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June 6, 2020 | “An Intent and Deliberateness” in the Precious Metals This Past Week

"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."
06 June 2020 — Saturday


The gold price was up a small handful of dollar by around 8:30 a.m. China Standard Time on their Friday morning…but then the selling pressure commenced.  It continued quietly lower until it touched the $1,700 spot mark around 11:15 a.m. in London — and then jumped a bit higher at that point. The unbelievable jobs report hit the tape at 8:30 a.m. — and ‘da boyz’ went to work.  The low tick was set around 10:35 a.m. in New York — and its subsequent rally was cut off at the knees shortly after that.  From that juncture it crept ever-so-quietly higher right into the 5:00 p.m. close.


The high and low ticks in gold were recorded as $1,723.20 and $1,671.70 in the August contract.  At the close, the July/August price differential was $4.50…August/October was $11.10 — and October/December was $7.80.


Gold finished the Friday session in New York at $1,684.00 spot, down $28.90 from its close on Thursday — and about 13 bucks off its low tick of the day — and back below its 50-day moving average by a decent amount.  Net volume was very heavy, relatively speaking, at 253,000 contracts — and there was a bit under 21,500 contracts worth of roll-over/switch volume on top of that.



Except for the fact that JPMorgan et al. set silver’s low tick around 9:10 a.m. in New York trading, the silver price was handled in a similar manner as gold’s.  It began to creep quietly higher starting around 2:10 p.m. in after-hours trading and, like gold, that continued right into the 5:00 p.m. close.


The high and low ticks in silver were reported by the CME Group as $18.05 and $17.375 in the July contract.  At the close, the June/July spread differential was 3.6 cents…July/September was 18.9 cents — and September/December was 21.7 cents.


Silver finished the Friday session at $17.400 spot, down 32.5 cents from Thursday, but 22 cents off its Kitco-recorded low tick of the day.  Net volume was pretty heavy at a bit under 68,500 contracts — and there was a hair under 22,000 contracts worth of roll-over/switch volume out of July and into future months….mostly September and December.



The price pattern in platinum was very similar to what happened in gold, so I’ll spare you the play-by-play.  Its engineered low was set shortly before the Zurich close — and it rallied a decent amount from that point until around 2:25 p.m. in after-hours trading.  It didn’t do much after that.  Platinum was closed at $810 spot, down 15 dollars from Thursday.



Palladium had a bit of an up/down move in mid-morning trading in the Far East — and after that it didn’t do much until Zurich opened.  It edged quietly lower from there until minutes after 12 o’clock noon in London — and then rallied a decent amount until it ran into ‘something’ a few minutes after 12 o’clock noon in New York.  It was sold down a bunch by 1 p.m. EDT — and didn’t do much of anything after that.  Palladium was closed at $1,897 spot, up 25 bucks on the day.



Based on the Kitco spot closing prices in both gold and silver posted above, the gold/silver ratio worked out to a tiny bit under 97 to 1.



The dollar index closed very late on Thursday afternoon in New York at 96.6770 — and opened up 7 basis points and change once trading commenced around 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It crept quietly higher until 10:12 a.m. CST — and then was sold unevenly lower until the 96.44 low tick of the day was set around 2:35 p.m. CST.  A very choppy and uneven ‘rally’ commenced at that juncture — and all the gains that mattered were in by a couple of minutes after the 1:30 p.m. COMEX close in New York, which was the 97.03 high tick of the day.  It crept a bit lower until trading ended at 5:30 p.m. EDT.


The dollar index finished the Friday session in New York at 96.9370…up 26 basis points from its close on Thursday.


Here’s the DXY chart for Friday, courtesy of Bloomberg as usual.  Click to enlarge.



And here’s the 5-year U.S. dollar index chart, courtesy of he good folks over at the Internet site.  The delta between its close…96.92…and the close on the DXY chart above, was about 2 basis points below the spot close on Friday.  Click to enlarge as well.



Not surprisingly, the gold shares gapped down a whole bunch at the 9:30 open in New York on Friday morning.  They turned higher on a dime within a few minutes — and that rally lasted until the 10 a.m. EDT afternoon gold fix in London.  They were sold lower anew until 11 a.m. EDT — and fifteen minutes later they began to head quietly higher — and that rally continued right until the markets closed at 4:00 p.m. in New York.  The HUI closed down only 1.17 percent.



With no differences worthy of the name, the silver equities performed in a similar manner as the gold stocks — and Nick Lairds’ Intraday Silver Sentiment/Silver 7 Index closed lower by 1.74 percent.  Click to enlarge if necessary.



Computing the index manually, the change worked out to down 1.63 percent.


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



The ‘star’ was Peñoles…up 2.32 percent, but only on a thousand shares traded.  Pretty much tied for the honour of dog of the day were Hecla Mining and Wheaton Precious Metals…down 3.05 and 3.13 percent respectively.



Here are two of the usual three charts that show up in every Saturday missive.  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 the month-to-date chart…as they’re one in the same for this week only — and the handiwork of JPMorgan et al. is painted all over it. They had all four precious metals down on the week — and of course their associated equities followed. Click to enlarge.



And here’s the year-to-date chart — and gold is still the clear winner so far, but certainly not up as much as it was a week ago…per the weekly chart above.  Silver and it’s associated shares also had a set-back…but they shall rise again!  Click to enlarge.



As per the COT and Days to Cover discussion a bit further down, the Big 8 traders are still mega short gold in the COMEX futures market, but some of them appear to be delivering physical metal into their short positions now, rather than covering in the COMEX futures market.  But they still remain trapped in silver.  And as of Tuesday cut-off, JPMorgan is most likely a bit long in gold — and a tiny bit short in silver according to Ted.  The potential for a JPMorgan double cross of the Big 8 traders is not only very much alive, but has already begun…as per Ted’s comments to me on the phone a week ago.  It’s now unfolding exactly as he said it would — and the bodies are just starting to float to the surface now.  There will be more to come.



The CME Daily Delivery Report showed that 1,321 gold and 6 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.


In gold, there were nine short/issuers in total — and the three largest by far were Morgan Stanley, International F.C. Stone — and Deutsche Bank.  Morgan Stanley issued 714 contracts from its in-house/proprietary trading account…followed by International F.C. Stone with 311 contracts out of its client account.  And lastly, Deutsche Bank issued 212 contracts out of its own account.  There was another very big list of long/stoppers.  By far the largest was JPMorgan, picking up 987 contracts…894 for its so-called client account, plus 93 for its own account.  In very distant second place was Goldman Sachs with 157 contracts…133 for its in-house/proprietary trading account, plus another 24 for clients.  And way down the list in third spot was Morgan Stanley, stopping 45 contracts for its client account.


In silver, the lone short/issuer was Advantage.  ADM and Morgan Stanley picked up 4 and 2 contracts respectively.  All contracts issued and stopped involved their respective client accounts.


So far in June, there have been an eye-watering 47,123 gold contracts issued/reissued and stopped — and that number in silver is 404 contracts.


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


The CME Preliminary Report for the Friday trading session showed that gold open interest in June rose by another 131 contracts, leaving 5,258 still around, minus the 1,321 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 543 gold contracts were actually posted for delivery on Monday, so that means that another 543+131=674 gold contracts were just added to the June delivery month.  Silver o.i. in June also rose…by 4 contracts…leaving 19 still open, minus the 6 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 6 silver contracts were actually posted for delivery on Monday, so that means that 6+4=10 more silver contracts just got added to June.



For the second day in a row there were withdrawals from both GLD and SLV, as authorized participants removed 131,599 troy ounces of gold from GLD — and 931,948 troy ounces of silver from SLV.


In other gold and silver ETFs and mutual funds on Planet Earth on Friday, net of any COMEX, GLD & SLV activity, there was a net 9,070 troy ounces of gold removed — and there was a net 112,350 troy ounces of silver withdrawn as well.


There was a tiny sales report from the U.S. Mint on Friday.  They sold 500 troy ounces of gold eagles — and 500 one-ounce 24K gold buffaloes.


So far in June the mint has sold 2,500 troy ounces of gold eagles — 450,000 silver eagles — and 500 one-ounce 24K gold buffaloes.



There was a bit more activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  They received 84,356 troy ounces — and didn’t ship out anything.  In the ‘in’ category, the largest amount 64,302.000 troy ounces/2,000 kilobars [SGE kilobar weight] was dropped off at HSBC USA — and the remaining 20,054 troy ounces was received at Brink’s, Inc.  There was a bit of paper activity, as 63,464.100 troy ounces/1,974 kilobars [U.K./U.S. kilobar weight] was transferred from the Eligible category and into Registered over at Loomis International.  Undoubtedly this out for delivery in June.  The link to this is here.


There wasn’t much happening in silver, as only one truckload…598,328 troy ounces… was received — and all of that ended up at Canada’s Scotiabank.  There was 36,330 troy ounces shipped out…30,237 troy ounces from CNT — and the remaining 6,093 troy ounces from Delaware.  The link to that is here.


It was pretty quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 330 of them — and shipped out 18.  All of this occurred over at Brink’s, Inc. — and the link to that, in troy ounces, is here.



Here are two charts that you’re more than familiar with.  They’re 10-year charts showing all the known physical gold and silver holdings by the world’s depositories, mutual funds and ETFs…updated with this past week’s data.  During the week just past, there was 1,764,000 troy ounces of gold added, plus another 11.50 million troy ounces of silver.


And where has that silver been coming from over the last many months…almost 70 million ounces deposited in the last four weeks?  That question should be directed to Jamie Dimon.  Ted Butler wrote about it in an essay headlined “The Return of Precious Metals Leasing” — and the link to that is here.



The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, June 2, was not anywhere near as bad in silver as Ted and I were  expecting — and there was big drop in the commercial net short position gold.  According to Ted, when we were talking on the phone yesterday, that this drop in gold was mostly due to deliveries, which I’ll get into in a bit.


In silver, the Commercial net short position only increased by 3,355 contracts, or 16.8 million troy ounces.  I would have not been surprised by a number two or three times that amount, and neither would Ted.  So this was a big positive.


They arrived at that number by increasing their long position by 3,927 contracts, but they also increased their short position by 7,282 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, the Managed Money and ‘Other Reportables’ didn’t do much…the former increasing their net long position by only 611 contracts — and the latter decreased their net long position by only 576 contracts.  The big activity was in the ‘Nonreportable’/small trader category, as the increased their net long position by a very hefty 3,320 contracts.


Doing the math: 3,320 plus 611 minus 576 equals 3,355 contracts…the change in the Commercial net short position.


The Commercial net short position in silver is now sitting at 53,947 COMEX contracts…269.7 million troy ounces.  The Big 8 traders are short 78,726 COMEX contracts, or 393.6 million troy ounces, or 146 percent of the Commercial net short position…which is preposterous, but that percentage has been dropping steadily over the last few weeks.  At their most outlandish, the Big 8 were short a bit over 200 percent of the Commercial net short position.  More on this on the Days to Cover data further down.


As of the Tuesday cut-off, Ted puts JPMorgan’s short position at around 5,000 contracts, up a couple of thousand from last week’s report.


Here’s Nick’s 3-year COT chart for silver — and this past week’s changes should be noted.  Click to enlarge.



Of course, things have changed materially since the Tuesday cut-off — and Friday’s COT Report is very much “yesterday’s news”.  But if one could see a COT Report as of yesterday’s close, it would show a fairly significant reduction in the Commercial net short position in silver — and that JPMorgan had covered all of their current short contracts.



In gold, the commercial net short position declined by a very hefty 17,699 COMEX contracts, or 1.77 million troy ounces.


They arrived at that number by reducing their long position by 23,323 contracts, but they also reduced their short position by 41,022 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.


Under the hood in the Disaggregated Report, it was all Managed Money and ‘Other Reportables’ that accounted for the change.  the Managed Money traders decreased their net long position by 12,726 contracts — and the ‘Other Reportables’ by 6,154 contracts.  The traders in the ‘Nonreportable’/small trader category went the other way…increasing their net long position by 1,181 contracts.


Doing the math: 12,726 plus 6,154 minus 1,181 equals 17,699 contracts…the change in the commercial net short position.


Ted was of the opinion yesterday [his first reaction] that this sizeable reduction in net long positions by the non-technical Managed Money and Other Reportables traders was due to the fact that physical deliveries were made in these two categories during the reporting week, as the price change over that period would have never have resulted in such large position changes on their own.  Some, but certainly not all, of the Big 8 were covering short positions [at a huge loss] by delivering physical metal, rather than buying long contracts in the COMEX futures market and driving the price higher in the process.


He’s going to sleep on all this overnight — and I’ll certainly be looking forward to reading is thoughts in his weekly review this afternoon.


The commercial net short position in gold is now down to 25.66 million troy ounces — and of that amount, the Big are short 20.74 million troy ounces…down from 24.9 million troy ounces the previous week.  That’s a big decline.  There certainly didn’t appear to be much paper short covering — as almost all of that was a reduction in short position because it looked like they were delivering into them, which is the other way of extinguishing a short contract.


Ted was also of the opinion that JPMorgan may actually be net long the COMEX futures market in gold by around 5,000 contracts as of the Tuesday cut-off.


Here’s Nick’s 3-year COT Report for gold, updated with yesterday’s date — and the change should be noted.  Click to enlarge.



This COT Report in gold is just as much “yesterday’s news” as it is for silver — and what has happened since the Tuesday cut-off won’t be known until next Friday report which, as I’ve stated before, is a lifetime in this current situation.


But make no mistake about it, there is absolutely nothing in this above report that is anything but very bullish from a price perspective at some point.  Ted said that there was “an intent and deliberateness” to this past week’s precious metal price action, especially since the cut-off.



In the other metals, the Manged Money traders in palladium decreased their net long position by 424 COMEX contracts during the reporting week — and are net long the palladium market by only 598 contracts…around 8.8 percent of the total open interest…down from 14.5 percent last week. I suspect that after Thursday’s engineered price decline, that Managed Money traders may now be net short palladium by a bit.  In platinum, the Managed Money traders traders reduced their net long position by 1,721 COMEX contracts.  They’re net long the platinum market by 12,982 COMEX contracts…about 24.5 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] continue to be mega net long against JPMorgan et al…especially the ‘Other Reportables’.  In copper, the Managed Money traders went from net short to net long during the reporting week — and are net long copper by 2,543 COMEX contracts…an immaterial 1.3 percent of total open interest.



Here’s Nick Laird’s “Days to Cover” chart, updated with the COT data for positions held at the close of COMEX trading on Tuesday, June 2.  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.


The Big 4 traders are short about 121 days of world silver production, up 2 days from last week’s report.  The ‘5 through 8’ large traders are short an additional 48 days of world silver production…up about 1 day from last week’s COT Report – for a total of  about 169 days that the Big 8 are short…up about 3 days from last week’s report. This represents a bit over five and a half months of world silver production, or about 394 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 166 days of world silver production.]


In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 270 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is around 394 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by about 394-270=124 million troy ounces…which is down about 10 million ounces from last week’s report.


The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 26-odd small commercial traders other than the Big 8, are net long that amount.  JPMorgan is still in this raptor category along with the other small commercial traders — and that’s despite the smallish increase in their short position during this latest reporting week.


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 [mostly sans JPMorgan] against everyone else…a situation that has existed for over three decades in both silver and gold — and in platinum and palladium as well.


As per the first paragraph above, the Big 4 traders in silver are short around 121 days of world silver production in total. That’s 30.25 days of world silver production each, on average…up from 29.75 days in last week’s report.  The four big traders in the ‘5 through 8’ category are short 48 days of world silver production in total, which is 12 days of world silver production each, on average…up a tiny amount from last week.


The Big 8 commercial traders are short 46.4 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 49.1 percent they were short in last week’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be a bit under the 55 percent mark.  In gold, it’s now 43.6 percent of the total COMEX open interest that the Big 8 are short, which is up a hair from the 43.1 percent they were short in last week’s report.


In gold, the Big 4 are short 47 days of world gold production, down another 5 days from last week’s COT Report — and that’s because one of the traders in the Big 4 category covered part or all of their short position…mostly by delivering physical metal into their short position.  The ‘5 through 8’ are short another 25 days of world production, down 1 day from last week’s report…for a total of 72 days of world gold production held short by the Big 8…down 6 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 65 percent of the total short position held by the Big 8…down about 2 percentage points from last week’s report.


JPMorgan is no longer in the Big 8 category and, according to Ted, are net long gold by a bit in the COMEX futures market…and are now one of the raptors, just like they are in silver.


The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 72, 77 and 74 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is about unchanged from last week’s COT Report…platinum down 2 percentage points from a week ago — and palladium is up an almost meaningless 1 percentage point week-over-week.


To repeat my comments from earlier up…”The potential for a JPMorgan double cross of the Big 8 traders is not only very much alive, but has already began…as per Ted’s comments to me on the phone last Friday.  It’s now unfolding exactly as he said it would.”



The June 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 June Bank Participation Report covers the time period from May 6 to June 2 inclusive.]


In gold, 4 U.S. banks are net short 67,675 COMEX contracts in the June BPR.  In May’s Bank Participation Report [BPR] these same 4 U.S. banks were net short 97,889 contracts, so there was a huge drop of 30,214 COMEX contracts from a month ago.  It’s been quite some time since the U.S. banks have been short such a small amount…April of 2019 to be exact, when these U.S. banks were net short 64,906 contracts.


With JPMorgan now a bit long the COMEX futures market in gold, Citigroup, HSBC USA and I suspect Goldman Sachs 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.


Also in gold, 32 non-U.S. banks are net short 66,651 COMEX gold contracts.  In May’s BPR, 31 non-U.S. banks were net short 81,098 COMEX contracts…so the month-over-month change shows a big decrease as well…14,447 contracts.  The last time the non U.S. banks were short this small of an amount was back in May of 2019.


But 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 and maybe the BIS.  I’m starting to have suspicions about Dutch Bank ABN Amro, plus Australia’s Macquarie as well.  Other than that small handful, the short positions in gold held by the vast majority of non-U.S. banks are immaterial.


As of this Bank Participation Report, 36 banks [both U.S. and foreign] are net short 28.3 percent of the entire open interest in gold in the COMEX futures market, which is down pretty big from the 36.5 percent they were short in the May 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 34,173 COMEX contracts in June’s BPR.  In May’s BPR, the net short position of these same 4 U.S. banks was 28,995 contracts, so the short position of the U.S. banks has increased by 5,178 contracts month-over-month — and I suspect that’s all courtesy of JPMorgan.


As in gold, the three biggest short holders in silver of the four U.S. banks in total, would be Citigroup, HSBC USA — and perhaps Goldman in No. 3 spot — and 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, 21 non-U.S. banks are net short 32,640 COMEX contracts in the June BPR…which is up a very decent amount from the 23,584 contracts that 20 non-U.S. banks were short in the May 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 19 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 19 non-U.S. banks are immaterial – and have always been so.


As of June’s Bank Participation Report, 25 banks [both U.S. and foreign] are net short 39.4 percent of the entire open interest in the COMEX futures market in silver-virtually unchanged from the 39.6 percent that 24 banks were net short in the May BPR.  And much, much more than the lion’s share of that is held by Citigroup, HSBC USA, Goldman, 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, 4 U.S. banks are net short 12,755 COMEX contracts in the June Bank Participation Report.  In the May BPR, 4 U.S. banks were net short 11,130 COMEX contracts…so there’s been a small increase in the short position of the big 4 U.S. banks month-over-month.


[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 — and they’ve still got a long way to go to get back to that number.]


Also in platinum, 17 non-U.S. banks are net short 3,460 COMEX contracts in the June BPR, which is up a bit from the 1,741 COMEX contracts that these same 17 non-U.S. banks were net short in the May BPR.


[Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts — and they’re almost back at that number.]


And as of June’s Bank Participation Report, 21 banks [both U.S. and foreign] are net short 30.3 percent of platinum’s total open interest in the COMEX futures market, which is up a bit from the 25.6 percent that 22 banks were net short in May’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 1,210 COMEX contracts in the June BPR, down from the 1,608 contracts that these same 3 or less U.S. banks were net short in the May BPR.
Also in palladium, 8 or more non-U.S. banks are net long 597 COMEX contracts-compared to the 807 COMEX contracts that 11 or less non-U.S. banks were net long in the May BPR.


As of this Bank Participation Report, 11 banks [both U.S. and foreign] are net short 9.0 percent of the entire COMEX open interest in palladium…down from the 10.5 percent of total open interest that 13 banks were net short in May.  Because of the small numbers of contracts involved, along with a declining opening interest, these numbers are pretty much meaningless — and that’s being kind. So, for the third month in a row, the world’s banks are no longer involved in the palladium market in a material way…and may be out entirely after the enormous engineered price decline in that precious metal on Thursday.


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, as I mentioned above, they have imploded into insignificance over the last five 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 still have meaningful short positions in the other three precious metals.


JPMorgan is a tiny bit net short in silver — and a bit net long in gold in the COMEX futures market as of Tuesday’s cut-off — and may be the same in platinum and palladium, but there’s no way to tell that.  It’s negligible in palladium for sure, but not so in platinum, if they’re still short in that market.


However, since the Tuesday cut-off for the above COT and Bank Participation Reports, there have certainly been some material changes – and all of them positive.  I suspect that JPMorgan is out of its tiny short position in silver — and may be net long.  I also suspect that they’re even longer in gold now than they were on Tuesday.


I have a very decent number of stories, articles and videos for you today.


U.S. Hiring Rebounds, Defying Forecasts for Surge in Joblessness

America’s labor market defied forecasts for a Depression-style surge in unemployment, signaling the economy is picking up faster than anticipated from the coronavirus-inflicted recession amid reopenings and government stimulus.


A broad gauge of payrolls rose by 2.5 million in May, trouncing forecasts for a sharp decline following a 20.7 million tumble the prior month that was the largest in records back to 1939, according to Labor Department data Friday. The jobless rate fell to 13.3% from 14.7%.


U.S. stocks jumped after the report with the S&P 500 up 2.9%, adding to weeks of gains in equities since mid-March. The figures were so astonishing that President Donald Trump held a news conference, where he called the numbers “outstanding” and predicted further improvement before he’s up for re-election in November.


While the overall picture improved, there are still major caveats: 21 million Americans remain unemployed with a jobless rate higher than any other time since 1940, indicating a full recovery remains far off with many likely to suffer for some time.


And the return to work is uneven, with unemployment ticking up among African Americans to 16.8%, matching the highest since 1984, even as unemployment rates declined among white and Hispanic Americans. That comes amid nationwide protests over police mistreatment of African-Americans, which have drawn renewed attention to race-based inequality.


Well, dear reader, if you believe this, than I have bridge for you at a really good price.  This ‘news’ item appeared on the Bloomberg website at 5:34 a.m. PDT on Friday morning — and was updated about forty-five minutes later.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.  The Zero Hedge take on this is headlined “This Makes No Sense: In Month When U.S. Was Shut Down, BLS Estimated That 345K New Businesses Were Formed” — and I thank Brad Robertson for that one.


Retailer Gap posts near-$1bn loss due to coronavirus

The company was $932m (£740m) in the red for the three months to May, compared with a profit of $227m in the same period last year.


It comes as Gap wrote off the value of the goods it holds by more than a quarter of a billion dollars.


With net sales falling 43% in the period, Gap’s chief executive Sonia Syngal said they continued to reflect “material declines in May as a result of closures” but added that online demand was improving.


Retailers of non-essential goods, especially clothing, have been hit hard by restrictions aimed to help slow the spread of Covid-19.


Shops have been shut across much of the world as retailers were forced to limit their businesses to online operations.


San Francisco-based Gap, which operates almost 2,800 stores in North America, said that more than half of its company-operated stores in the U.S. have now reopened.


Separately, Gap is is being sued by America’s largest shopping mall operator for refusing to pay rent for stores temporarily closed during the coronavirus pandemic.


This news item was posted on the Internet site on Friday sometime — and I thank Patrik Ekdahl for his second offering in today’s column.  Another link to it is here.


U.S. Consumer Credit Crashes as Americans Repay a Record Amount of Credit Card Debt

One of the striking changes to U.S. consumer behavior spawned by the economic shutdowns from the coronavirus pandemic, was the unprecedented surge in personal savings which as we learned last week, exploded to a record 33% of disposable personal income…Click to enlarge.



… as the annualized amount of Personal Savings soared by a mind blowing $4 trillion in May, rising from $2.1 trillion to $6.1 trillion.  Click to enlarge.



Now, thanks to the latest consumer credit data released by the Fed, we know what much of that saving went to: paying down debt.


According to the Fed’s latest G.19 statement, in April total consumer credit plunged by a record $68.8 billion, smashing  expectations for a modest $20 billion drop sparked by last month’s $6.8 billion (revised) drop, and more than 3x greater than the biggest consumer credit draw-down observed during the financial crisis.  Click to enlarge.



Just like March, the bulk of the credit repayment took place in revolving credit although to a far greater degree as Americans repaid a record $58 billion on their credit card bills as U.S. consumer society literally went into reverse and instead of spending wildly as it does every other month, usually spending what it can’t afford, U.S. consumers repaid the most on their credit cards ever.


What we find most surprising, however, is that in this day and age when the Fed has effectively institutionalized moral hazard and where failure is no longer punished as capitalism is now officially dead and zombie existence is rewarded, Americans still care enough about their credit rating to pay down their own debt even as corporations and the country go on a historic debt issuance spree which everyone knows will never be repaid.


Our advice to Americans with credit cards: go crazy, after all if everyone defaults it’s the same as nobody defaulting.


This Zero Hedge article showed up on their Internet site at 3:47 p.m. on Friday afternoon EDT — and it comes to us courtesy of Brad Robertson.  Another link to it is hereGregory Mannarino‘s post market close rant for Friday is linked here.


You May Never See “Normal” Again — Jim Rickards

American cities are burning, there’s a lethal pandemic and we’re in a new Great Depression.
Other than that, everything’s fine.


People often ask me when things will “get back to normal.” Well, the answer could be never (or at least not for a long time).


Germany was not “normal” from 1914-54, for example. Social disorder is like a virus; it goes away eventually but not necessarily soon.


Meanwhile, we’re now in our third month of a national lock-down, with perhaps another month to go, depending on your locality.


Some states and cities are beginning to reopen, but they’re doing it in “phases,” so maybe your hair stylist reopened last week and your favorite restaurant will reopen next week.


The lock-down has certainly been painful for many. Even under the best of circumstances, anxiety levels went up, patience wore thin and tempers flared at trivial things. Cabin fever is a real disease.


Was it all worth it?


This commentary from Jim is datelined June 2…but it didn’t show up on the Internet site until Friday sometime — another link to it is here.


American Politics, Economics Offer False Realities — Bill Bonner

One country. Two systems.


One financial. One economic.


One for Wall Street. One for Main Street.


One for the elite. One for everyone else.


One fraudulent. The other just a rip-off.


To make a long story precariously short (and deliberately provocative), the “rich” got some of their wealth honestly.


The rest they got by ripping off the poor and middle classes, using their fake-money system.
In effect, after 2008, they had access to an almost unlimited amount of credit priced at artificially low rates, giving them a greater and greater share of the nation’s real wealth.


And who noticed? They said the Federal Reserve was “stimulating” the economy.


But the two-system system is now wreaking havoc on our economy, our society, and our government… and driving the whole kit and caboodle to a disaster.


This interesting commentary from Bill showed up on the Internet site on Friday sometime — and another link to it is here.


Extraordinary Disconnect Between Stock Prices and Economic Collapse — Stephen Lendman

U.S. equity prices are near or at all-time highs at a time of unprecedented economic collapse, a festering main street Depression, unemployment way higher than in the 1930s, with no prospect for a V-shaped recovery, only its illusion.


The Wall Street owned and controlled Fed is responsible for the extraordinary melt-up in stock valuations, money printing madness to blame – saving the stock market at the expense of the economy and welfare of ordinary Americans.


For the first time in U.S. history, the Fed’s balance sheet exceeds $7 trillion.


It’s up from around $250 billion in the late 1980s and $750 billion in late December 2007, the onset of the 2008-09 financial crisis – a colossal example of mismanagement, an eventual price to pay for what’s going on.


Wall Street on Parade (WSOP) noted a disconnect between the Fed’s balance sheet and economic collapse.


At year-end 2019, WSOP explained that the Fed “was already deep into a debt crisis,” reflected by its minutes.


From mid-September 2019 to late January, the Fed already “had made $6.6 trillion cumulatively in emergency revolving repo loans to Wall Street” – even though the first US COVID-19 death didn’t occur until February 28.


Flooding the market with liquidity at near-zero percent interest is a virtual open sesame to unrestrained speculation for easy profits – no matter the extraordinary divergence between equity valuations and intrinsic value.


This commentary from Stephen, which I haven’t had time to finish reading, showed up on his Internet site on Friday sometime — and another link to it is here.  I thank Roy Stephens for sending it our way.


Doug Noland — Bubble Meets Pandemic Consequences

I try to stay laser-focused on the analysis, conscious not to stray into the conspiracy realm. The Fed may buy S&P futures contracts at key market junctures and the government might at times fudge the numbers. I don’t know, and I’m not going there. Some will question the veracity of Friday’s payrolls data. [No!…really??? – Ed]


Securities markets are indeed on a moonshot; the real economy not so much. The 2016 election cycle was nothing short of unbelievable. We’re now only five months from what is poised to be a historic election. The President has stumbled in a most challenging backdrop – and is down in the polls. With the pandemic, economic turmoil, protests and riots, it’s a surreal environment. We should expect things to turn even crazier in the months heading into voting. It was as if the presidential campaign finale officially commenced, buoyed by a stunningly better-than-expected employment report.


We’re witnessing final convulsions from a historic global speculative Bubble. Markets enjoy unparalleled support from the President and Federal Reserve, along with central bankers and other policymakers spanning the globe.


Keep in mind, the Fed began aggressively expanding its balance sheet – injecting marketplace liquidity – back in September in response to heightened repo market strain. So-called “insurance” policy measures were adopted: apply stimulus measures early and aggressively to ward off potential instability.


Employing liquidity injections in an environment of record securities prices significantly exacerbated speculative excess. Bubble markets could not have been in a more vulnerable state when the pandemic hit. As powerful self-reinforcing de-risking/deleveraging took hold, Bubbles were bursting in synchronized fashion. Dislocating markets were swiftly pushing global finance to the precipice. The upshot: global stimulus measures were taken to a whole new level, including an additional $3.0 TN of support from the Federal Reserve.


Prospective U.S. economic fundamentals may no longer prove the “envy of the world.” And as crazy as it sounds, perhaps fundamentals including trade and Current Account Deficits, economic structure, debt and deficits actually begin to matter. In a world of “pain trade” proliferation, it doesn’t take a wild imagination to envisage the Crowded long dollar trade suffering a bout of discomfort.


Doug’s weekly commentary always falls into the must read category for me — and this week’s edition was posted on his website in the very wee hours of Saturday morning.  Another link to it is here.


Gold: Bullish bias intact into H2 2020 – JP Morgan

Despite the recent consolidation in gold, the yellow metal is predicted to stay bullish in the second half of this year, with additional gains not off the table.


Key quotes
Warning signs are mounting, and should be bullish gold into the second half.
For the near-term, the current bull-run in equity markets will likely remain.
Not only is gold likely to benefit from central bank liquidity injections, but it also offers exposure to a weaker dollar and should provide a hedge to some of the downside risks [including U.S./China trade tensions and civil unrest in the U.S.].


The above small handful of paragraphs are all there is to this very brief article that appeared on the Internet site at 4:38 a.m. BST in London on Friday.  I found it on Sharps Pixley — and another link to the hard copy is here.


Gold and silver still flooding into PM ETFs — Lawrie Williams

If there’s anything out there that demonstrates the continuing momentum which will likely drive gold to new heights, and drag silver up with it too, it is the continuing flow of gold and silver into their respective metal-related ETFs.  Those of you who read my article of Wednesday –  Unsustainable equity markets. All the more reason to invest in gold and silver – should hopefully have taken notice of the comment about the huge inflows into U.S. gold and silver ETFs in May and the first couple of days of June.  Now the World Gold Council (WGC) has released a report citing the exceptional level of inflows into global gold ETFs in May – inflows which have continued so far almost every working day in the current month.


According to the WGC gold-backed ETFs added 154 tonnes – net inflows of US$8.5 billion (+4.3%) – across all regions in May, boosting global holdings to a new all-time high of 3,510 tonnes. Year-to-date, inflows (623 tonnes, $33.7 billion) have now already exceeded the highest level of annual inflows (591 tonnes) recorded back in 2009.  And, as we pointed out in Wednesday’s article, recent silver flows into ETFs have probably been even more spectacular.  All this increase has happened despite some fairly volatile movement in the gold price which, at one time even spent much of the first half of May back below the $1,700 level, which many had reckoned to be the new base price for the yellow metal.  This volatility has continued into the current month with the gold price being driven down to around $1,680 yesterday, before recovering back to around $1,720 as I write.


Despite the pressure under which gold and silver prices currently find themselves we think the momentum generated by the enormous flood of money going into the precious metals ETFs is indicative of things to come for the sector.  We suspect that the $1,750 current ceiling for gold will be breached comprehensively by the northern hemisphere fall and $2,000 gold will not be too far behind, although there will be periods of resistance along the way.  Anecdotal reports suggest that demand in China and India, the two leading gold consumers, is beginning to to turn up again, while global new mined gold production seems at last to be beginning to fall, both because of coronavirus related production losses and through other factors as we are already seeing in Australia, the world’s No.2 gold mining nation and as we have been seeing in China, the world No.1, for several years already.  With the accelerating gold-related ETF rises worldwide, and as the world comes out of the coronavirus lock-downs, gold’s supply/demand fundamentals may be improving. While what we expect to be a severe equities plunge, coupled with perhaps a declining dollar index, should further enhance gold’s appeal as the ultimate safe haven investment – which should drag silver up with it.  In our view the prospects look positive for both principal precious metals.


This commentary from Lawrie was posted on the Sharps Pixley website on Friday sometime — and another link to it is here.


The Cracks in the Financial System Are Getting Bigger: Here’s What It Could Mean for Gold — Frank Giustra

Doug Casey’s Note: In the over 30 years I’ve known him, my respect-and liking-for Frank Giustra has only grown. Not just because he’s a world-class businessman, having built Yorkton Securities into a powerhouse, and then founding Lionsgate Entertainment. More relevant to this interview, he’s a first-rate judge of the markets-one of the best I’ve ever met at seeing turning points and understanding trends.


He’s one of the few financiers in the “Master of the Universe” class that understands gold and economics. Frank knows what he’s talking about. I suggest you read this closely.


International Man: Last time around, the Fed was able to paper over the crisis and create a ten-year bull market in stocks. Is the Fed out of ammo this time?


Frank Giustra: They are, but that won’t stop them, and they’ll call it something else-helicopter money or Modern Monetary Theory (MMT).


In the last cycle, it was QE. It wasn’t printing money; it was QE because it sounded better. It was much more calming and elegant to call it that. It almost rolled off your tongue.


They will never call it money printing.


The new and popular handle is Modern Monetary Theory. But it’s the same old Ponzi scheme. It’s still plain old money printing.


This worthwhile Q&A/commentary from Frank was posted on the Internet site on Friday sometime — and another link to it is here.


Why Gold?  — Jim Rickards

That’s a question I’m asked frequently. It’s usually followed by a comment along the lines of, “I don’t get it. It’s just a shiny rock. People dig it out of the ground and then put it back in the ground. What’s the point?


I usually begin my reply by saying, “It’s not a rock, it’s a metal” and then go from there.


I have a lot of sympathy in these conversations. The fact that people don’t know much about gold today is not exactly their fault. The economics establishment of policymakers, academics and central bankers have closed ranks around the idea that gold is a taboo subject.


You can teach it in mining colleges, but don’t dare teach it in economics departments. If you have a kind word for gold in a monetary context, you are immediately labeled a “gold nut,” “gold bug,” “Neanderthal” or something worse. You are excluded from the conversation. Case closed.


It wasn’t always this way. I was a graduate student in international economics in 1973-1974. Many observers believe that the gold standard “ended” on August 15, 1971 when President Nixon suspended the redemption of dollars for gold by foreign trading partners. That’s not exactly what happened.


Nixon’s announcement was a big deal. But, he intended the suspension to be “temporary” and he said so in the announcement. The idea was to call a kind of “time out” on redemptions, hold a new international monetary conference similar to Bretton Woods in 1944, devalue the dollar against gold (and other currencies such as the German Deutschemark and Japanese Yen), and then return to the gold standard at the new exchange rates.


I was able to confirm this plan with two of Nixon’s advisors who were with him at Camp David in 1971 when he made the announcement. I spoke to Kenneth Dam (an executive branch lawyer) and Paul Volcker (at the time, the Deputy Secretary of the Treasury). They both confirmed that the suspension of gold redemptions was meant to be temporary, and the goal was to return to gold at new prices.


This very interesting and worthwhile commentary from Jim, datelined June 2, appeared on the Internet site on Friday sometime — and another link to it is here.


After leaving Harrison Hot Springs and heading back to Merritt on October 13, I decided to take a different route — and crossed the Fraser River at a small town just outside Harrison called Agassiz.  In the fading light of a now setting sun, I took these photos from the shore of the river from a couple of different spots.  As you can see from the various high-water marks on the shore, the river level varies wildly depending on how precipitation has fallen upstream in the mountains that feed it.  Click to enlarge.


Today’s pop ‘blast from the past’ features the genius of Charles Roger Pomfret Hodgson.  He is an English musician, singer and songwriter, best known as the former co-frontman and founder member of progressive rock band Supertramp.  His voice is unmistakable — and the tune instantly recognizable.  The link is here.  And a link to the bass cover of the original Supertramp hit is here.
Today’s classical ‘blast from the past’ was one I stumbled over when I was researching last week’s blast from the past.  I’ve featured it before, but it’s been a while…so here it is again.
The Warsaw Concerto is a short work for piano and orchestra by Richard Addinsell, composed for the 1941 British film Dangerous Moonlight.  “The film’s director had originally wanted to use Sergei Rachmaninoff’s Second Piano Concerto, but this idea was either forbidden by the copyright owners, or was far too expensive.
The success of the film led to an immediate demand for the work, and a recording was dutifully supplied from the film’s soundtrack (at nine minutes, it fit perfectly on two sides of a 12-inch disk playing at 78 rpm) along with sheet music for a piano solo version. Such unexpected success had another consequence. The off-screen piano part was played by Louis Kentner, a fine British pianist known for his performances of Franz Liszt, but he had insisted that there be no on-screen credit, for fear that his participation in a popular entertainment would harm his classical reputation. He lost his qualms when the recording sold in the millions, and Douglas notes that he even asked for royalties (they were granted). Ultimately the Warsaw Concerto was such a hit that it made the then unusual journey from movie screen to concert hall.
And here it is, performed by the absolutely incomparable Valentina Lisitsa — and it is stunning.  The link is here.  Enjoy!

Like you, I certainly wasn’t happy to watch JPMorgan et al. work over the precious metals in the COMEX futures market on Friday morning — and using that bulls hit jobs number as cover, only added insult to injury.
But I was more than delighted to see the recovery in the precious metal equities, as that wasn’t John Q. Public filling their faces…that was the deep state/deep pocket insiders loading the boat with shares that everyone else was selling in a panic.  If the New York markets had been open for another thirty minutes, it would have been an even money bet that they would have closed in the green for the day.  This price action was a very positive development.
And despite the pain, the price action since the Tuesday cut-off was more bullish news piled on top of an already bullish market structure in the COMEX futures market.  Whether or not there was any further short covering by any of the Big 8 traders during the last three trading session of the week, won’t be known until next Friday’s COT Report is out.
I was very intrigued when Ted pointed out that it appeared that some/a select few of the Big 8 traders were actually delivering into their short positions during the reporting week.  Instead of buying boatloads of long positions, which would drive prices higher, they took their losses in the physical market instead.  I’ll be more than interested in what he has to say about this in his weekly review this afternoon once he’s had the night to ‘sleep on it’.
All of the above, including the ocean of money going into physical metal in the various and sundry ETFs and mutual funds, is not something that is at all negative for prices going forward.
Both Ted and I are of the firm belief that a major paradigm shift has been underway during the last several months — and we’re only getting glimpses here and there of what’s happening under the surface.
But movements of this magnitude are hard to hide — and Ted has been all over JPMorgan et al. like white on rice.  Everything he sees is a harbinger of far higher precious metal prices ahead — and it’s just a matter of when…not if.
Here are the 6-month charts for the Big 6 commodities — and gold’s close a decent amount below its 50-day moving average should be noted.  Silver’s 200-day moving average is less than 50 cents away.  Platinum got hammered pretty good — and palladium managed to close up a bit on the day.  Copper jumped above its 200-day moving average on Friday — and closed a penny above it…up 7 cents from Thursday.  WTIC tacked on another $2.14 a barrel…up 5.72 percent.  If you’re looking for an overprice commodity, WTIC is it.  Click to enlarge.
When I saw the story on the job numbers I knew immediately that it was a total fabrication.  I was saddened by the fact that the U.S. government had pulled off a bald-face lie like that one, in a blatantly transparent attempt to affect the markets and public opinion.
I was sad for the American people that their deep state ‘leaders’ had fallen this low — and how, over the last 50 years or so, I’ve watched America turn from the respected and beloved nation that it was back then, to the horror show it has become today.
We are in a very dark economic hole right now — and nothing will bring it back to what it was.  I said many years ago that when the depression that the central banks had long been fighting against, finally manifested itself, that I would not live long enough to see it breath its last…and I won’t.
All the money printing in the world won’t save us now — and the central banks know that they are fighting an impossible battle against this deflationary depression that’s pounding on their ramparts.
They’ve played all their cards — and are all out of aces…except one.  The gold card.
The fractional reserve banking system, as I and others have stated over the last two decades, does not work in reverse.  The economic, financial and monetary systems must be kept ever expanding — and the trillions they’re printing out of thin air to keep this ‘Everything Bubble’ inflated, are having less and less effect either financially, monetarily…or psychologically.  The jig is now up — and they know it.
They must generate inflation — and lots of it.  Rampant counterfeiting by the Fed et al. is only keeping equity prices elevated — and companies liquid, if not solvent.  A new price for gold will fix a lot of their deflationary problems literally overnight, as everything will be devalued against hard assets…including all fiat currencies.
The smart money is already in the precious metals, with more arriving by the day, week and month — and I know you are as well.
This fiat currency game will celebrate its 50th anniversary in August of next year — and I wouldn’t be prepared to bet any money that the system makes it to that date, before everything implodes into a financial and monetary black hole.
So one has to wonder how close the deep state powers-that-be will get to the event horizon before they play it?
But I’m still happy playing at being my own central bank here in Merritt — and I’m still “all in”.
And while on the subject of central banking, the Fed has its FOMC meeting this coming Tuesday and Wednesday — and we’ll find out on Wednesday afternoon what new rabbits Jay Powell has pulled out of his hat.
I’m done for the day — and the week — and I’ll see you here on Tuesday.

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June 6th, 2020

Posted In: Ed Steer's Gold and Silver Digest

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