Another Surprising COT Report

 — Revealed: Monday, 10 February 2020 | Print  | Disqus 

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

By Ed Steer

The gold worth wandered round just a few {dollars} both facet of unchanged on Friday — and that lasted till the job numbers hit the tape at 8:30 a.m. in New York.  It rallied a bit from there, however clearly bumped into ‘one thing’ just a few minute after the 9:30 open of the fairness markets.  As soon as the 10 a.m. EST afternoon gold repair was put to mattress, the gold worth was offered decrease till round 11:30 a.m. — and from there it rallied quietly till it bumped into one other ‘one thing’ a minute or so after 2 p.m. in after-hours buying and selling.  It crept quietly decrease from there till buying and selling ended at 5:00 p.m. in New York.

The high and low ticks definitely aren’t price wanting up.

Gold was closed on Friday afternoon in New York at $1,570.00 spot, up $3.60 on the day.  Web quantity was pretty first rate at a tiny bit underneath 275,00Zero contracts — and there was about 12,500 contracts price of roll-over/swap quantity on this treasured steel.

The silver worth chopped and flopped round by a couple of pennies up till a couple of minutes after London opened — and it was then offered quietly decrease till the roles report at 8:30 a.m. in New York.  At that time it was down about 15 cents the ounce.  Its rally on that information met the identical destiny because the gold worth round 9:30 a.m. EST — and it was offered all the way down to its low tick of the day by shortly earlier than 11:30 a.m.  From that time onwards, it adopted the identical worth path as gold.

The excessive and lows in silver have been recorded by the CME Group as $17.855 and $17.605 within the March contract.

Silver was closed in New York on Friday afternoon at $17.665 spot, down 12.5 cents from Thursday.  Web quantity was fairly quiet at a bit underneath 50,00Zero contracts — and there was a hair underneath 22,00Zero contracts price of roll-over/swap quantity out of March and into future months.

Platinum was offered quietly and inconsistently decrease till round 3:30 p.m. China Normal Time on their Friday afternoon — and from that juncture it headed equally inconsistently increased till round 8:45 a.m. in New York.  It was then offered decrease till midday EST – after which ticked just a few {dollars} increased through the the rest of the Friday session.  Platinum was closed at $966 spot, up Four {dollars} from Thursday.

Palladium was additionally offered quietly and inconsistently decrease till the low tick was set simply minutes earlier than Three p.m. CST on their Friday afternoon.  It rallied a bit till shortly earlier than 9:30 a.m. in Zurich — and from that time it wandered sideways for the remainder of the day.  Palladium was closed at $2,213 spot, down 15 bucks.

The greenback index closed very late on Thursday afternoon in New York at 98.49 — and opened down about Four foundation factors as soon as buying and selling commenced round 7:45 p.m. EST on Thursday night, which was 8:45 a.m. China Normal Time on their Friday morning.  It dipped just a few extra foundation factors till about 11:40 a.m. CST — after which started to ‘rally’.  There was an enormous down/up/down dip between midday in London and 10:45 a.m. in New York — and it started to ‘rally’ anew from there.  A lot of the beneficial properties that mattered have been in by a couple of minutes earlier than 1 p.m. EST — and it chopped quietly sideways till buying and selling ended at 5:30 p.m. in EST.  The greenback index completed the Friday session at 98.68…up 19 foundation factors from its shut on Thursday.

If there was any correlation between the greenback index and what was taking place within the treasured metals, it was most definitely unintentional.

This is the DXY chart for Friday, courtesy of Bloomberg as at all times.  Click on to enlarge.

And here is the 5-year U.S. greenback index chart, courtesy of the nice people over on the stockcharts.com Web web site.  The delta between its shut…98.57…and the shut on the DXY chart above, was 11 foundation factors on Friday.  Click on to enlarge as nicely.

The gold shares edged a bit increased on the 9:30 open of the fairness markets in New York on Friday morning, however as quickly because the gold worth was offered decrease after the afternoon gold repair in London, the gold shares adopted till 12:30 p.m. EST.  They rallied a tiny bit from there, however gave most of that again by the 4:00 p.m. shut.  The HUI closed down 1.90 p.c.   Contemplating the truth that gold closed increased on the day, I used to be definitely underwhelmed by the efficiency of their underlying shares.

The value path for the silver equities was nearly a carbon copy of what occurred to the gold shares — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.83 p.c, which is considerably comprehensible contemplating the truth that silver was closed down 12.5 cents the ounce on Friday.  Click on to enlarge if mandatory.

And here is Nick’s 1-year Silver Sentiment/Silver 7 Index chart, up to date with Friday’s doji.  Click on to enlarge as nicely.

Listed here are two of the same old charts from Nick that present what’s been taking place for the week, month — and year-to-date. The primary one reveals the adjustments in gold, silver, platinum and palladium for the previous buying and selling week, in each p.c and greenback and cents phrases, as of their Friday closes in New York – together with the adjustments within the HUI and the Silver 7 Index.

This is the weekly chart — and the one inexperienced bar is for platinum.  The silver equities ‘outperformed’ their golden cousins through the reporting week, however that is chilly consolation.  Click on to enlarge.

And there is not any month-to-date chart, as a result of it is the identical because the weekly chart for this week solely.

And now that we’re into February, here is the year-to-date chart — and it is fairly abysmal.  It is arduous to say whether or not the gold or silver equities are underperforming probably the most — and it actually does not matter.  I’ve learn all types of cockamamie causes on the Web as to why that is so — and the one ones which have a shred of credibility with me is that there’s energetic shorting happening…and/or that hedge funds are locking in income after after the massive beneficial properties of final yr.  One factor is for certain — and that is that it ain’t the common treasured steel investor that’s having such deleterious impression on treasured steel costs.  That was definitely apparent on a number of events throughout this previous week — and the worth motion in each the silver and gold equities on Friday was a poster little one for that.

In fact the dear steel equities could possibly be caught in the identical downdraft because the shares of different commodities as nicely.  Collateral injury if you’ll.

As Ted has been mentioning for a while now, how silver and gold costs unfold from right here is dependent upon whether or not or not the Large 7/Eight business merchants which are holding big however unrealized loses on the quick facet, are in a position to snooker the Managed Cash merchants out of their historic and unprecedented web lengthy place.  They have been semi-successful earlier this week, however they’ve misplaced floor since Tuesday.  And as I stated on this area final week — and the week earlier than…as for the unfavorable begin to the yr for the dear steel equities, I’ve already mentioned this at size simply above.  However I think that ‘da boyz’ should let silver break above $18 spot by an honest quantity — and gold above $1,600 spot earlier than we see critical cash return to this sphere.

The CME Day by day Supply Report confirmed that 198 gold and 6 silver contracts have been posted for supply inside the COMEX-approved depositories on Tuesday.

In gold, there have been 5 quick/issuers in whole — and the 2 largest have been JPMorgan with 145 contracts out of its in-house/proprietary buying and selling account — and Benefit, with 41 contracts from its consumer account.  There have been eight lengthy/stoppers in whole — and the 2 largest have been JPMorgan and Benefit, with 120 and 23 contracts for his or her respective consumer accounts.  Scotia Capital/Scotiabank was a distant third with 15 contracts for its personal account.

In silver, the 2 quick/issuers have been Benefit and ADM, with 5 and 1 contracts — and all from their respective consumer accounts.  The lone lengthy/stopper was Canada’s Scotia Capital/Scotiabank — and all six have been for their very own account.

Up to now this month there have been 6,133 gold contracts issued/reissued and stopped — and that quantity in silver is 219 contracts.

And of that quantity in gold, JPMorgan has issued 1,465 contracts and stopped 2,551 contracts for it its personal account — and it has additionally issued 467 contracts and stopped 1,597 contracts from its so-called ‘consumer’ account.  The opposite two massive gamers in gold thus far this month have been Australia’s Macquarie Futures and HSBC USA.  The previous has issued 1,469 contracts from its personal account — and HSBC USA has issued 1,500 contracts from its personal account as nicely.

The CME Preliminary Report for the Friday buying and selling session confirmed that gold open curiosity in February fell by 333 contracts, leaving 1,729 nonetheless open, minus the 198 contracts talked about just a few paragraphs in the past.  Thursday’s Day by day Supply Report confirmed that 464 gold contracts have been truly posted for supply on Monday, in order that implies that 464-333=131 extra gold contracts have been simply added to the February supply month.  Silver o.i. in February rose by 1 contract, leaving 7 nonetheless round, minus the 6 contracts talked about just a few paragraphs in the past.  Thursday’s Day by day Supply Report confirmed that 5 silver contracts have been truly posted for supply on Monday, in order that implies that 5+1=6 extra silver contracts simply obtained added to February.

There was one other deposit into GLD yesterday, as a licensed participant added 37,649 troy ounces.  There have been no reported adjustments in SLV.

In different gold and silver ETFs on Planet Earth on Friday…web of all adjustments in COMEX, SLV & GLD…there was a web 10,610 troy ounces of gold added — and there was a web 456,675 troy ounces of silver added as nicely.

There was no gross sales report from the U.S. Mint on Friday.

Month-to-date the mint has offered 26,00Zero troy ounces of gold eagles — 10,500 one-ounce 24Okay gold buffaloes — and 1,548,00Zero silver eagles.

And there was no exercise over on the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday — and I need to admit that I am reasonably shocked on the lack of motion over there this previous week.

Listed here are the same old two charts that Nick passes round on Friday night — and I believed I would embody them in my Saturday column, reasonably than wait till Tuesday’s missive.

They present the quantity of gold and silver in all identified depositories, ETFs and mutual funds as of the shut of enterprise on Friday, February 7.  Throughout the week that was, there was a web 382,00Zero troy ounces of gold added — and in silver, that quantity was 2,696,00Zero troy ounces.  Click on to enlarge for each.

The Dedication of Merchants Report, for positions held on the shut of COMEX buying and selling on Tuesday, February 4, confirmed the anticipated enhance within the Industrial web quick place in silver…though it wasn’t a lot…plus a really first rate enchancment within the business web quick place in gold.

In silver, the Industrial web quick place elevated by a reasonably smallish 2,185 contracts, or 10.9 million troy ounces of paper silver.

They arrived at that quantity by including 1,142 lengthy contracts, however additionally they elevated their quick place by 3,327 contracts — and it is the distinction between these two numbers that represents their change for the reporting week.

However underneath the hood within the Disaggregated COT Report, there have been some pretty massive surprises.  The largest one was that the Managed Cash merchants not solely lowered their lengthy place by 4,187 contracts, however additionally they lowered their quick place by an eye-watering 11,438 contracts…for a web enhance of their web lengthy place of 11,438 minus 4,187 equals 7,251 contracts for the reporting week.  This was completely sudden.  The merchants within the ‘Different Reportables’ and ‘Nonreportable’/small dealer classes each lowered their web lengthy positions through the reporting week.

The opposite shock was that due to the massive quick overlaying by the Managed Cash merchants through the reporting week, the merchants within the Producer/Service provider class…learn JPMorgan…did  just about nothing through the reporting week…lowering their web quick place by a paltry 117 contracts.  Ted was anticipating/hoping that they’d be overlaying quick positions reasonably aggressively through the reporting week, however that did not occur for the above-mentioned cause.

The heavy lifting within the business class got here on the backs of the merchants within the Producer/Service provider class, as they elevated their web quick place by an extra 2,302 contracts through the reporting week — and that quantity, minus the above-mentioned 117 contracts equals the two,185 contract change within the Industrial web quick place…which it should do.

The Industrial web quick place in silver now sits at 91,356 COMEX contracts, or 456.Eight million troy ounces.

With the brand new Financial institution Participation Report in hand, Ted was in a position to recalibrate JPMorgan’s quick place…which he now pegs someplace across the 16-17,00Zero contract mark…up one or two thousand contracts from the 15,00Zero contracts they have been quick in final week’s COT Report.  I’ll use the common of these two numbers…16,500 contracts…for recording-keeping functions additional down.

Right here is Nick’s 3-year COT chart for silver, up to date with Friday’s knowledge — and the smallish adjustments must be famous.  Click on to enlarge.

Ted wasn’t certain what made seven of the Managed Cash merchants on the quick facet shut out their quick positions through the reporting week, however that is what they did.  It is not that the COT Report was good or unhealthy in silver, it is what occurred internally that was sudden.

In gold, the business web quick place fell by a really hefty 29,127 contracts, or 2.91 million troy ounces of paper gold.

They arrived at that quantity by decreasing their lengthy place by 15,514 contracts, however additionally they lowered their quick place by 44,641 contracts — and it is the distinction between these two numbers that represents their change for the reporting week.

Below the hood within the Disaggregated COT Report, it was all Managed Cash merchants, plus extra, as they decreased their lengthy place by 30,497 contracts — and in addition elevated their quick place by 7,831 contracts, for a complete weekly change of 38,328 contracts.

The primary shock in gold was how aggressively the ‘Different Reportables’ and ‘Nonreportable’/small merchants elevated their web lengthy positions…the previous by 8,042 contracts — and the latter by 1,159 contracts.

On account of that, the merchants within the ‘Producer/Service provider’ class the place JPMorgan hides out did not do a lot of something through the reporting week.  Ted was anticipating JPM to aggressively cowl quick positions through the reporting week, however they did not…similar to they did not in silver — and for a similar cause…there was aggressive shopping for happening in different classes.

And in addition like in silver, all of the heavy lifting got here on the expense of the of the Swap/Sellers, as they decreased their web quick place by 28,798 contracts — and nearly all these contracts have been lined at an enormous loss, as numerous the Large 7 merchants reside on this class.

The business web quick place in gold is now all the way down to 33.17 million troy ounces…nonetheless, like in silver, in nosebleed territory on an historic foundation.

And with the most recent Financial institution Participation Report in hand, Ted has adjusted JPMorgan’s quick place in gold as much as 32,00Zero contracts…up 2,00Zero contracts from what he pegged them at every week in the past.

This is the 3-year COT chart for gold from Nick.  Click on to enlarge.

It was an honest COT Report for gold, however as soon as once more the actual surprises occurred underneath the hood and out of sight within the Disaggregated COT Report…with JPMorgan doing nothing — and the Large 7 reserving some sizeable losses on their short-covering.

They nonetheless have an extended method to go to get again to break-even, not to mention make a revenue.  Their efforts have been partially profitable as much as an together with Tuesday’s cut-off, however since then they’ve misplaced floor, significantly in gold.

I stay up for what Ted has to say about all this in his weekly evaluation later at present.

Within the different metals, the Manged Cash merchants in palladium decreased their web lengthy place by  an extra 1,042 COMEX contracts through the reporting week — and are actually web lengthy the palladium market by solely 6,660 contracts…a bit underneath 29 p.c of the entire open curiosity…down from 32 p.c final week.  Whole open curiosity in palladium is 23,178 COMEX contracts.  In platinum, the Managed Cash merchants decreased their web lengthy place by 4,478 contracts.  The Managed Cash merchants are web lengthy the platinum market by an eye-watering 47,234 COMEX contracts…a bit over 47 p.c of the entire open curiosity. The opposite two classes [Other Reportables/Nonreportable] are nonetheless mega web lengthy towards JPMorgan et al.  In copper through the reporting week, the Managed Cash merchants elevated their web quick place in that steel by an extra 26,915 COMEX contracts.  They’re now web quick copper by 47,701 COMEX contracts, which works out to 1.19 billion kilos of the stuff.  Not a report by an extended shot, however nonetheless quite a bit.

This is Nick Laird’s “Days to Cowl” chart, up to date with the COT knowledge for positions held on the shut of COMEX buying and selling on Tuesday, February 4.  It reveals the times of world manufacturing that it will take to cowl the quick positions of the Large 4 – and Large ‘5 via 8’ merchants in every bodily traded commodity on the COMEX. Click on to enlarge.

For the present reporting week, the Large Four merchants are quick 155 days of world silver manufacturing…unchanged from final week’s COT Report – and the ‘5 via 8’ massive merchants are quick an extra 79 days of world silver manufacturing…up Four days from final week’s COT Report – for a complete of 234 days that the Large Eight are quick…up Four days from final week’s report. This represents over 7 months of world silver manufacturing, or about 546 million troy ounces of paper silver held quick by the Large 8.  [In the prior reporting week, the Big 8 were short 230 days of world silver production.]

Within the COT Report above, the Industrial web quick place in silver was reported by the CME Group as 457 million troy ounces.  As talked about within the earlier paragraph, the quick place of the Large Eight merchants is 546 million troy ounces.  So the quick place of the Large Eight merchants is bigger than the entire Industrial web quick place by round 546-457=89 million troy ounces.

The rationale for the distinction in these numbers…because it at all times is…is that Ted’s raptors, the 34-odd small business merchants aside from the Large 8, are web lengthy that quantity.

One other manner of stating this [as I say every week in this spot] is that should you eliminated the Large Eight business merchants from that class, the remaining merchants within the business class are web lengthy the COMEX silver market.  It is the Large Eight towards everybody else…a state of affairs that has existed for about three a long time in each silver and gold — and now in platinum and palladium as nicely.

As I discussed in my COT commentary in silver above, I estimated that JPMorgan is brief round 16,500 contracts, up about 1,500 contracts from final week’s COT Report.  That works out to round 82.5 million troy ounces of paper silver…which works out to round 35 days of world silver manufacturing that JPMorgan is brief…up Three days from final week’s report.

Based mostly on the numbers within the paragraph under, that places JPMorgan within the #2 spot within the Large 4/Eight dealer class.  Citigroup is the biggest, however not by quite a bit now, with HSBC USA and one different to spherical out the Large 4.

As per the primary paragraph above, the Large Four merchants in silver are quick round 155 days of world silver manufacturing in whole. That is about 38.75 days of world silver manufacturing every, on common.  The 4 merchants within the ‘5 via 8’ class are quick round 79 days of world silver manufacturing in whole, which is round 19.75 days of world silver manufacturing every, on common…up one full day from final week.

The Large Eight business merchants are quick 48.5 p.c of your entire open curiosity in silver within the COMEX futures market, which is up a bit from the 46.2 p.c they have been quick in final week’s COT report.  And as soon as no matter market-neutral unfold trades are subtracted out, that proportion can be across the 55 p.c mark.  In gold, it is now 44.2 p.c of the entire COMEX open curiosity that the Large Eight are quick, up a bit from the 42.6 p.c they have been quick in final week’s report — and round 50 p.c, as soon as the market-neutral unfold trades are subtracted out.

In gold, the Large Four are quick 64 days of world gold manufacturing, down 2 days from final week’s COT Report.  The ‘5 via 8’ are quick one other 36 days of world manufacturing, down Four days from final week’s report…for a complete of 100 days of world gold manufacturing held quick by the Large 8…down 6 days from final week’s COT Report.  Based mostly on these numbers, the Large Four in gold maintain about 64 p.c of the entire quick place held by the Large 8…up 2 proportion factors from final week’s report.

The “concentrated quick place inside a concentrated quick place” in silver, platinum and palladium held by the Large Four business merchants are about 66, 69 and 77 p.c respectively of the quick positions held by the Large 8…the purple and inexperienced bars on the above chart.  Silver is down a p.c from final week’s COT Report…platinum can also be down a p.c from every week in the past — and palladium is unchanged week-over-week.

And as Ted has been mentioning for years now, JPMorgan is, as at all times, ready to double cross the opposite business merchants at any time and stroll away smelling like a rose — and that is due to the large quantities of bodily gold and silver they maintain.  Up thus far they [obviously] have not taken benefit of that state of affairs.  But when they do, you may see it within the worth instantly.

The February Financial institution Participation Report [BPR] knowledge is extracted immediately from yesterday’s Dedication of Merchants Report.  It reveals the variety of futures contracts, each lengthy and quick, which are held by all of the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded merchandise.  For this at some point a month we get to see what the world’s banks are as much as within the treasured metals -and they’re normally as much as fairly a bit.

[The February Bank Participation Report covers the time period from January 8 to February 4 inclusive.]

In gold, 5 U.S. banks are web quick 105,824 COMEX contracts within the February BPR.  In January’s Financial institution Participation Report [BPR] these identical 5 U.S. banks have been web quick 109,567 contracts, so there was a reasonably immaterial lower of three,743 COMEX contracts from a month in the past.

JPMorgan, Citigroup and HSBC USA would maintain the lion’s share of this quick place.  However as to who different U.S. financial institution may be that’s quick on this BPR, I have never a clue, however it’s a on condition that their quick place wouldn’t be materials.

Ted talked about on the cellphone yesterday that JPMorgan is brief round 32,00Zero contracts of the entire web quick place held by the Four U.S. banks as of Tuesday’s COT Report.  That is round 30 p.c of the entire quick curiosity held by these identical banks.  I think that JPMorgan is probably not the most important quick holder in COMEX gold futures.  That title most probably belongs to Citigroup now.

Additionally in gold, 34 non-U.S. banks are web quick 105,325 COMEX gold contracts.  In January’s BPR, 35 non-U.S. banks have been web quick 115,544 COMEX contracts…so the month-over-month change reveals a lower of 10,219 contracts.

On the low again within the August 2018 BPR…these identical non-U.S. banks held a web quick place in gold of just one,960 contacts!

Nevertheless, as I at all times say at this level, I think that there is not less than two massive non-U.S. financial institution on this group, considered one of which would come with Scotiabank.  It is definitely doable that it could possibly be the BIS within the No. 1 spot.  However no matter who this second non-U.S. financial institution is, the quick positions in gold held by the remaining 32 non-U.S. banks are immaterial.

As of this Financial institution Participation Report, 39 banks [both U.S. and foreign] are web quick 32.2 p.c of your entire open curiosity in gold within the COMEX futures market, which is up an honest quantity from the 28.7 p.c they have been quick within the January BPR.

This is Nick’s BPR chart for gold going again to 2000.  Charts #Four and #5 are the important thing ones right here.  Observe the blow-out within the quick positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX quick place was outed by the CFTC in October of 2012.  Click on to enlarge.

In silver, Four U.S. banks are web quick 36,289 COMEX contracts in February’s BPR.  In January’s BPR, the web quick place of those identical Four U.S. banks was 33,983 contracts, so the quick place of the U.S. banks is up one other 2,306 contracts month-over-month — and I’d suspect that enhance comes courtesy of JPMorgan.

As in gold, the three largest quick holders in silver of the 4 U.S. banks in whole, can be JPMorgan, Citigroup and HSBC USA…with Citigroup in No. 1 spot…and JPM in No. 2 place.  Whoever the remaining U.S. financial institution could also be, their quick place, just like the quick place of the smallest U.S. financial institution in gold, can be immaterial within the grand scheme of issues.

Additionally in silver, 24 non-U.S. banks are web quick 47,308 COMEX contracts within the February BPR…which is up a bit from the 46,947 contracts that these identical 24 non-U.S. banks have been quick within the January BPR.  I’d suspect that Canada’s Scotiabank [and maybe one other, the BIS perhaps] holds a goodly chunk of the quick place of those non-U.S. banks.  I consider that numerous the remaining 22 non-U.S. banks may very well web lengthy the COMEX futures market in silver.  However even when they don’t seem to be, the remaining quick positions divided up between these different 22 non-U.S. banks are immaterial – and have at all times been so.

As of February’s Financial institution Participation Report, 28 banks [both U.S. and foreign] are web quick 37.1 p.c of your entire open curiosity within the COMEX futures market in silver-up a bit from the 34.6 p.c that they have been web quick within the January BPR.  And far, rather more than the lion’s share of that’s held by Citigroup, HSBC USA, JPMorgan, Scotiabank — and possibly one different non-U.S. financial institution, which I think will be the BIS.

This is the BPR chart for silver.  Observe in Chart #Four the blow-out within the non-U.S. financial institution quick place [blue bars] in October of 2012 when Scotiabank was introduced in from the chilly.  Additionally word August 2008 when JPMorgan took over the silver quick place of Bear Stearns-the purple bars.  It’s extremely noticeable in Chart #4-and actually stands out just like the proverbial sore thumb it’s in chart #5.  Click on to enlarge.

In platinum, 5 U.S. banks are web quick 27,115 COMEX contracts within the February Financial institution Participation Report.  Within the January BPR, Four U.S. banks have been web quick 27,057 COMEX contracts…so there’s been just about no change month-over-month.

[On the ‘low’ again in July of 2018, these identical 5 U.S. banks have been truly web lengthy the platinum market by 2,573 contracts. That is fairly a change for the more severe since then.]

Additionally in platinum, 20 non-U.S. banks are web quick 25,365 COMEX contracts within the February BPR, which is down a hair from the 26,150 COMEX contracts that 21 non-U.S. banks have been web quick within the January BPR.

[Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]

The quick place in platinum held by the U.S. banks is at one other new report excessive, however solely by a bit — and the quick place in platinum held by the non-U.S. banks is simply off its report excessive by just a few hundred contracts.  One can solely think about what the worth of platinum can be if the banks weren’t in there as quick sellers of each first and final resort.

And as of February’s Financial institution Participation Report, 25 banks [both U.S. and foreign] are web quick a grotesque and obscene 51.Eight p.c of platinum’s whole open curiosity within the COMEX futures market, which is just about unchanged from the 51.9 p.c that these identical 25 banks have been web quick in January’s BPR.

This is the Financial institution Participation Report chart for platinum. Click on to enlarge.

In palladium, Three or much less U.S. banks are web quick 3,616 COMEX contracts within the February BPR, which is a whopping lower [46.9%] from the 6,813 contracts that these identical Four U.S. banks have been web quick within the January BPR.

Additionally in palladium, 12 or extra non-U.S. banks are web quick 941 COMEX contracts-which is down  massive [54.4%] from the 1,845 COMEX contracts that 14 non-U.S. banks have been quick within the January BPR.

It is clearly this quick overlaying by the banks is what drove palladium costs to the moon and stars throughout January.

As of this Financial institution Participation Report, 15 banks [both U.S. and foreign] are web quick a piddling 4.Zero p.c of your entire COMEX open curiosity in palladium…down vastly from the 34.Eight p.c of whole open curiosity that 18 banks have been web quick in January.

This is the palladium BPR chart.  And as I level out each month, you must word that the U.S. banks have been nearly nowhere to be seen within the COMEX futures market on this treasured steel till the center of 2007-and they turned the predominant and controlling issue by the tip of Q1 of 2013 — however have imploded into insignificance as of this Financial institution Participation Report.  It stays to be seen in the event that they return as quick sellers once more sooner or later, like they’ve at all times performed previously.  Click on to enlarge.

I haven’t got all that many tales/articles for you at present — and I am together with one which I have been saving for at present’s column for the same old size and/or content material causes.

CRITICAL READS 

January Payrolls Soar By 225K, Smashing Expectations As Hourly Earnings Coming In Hot

For as soon as the ADP report was not massively off.

With Wall Road anticipating a 165Okay print on this morning payrolls report, and with ADP coming in at nearly 300Okay, the whisper quantity was clearly nicely above the official consensus, and the BLS didn’t disappoint, as a result of simply as Trump hinted just a few days in the past together with his “jobs, jobs, jobs” tweet, in January the U.S. created a whopping 225Okay jobs, smashing expectations, and nicely above final month’s upward revised 142Okay print.  Click on to enlarge.

Wanting again, the change in whole non-farm payroll employment for November was revised up by 5,00Zero from +256,00Zero to +261,000, and the change for December was revised up by 2,00Zero from +145,00Zero to +147,000. With these revisions, employment beneficial properties in November and December mixed have been 7,00Zero increased than beforehand reported. After revisions, job beneficial properties have averaged 211,00Zero during the last Three months.

Commenting on the report, Bloomberg‘s Eliza Winger says “The labor market is roaring, offering an necessary pillar for the financial system. The unemployment price edged up, however Bloomberg Economics continues to anticipate it to fall to three.3% by year-end and labor prices to accentuate.”

As Bloomberg notes, the headline quantity is a strong beat and reveals the labor market was nonetheless fairly robust, if solely earlier than no matter injury the coronavirus pandemic does. The acquire in common hourly earnings is sweet information for American employees, and the rise in labor pressure participation suggests we nonetheless have a little bit of labor market slack. All in all, Powell will possible be pleased with this report, which was neither unhealthy nor adequate to ship shares sharply increased.

One closing level, and we’ll have extra to say about this in a subsequent submit: annual revisions to historic knowledge took a few of the shine off considered one of President Trump’s bragging factors, slicing 2018’s job acquire to 2.31 million from 2.68 million. The will increase in 2017 and 2019 have been about 2.1 million, that means that every yr underneath Trump – whereas nonetheless robust – has been barely slower than the two.35 million enhance within the closing yr of Barack Obama’s presidency.

The Fed Has a Dangerous Repo Problem: Here’s the Charts

On each days this week that the New York Fed provided its $30 billion in 14-day repo loans to 24 buying and selling homes on Wall Road, there was way more demand than the New York Fed had pre-announced it will present. On Tuesday, the demand was for $59.05 billion whereas the New York Fed supplied solely $30 billion. On Thursday, the demand was for $57.25 billion whereas the New York Fed supplied $30 billion. In brief, there’s a rising demand for long-term loans at inexpensive charges on Wall Road – that means a number of buying and selling homes has a borrowing downside.

The Fed’s loans this week have been made at a below-market rate of interest of 1.60 p.c.

The demand for the 14-day loans got here on the identical days that the New York Fed additionally funneled big quantities of cash in one-day loans to Wall Road’s buying and selling homes: $64.45 billion on Tuesday and $46.75 billion on Thursday. Cumulatively, because the Fed started making these unprecedented repo loans to Wall Road’s buying and selling homes on September 17 of final yr, it has pumped over $6.6 trillion into Wall Road.

That cash has discovered a house within the inventory market, most probably by way of inventory index futures which ship an enormous bang for the buck via excessive leverage by way of margin loans. A few of these Wall Road buying and selling homes which are borrowing from the Fed at 1.60 p.c are possible loaning that cash out to hedge funds (at a a lot increased rate of interest) and the hedge funds are then plowing the cash into inventory index futures.

The inventory market has set repeated new highs because the New York Fed turned on this multi-trillion-dollar cash spigot that has been working each enterprise day since September 17.

Democrats Query Powell on Regulatory Response to Repo Blowup

Senate Democrats despatched a letter Thursday to Federal Reserve Chairman Jerome Powell looking for solutions concerning the central financial institution’s ongoing interventions within the cash markets to alleviate a money crunch that erupted in September.

Senate Banking Committee Democrats, together with rating member Sherrod Brown and presidential hopeful Elizabeth Warren, posed a collection of questions concerning the mid-September episode, together with whether or not it was getting used as a pretext to chill out rules that have been put in place after the 2008 monetary disaster. Powell is scheduled to testify earlier than the committee on Feb. 12.

In mid-September, over $100 billion in financial institution deposits on the Fed rapidly disappeared as a big company tax funds collided with a settling Treasury public sale, sending in a single day rates of interest on repurchase agreements — so-called repo loans — as excessive as 10%. It was the primary main check of liquidity situations because the Fed accomplished a partial unwind of its steadiness sheet, a course of which shrank the amount of money excellent within the banking system by nearly $900 billion between the tip of 2017 and July 2019.

The September episode recommended Fed officers had underestimated the quantity of remaining liquidity, and so they’ve since pumped a whole lot of billions of {dollars} again into the cash markets by way of a mixture of repo loans and outright purchases of Treasury payments. However banks have argued new rules put in place because the monetary disaster that discourage lending are additionally responsible, and Fed officers have stated they’re reviewing the principles.

Warren despatched a letter quizzing Treasury Secretary Steven Mnuchin in October and she or he and her colleagues turned their consideration to Powell on Thursday.

“Whereas one potential clarification is the convergence of occasions in September, some market individuals have argued that capital and liquidity regulation and supervision are responsible,” they wrote. “May a financial institution use entry to this facility to sport capital or liquidity requirements, and what steps are supervisors taking to make sure that will not be the case?“

This Is How Americans Paid For That Record Holiday Spending: Credit Card Debt Exploded In December

There was one thing unusual in final month’s client credit score knowledge from the Federal Reserve: at a time when Individuals have been on the point of unleash a report vacation spending spree, revolving, i.e., bank card debt truly contract probably the most since March, which meant that both Individuals have been saving an entire lot extra or their hourly incomes had soared increased. And since neither of those had occurred, it wasn’t clear simply how U.S. shoppers entered the final month of the yr with the primary November decline in revolving debt since 2013.

In truth, as we concluded our January submit on client credit score, “contemplating the robust finish to the yr for retail gross sales, particularly on-line, we assume this was a one-off occasion, and in December any bank card “shrinkage” was greater than offset with aggressive year-end “charging.” If not, then the US client could certainly be reaching the boundaries of their debt-funded spending euphoria.”

Nicely, we have been proper once more: the reply was revealed on Friday afternoon when the Fed reported the patron credit score change for the final month of 2019, and of the last decade… and it was a doozy.

With analysts anticipating a $15BN enhance in client credit score, the precise print was a whopping $22.1 billion, bringing whole client credit score excellent to a brand new month-to-month all time excessive of $4.2 trillion.

Nevertheless it was the composition of this quantity that sparked raised eyebrows throughout Wall Road, as a result of whereas shoppers added a reasonably subdued $9.4bn in non-revolving credit score, i.e., auto and scholar loans, it was the $12.63 billion surge in revolving credit score that defined not solely November’s modest drop in bank card debt, however the report vacation spending in 2019, which – as we now know – was to a report extent due to bank card debt. In truth, because the chart under reveals, it was the most important one month enhance in bank card debt since 1998!  Click on to enlarge.

And so, for yet one more month, Individuals sank ever deeper in debt simply so their obsession with buying issues they do not want nor cad afford – clearly – could be happy. Though in a world through which central banks and politicians now brazenly encourage extreme spending and residing past one’s means, who can blame Individuals for doing simply as all financial and monetary officers demand of them.

Trump Did Not Save America From Decline — Bill Bonner

Right this moment we take a look at numbers. And oh… what you are able to do with numbers.

There are solely 10 of them. However you may string them collectively in a sequence so long as you need.

Then, relying on the place you set the one interval, you may describe both the space to Pluto… or the thickness of a molecule…

Twisted Truths

Numbers could be as true as a carpenter’s degree… or as twisted because the U.S. funds.

They might not lie. However they’ll cover the reality, disguise the reality, or faux there may be fact the place there may be none.

Put sufficient dodgy, dopey, and fakey numbers collectively, for instance, and you’ve got the U.S. GDP development price. The quantity is so stuffed with fudge it would make your tooth rot.

Doug Noland: Dr. Li Wenliang

China was in a very fragile state over the summer season, with escalating monetary stress within the face of deteriorating U.S./China commerce negotiations. China’s aggressive stimulus measures together with a “section 1” commerce deal lowered near-term disaster danger. International yields then considerably normalized. Ten-year Treasury yields ended the yr at 1.92%, up nearly 50 bps from early-September lows. Bund yields ended 2019 at unfavorable 0.19%, up from unfavorable 0.72% on August 28th. Swiss bond yields jumped 66 bps off lows to finish the yr at unfavorable 0.54%.

Then arrived the coronavirus outbreak. All of the sudden, Chinese language financial prospects look extremely unsure at finest. Even when the outbreak one way or the other comes underneath management within the coming weeks, the financial system will take a major hit. There is a state of affairs the place the state of affairs continues to deteriorate and takes on longer-term significance. International markets rallied this week on the PBOC’s aggressive liquidity injections, together with different stimulus measures. There isn’t any doubting Beijing’s dedication to aggressive fiscal and financial stimulus. I simply consider nearly everybody is simply too optimistic – drowning in central financial institution liquidity complacency. China is confronting an unprecedented predicament, whereas concurrently dealing with acute monetary and financial fragilities related to a faltering Bubble.

Secure haven bonds and commodities have this proper. Danger markets are merely enjoying a unique sport – an particularly harmful one at that. The Fed’s twin 2019 “U-turns” have profoundly modified danger market perceptions and habits. Charges have been lower, and liquidity was injected regardless of free monetary situations, speculative markets and report inventory costs. Understandably, danger market individuals have been emboldened to consider the Fed and international central bankers have minimal tolerance for market instability.

To argue that the Fed’s $400 billion steadiness sheet enlargement is neither QE nor culpable for surging inventory costs utterly misses the purpose. The Fed’s operations solidified the view that securities costs are the precedence – much more so than the actual financial system. This basically altered perceptions of market danger and, accordingly, worth dynamics all through equities, company Credit score and derivatives.

Markets have turn out to be precariously distorted and dysfunctional. Central financial institution financial stimulus has succeeded in utterly turning danger evaluation on its head. In all of the craziness, China fragilities are a optimistic. The coronavirus possible constructive to the U.S. financial system. Even dangerous political and geopolitical dynamics are seen in optimistic mild. All of them guarantee financial stimulus so far as the attention can see.

And the apparent retort can be: “Doug, what’s new right here?” What’s modified is the diploma to which the danger markets are conditioned to ignore danger. Even a growth with the clear potential to be extremely disruptive to international economies and finance could be ignored. Feedback I am listening to and studying are probably the most indifferent from actuality that I can recall. In my 30 plus years of following the markets, I’ve by no means seen such a divergence between market danger perceptions and actuality.

Top New Zealand Scientist Describes “Global Warming” as Pseudo-Science

“The widespread obsession with International-Warming-Local weather-Change, in opposition to all factual proof, is sort of unbelievable.” — Dr. David Kear

Dr David Kear is a former Director Common of New Zealand’s Division of Scientific and Industrial Analysis (DSIR) – as such he would have been thought-about considered one of New Zealand’s prime scientists. He has been publishing on sea ranges because the 1950s.

In 2013 Dr. Kear ready a booklet through which he set out his views on the globalist local weather challenge. Within the booklet, Dr. Kear describes:

• his expertise with the U.N.’s Worldwide Panel on Local weather Change
• the corrupted science behind the International Warming narrative
• the corrupted science behind the claims of rising sea-levels
• the demonisation by “International Heaters” of the “important and harmless fuel, carbon dioxide“.
• how councils are making zoning & different selections purely to fulfill a false narrative, with whole disregard for the information

Assume globally, act domestically (U.N. catch-cry)  Dr. Kear describes how native councils are ignoring scientific reality in an effort to fulfill an agenda imposed on them from above. Irrespective of if scientists, engineers and native observers all point out that the ocean will not be rising, even retreating – as soon as a council has selected a coverage that assumes that the ocean IS rising, the council is immovable, and makes selections on zoning and constructing codes on that foundation.

Have these men found a forgotten road to lost Spanish gold mines in Ecuador?

Stefan Ansermet was deep in Ecuador’s tangled southeastern jungles, a tough two-day hike from the closest village, when he stumbled right into a clearing. The change in vegetation was so refined that everybody else on his group tromped straight via, unaware, however Ansermet was intrigued.

Over the subsequent 4 days in mid-November, Ansermet, a geologist and explorer, saved returning to the distant space, discovering clues that confirmed his suspicions: The slender clearing stretched a mile and a half and had been carved into the facet of the mountain at factors. There was a big, chiseled stone embedded within the path.

“It took me a day to digest all the data and notice that this isn’t regular,” Ansermet stated from his residence in Lausanne, Switzerland. “It goes completely north-south and has been engineered for certain. In some locations it is completely straight for greater than 100 meters. It is a great masterpiece of highway engineering.”

However it’s the place this highway in the midst of nowhere would possibly lead that has Ansermet and his colleagues excited.

For greater than 20 years, Ansermet’s boss, Keith Barron, has been looking for two Spanish conquest-era gold mines misplaced in Ecuador’s forests.

The 2 mines, Logroño de los Caballeros and Sevilla de Oro, have been established round 1562 and deserted 40 years later after a smallpox epidemic killed the indigenous workforce and the Spaniards got here underneath extended assault from native tribes. At one level the conquistadors who owned the mine appealed to the Spanish crown to ship African slaves to maintain the enterprises alive, however by that time the empire was bankrupt.

Because the jungle reclaimed the realm, the mines themselves have been misplaced to historical past – final pinpointed on maps in about 1650.

Barron’s obsession with the South American mines started nearly by probability.

The WRAP

Though the Large 7 shorts have been in a position to lower their losses in gold within the newest COT Report, they have not been in a position to enhance on that because the Tuesday cut-off, as gold has risen a bit on all three days since.  In fact the COT report additionally reveals that they added a tiny quantity to their loses in silver up till Tuesday’s cut-off.  However their silver loses are the least of their issues, as their open margin loses in gold dwarf their quick place in silver.

I did not ask for a greenback determine from Ted once we have been speaking yesterday, however for the reporting week simply previous…Monday via Friday mixed…and regardless of their enhancements, I think that these Large 7 merchants are nonetheless $4+ billion {dollars} within the purple.  It nonetheless stays be be seen if they’ll engineer gold and silver costs decrease within the days and weeks forward and lower their loses much more.  I believed for certain that they’d press their benefit additional on Wednesday morning buying and selling in London, however that by no means occurred.  They gave up about 10 a.m. GMT — and  the gold worth truly closed increased on the day.

However, as Ted identified on the cellphone, the Large 7 did e-book some pretty critical loses on this newest COT Report — and it stays to be seen if they may proceed to cowl their positions for a loss as time strikes alongside.

Listed here are the 6-month charts for the Large 6 commodities.  There’s not a lot to see in gold and silver — and ‘da boyz’ did not enable platinum to go wherever over the last week.  They have been beating on palladium fairly good — and it stays to be seen how low they’ll get the worth.  The most recent Financial institution Participation Report confirmed that the world’s banks have just about vacated the COMEX futures market in palladium during the last month…now holding solely Four p.c of whole COMEX open curiosity on this treasured steel…down from 32 p.c in December.  Each copper and WTIC closed decrease on Friday.  Click on to enlarge.

With this coronavirus nonetheless raging uncontrolled in China — and now seeping throughout the borders into different international locations, it stays to be seen if all this cash printing by the Federal Reserve plus different central banks can preserve the fairness and bond markets behaving going ahead.

Sooner or later, one would suppose, pure concern and cause will present up within the markets each within the U.S. and overseas, as China’s GDP needs to be tremendously threatened.

It is nonetheless my opinion that when the powers-that-be acknowledge the tip is nigh no matter their efforts, then they may enable the system to fail.  And when it does, it would accomplish that spectacularly…a degree that Gregory Mannarino, plus others [including this writer] have been mentioning for a while now.

Proper now, the deep state is at battle stations on all fronts on a world-wide foundation, however even they have to know that their efforts can be for naught sooner or later.  And when that proverbial pin does arrive…all we’ll be capable to do is sit again and watch the carnage on our flat-screen TVs.

Such as you, I’ve obtained my bodily treasured metals in a single hand — and my treasured steel equities within the different…hoping it is going to be sufficient.

So, with the Large 7 merchants nonetheless sitting on billions of greenback price of margin name loses that they have not been in a position to cowl — and the DoJ with a gun to JPMogan’s head — and the ‘Every part Bubble’ wanting more and more susceptible…I am nonetheless fairly content material to be “all in”.

I am performed for the day — and the week — and I will see you right here on Tuesday.

Ed

 

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 — Revealed: Monday, 10 February 2020 | E-Mail  | Print  | Supply: GoldSeek.com