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'Da Boyz' Appear at 8:30 a.m. in New York


 -- Published: Monday, 9 December 2019 | Print  | Disqus 

'Da Boyz' Appear at 8:30 a.m. in New York
 (First published on: 07 December 2019 -- Saturday)
 

 - Ed Steer

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

The gold price traded flat up until 2 p.m. China Standard Time on their Friday afternoon -- and then got sold a bit lower for the next forty-five minutes or so.  It began to creep quietly and mostly evenly higher until the jobs report came out at 8:30 a.m. in New York yesterday morning.  The bids got pulled -- and every other illegal act was performed -- and it was sold down hard into the 10 a.m. EST afternoon gold fix in London.  From there it traded quietly and unevenly sideways until the 1:30 p.m. EST COMEX close -- and it didn't do a thing after that.

The high and low ticks in gold were reported as $1,485.30 and $1,463.30 in the February contract.

Gold was closed in New York on Friday afternoon at $1,459.70 spot, down $15.80 on the day.  Net volume was on the heavier side, but nearly as heavy as one might expect, at 293,000 contracts -- and there was a hair under 26,000 contracts worth of roll-over/switch volume in this precious metal.


'Da boyz' manhandled the silver price is an identical manner, so I'll spare you the play-by-play.

The high and low ticks in silver were reported by the CME Group as $17.125 and $16.575 in the March contract.

Silver was closed on Friday afternoon in New York at $16.565 spot, down 37 cents from Thursday.  Net volume was very heavy at about 106,500 contracts -- and there was 4,700 contracts worth of roll-over/switch volume on top of that.


The platinum price traded pretty flat until shortly after 12 o'clock noon in Zurich -- and then it jumped around a bit until about 12:30 p.m. in New York -- and didn't do a thing after that.  Platinum finished the Friday session at $894 spot, down a dollar on the day.


Palladium traded quietly and unevenly sideways -- and was back at unchanged by the Zurich open.  It was sold quietly lower from there until around 2 p.m. CET/8 a.m. EST.  It rallied a bit from that point before chopping unevenly sideways from about 10:40 a.m. in New York trading onwards.  Platinum finished the day at $1,860 spot, up 5 dollars on the day -- and at a new record high close.


The dollar index closed very late on Thursday afternoon in New York at 97.41 -- and opened down about 2 basis points once trading commenced around 7:45 p.m. EST on Thursday evening, which was 8:45 a.m. China Standard Time on their Friday morning.  It traded very quietly sideways from that juncture until it began to tick a bit higher starting at 9 a.m. in London.  It blasted higher at 8:30 a.m. in New York when the job numbers hit the tape -- and the 97.84 high tick was set at 10:50 a.m. EST.  From there it crept very quietly lower until trading ended at 5:30 p.m.  The dollar index finished the Friday trading session at 97.7000...up 29 basis points from Thursday's close.

I doubt very much if you need me to tell you that this dollar index/Dow rally -- and the engineered price declines in silver and gold had anything to do with free markets yesterday.

Here's the DXY chart, courtesy of Bloomberg Click to enlarge.


And here's the 5-year U.S. dollar index chart, thanks to the good folks over at the stockcharts.com Internet site.  The delta between its close...97.66...and the close on the DXY chart above, was 4 basis points on Friday. Click to enlarge to enlarge as well.


The gold shares gapped down a bit over two percent at the open -- and after a brief rally that lasted until shortly before 11 a.m. in New York trading, they were sold very quietly lower for the remainder of the Friday session.  The HUI closed lower by 2.78 percent.


The silver equities gapped down about three percent at the 9:30 a.m. open in New York on Friday morning -- and they wandered quietly and unevenly lower until trading ended at 4:00 p.m. EST.  Nick Laird's Intraday Silver Sentiment/Silver 7 Index got clubbed by 4.22 percent.  Click to enlarge if necessary.


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


Yes, it was ugly...BUT...you have to remember that for every share sold in a panic, there were willing buyers waiting -- and it's a given that those shares sold, now reside in the strongest of hands.



Here are two charts from Nick that show what's been happening for the week, month -- and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York - along with the changes in the HUI and the Silver 7 Index.

Here's the weekly chart -- and it's not as happy looking as it was before Friday's price activity.  But it should still be noted that the stand-out feature here is how well the silver equities are holding up vs. the underlying precious metal.  That goes for the gold shares as well, but it's not as prominent.  Click to enlarge.


There's no month-to-date chart, because it's the same as the weekly chart.

Here's the year-to-date chart.  It's still all green across the board, of course -- and the silver equities are now outperforming the gold shares YTD...compared to the gains in their respective underlying precious metals.  This has become the norm over the last month or so.  But palladium's gain continues to tower above all others.  Click to enlarge.


'Da boyz' kept their powder dry until Friday and the jobs report.  But how well they did won't be known until next Friday's COT Report.  It also remains to be seen if they are able to press their advantage into next week...or was yesterday's engineered price decline all there is?  But the outperformance of the silver equities on a weekly/month-to-date -- and now year-to-date basis, is the standout feature on both of the above charts.  So I'm still quite content to be "all in" -- and overweighted in the silver equities.



The CME Daily Delivery Report showed that 1,888 gold and 29 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, there were five short/issuers in total -- and three largest, starting with JPMorgan, with 1,277 contracts out of its 'client' account.  In distant second and third spots were ABN Amro with 381 contracts out of its client account, with Goldman Sachs issuing 160 contracts out of its in-house/proprietary trading account.  There were 14 long/stoppers in total -- and head and shoulder above all once again was JPMorgan, picking up 1,294 contracts for its client account.  In very distant second place was Scotia Capital/Scotiabank with 154 contracts for its own account -- and in third place was Citigroup, stopping 134 contracts...112 contracts for its own account, plus 22 for its client account.

In silver, there four short/issuers -- and Advantage was the biggest with 14 contracts from its client account.  There were five long/stoppers -- and the largest of them was JPMorgan, with 12 contracts for its client account.

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

So far this month there have been 11,629 gold contracts issued and stopped -- and that number in silver is 2,794 contracts.

The CME Preliminary Report for the Friday trading session showed that gold open interest in December declined by 271 contracts, leaving 2,275 contracts still open, minus the 1,888 mentioned a few paragraphs ago.  Thursday's Daily Delivery Report showed that 845 gold contracts were actually posted for delivery on Monday, so that means that 845-271=574 more gold contracts just got added to the December delivery month.  Silver o.i. in December declined by only 1 contract, leaving 913 still around, minus the 29 silver contracts mentioned a few paragraphs ago.  Thursday's Daily Delivery Report showed that 61 silver contracts were actually posted for delivery on Monday, so that means that 61-1=60 more silver contracts were added to December.



There was a withdrawal from GLD yesterday, as an authorized participant took out 75,348 troy ounces.  And there was a fairly decent withdrawal from SLV, as an authorized participant removed 1,868,540 troy ounces.  Ted would suspect that regardless of whether this was a "plain vanilla" withdrawal, or a conversion of shares for physical metal, JPMorgan owns this silver now.

In other gold and silver ETFs...minus COMEX and SLV & GLD movements...there was a net 36,030 troy ounces of gold withdrawn, but in silver there was a net 389,011 troy ounces added.

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

Month-to-date the mint has sold 500 troy ounces of gold eagles -- and 25,000 of those 'America the Beautiful' 5-ounce silver coins.  Pretty pathetic.

There was very little activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday -- and what activity there was, was confined to the International Depository Services of Delaware.  They shipped out 1,350.300 troy ounces/42 kilobars [U.K./U.S. kilobar weight] -- and they also had a paper transfer of 12,249.531 troy ounces/381 kilobars [SGE kilobar weight] from the Registered category -- and back into Eligible.  The link to this is here.

There was some activity in silver.  Nothing was reported received -- and 632,206 troy ounces was shipped out.  Of the 'out' activity, there was 543,687 troy ounces that departed CNT...and 83,679 and 4,839 troy ounces were shipped out of the International Depository Services of Delaware and Brink's, Inc. respectively.  There were some minor paper transfers from the Eligible category and into Registered over at Delaware and CNT -- and if you wish to check that out, the link to 'all of the above' is here.

There was some very decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They received 419 of them -- and shipped out 4,050.  All of this occurred at Brink's, Inc. -- and the link to that, in troy ounces, is here.



Here are three charts that Nick passed around yesterday.  The first one shows the amount of gold imported and exported into and out of the U.K. during the month of September.  During the month they imported 199.9 tonnes -- and shipped out 24.3 tonnes.  This is the third month in a row that imports have exceeded exports by a very wide margin.  Click to enlarge.


The next two charts shows the countries and tonnages that they received gold from -- and the second shows the countries and amounts they shipped gold to during September Click to enlarge for both.




The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, December 3, showed virtually no change in the Commercial net short position in silver -- and an increase in the commercial net short position in gold...but nearly as much as Ted had feared.

But, having said that, Friday's price action in both these precious metals makes this COT Report, plus the companion Bank Participation Report, pretty much "yesterday's news".  But I'll go through the motions anyway.

In silver, the Commercial net short position increased by an insignificant 426 contracts, or 2.13 million troy ounces of paper silver.

They arrived at that number by reducing their long position by 3,023 contracts -- and they reduced their short position by 2,597 contracts.  It's the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report was somewhat of a surprise, as the Managed Money traders actually reduced their net long position by 3,966 contracts....reducing their long position by 2,565 contracts and adding 1,401 short contracts.  It's the sum of those last two numbers that represent that 3,966 contract change for the reporting week.

It was the traders in the other two categories, as always, that made up the difference, as both increased their net long positions.  The 'Other Reportables' increased their net long position by 1,683 contracts -- and the 'Nonreportable'/small traders increased their net long position by 2,709 contracts.  The sum of those two numbers...4,392 contracts...represents their change for the reporting week.  The difference between that number and what the Managed Money traders did...4,392 minus 3,966 equals the 426 contract change in the Commercial net short position, which it must do.

With the new Bank Participation Report in hand, Ted pegs JPMorgan's short position in silver somewhere between 10-12,000 contracts.

The Commercial net short position in silver now sits at 371.5 million troy ounces, which is certainly bearish on its face, but not as wildly bearish as it appears to be in gold.

Here's the 3-year COT chart for silver from Nick Laird -- and this week's change is immaterial -- and barely registers.  Click to enlarge.


As I pointed out above, this COT Report for silver is already wildly out of date after Friday's engineered price decline on the jobs report, so I'm mostly providing it for entertainment purposes.



In gold, the commercial net short position increased by a further 17,320 contracts, or 1.73 million troy ounces of paper gold.

They arrived at that number by adding 12,372 long contracts -- and they also increased their short position by 29,692 contracts.  It's the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was mostly Managed Money traders that made up for that change, as they added 13,552 long contracts -- and reduced their already small short position by a further 123 contracts.  It's the sum of those two numbers...13,675 contracts that makes up their change for the reporting week.

As is always the case, it was the traders in the 'Other Reportables' and 'Nonreportable'/small trader categories that made up the difference.  The former category did most of the heavy lifting, as they increased their net long position by 5,396 contracts -- and the 'Nonreportable'/small traders reduced their net long position during the reporting week by 1,751 contracts.  So...13,675 plus 5,396 minus 1,751 equals 17,320 contracts, which is the change in the commercial net short position.

Ted puts JPMorgan's short position in gold at around 30,000 contracts, up about 5,000 contracts from last week's COT Report.

The commercial net short position in gold is now up to 32.28 million troy ounces, which is not a new record high, but very close -- and still an obscene and grotesque amount.

Here's Nick's 3-year COT chart for gold -- and the increase should be noted.  Click to enlarge.


One would expect that all of this deterioration in gold during the reporting week has disappeared as of the close of COMEX trading on Friday.  But that leaves the Managed Money traders still very long both the gold and silver markets -- and unless the Big 7 commercial traders can force these Managed Money traders to puke up more longs and go massively short, the commercial traders are still in a financial hole of some size.



In the other metals, the Manged Money traders in palladium increased their net long position by by a further 650 COMEX contracts -- and are net long the palladium market by 13,961 contracts...just under 55 percent of the total open interest.  Total open interest in palladium is 25,563 COMEX contracts.  It's a very tiny and illiquid market -- and as you already know, it doesn't take more than a handful of contracts to move the price by a significant amount.  In platinum, the Managed Money traders decreased their net long position by a tiny 312 contracts.  The Managed Money traders are still net long the platinum market by 27,562 COMEX contracts...a bit over 30 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al. as well.  In copper, the Managed Money traders increased their net short position in that metal by a further 7,751 COMEX contracts during the reporting week -- and are net short copper 45,573 contracts...1.14 billion pounds of the stuff. That's a bit over 21 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. It shows the days of world production that it would take to cover the short positions of the Big 4 - and Big '5 through 8' traders in each physically traded commodity on the COMEX. Click to enlarge.


For the current reporting week, the Big 4 traders are short 144 days of world silver production...down 1 day from last week's COT Report - and the '5 through 8' large traders are short an additional 72 days of world silver production...up 1 day from last week's COT Report - for a total of 216 days that the Big 8 are short...unchanged from last week.  This represents seven months of world silver production, or about 504 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 216 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 371 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 504 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by around 504-371=133 million troy ounces.

The reason for the difference in those numbers...as it always is...is that Ted's raptors, the 28-odd small commercial traders other than the Big 8, are net long that amount.

Another way of stating this is that if you removed the Big 8 commercial traders from that category, the remaining traders in the commercial category are net long the COMEX silver market.  It's the Big 8 against everyone else...a situation that has existed for about three decades in both silver and gold.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 10-12,000 COMEX contracts -- 60 million troy ounces of paper silver, using the higher number, which works out to around 26 days of world silver production the JPMorgan is short.

Based on the numbers in the paragraph below, that puts JPMorgan in the Big 4 category once again, but probably at the bottom of that list -- and if they're only short 10,000 COMEX contracts instead of the 12,000 that I calculated, that puts them back in the '5 through 8' category.

The Big 4 traders in silver are short 144 days of world silver production in total. That's 36 days of world silver production each, on average.  The four traders in the '5 through 8' category are short around 72 days of world silver production in total, which is 18 days of world silver production each, on average.

The Big 8 commercial traders are short 49.0 percent of the entire open interest in silver in the COMEX futures market, which is up a tiny bit from the 48.2 percent they were short in last week's report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 55 percent mark.  In gold, it's now 40.6 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 36.6 percent they were short in last week's report -- and a bit over 40 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 65 days of world gold production,up 2 days from last week's COT Report.  The '5 through 8' are short another 34 days of world production, up 1 day from last week's report...for a total of 99 days of world gold production held short by the Big 8...up 3 days from last week's COT Report.  Based on these numbers, the Big 4 in gold hold about 66 percent of the total short position held by the Big 8...about unchanged from last week's report.

The "concentrated short position within a concentrated short position" in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 72 and 77 percent respectively of the short positions held by the Big 8...the red and green bars on the above chart.  Silver is unchanged from last week's COT Report...platinum is down 1 percentage point -- and palladium is up 4 percentage points.



The December 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 December Bank Participation Report covers the time period from November 6 to December 3 inclusive.]

In gold, 4 U.S. banks are net short 100,534 COMEX contracts in the December's BPR.  In November's Bank Participation Report [BPR] these same 4 U.S. banks were net short 107,948 contracts, so there was a bit of a decrease of 7,414 COMEX contracts from a month ago, which isn't much.

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

Ted mentioned on the phone yesterday that JPMorgan is short around 30,000 contracts of the total net short position held by the 4 U.S. banks as of Tuesday's COT Report.  That's 30 percent of the total short interest held by these same banks.  That makes me suspect that JPMorgan may not be the biggest short holder in COMEX gold futures.  That title most likely belongs to Citigroup now.

Also in gold, 32 non-U.S. banks are net short 104,690 COMEX gold contracts.  In the November's BPR, 32 non-U.S. banks were net short 94,722 COMEX contracts...so the month-over-month change shows an increase of 9,968 contracts...which just about negates the decrease in the short position of the 4 U.S. banks.

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

However, as I always say at this point, I suspect that there's at least two large non-U.S. bank in this group, one of which would include Scotiabank.  It's certainly possible that it could be the BIS in the No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 30 non-U.S. banks are immaterial.

As of this Bank Participation Report, 36 banks [both U.S. and foreign] are net short 29.3 percent of the entire open interest in gold in the COMEX futures market, which basically unchanged from the 29.4 percent they were short in the November 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 31,818 COMEX contracts in December's BPR.  In November's BPR, the net short position of these same 4 U.S. banks was 28,448 contracts, so the short position of the U.S. banks is up 3,370 contracts month-over-month -- and most assuredly that increase comes courtesy of JPMorgan, which Ted pointed out was up to about 10-12,000 contracts held short by them.

As in gold, the three biggest short holders in silver of the four U.S. banks in total, would be JPMorgan, Citigroup and HSBC USA.  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 43,879 COMEX contracts in the December BPR...which is up a bit from the 41,978 contracts that 23 non-U.S. banks were short in the November BPR.  I would suspect that Canada's Scotiabank [and maybe one other, the BIS perhaps] holds a goodly chunk of the short position of these non-U.S. banks.  I believe that a number of the remaining 21 non-U.S. banks may actually net long the COMEX futures market in silver.  But even if they aren't, the remaining short positions divided up between these other 19 non-U.S. banks are immaterial - and have always been so.  This is a JPMorgan-run operation as short seller of last resort...end of story.

As of December's Bank Participation Report, 25 banks [both U.S. and foreign] are net short 36.8 percent of the entire open interest in the COMEX futures market in silver-up a decent amount from the 31.0 percent that they were net short in the November BPR.  And much, much more than the lion's share of that is held by Citigroup, HSBC USA, JPMorgan, Scotiabank -- and maybe one other non-U.S. bank, which I suspect may be the BIS.

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


In platinum, 5 U.S. banks are net short 21,506 COMEX contracts in the December Bank Participation Report.  In the November BPR, these same banks were net short 22,383 COMEX contracts...so there's been a slight decrease month-over-month...877 contracts worth.

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

Also in platinum, 21 non-U.S. banks are net short 22,834 COMEX contracts in the December BPR, which is up a bit from the 21,234 COMEX contracts that 20 non-U.S. banks were net short in the November BPR.

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

And as of December's Bank Participation Report, 26 banks [both U.S. and foreign] are net short a grotesque 48.7 percent of platinum's total open interest in the COMEX futures market, which is up a bit from the 47.5 percent they were net short in November's BPR.
Here's the Bank Participation Report chart for platinum Click to enlarge.


In palladium, 4 U.S. banks are net short 6,831 COMEX contracts in the December BPR, which is up a tiny bit from the 6,530 contracts that these same 4 U.S. banks were net short in the November BPR.

Also in palladium, 15 non-U.S. banks are net short 2,179 COMEX contracts-which is up a bit from the 1,899 COMEX contracts that 14 non-U.S. banks were short in the November BPR.
But when you divide up the short positions of these 15 non-U.S. banks more or less equally, they're completely immaterial...especially when compared to the positions held by the 4 U.S. banks.

And as you already know, palladium is very tiny market -- and these numbers attest to that.
As of this Bank Participation Report, 19 banks [both U.S. and foreign] are net short 35.3 percent of the entire COMEX open interest in palladium...up a decent amount from the 30.6 percent of total open interest that 14 banks were net short in November.

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 -- and are even more so today.  Click to enlarge.


JPMorgan et al. are facing some rather serious and long-term headwinds...but that fact hasn't prevented them from engineering a price decline of some size on Friday, so they're iron grip on precious metal prices remains unchanged.

But, as always -- and because of their massive physical holdings in both silver and gold, JPMorgan continues to be in a position to double cross the rest of the short holders in both silver and gold if they so choose.  And as I said in this space last month....whether they will they or they won't, remains to be seen.

I only have a small handful of stories for you today.

CRITICAL READS 

November Payrolls Smash Expectations: 266K Jobs Added, as Mfg Workers Soar

Heading into today's November payrolls report, DB's Jim Reid wrote that "the consensus for November non-farm payrolls is pegged at 185k (vs. 128k in October) but after Wednesday's disappointing ADP (67k vs. 135k expected) print it's likely that the whisper number is lower." And sure enough, we agreed following our recent article showing how the U.S. labor market was about to crack.

As it turns out, both we and DB were dead wrong, because moments ago the BLS reported that in November, a whopping 266K jobs were added, smashing expectations of 183K and the double digit whisper number, in what was the single best month for US payrolls since January 2019, with the prior jobs print was also revised sharply completing the picture of a labor market in perfect, yet strange, health.  Click to enlarge.


The change in total non-farm payroll employment for September was revised up by 13,000 from +180,000 to +193,000, and the change for October was revised up by 28,000 from +128,000 to +156,000. With these revisions, employment gains in September and October combined were 41,000 more than previously reported.

The strong job number surprised almost everyone: here is Bloomberg economist James Callan noting that "the labor market is holding up surprisingly well despite a deceleration in economic momentum at year-end and uncertainty on the U.S.-China trade front. Bloomberg Economics expects the labor market to continue to tighten and the unemployment rate to drop to 3.3% by the end of next year."

This long Zero Hedge article was posted on their Internet site at 8:36 a.m. EST on Friday morning -- and I thank Brad Robertson for his first offering of the day.  Another link to it is here.  There was a related ZH story on the above headlined "Here is the Main Reason For Today's Blockbuster Jobs Report" -- and that's from Brad as well.


November Heavy Duty Truck Orders Resume Collapse, Down 39% to Weakest Since 2015

The collapse in heavy duty trucking is getting tougher to blame on difficult YoY comps and is more and more looking like the symptom of a real manufacturing recession in the U.S.

Class 8 orders against collapsed in November, culminating a dismal year that some thought had seen a reprieve with October's improved bookings. But new data from FreightWaves shows that the collapse has continued its trend, indicating that the sluggish economy is to blame for lackluster replacement demand.

Orders totaled 17,300 units for the month, which marks the slowest November since 2015 and a 39% collapse from November 2018. The slowdown in orders is prompting layoffs of hundreds of production workers by companies like Daimler Trucks North America, Volvo Trucks North America, Paccar Inc. and Navistar International Corp.

Other names in the Class 8 supply chain are also dealing with the negative effects. For instance, engine manufacturer Cummins Inc. is "laying off 2,000 white-collar employees globally in the first quarter of 2020".

Meanwhile, November used to be a month when fleets would be busy placing orders for the upcoming year. After October's slight tick up in orders, many analysts thought November could follow suit. That didn't happen, and sequentially November's order book was down 21% from October.

Don Ake, FTR vice president of commercial vehicles commented: "The stalling of freight growth is causing fleets to exercise caution in placing orders for 2020. There will still be plenty of freight to haul, so we expect fleets will continue to be profitable and to replace older equipment.
However, there won't be a need for much additional equipment on the roads."

"The industry thrives on stability, but we are now on a rocky road," Ake concluded.

This story put in an appearance on the Zero Hedge website at 8:05 p.m. EST on Friday evening -- and another link to it is here.


America's Wealth Gap Widens Further -- Bill Bonner

Baltimore lives on the edge of civility... like a city on the frontier of the Sahara, gradually being taken over by the desert. There are pockets of grace and charm remaining. But much of the town is already under the sand.

Yesterday, walking barely five blocks up the street, a drug-addled bum exposed himself to passersby, and a panhandler asked for money to get a cup of coffee. A moment later, fire engines appeared - sirens whining, lights blazing; a house was on fire.

Last night was the "Monument Lighting," signaling the beginning of the Christmas season. It takes place in front of our office. There stands the nation's first monument to George Washington.

The nearby houses - as well as the Peabody music conservatory and the Walters Art Museum - are among the most elegant buildings of the era. And today, the buildings are still there, but Gen. Washington commands only a narrow strip of civilized urban America, threatened with being overrun at any moment.

On his right flank are the poor... the embittered masses and flash mobs. On his left is the city government, with its closet collectivists and visible incompetence.

This sobering commentary from Bill appeared on the bonnerandpartners.com Internet site on Monday morning EST -- and another link to it is here.  The link to Gregory Mannario's post market close rant on Friday, which is semi 'R' rated, is here.


Trade Wars Just Getting Started -- Jim Rickards

Markets are eagerly awaiting the conclusion of the so-called "phase one" trade deal between the U.S. and China.

Both parties are trying to reach a mini-deal involving simple tariff reductions and a truce on new tariffs along with Chinese purchases of pork and soybeans from the U.S.

The likely success or failure of the mini-deal has been a main driver of stock market action for the past year. When the deal looks likely, markets rally. When the deal looks shaky, markets fall.

A deal is still possible. But investors should be prepared for a shocking fall in stock market valuations if it does not. Markets have fully discounted a successful phase one, so there's not much upside if it happens.

On the other hand, if phase one falls apart stock markets will hit an air pocket and fall 5% or more in a matter of days.

But even if the phase one deal goes through, it does not end the trade wars. Unresolved issues include tariffs, subsidies, theft of intellectual property, forced transfer of technology, closed markets, unfair competition, cyber-espionage and more.

Most of the issues will not be resolved quickly, if ever.

This commentary by Jim is datelined December 4...but didn't show up on the dailyreckoning.com Internet site until Friday.  Another link to it is here.


Meanwhile In Canada: "Terrible" Jobs Report, Worst Since the Financial Crisis

As the U.S. was basking in the warm glow of the best jobs report since January, it was a different story over in Canada, where BMO's chief economist Robert Kavcic had one recommendation to clients: "avert your eyes." Here's why: Canadian employment unexpectedly tumbled by 71,200 in November, the biggest decline since the financial crisis.  Click to enlarge.


For those hoping that the details might serve up better news, they too were disappointed: Full-time employment was down 38.4k, and the private sector shed 50.2k. The jobless rate also rose sharply, up four ticks, and also the biggest monthly jump since the recession, to 5.9%.

Putting it together, BMO's "grading system" gave this report a 12.1 rating out of 100, which is pretty much as bad as it can possibly get (it is in fact the worst rating in about six years of tracking).

The BMO economist wasn't alone in slamming the report: it's a "terrible jobs report," said Wells Fargo strategist Brendan Mckenna. "There's really not much you can point to that is positive about those numbers. We'll probably hover around these levels til year-end."

Hours worked fell 0.3%, and remain an area of persistent disappointment-they're now up just 0.25% y/y, much more muted than the 1.6% annual job gain. Oddly enough, the one area of strength was wages, with growth accelerating to match a cycle high at 4.5% y/y, according to Kavcic.

This Zero Hedge news item was posted on their website at 10:57 a.m. on Friday morning EST -- and another link to it is here.


Doug Noland: Crazy Extremis

As the late Dr. Kurt Richebacher would often repeat, "the only cure for a Bubble is to not let it inflate." Certainly, the longer Bubbles expand the greater the underlying fragilities - ensuring timid central bankers unwilling to risk reining in excess. This was the problem in the late-twenties and in 2006/2007. I would argue this has been a fundamental dilemma for central bankers persistently now for going on a decade. Especially after the Bernanke Fed targeted risk assets as the key reflationary mechanism, central banks have been loath to do anything that might risk upsetting the markets. Remember the 2011 "exit strategy" - promptly scrapped in favor of another doubling of the Fed's balance sheet to $4.5 TN (by 2014).

From my analytical perspective, things have followed the worst-case scenario now for over three decades. Alan Greenspan's assurances and loose monetary policy after the 1987 crash spurred "decade of greed" excesses that culminated with Bubbles in junk bonds, M&A and coastal real estate. The response to severe early-nineties bank impairment and recession was aggressive monetary stimulus and the active promotion of Wall Street finance (GSEs, MBS, ABS, derivatives, hedge funds, proprietary trading, etc.).

Once the boom in highly speculative market-based Credit took hold, there was no turning back. The 1994 bond bust ensured the Fed was done with the type of rate increases that might actually impinge speculation and tighten financial conditions. The Mexican bailout guaranteed fledgling Bubbles would run wild in Southeast Asia and elsewhere. The LTCM/Russia market "bailout" ensured Bubble Dynamics turned absolutely crazy in technology stocks and U.S. corporate Credit. Things took a turn for the worse following the "tech" Bubble collapse. With Wall Street cheering on, the Federal Reserve fatefully targeted mortgage Credit as the key mechanism for system reflation. A doubling of mortgage debt in just over six years was one of history's more reckless monetary inflations. The panicked response to the collapsing mortgage finance Bubble fomented by far the greatest monetary inflation the world has ever experienced: China; EM; Japan; Treasury debt; central bank Credit; speculative leverage everywhere...

The "global government finance Bubble" saw egregious excess break out at the foundation of finance - central bank Credit and sovereign debt. It was a "slippery slope"; no turning back. The sordid history of inflationism has been replayed: once monetary inflation commences it becomes virtually impossible to stop.

Yet the possibility of a trade agreement, economic expansion and some inflationary pressures could prove problematic. Rising bond yields would put pressure on highly leveraged and vulnerable markets. In all the discussion of "repo" market issues and challenges, the key point is somehow missed: Accommodating and promoting a market that finances speculative leveraging virtually guarantees problematic Bubbles. How could this lesson not have been learned in 2008? Now it's a global Bubble, with all the issues of financial fragility, economic maladjustment, and wealth redistribution on an unprecedented scale.

Doug's very worthwhile weekly commentary appeared on his website very early on Saturday morning EST -- and another link to it is here.


Goldman Says Case to Diversify With Gold "as Strong as Ever"

Goldman Sachs Group Inc. said investors should diversify their long-term bond holdings with gold, citing "fear-driven demand" for the precious metal.

"Gold cannot fully replace government bonds in a portfolio, but the case to reallocate a portion of normal bond exposure to gold is as strong as ever," Goldman analysts including Sabine Schels said in a note Friday. "We still see upside in gold as late cycle concerns and heightened political uncertainty will likely support investment demand" for bullion as a defensive asset.

The precious metal climbed to a six-year high in September as the Federal Reserve cut borrowing costs and the total pile of debt yielding less than zero climbed to a record $17 trillion, boosting the appeal of non-interest bearing gold.

Hedge funds and other large speculators boosted their bullish bets on the precious metal by 8.9% in the week ended Dec. 3, government data showed Friday. That's the biggest gain since late September.

This gold-related news item showed up on the Bloomberg website a 12:27 p.m. PST on Friday afternoon -- and it was updated two hours later.  I found it on the gata.org Internet site -- and another link to it is here.

The WRAP

Today's pop 'blast from the past' dates from 1976.  They first found success when its members moved to Canada, in part to avoid the draft, then later in the United States, and ultimately worldwide.  It was the lead vocals of Ann and Nancy Wilson that made this group the success it was back then -- and they're still at it today.  The link to one of their biggest hits is here.  But one of my favourites is this live performance from 41 year later in 2017 -- and it's linked here.

Today's classical 'blast from the past' is one I've posted before, but it's been awhile -- and is hands-down the most recognized of all organ works.  It's Johann Sebastian Bach's Toccata & Fugue in D-minor, BWV 565 which was composed in the very early 1700s.

There are a lot of videos on the Internet to choose from, but this one is my favourite with Netherland's wonder-kid Gert van Hoef doing the honours.

It's an ancient organ with only two manuals -- and with organs such as these, he has two people pulling stops, as well as turning pages.  This is where the expression "pulling all the stops" comes from -- and they're pretty much all out by the end of the performance.  The link is here.



Friday's price activity, although disappointing, wasn't all that surprising, as the Big 8 commercial traders...with or without JPMorgan's participation...pulled their bids on the job numbers -- and the Manged Money traders [most likely] responded as they normally do.  However, that won't be know for sure until next week's COT Report.

But even if JPMorgan wasn't involved in that price decline, it's a given that they were buying longs and covering shorts like the bandits they are.  And as I mentioned at the end of my Bank Participation Report discussion, they're in a position to pull Ted's double cross of the remaining Big 7 commercial traders any time they wish.

Despite that engineered price decline, the volume in gold wasn't all that heavy, but it was way up there in silver...so it certainly appears that 'da boyz' were more successful in their attempts in silver than in gold.  It remains to be seen if they're going to push their advantage in the days ahead...or was that it?

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  The pounding that silver and gold took should be noted -- and also the fact that both platinum and palladium were left untouched on Friday during the COMEX trading session.  Copper was closed back above its 200-day moving average for the first time in a long while -- and WTIC had its fifth 'up' day in a row and is back above its 200-day moving average as well.  Click to enlarge.


Like all the other statistics coming out of the U.S. government, those job numbers yesterday were massaged to perfection -- and as Zero Hedge correctly mentions in a story in the Critical Reads section, a lot of those permanent jobs added in November were the GM employees going back to work after the strike.

And as Bill Bonner pointed out in an article [albeit dated] headlined "America's Hidden Depression"...rings even more true today than when the article was first posted...

"What we see is claptrap. The dots don't connect.

In a labor pool with barely any increase in average wages, if some wages are going up, other wages must be going down.

And in a country where growth is concentrated in a few urban-suburban conglomerates - Washington, D.C., New York, San Francisco, etc. - there must be a lot of places where people are not drinking cappuccinos, sending their children to private schools, or listening to NPR.

In the bottom half of the U.S. population, 117 million adults earn an average annual wage of $16,000 a year.

These people are worse off than they were at the end of the last century... and probably worse off than they were when the Fake-Money Era began in 1971.

But we'll let you draw your own conclusion."

Then Tucker Carlson of Fox News had a few things to say about how the influence and corruption of Wall Street hedge funds has slowly crept into rural America, now that they've raped and pillaged everything else.  The banner headline on the screen reads "Paul Singer: "The World's Most Feared Investor"".  The youtube.com video is datelined Tuesday, December 3 -- and the link is here.

Couple the above with the fact that Wall Street, the New York banking syndicate, along with the Federal Reserve have removed all price discovery from any markets that matter...things will continue along until the whole thing collapses in a heap.

And collapse it will.  The average person in the street thinks everything is OK, because the government is telling them so -- and the major U.S. stock indices are hitting new all-time highs just about every week.  Jobs are plentiful -- and interest rates are low...so what's the worry?

But a lot of them figured out some time ago that things weren't right in this world, even though they couldn't quite put their finger on it -- and the election of Donald Trump was the end result of that.

The problem is that this massive intervention in all market either by willful act, or jawboning, is all "bread and circuses" for John Q. Public...as it was for the citizens of Rome as the Republic fell into ruin.  Behind that propaganda is an economic, financial and monetary system that floated off the rails long ago -- and is only kept going by massive money printing/debt issuance.

Not even negative interest rates will save the U.S. now.  It has been tried in Europe -- and Japan -- and look where that's got them.  As I, along with many others now, have been pointing out for a long while -- and only became crystal clear in September when the Fed announced their "temporary" repo scheme...this is a trap from which there is no escape...none whatsoever.  It has become "Print, or die" -- which has immediately morphed into "Print -- and die".

Of course the die was cast the moment that Nixon took the world off of what was left of the Bretton Woods-based gold standard back in August of 1971 -- and we've been slowly circling the drain since.  But with the Fed announcement in September, it became abundantly clear to a lot of people that the U.S. financial system had crossed the black hole equivalent of an "event horizon" -- and the fate of the U.S...along with the rest of the world was sealed.

Not that it wasn't before, mind you, but the events of September was proof positive that the time between now -- and the "end of all things" is accelerating at Warp speed.  We're only one black swan or false flag away from total collapse.  It will be too big even for the world's banks to fix -- and they may have no desire to do so.  As I keep saying, the end will come by either circumstance...or design...or a combination of both.  Since the system cannot be saved, the IMF and other key world central banks, may precipitate the end themselves -- and at a time of their choosing.

Besides the ultimate economic, financial and monetary chaos that will follow this event...what will most certainly return at some point will be a gold-backed currency of some sort.  As we have noticed at an ever increasing rate over the last few years, many countries, as quietly as they can, have been buying gold...or repatriating gold they already own, as fast as they can without alarming their citizenry.

And I also suspect that this price management scheme in the precious metals will end in a similar fashion...when JPMorgan desires it...or even more likely, when they're requested to step aside.  That will come concurrently with "the end of all things" -- and may even be the event that precipitates it.

At that point, as I and many others have stated in the past..."He who has the gold [and silver] makes the rules."

That will certainly include JPMorgan -- and judging by the amount money going into the precious metal equities, depositories, ETFs and mutual funds over the last fifteen years or so...us as well.

I'm still "all in" -- and I'll see you here on Tuesday.


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 -- Published: Monday, 9 December 2019 | E-Mail  | Print  | Source: GoldSeek.com

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