¤ Yesterday In Gold & SilverThe gold price got sold down five bucks or so shortly after trading began in New York on Tuesday evening...and from there, the gold price chopped around in a five dollar price range right up until the Comex open in New York on Wednesday morning.
The high-frequency traders went to work...and down went the price...with the low tick [$1,312.50 spot] coming fifteen minutes after the 1:30 p.m. EDT Comex close. Gold recovered about ten bucks off its low going into the close of electronic trading.
Gold finished the Wednesday session at $1,321.60 spot...down $26.10 on the day. Net volume was decent...around 130,000 contracts.
Silver's price action was basically the same as gold's, with the low tick...$19.93 spot, according to Kitco...also coming at 1:45 p.m. in New York trading. Then, also like gold, the silver price recovered a bit into the close.
Silver finished the day at $20.15 spot...down 34 cents from Tuesday. Gross volume was around 41,000 contracts, only a hair less than the volume on Tuesday.
Platinum and palladium were in rally mode once New York began to trade yesterday...but it was equally obvious that a seller of last resort put in an appearance before either could really break to the upside...which they both appeared to want to do. Here are the charts...
The dollar index closed on Tuesday afternoon in New York at 82.03...and then it did nothing during Far East trading...but did spike down to 81.95 a couple of times in London trading...and then finally began to rally at the 8:20 a.m. Comex open in New York. The high tick [82.38] came around 1:40 p.m. EDT...and then the index drifted lower from there. The index closed at 82.30...up 27 basis points on the day. Not much to see here...but the New York rally in the dollar index matched the decline in both gold and silver prices during the Comex trading session almost to the minute.
The gold stocks gapped down a bit at the open...and continued to decline for the rest of the day, despite the fact that gold began to rally sharply at 1:45 p.m. EDT. The stocks themselves hit their nadir at 3:15 p.m. EDT...and then rallied a hair into the close. The HUI lost everything it gained on Tuesday, plus a bit more...and closed down 4.86%.
The silver stocks got hit hard as well...and Nick Laird's Intraday Silver Sentiment Index closed down 3.66%.
(Click on image to enlarge)
The CME's Daily Delivery Report for Wednesday, also showed that zero gold and 18 silver contracts were posted for delivery tomorrow. It was almost the same story again, as 16 contracts were delivered out of JPMorgan's client account...and JPM stopped 13 of those contracts in its in-house [proprietary] trading account. No amount is too small for these crooks to go after. The link to yesterday's Issuers and Stoppers Report is here.
For a change there were no reported changes in GLD. But it was an entirely different story over at SLV, as a very chunky 4,630,359 troy ounces were deposited by an authorized participant[s] yesterday. Since July 1st, there have been 16.8 million troy ounces of silver deposited in SLV...and GLD has been a one-way street in the opposite direction. Ted Butler is speculating that someone [probably JPMorgan Chase] is covering a short position.
As it now turns out, the good folks over at the shortsqueeze.com Internet site report that the short position in SLV, as of 15 July, decreased by 17.25%...from 20.95 million troy ounces/shares...down to 17.33 million troy ounces/shares. That represents 5.0% of all the outstanding shares of SLV at this moment. Without doubt the short position in SLV is substantially lower than that by now, as 7.8 million ounces of silver have been added since the cut-off date of this report.
There was almost no change in the short position GLD, as it rose a tiny 0.60%...or 17,610 troy ounces of gold. Nothing to see here.
Over at Switzerland's Zürcher Kantonalbank for the week ending 19 July...there were only minor changes in their gold and silver ETFs. Their gold ETF declined by a smallish 12,955 troy ounces...and their silver ETF actually posted a small increase...43,821 troy ounces.
The U.S. Mint did not have a sales report yesterday.
It was quieter over at the Comex-approved depositories on Tuesday. In silver, they reported receiving only 19,514 troy ounces...and shipped 65,825 ounces out the door. The link to that activity is here.
As for gold, there were 29,233 troy ounces reported received...all in Scotia Mocatta's depository. The link to that activity is here. I've cut the number of stories down to a bare minimum...at least for me...and I hope you find a few to be of interest.
¤ The WrapThere continues to be an outburst of what I feel are misleading reports from within the precious metals Internet community. Some of the reports, from declining gold inventories on the COMEX, to stories about lease rates and backwardation in gold, to predictions of COMEX default or sudden changes in contract delivery terms, have my head spinning. Look, I’m bullish about the price prospects for gold and silver based upon the market structure and the fact that the silver cost of production is above current prices, but that’s no excuse for spreading false information. The level of COMEX inventories has little to do with a contract default. What would matter more would be short contract holders refusing to buy back or roll over positions in the spot delivery month. A delivery default would kill the COMEX and it would be a self-inflicted fatality. The CME knows better than anyone what the consequences of a delivery default would be and they would take any measure necessary to prevent it, especially now that JPMorgan is massively long COMEX gold. The same goes for suggestions that the exchange would suddenly and unilaterally alter basic contract delivery requirements or institute a cash settlement. The term, futures contract, means there are rigid contractual requirements which can’t be suddenly abrogated without that being considered a legal default. I suppose the CME could introduce new futures contracts voiding the physical delivery obligations of the current contracts, but that would take years and no one would deal in such phony contracts anyway. The one thing that gives COMEX metal contracts legitimacy is the ability to convert futures contracts into actual metal via delivery. The chance of the CME initiating a contract default in gold or silver, regardless of what warehouse inventories may be, are about as good as me stepping ahead of the new royal baby in future UK succession plans for the throne. And I have to add that I don’t understand any of the current discussion of gold lease rates (and I am very familiar with metals leasing), for the simple reason that none of them make any sense. Let me be the first to say it – for a wide variety of reasons, GOFO is goofy. - Silver analyst Ted Butler...24 July 2013 So why the big $35 sell-off in gold during the Comex trading session yesterday? Was it the rise in the dollar index? Hardly. Hong Kong hedge fund manager William Kaye mentions the fact that it's related to option expiry...and that's probably the correct answer, as there was no other reason that I could see. Silver got taken along for the ride as well. But as the charts at the top of this column show, platinum and palladium were trading in another world.
Since yesterday's price action occurred on Wednesday, the day after the cut-off for tomorrow's COT Report, nothing will be known for sure until next Friday's report.
I see that gold is now back below it's 50-day moving average, a possibility that I alluded to either on Saturday or Tuesday. It's not possible to tell whether this 'failure' was engineered...and there's more downside ahead...or whether it was a momentary blip in the current rally. I'm sure that JPMorgan et al won't leave us in suspense for long. Here's the 6-month chart...
(Click on image to enlarge)I note that there are still 195 silver contracts open for the July delivery month...minus the 36 contracts posted for delivery today and tomorrow. These 195 contracts still have been delivered, sold, or rolled before First Day Notice next week...July 31st. There are still over 98,000 contracts open in gold for August, but most of those will vanish by that day as well.
I would assume, using the past as prologue, that JPMorgan Chase will be the stopper on the lion's share of whatever silver contracts are delivered between now and month's end...and I will be more than interested in seeing how much gold they stand for delivery on during August. I would bet that it will be quite a bit.
Very little of anything happened price wise in all four precious metals during Far East and early London trading on their Thursdays...and both gold and silver are down a bit from Wednesday's New York close as I hit the 'send' button on today's column at 5:17 a.m. EDT. Volumes are about 'average' in both metals...and the dollar index, which had been down over 20 basis points going into the London open...has jumped back to unchanged.
After yesterday's price action in New York, I'm looking forward to today's Comex open with great interest.
That's all I have for today...and I'll see you here tomorrow.