Saturday, March 22: Today in Gold and Silver
NEW YORK ( TheStreet) -- It was pretty quiet in gold in Far East trading on their Friday, as it rose and fell about five bucks between the Tokyo open and up until 30 minutes after the London open. At that point, the gold price took off to the upside, only to be met with a firestorm of selling by the sellers of last resort.
JPMorgan et al managed to put the fire out by shortly after 11 a.m. GMT in London---and from there the price traded quietly lower until around 10:30 a.m. EST in New York. After that it didn't do a lot, although a tiny rally that began around 12:30 p.m. EDT got sold down at 3:30 p.m. before it could get anywhere.
The CME Group recorded the high and lows ticks as $1,328.00 and $1,343.00 in the April contract.The gold price finished the week at $1,334.70 spot, up $6.20 from Thursday's close. Net volume was very quiet at 87,000 contracts, with at least 50% of that used to kill the morning rally in London. Here's the New York trading session up close and personal---and you can see the not-for-profit selling show up at 3:30 p.m. in electronic trading. It was more or less the same price pattern in silver, so I'll spare you the play-by-play. The high and low price ticks were recorded at $20.585 and $20.265 in the May contract. Silver closed in New York at $20.275 spot, up a whole half a penny. Volume, net of March and April, was pretty low at 28,000 contracts but, like gold, it's a good bet that almost half of that volume was JPMorgan et al throwing Comex paper at the price during the rally in early trading in London. The platinum chart was a mini version of the gold and silver charts---and the metal managed to close up a few dollars. Here's the chart. Not surprisingly---and for the second day in a row---there was a decent rally in palladium, as news about the two new palladium ETFs in South Africa hit the Internet. The rally began just before 10 a.m. GMT in London---and just as obviously got capped less than an hour later. Then shortly after 9 a.m. in New York, the price went vertical---and a seller of last resort [probably JPMorgan] showed up and prevented the price from taking out the $800 spot level, which it would have certainly done if left to its own devices. As it turned out, the high tick in palladium was 800.00 right on the button---and the low tick was $768.20---in the June contract, which is the current front month. You pretty much have to have to have been born stupid, willfully blind, or be a bought and paid for whore of the World Gold Council and/or Silver Institute, not to see that JPMorgan et al prevented an upside explosion in the precious metals yesterday. If Russia really wanted to screw the U.S. over real good, all they would have to do is put an end to this price management scheme in all four precious metals, as they've known about it for at least a decade now---and China has, as well. If these two countries wanted to be heroes to all the poor resource-producing countries of Africa, South America and elsewhere, they could change these country's fortunes virtually overnight---if Russia and China thought it in their own respective best interests to do so. The dollar index closed on Thursday afternoon in New York at 80.19---and then spent all of Friday quietly chopping lower in a very tight range. The index close yesterday at 80.12, which was down 7 basis points on the day. The gold stocks gapped up about a percent at the open---and hit their highs of the day about 20 minutes later. Despite the fact that the gold price traded flat in New York for most of yesterday, the stocks continued to sell off quietly into the red, right up until the tiny gold rally that began around 2:30 p.m. EDT in electronic trading. From there, the gold stocks rallied quietly right into the close, despite the fact that gold got sold down pretty hard during the last 30 minutes of trading. The HUI finished down a smallish 0.27%. The fact that the general stock market sold off starting around 11 a.m. EDT may have had something to do with the sell-off in the gold shares as well. The silver equities performed in a similar manner up until about 2:30 p.m EDT. Then, despite the continued weakness in the underlying metal, the equities rallied quietly into positive territory. Nick Laird's Intraday Silver Sentiment index eked out a gain of 0.46%. This is the third day this week that the silver equities outperformed not only the metal itself, but gold equities as well. As I've been saying for the last few days, does someone with deep pockets know something we don't? Just to show you the dichotomy between the gold share price action and the silver share price action---consider the week-over-week changes in the price of both metals vs. how well the HUI and Silver Sentiment Index did. For the week, gold was down $47.30---or 3.4%---and the HUI lost 8.60%. Silver was down $1.185 for the week---or 5.52%---and the Intraday Silver Sentiment Index closed lower by only 2.93%. Does it mean anything? I don't know for sure, but this particular dichotomy is beyond obvious, as it appears to me that a buyer with deep pockets is using this engineered price decline in silver to pick up a substantial position in the silver equities. The CME's Daily Delivery Report drew a blank yesterday, as no gold or silver contracts were posted for delivery on Tuesday within the Comex-approved depositories. There was activity, but it was all in palladium. Much to my surprise, an authorized participant added 134,905 troy ounces of gold to GLD yesterday. I'm only speculating here, but based on the price action all week, I'd guess that this deposit was being used to cover an existing short position. And as of 10:10 p.m. EDT yesterday evening, there were no reported changes in SLV. The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs for the week ending Friday, March 14. Their gold ETF continues to slide. During this reporting week, it declined by another 29,224 troy ounces. But their silver ETF showed an increase of 123,009 troy ounces. The U.S. Mint had a sales report yesterday. They sold 3,500 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes---and 140,500 silver eagles. They also sold 300 one-ounce platinum eagles sometime during the reporting week as well. Month-to-date the mint has sold 16,500 troy ounces of gold eagles---10,000 one-ounce 24K gold buffaloes---9,000 one-ounce platinum eagles---and 3,283,500 silver eagles. Based on these numbers, the silver/gold sales ratio for the month so far stands at 124 to 1---and it's about 200 to 1 if you just compare silver eagles sales to gold eagles sales. These are incredible sales ratios. There was a fairly large gold deposit---160,750 troy ounces---over at the Comex-approved warehouses on Thursday, all of which went into JPMorgan's depository. Nothing was shipped out. The link to that activity is here. In silver, nothing was reported received, but 302,242 troy ounces were shipped out of four of the six depositories---and the link to that action is here. The Commitment of Traders Report was a mixed bag. Silver was way better than I expected, but gold was terrible---and I'll leave the discussion about copper up to Ted Butler in his commentary to paying subscribers later today. In silver, the Commercial net short position actually improved by 1,734 contracts, or 8.67 million ounces. The Commercial net short position now sits at 179.5 million ounces. That's the 'good' news. The bad news is that of the 2,700 short contracts put on/bought by the Big 8 short holders, Ted figures that 2,000 of those contracts were done by JPMorgan. This brings their short-side corner in the Comex silver market up to around 20,000 contracts, or 100 million troy ounces. As I mentioned in the previous paragraph, the Commercial net short position in silver was 179.5 million ounces, so this means that JPMorgan holds about 55% of the Commercial net short position all by itself---and about 33% of the short position held by the eight largest traders on the short side combined. This is a short-side corner by definition. As an aside in silver, the raptors---the Commercial traders other than the Big 8---bought 4,400 long contracts during the reporting week. Gold was ugly. The Commercial net short position blew out by 20,567 contracts, or 2.06 million troy ounces. The Big 8 increased their short position by about 8,500 contracts---and the raptors [the Commercial traders other than the Big 8] went short about 8,000 contracts---and Ted Butler said that JPMorgan sold between 7-8,000 of their long-side corner, which is now down to somewhere between 39 and 40,000 contracts, or 3.9 to 4.0 million ounces of the stuff. All of this was done in gold [and silver] by JPMorgan et al in order to prevent prices from blowing sky high during the reporting week, just like these same precious metals attempted to do again yesterday. As you already know, "da boyz" are the not-for-profit sellers---and the sellers of last resort. If they weren't there 24/7, then precious metal prices would be just outside the orbit of Pluto by now. Here's a chart from Nick Laird that I haven't posted for many a moon. It's the " Days of World Production to Cover Comex Short Positions". It still looks much the same as it has for the last couple of years. Silver, except for a few weeks, has always occupied the far right position on this chart, with palladium and platinum not that far behind. To give you some idea of JPMorgan's short position in silver compared to the total short positions of the Big 4 or Big 8 shorts---their 100 million ounce short-side corner in Comex silver translates into roughly 50 days of world silver production. The numbers on this chart are a graphic representation of the short positions of the 4 and 8 largest traders in all physical commodities on the Comex---and the data for this chart came straight out of yesterday's COT Report. Once again I have a lot of stories and, as always, I'll leave the final edit up to you.
¤ The WrapYou pretty much have to have to have been born stupid, willfully blind, or be a bought and paid for whore of the World Gold Council and/or Silver Institute, not to see that JPMorgan et al prevented an upside explosion in the precious metals yesterday. If Russia really wanted to screw the U.S. over real good, all they would have to do is put an end to this price management scheme in all four precious metals, as they've known about it for at least a decade now---and China has, as well. If these two countries wanted to be heroes to all the poor resource-producing countries of Africa, South America and elsewhere, they could change these country's fortunes virtually overnight---if Russia and China thought it in their own respective best interests to do so. - Ed Steer: Gold and Silver Daily---21 March 2014 Today's pop "blast from the past" is only 15 years old---and one of the few modern pop songs that I think is worth listening to. Carlos Santana and Rob Thomas do the honours---and the link is here. Today's classical "blast from the past" is another Jean Sibelius number, but it's totally different from the one that I posted in this space last week. The Swan of Tuonela is an 1895 tone poem---and is the second part of Op. 22 Lemminkäinen (Four legends), tales from the Kalevala epic of Finnish mythology. It's a melancholy piece---and the solo by the cor anglais is perhaps the best known for this instrument in all of orchestral literature. The link is here. Well, I'll be the first one to admit that yesterday's price rally shortly after the London open came as a big surprise to me. What wasn't a surprise---and a disappointment---was the immediate explosion in open interest as JPMorgan et al, as sellers of last resort, were there to kill the rallies stone cold dead. Of course they had to give a little ground in palladium because of the announcement of the two new South African palladium funds, but even then, their footprints at the $800 mark were obvious for anyone who cared to examine the price chart carefully. As I said in The Wrap in yesterday's column, it didn't appear that "da boyz" were about to give up control of the precious metal market any time soon---and this turned out to be prophetic within hours of me writing it. Where we go from here is anyone's guess. The roll-overs out of the April delivery month in gold have to be all done by next Friday---and I'm sure that JPMorgan would still dearly love to take out both the 50 and 200-day moving averages in that precious metal before then, but yesterday's price action sort of threw a spanner into the works. And as I mentioned in the first part of today's column, the dichotomy between the gold and silver equities is still something I'm keeping an eye on---and Friday's numbers only reconfirmed my suspicion that someone with very deep pockets is taking a very large position in silver equities using the engineered price decline as cover. Taking a look at the preliminary volume report from the CME yesterday, I note that there are only about 35 gold contracts and just under 200 silver contracts still open in the March delivery month---and those have to delivered into, or rolled over, by next Friday as well. I'm only speculating here, but it appears that it may be anything but "business as usual" next week---and for that reason I'll be watching the 6 p.m. EDT open in New York on Sunday evening with more interest than normal. Enjoy what's left of your weekend---and I'll see you here on Tuesday.
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