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TheStreet Open House

Saturday, April 5: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do a thing in Far East trading on their Friday---and as I stated in The Wrap section of yesterday's column, volume up until the London open was lower than I could ever remember seeing it.

But shortly after trading began in London, some positive price action got underway, with higher ticks at both the 12 noon BST silver fix---and again at the Comex open in New York.  The usual smash down at the release of the jobs numbers failed to materialize.  But the serious price rally that began when London closed at 11 a.m. EDT in New York, ran into the usual not-for-profit sellers within 15 minutes---and that was it for the remainder of the day.

The CME Group reported the low and high price ticks as $1,284.40 and $1,307.50 in the June contract.

Gold finished the trading day in New York at $1,302.30 spot, up $15.50 on the day.  Not surprisingly volume, net of April and May, was pretty decent at 156,000 contracts.

Here's the New York Spot Gold [Bid] chart so you can see the Comex trading session in more detail---particularly the price capping shortly after London closed.

Silver did nothing in Far East trading as well, with the total volume under 2,000 contracts at the London open.  But once silver began to rally, it was obvious that there numerous times where a seller of last resort put in an appearance before prices got too far out of hand to the upside, especially in New York trading.  And, true to form, not only did JPMorgan et al cap the rally, but the also sold silver back down below $20 the ounce while they were at it.

The low and high ticks were reported as $19.785 and $20.23 in the May contract.  Silver finished the Friday session at $19.955 spot, up only 14 cents on the day---and it should have been obvious to all except the willfully blind, that it would have closed materially higher if allowed to do so.  Net volume was only 30,500 contracts, so "da boyz" had a pretty easy time keeping the price under wraps.

Platinum hit its low of the day shortly before London opened---and then rallied quietly until just about lunchtime in New York.  From there it traded sideways into the close.  Palladium didn't do much.  Here are the charts.

The dollar index closed late on Thursday afternoon in New York at 80.46---and then chopped sideways until around 8 a.m. EDT.  The index jumped around either side of unchanged for the next three hours before sliding a hair into the close.  The index finished the day on Friday at 80.43---virtually unchanged on the day.

The gold stocks jumped a bit over 2% at the open---and then hung in there until shortly after 11 a.m. when the gold price got capped.  After that the stocks quietly sold down for the remainder of the day, but managed to close just off their low.  The HUI barely finished in positive territory, up 0.67%.  I'm sure that the sell-off in the general equity markets was a factor in the gold stock's poor performance.

And as underwhelming as the performance of the gold stocks were, the silver stock did even worse, with Nick Laird's Intraday Silver Sentiment Index closing up a tiny 0.15%.

The CME Daily Delivery Report showed that 84 gold and 11 silver stocks were posted for delivery on Tuesday within the Comex-approved depositories.  JPMorgan and Canada's Scotiabank took delivery of most of the gold contracts.  The link to yesterday's Issuers and Stoppers Report is here.

There was another withdrawal from GLD yesterday.  This time an authorized participant withdrew 57,807 troy ounces.  And as of 8:11 p.m. EDT, there were no reported changes in SLV.

I forgot about Joshua Gibbons' updated SLV bar list in yesterday's column, so here it is now.  " Analysis of the 02 April 2014 bar list, and comparison to the previous week's list: 1,538,108.2 oz. were added (all to Brinks London), no bars were removed or had a serial number change.  As of the time that the bar list was produced, it was overallocated 28.8 oz.  145,922.1 oz. were removed Wednesday, but not yet reflected on the bar list."  The link to Joshua's website is here.

The U.S. Mint had a tiny sales report yesterday.  They sold 4,500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---100 platinum eagles---and zero silver eagles.  Week/month-to-date the U.S. Mint has sold 11,000 troy ounces of gold eagles---7,000 one-ounce 24K gold buffaloes---293,000 silver eagles----and 300 platinum eagles.  Based on these numbers, the silver/gold sales ratio is only 16 to 1.  However, I don't expect this low sales ratio to last too long, as the next big silver eagles sales report will change everything.

Over at the Comex-approved depositories on Thursday, there wasn't much in/out activity in gold, as only 16,274 troy ounces were reported received---and 199 troy ounces were shipped out.  Most of what was received went into JPMorgan's vault.  The link to that activity is here.

But it was a horse of an entirely different colour in silver---and by the time they parked the forklifts for the day, they reported receiving 1,243,515 troy ounces---and had shipped out an eye-watering 2,304,448 troy ounces of the stuff.  That action is definitely worth a quick look---and the link is here.

As far as yesterday's Commitment of Traders Report goes---as I was expecting, there was improvement in the Commercial net short positions in both gold and silver yesterday.

In silver, the Commercial net short position [total long positions minus total short positions in that category] declined by 3,313 contracts, or 16.6 million ounces---and the Commercial net short position now stands at 142.2 million troy ounces.

Ted Butler said that the raptors [the Commercial traders other than the Big 8] purchased about 4,100 new long contracts that the technical funds puked up as JPMorgan et al engineered the price lower.  But to add insult to injury, Ted also said that JPMorgan added 1,000 new short contracts to their already grotesque short-side corner---and their short position now sits at an even 20,000 contracts, or 100 million ounces. [Make note of that number, as it resurfaces in my discussion on the Bank Participation Report.]

In gold, the Commercial net short position declined by 13,592 contracts, or 1.36 million troy ounces.  The current net short position is now down to 11.40 million troy ounces.

Ted said that the decline in the Commercial category was virtually all raptor buying of the long contracts [13,400 in total] that the technical funds in the Non-Commercial category were forced to sell.  That number included the 3 or 4,000 contracts that JPMorgan added to their long-side corner in the Comex gold market---and their current long position stands at 43,000 contracts, or 4.3 million troy ounces. Remember that number for later as well.

As wonderful as the COT Report was, I was hoping for more, as the current net short positions in both gold and silver are nowhere near their record lows of late December.  Based on the price action of the last week, I'm not sure if we're going to revisit those lows again in this cycle or not.

As I said in this space yesterday, the numbers in the companion April Bank Participation Report [BPR] are extracted directly from the numbers in the COT Report, so we can compare apples to apples for this one day a month and discover what the world's bullion banks were up to during the last month.  The cut-off for both reports was at the Comex close on Tuesday.

I'll start with silver---and during the reporting month, the price of silver declined by about $1.75---but despite that fact, '3 or less' U.S. banks increased their short position in that metal by 1,852 contracts---and is now up to 20,600 contracts.  But from the COT Report above, Ted said that JPMorgan's net short position was an even 20,000 contracts.  So it appears that virtually the entire net short position in Comex silver held by all U.S. banks [3 or less according to the BPR] is, in fact, only held by one U.S. bank---and that's JPMorgan.  If two other U.S. banks [and they would be Citi and HSBC USA] actually held short positions in Comex silver, they would only be a few hundred contracts at most.  But a safe bet is that JPMorgan Chase is the only U.S. bank with a short position in silver---and the other two U.S. banks are now net long the Comex silver market.

Also in silver, 13 non-U.S. banks---and that's a minimum number--- decreased their net short position in Comex silver by 2,714 contracts.  These non-U.S. banks now hold 14,721 Comex silver contracts net short---and it's always been my opinion [since the October 2012 BPR came out] that Canada's Scotiabank holds well over half of that short position all by itself.  So if you take 8,000 of those 14,721 contracts and assign them to Scotiabank, the remaining 7,000-odd contracts or so divided up between the 12 [minimum] remaining non-U.S. banks become pretty much immaterial in the grand scheme of things.

Here's Nick's most excellent chart showing every Bank Participation Report in silver going back to the turn of the century---and the 'click to enlarge' feature works wonders here.  It's charts 4 and 5 that you should spend the most time on.  And as I say in conjunction with the silver BPR chart every month---note the August 2008 increase in the U.S. banks' short position.  That's when JPMorgan officially took over the silver short position from Bear Stearns.  And also note the blow-out in the Commercial net short position in the non-U.S. banks in October 2012.  That's when Canada's Scotiabank was outed---and had to report their Comex positions as a bank---and could no longer hide behind the skirts of their wholly-owned subsidiary Scotia Mocatta.

In round numbers, gold was down about $70 during the reporting month, however you'd never know that by the way the banks, both U.S. and foreign, reacted during that time.

In gold, '4 or less' U.S. banks that hold Comex contracts actually decreased their net long position by 11,039 contracts---and their net long position now sits at 14,565 contracts---and all of that decrease came from JPMorgan's long position.  Ted mentioned in the COT Report above that JPMorgan has a net long-side corner in Comex gold of 43,000 contracts on its own, so that means that the other 3 U.S. banks must hold a combined net short position of about 28,500 Comex contracts to make the numbers in the BPR balance out.  As to why JPMorgan holds a long-side corner in the Comex gold market---and the other 3 U.S. bullion banks are massively short---is still a mystery to me, but that's the way it's been for about a year now.

Also in gold, 21 non-U.S. banks also went shorter in gold during the reporting month, despite the price decline.  They increased their net short positions by a smallish 2,118 contracts---and their net short position now sits at 38,977 Comex contracts.  It's my opinion that a decent chunk of that is also held by Canada's Scotia Mocatta---at least a third, or around 13,000 contracts.  So the remaining 26,000-odd Comex contracts, once divided up between the other 20 non-U.S. bullion banks are, like in silver, basically immaterial.

In platinum, 4 U.S. bullion banks were short 12,828 Comex contracts, a decline of 2,525 contracts from the March BPR.  These four banks are net short 19.2% of the entire Comex platinum market---and it's a good bet that JPMorgan holds the lion's share of this grotesque short position.

Also in platinum, 13 non-U.S. banks decreased their net short position by 1,336 Comex contracts---and their combined net short positions now sits at 4,928 Comex contracts.  All together, these 13 banks are net short 7.4% of the entire Comex platinum market.  And as you can already tell, divided up between all 13 banks, their positions are immaterial.

In palladium, '3 or less' U.S. bullion banks increased their net short position in this metal to 9,653 contracts in the April BPR.  That's an increase of 1,205 contracts from the March BPR.  These '3 or less' U.S. banks---most likely dominated by JPMorgan as well---are net short 23.5% of the entire Comex palladium market.

Also in palladium, '13 or more' non-U.S. banks decreased their net short position in this metal down to 3,640 contracts, a decline of 773 contracts from the prior reporting month.  These '13 or more' non-U.S. banks are short 8.8% of the entire Comex palladium market---and even without doing the division, their individual positions are immaterial as well.

In a nutshell, JPMorgan went shorter in both silver and gold during the reporting month, even though prices were well down from a month earlier---and even the non-U.S. banks got into the act in gold as well, as they increased their net short position in the face of declining prices.  It's madness.

As I say every month, the precious metals price management scheme is 100% "Made in the U.S.A." with JPMorgan Chase as the capo di tutti capi---with Canada's Scotiabank thrown in for a little international "spice" in silver and gold.

I have a decent number of stories for you today, so I hope you have time over what's left of your weekend to read the ones that interest you.

¤ The Wrap

Setting an example is not the main means of influencing others; it is the only means. ~ Albert Einstein 

Today's pop "blast from the past" is from 51 years ago---and don't ask me what happened to all that intervening time.  He was an American singer-songwriter who was a teen idol when I was in my teens in early-to-mid 1960s.  His music was not only popular in North America, he was one of the few American recording artists to enjoy fame on both sides of the Atlantic.  It's been quite a number of years since I've posted it---and it's time for a revisit---and the link is here.

Today's classical blast from the past is an old chestnut by Peter I. Tchaikovsky.  It took him less than a month to compose his classic violin concerto in D major---but what work it was---and it's considered to be among the most technically difficult of all the violin concertos to play, but Dutch violinist Janine Jansen has no problems with it at all, as she and the Frankfurt Radio Symphony Orchestra toss it off in this 19 April 2013 recording posted over at youtube.com Internet site---and the link is here.  Watch it full screen---and turn the sound way up.

I was happy to see that "da boyz" were a no-show at the release of the jobs number yesterday, but it was equally as obvious that JPMorgan et al weren't going to let things get out of hand, either.

Here are the 6-month charts for both gold and silver.  As you can see, the gold price broke back above the 200-day moving average, but got stopped at the 50-day moving average.

Silver has quite a ways to go before it gets anywhere near its 50 and 200-day moving averages---and it could take awhile if the powers that be continue to hold silver under the $20 spot price mark.

The new situation that has arisen around Russia and the petrodollar could certainly develop into something, as a move away from the dollar in oil payments would certainly not be good news for the U.S. dollar---and we'll have to wait and see how this develops.

It's getting harder to believe that the powers that be can keep the current economic and financial system afloat much longer in the face of what is happening in the world today.  As I said yesterday, if push really becomes shove, then it's my opinion that Russia and China together could end the price management scheme in all four precious metals, but the side effects of that would be pretty enormous---and not all of them positive, at least not in the short term, as the upheaval would be felt world-wide.

But one thing it would end is the fortunes of all the world's rich commodity-producing countries that Chris Powell says "insist on being poor"---and that would change the economic, financial monetary situation in pretty short order.  You have to wonder whether Russia and/or China would chance it, but the fact of that matter is that the current financial order is on its last legs anyway---and it only remains to be seen whether these two countries will be proactive with this---rather than reactive.

Time will tell, I suppose---but how much time is impossible to know.  So we wait.

I'm done for the day---and the week.

Enjoy what's left of your weekend---and I'll see you here on Tuesday.

This is an abbreviated version of Ed Steer's Gold & Silver Daily Sign-up to have to the complete market review delivered to your email inbox each morning for free.

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