Friday, April 25: Today in Gold and Silver
NEW YORK ( TheStreet) -- [ Note: After three years without a break, I'll be taking some time off. There will be no Gold and Silver Daily next week. Ed]
Gold rallied a few bucks in Thursday morning trading in the Far East---and then gave that back, plus a bit more by shortly after 11 a.m. in London. Then the HFT boyz showed up---and the short sellers piled in behind them---and had the price down another 15 bucks by the 8:20 a.m. EDT Comex open. That turned out to be the low of the day. The subsequent rally gained back about half that loss by 9:30 a.m. in New York, before a major short covering rally began---probably instigated by the same traders that had gone short just hours before.
But as the gold price screamed higher in what had all the hallmarks of a "no ask" market, the sellers of last resort put in an appearance just as the gold price was about to take out the $1,300 spot price. In no time at all, the price was back below $1,290---and from there it crawled slowly higher for the remainder of the day.The CME Group recorded the low and high ticks as $1,268.40 and $1,299.00 in the June contract. Gold finished the Thursday session in New York at $1,293.90 spot, up $10.20 on the day. Volume, net of April and May, was enormous at 188,000 contracts. Silver did nothing in Far East trading on their Thursday---and began a slow decline that started around 2 p.m. Hong Kong time---and a few minutes after 11 a.m. BST in London, the same scenario unfolded in silver as occurred in gold. The low tick of the day came at the noon silver fix---which was a new low for this move down---and the subsequent short-covering rally got capped shortly before 10 a.m. EDT in New York---and before it could break above the $20 spot price. From there it traded more or less flat into the close of electronic trading. The high and low price ticks were recorded as $18.93 and $19.91 in the May contract---a 5% intraday move. The silver price closed yesterday at $19.65 spot, up 20 cents from Wednesday's close. Gross volume was over the moon at 135,636 contracts---and the net volume came in at 43,500 contracts, which was pretty chunky, but most of the total volume was of the HFT variety. Platinum and palladium both traded flat up until about 11:45 a.m. BST in London. Then both got sold down to their 8:30 a.m. EDT lows of the day before blasting higher. Their respective rallies got capped minutes after 10 a.m. EDT---platinum at $1,410---and palladium the moment it broke back through the $800 price mark. Here are the charts. It should be obvious to anyone with two open eyes---along with an open mind---that precious metal prices would have melted up to fantastic closing prices if JPMorgan et al hadn't shown up when they did. This was a Comex rig job to the downside---and the upside. The dollar index closed at 79.86 late on Wednesday afternoon in New York---and except for a 2-hour long up/down spike between 8 and 10 a.m. EDT, the index crawled lower for the day, finishing the Thursday session at 79.77---down 9 basis points. It should come as no surprise that the precious metal price action yesterday had zero to do with what was happening in the currency markets. The gold stocks gapped down at the open, but rallied smartly the moment that the short covering rally commenced. The rally in the gold stocks also ended the very second that the rally in the gold price ended as well. There was no spill-over/follow-through at all---and the shares continued to sell off as the day went on, even though the gold price was working its way quietly higher for the remainder of the New York session. The HUI finished down 1.69%. The silver stocks also followed exactly the same price path---and despite the fact that silver finished up a percent, Nick Laird's Intraday Silver Sentiment Index closed down 1.14%. You have to wonder if the counterintuitive buyers of gold and silver stocks on Tuesday and Wednesday, when prices were stinking up the place, were the sellers yesterday. John Embry called me late last week---and we he's still very much of the opinion that precious metal equities are just as managed as the metal itself. I have no trouble agreeing with him---especially after yesterday's share price action. The CME's Daily Delivery Report showed that 1 gold and 12 silver contracts were posted for delivery within the Comex-approved depositories on Monday. JPMorgan was the short/issuer on all 12 silver contracts---and Canada's Scotiabank stopped all 12. The link to yesterday's Issuers and Stoppers Report is here. There were no reported changes in GLD---and as of 10:30 p.m. EDT yesterday evening, there were no reported changes in SLV, either. While on the subject of SLV--- Joshua Gibbons, the " Guru of the SLV Bar List ", updated his website with the goings-on inside SLV as of their weekly reporting date---and this is what he had to say: "Analysis of the 23 April 2014 bar list, and comparison to the previous week's list---1,729.971.4 oz were added (all to Brinks London). No bars were removed or had serial number changes. The bars added were from Kazzinc (0.4M oz), Solar Applied Materials (0.3M oz), Kazakhmys (0.3M oz), and 5 others. As of the time that the bar list was produced, it was overallocated 34.6 oz. All daily changes are 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 1,500 troy ounces of gold eagles---and 500 one-ounce 24K gold buffaloes. Once again there were no reported in/out moments in gold over at the Comex-approved depositories on Wednesday. But there was decent movement in silver, as 600,334 troy ounces were reported received---all into CNT---and 1245,600 troy ounces were shipped out. The link to that activity is here. Here are a couple of neat photos that reader M.A. sent my way from his recent trip---and I though they were worth sharing. If you want to read more about this giant gold nugget, the link is here. I have the usual number of stories for a weekday column---and I hope you find some in here that interest you.
¤ The WrapI suppose a rejoinder to silver's compelling undervaluation leading to eventual outstanding investment performance might be if JPMorgan and the other commercial crooks on the COMEX were able to continue to manipulate the price indefinitely thru additional short contracts. While this can extend silver's undervaluation in terms of time, it cannot last forever. Additional paper short sales by JPM and the crooks will blow up in their faces at some point, or the COMEX will shut down. That's because selling additional paper contracts short will not satisfy physical demand in excess of physical supply. That day must come, for no other reason than silver is the cheapest asset in the world. - Silver analyst Ted Butler: 23 April 2014 It's obvious that "da boyz" have to have gonads the size of church bells for what they pulled yesterday, as it was an engineered price decline, followed almost immediately by a price capping at all the important price levels on the short covering rally that followed, as the technical funds were whipsawed in a matter of hours, as JPMorgan et al painted a textbook chart pattern of a 'key reversal' pattern to the upside. Those were the high/low lights of the price action yesterday that Ted Butler mentioned on the phone yesterday. I said in my closing remarks in Thursday's column that " the price/volume activity between now and the Comex close on Tuesday, could prove interesting"---but even I was taken aback by the price action in light of the fact that we're in the final days of roll-overs out of the May contract. And as I said at the top of the column, if the sellers of last resort hadn't put in an appearance in all four precious metals when they did, we would have probably been looking at record high closing prices by the time the trading day was done in New York. Here are the 6-month charts for both gold and silver---and it's obvious that the good folks over at stockcharts.com have a small problem, as there are two separate candles for yesterday's price action in both metals. I noticed that seven hours ago when I first started writing this column---and I was hoping they would have it fixed by now, but obviously not. Looking at the preliminary volume numbers from the CME's report that came out in the wee hours of this morning EDT, I see that gold's open interest blew out by 6,656 contracts--but silver's total o.i. actually declined by 800 contracts. I'm not prepared to read much into this, as I've learned from hard [and rather embarrassing] experience, that these numbers can be misleading. So we'll just to wait until next week's Commitment of Traders Report next Friday. But anything could, and probably will happen between now and then to mask yesterday's action, so we may never find out. Both Ted and I felt that we saw the bottom in both gold and silver prices for this move down yesterday---and probably platinum and palladium as well. Time will tell, of course, but I feel very comfortable putting my marker down here. The other thing I noticed when I looked at the CME's Preliminary Report is that over half of the remaining gold open interest in the April delivery month got sold or rolled yesterday---and there are only 321 contracts left. They could disappear the same way as well---and we'll know by next Tuesday which way it turns out. And as I write this paragraph at 3:52 a.m. EDT, I note that there was absolutely no price follow-through in Far East or early morning London trading on their respective Fridays. Right now prices are flat in three of the four precious metals---and silver is down 12 cents. Gold volume is incredibly light, a hair above 18,000 contracts, with virtually all of it in the current front month. Net silver volume is light as well---and roll-overs are very heavy for this time of day. Despite the monstrous volume in silver yesterday, the CME's Preliminary Report showed that only 7,161 contracts disappeared out of the May contract, so there's a lot to go with 36,197 showing still open. And as I said yesterday, the volume will have to be fast and furious over the next four [now three] business days---and it was all of that yesterday, with much more to come. It will be interesting to see how many contracts are posted for delivery on First Notice Day. That data will be up on the CME's website late on Tuesday evening EDT. As I get ready to hit the send button on today's column at 5:20 a.m. EDT, I see that not much has changed in London trading. All four precious metals are marginally higher, but nothing worth hanging one's hopes on. Gold volume is now north of 21,000 contracts, which is still pretty light, but all of it's in the current front month, so it's obviously HFT related in some way. Net silver volume is also very light---and roll-overs continue unabated. The dollar index isn't doing a thing. After yesterday's price action, all bets are off going forward. And as I've already state, it's my [and Ted's] opinion that the bottom was in yesterday---and nothing will surprise me when I check the charts later this morning. Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see you here tomorrow.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts