Thursday, May 22: Today in Gold and Silver
NEW YORK ( TheStreet) -- The gold price didn't do much of anything in Far East trading on their Wednesday. It's 'high' of the day came at noon Hong Kong time---and it began to slide from there, with a quick spike down at 2 p.m. EDT in the thinly-traded electronic market just to add insult to injury. From that low, it rallied quickly, but didn't make it quite back to unchanged by the 5:15 p.m. New York close.
The CME Group recorded the high and lows ticks as $1,296.30 and $1,282.90 in the June contract.
Gold closed in New York at $1,291.90 spot, down $2.40 from Tuesday's close. Net volume was 101,000 contracts.The price action was more or less the same in silver, with the low tick coming at the noon London silver fix. From there it rallied until London closed---and from there it got sold down again until 2 p.m. EDT. The price spike in silver at that time was up, not down. But it didn't move up by much---and then proceeded to trade flat for the remainder of the New York trading session. The high and lows ticks were recorded at $19.50 and $19.265 in the July contract. The silver price was closed at $19.385 spot, precisely unchanged from Tuesday. Volume, net of May and June, was 29,000 contracts, with 3,400 of that amount occurring in the September and December delivery months. Platinum tried valiantly to rally once again on Wednesday, but when all was said and done, it was only allowed to close up seven bucks. Palladium didn't do a thing---and what tiny gains it did post in New York trading, mostly disappeared in New York trading, closing up only three bucks. Here are the charts. The dollar index closed late Tuesday afternoon in New York at 80.04---and did nothing until about 2:30 p.m. Hong Kong time on their Wednesday afternoon, which was 7:30 a.m. in London. It slid to its 79.90 low around 9:45 a.m. BST, but what appeared to be a not-for-profit buyer picked up the ball and ran the index up to 80.25 just before the 1:30 p.m. Comex close in New York. From that high, it slid down to 80.07---and closed there, up only a small handful of basis points. The gold stocks gapped down about a half a percent at the open and proceeded to chop sideways until the sharp rally in gold began after the equally sharp sell-off at 2 p.m. EDT. From there they rallied a hair more, finishing ever-so-slightly in the black, as the HUI finished up 0.08%. The silver stocks sold off almost 2% at the open---and then headed lower from there. Only the sharp rally in silver shortly after 2 p.m. EDT in electronic trading saved the silver equities from a total rout. As it was, Nick Laird's Intraday Silver Sentiment Index closed down 0.78%. The CME's Daily Delivery Report showed that zero gold---and one lonely silver contract was posted for delivery within the Comex-approved depositories on Friday. The link to yesterday's Issuers and Stoppers Report is not worth posting but, in case you're wondering, JPMorgan did take delivery of that one contract in its in-house [proprietary] trading account. Picking up nickels in front of the proverbial steamroller, perhaps? Once again there was a withdrawal from GLD. This time it was a fairly substantial 85,925 troy ounces. And as of 9:08 p.m. EDT yesterday evening, there were no reported changes in SLV. I checked the ish are.com Internet site several times late last night---and again in the wee hours of this morning---and finally sometime after 3 a.m. EDT there was a change---as an authorized participant withdrew 1,125,782 troy ounces. There was no sales report from the U.S. Mint. In gold, there was 24,202 troy ounces reported received---and nothing reported shipped out at the Comex-approved depositories on Tuesday. All the activity was at Canada's Scotiabank---and the link to that is here. But it was a very decent in/out day in silver, as 820,759 troy ounces were reported received---and 724,061 troy ounces were shipped out the door. The link to that action is here. Here's a chart that reader Brad Robertson sent around yesterday. It's the 1-minute tick chart for gold showing the price action around the 2 p.m. EDT time period. Once again I have a decent number of stories for you---and I hope you find some of them of interest.
¤ The WrapMany assert that the giant concentrated short position is just a hedge. The eight largest shorts on the COMEX hold 320 million oz of silver futures net short, or an average of 40 million oz each. [JPMorgan's short position is almost a third of that amount at 100 million ounces. - Ed] The eight largest silver miners in the world produced 255 million oz of silver in 2013 and little change is projected for 2014. I don’t think any of that production or future production is hedged. So if the world’s largest silver miners haven’t hedged their production, what is the legitimate economic explanation for the concentrated COMEX short position?
The concentrated short position is a matter of public record and the mining company data are in the just-released Silver Institute annual review (by GFMS), as well as the recent release on silver by CPM Group, yet neither report made any connection. Let me state the obvious – in having sold more than what the eight largest miners produced, the eight largest COMEX shorts exerted more influence on price than did the miners with their real production. But since the short selling was in no way related to legitimate miner hedging, the price influence becomes illegitimate. COT data indicate a concentrated short position of 320 million oz is held by 8 traders and the annual silver reviews indicate the miners aren’t hedging. So what’s behind the giant COMEX short position? - Silver analyst Ted Butler: 17 May 2014 As far as I could tell, Wednesday was just another day of quiet price management in all four precious metals---and I have no idea of the meaning of vicious down/up spike in the gold price that occurred at precisely 2 p.m. EDT. We're still coasting along just under the 50-day moving average in gold---and the 20-day moving average in silver. Here are the graphs from stockcharts.com showing yesterday's trading data in both metals. As I write this paragraph, London has been open just under 10 minutes. Gold is up a few dollars---and silver is up less than a dime, but spiked higher by more than 20 cents right at the open. Both platinum and palladium are up a buck each. Volumes in both metals were microscopic during most of Far East trading, but have picked up a hair since the open, but are still very much on the lighter side. The dollar index isn't doing a thing. I haven't much to add to today's column. I'm just sitting here my belly-button lint brush waiting for the precious metal markets to hatch into something---and that will happen when it's allowed to happen---and the return of India as a buying force [of an amount yet to be determined] will certainly change the dynamics in the gold market to as yet-unknown extent. But, as the last paragraph in the Zero Hedge story on this issue posted in the Critical Reads section so succinctly put it, it depends on what the powers that be decide. How much more Comex paper will they throw at these markets until they toss in the towel and attempt to control prices from much higher price levels? Then the question begs to be asked as to what will become of the Big 4 and 8 short holders in both silver and gold---and the other two precious metals as well. Some entities are going to have to burn in hell on that rally, if that turns out to be the action plan. This is all speculation on my part, of course, but something has to give at some point. The fact that Russia bought 28 tonnes of gold in April will not be lost on "da boyz"---and if these purchases extend into the future, the physical drain should have an impact sooner or later, especially if you throw a resurgent India into the mix as well. And as probable as this scenario may be, the situation in silver is most likely beyond critical, as the turnover at the Comex-approved depositories indicates that all is not well in that physical silver market, either. The strikes in South Africa still show no signs of letting up---and one wonders what how much is left in the physical markets in both platinum and palladium as well. If there is inventory on Planet Earth, it's a well-guarded secret, as there's certainly not much sitting in the Comex warehouses. So, we wait. And as I hit the send button on today's column at 5 a.m. EDT, not much has changed now that London has been trading a couple of hours. The tiny rally in gold didn't amount to much---and the rather enthusiastic rally in silver got dealt with in the usual manner. Volumes in both gold and silver have picked up quite a bit, but still not what I would call overly heavy. Platinum and palladium are still trading around the unchanged mark---and the dollar index is up a handful of basis points. That's it for today---and I'll see 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