This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Wednesday, May 28: Today in Gold and Silver

NEW YORK ( TheStreet) -- The selling pressure that began at noon Hong Kong time never let up---and got demonstrably worse starting at 1 p.m. BST in London, which was 20 minutes before the New York open.  The major damage was done by 11 a.m. EDT, but gold continued to slide from there---and closed on its absolute low tick

The high and lows were recorded by the CME Group as $1,294.80 and $1,263.20 in the June contract.

Gold finished the Tuesday session at $1,263.30 spot, down $29.20 on the day.  Gross volume was over the moon at 351,000 contracts, but once the roll-overs were taken out, the net volume fell down to 152,000 contracts, which was still a very chunky amount.

It was almost the same price action in silver.  The smallish recovery off the noon EDT low got snuffed out just before 4 p.m. in electronic trading in New York---and silver, like gold, was closed virtually on its low of the day.

The high and low price for Tuesday was recorded at $19.50 and $19.025 in the July contract.

Silver closed in New York yesterday at $19.035 spot, down 40.5 cents.  Volume, net of May and June, was huge at 63,500 contracts.  Of that amount, a bit over 5,800 contracts was traded in the September and December delivery months.  And if they were roll-overs out of July, the net volume was still monstrous.

Platinum wasn't spared, either, with its low coming in New York moments after Zurich closed.  The price recovered a bit and finished the day about seven bucks off its low---and down fourteen bucks from its Monday 'close'---and down nine bucks from Friday.

Palladium attempted to rally in the early going in the Far East on their Tuesday.  However, that wasn't allowed to last---and the palladium price traded down a few dollars and was actually up a buck by 10:15 a.m. EDT.  Then a HFT/not-for-profit seller showed up---and by 11 a.m. palladium was down a percent.  But from that low, it rallied back to close exactly unchanged from Monday---and up five bucks from Friday's close.

There was absolutely no reason whatsoever for the precious metals to get hammered yesterday.  I would bet that this was entirely option and futures expiry related.

The dollar index finished the Monday 'trading' session at 80.29---and then dropped to its 80.17 low early in Far East trading on their Tuesday.  A not-for-profit buyer was waiting in the wings to prevent the index from falling any lower---and the subsequent rally to its 80.47 high ran out of gas shortly after 1 p.m. in New York.  From there it slid down to 80.35---and closed the Tuesday session at 80.36.

Here's the dollar index chart starting right from the 6 p.m. New York open on Sunday evening EDT.

The HUI gapped down more than a percent at the open---and headed lower.  The bottom came shortly after 1 p.m. EDT---and from there the gold stocks traded sideways.  The HUI finished down a whopping 4.09%.

The silver equities followed a similar chart pattern---and Nick Laird's Intraday Silver Sentiment Index closed down a chunky 4.05% as well.

As bad as the performance of the precious metal shares were yesterday, don't forget one important thing.  As sellers were dumping them in a panic, there was someone there with very deep pockets buying everything that was being thrown overboard.  This is the really smart money.  On the other hand, of course, it could be "da boyz" scooping them up to dump them into the next rally in order to kill it when it occurs.  But I doubt that at this stage of the game.  However, it would be remiss of me not to mention it as a possibility.

The CME Daily Delivery Report showed that zero gold and 18 silver contracts were posted for delivery tomorrow.  Jefferies issued 16 of those contracts---and Scotiabank and JPMorgan stopped 17 of them.  The link to yesterday's Issuers and Stoppers Report is here.

Just checking the CME's Preliminary Report, there's not much left to deliver in either gold or silver in the May delivery month---a small handful in gold, maybe---along with a bigger handful in silver.  But whatever is left, has to be done by the end of the week.

Much to my amazement, there was a big deposit in GLD yesterday, as an authorized participant added a chunky 249,609 troy ounces.  Based on the price action over the last week, there certainly was no justification for the deposit---and the only explanation that makes any sense is that it was used to cover an existing short position.   And as of 9:36 p.m. EDT yesterday evening, there were no reported changes in SLV.

It will be interesting to see how much gold and silver is withdrawn from both these ETFs after yesterday's engineered price declines in both metals.

I see that the good folks over at shortsqueeze.com updated their website with the changes in the short positions in both GLD and SLV up to mid-May.  In SLV, the short position declined by 12.68%---from 14,902,600 shares/troy ounces, to 13,012,900 shares/troy ounces.  That translates into just under 405 metric tonnes.

The short position in GLD actually rose 3.26%, a rather immaterial amount.  GLD currently has a naked short position of 11,902,700 shares, or 1.19 million troy ounces.

There was a sales report from the U.S. Mint yesterday, but it was hardly impressive.  They sold 4,000 ounces of gold eagles---and 201,500 silver eagles.  There have been no big silver eagles sales reported for the last week or so---and Ted Butler is coming to the opinion that the big buyer of silver eagles over the last year or so, may have stepped to the sidelines.  We'll should certainly have a better grasp of this by the end of the week.

While on the subject of retail bullion sales, I can speak from first-hand knowledge that A-Mark, one of the largest precious metal wholesalers in the U.S., said last week that business is virtually nonexistent.  Except for the last few days, it's been that way at our store as well.

Over at the Comex-approved depositories on Friday, they reported receiving 96,450 troy ounces of gold, all of which went into JPMorgan's vault.  They didn't ship any out---and the link to that activity is here.

For a change, there wasn't much activity in silver, as only 58,575 troy ounces were reported received---and 99,314 troy ounces were shipped out the door.  The link to that action is here.

I have the usual number of stories for a mid-week column---and there should be a few posted below that you'll find of interest.

¤ The Wrap

Whether silver prices move high enough is a function of how aggressive the raptors are in liquidating their record net long position and how aggressive JPMorgan and the 7 other big shorts are in adding new short contracts. This is the key unknown. But what is clearly known is that the current concentrated short position of nearly 317 million oz is already so large that it proves the silver manipulation on its face. That the position has no hedging or economic legitimacy makes it outrageous to even contemplate that it may increase further. If there is one thing to focus on in silver, it is what happens to this criminal concentrated short position in COMEX silver. - Silver analyst Ted Butler:  24 May 2014

Well, a more obviously orchestrated bloodbath could hardly be arranged, or imagined.  As Jim Rickards said in his interview with Greg Hunter in yesterday's column: "One of the things I said about gold manipulation is if I was the manipulator, I would be embarrassed at this point.  The manipulation is obvious.  The evidence is coming in from all directions. The manipulation is clear."

As I said in yesterday's column, Tuesday was options expiry---and the HFT boyz made sure that as many options as possible expired out of the money.  It was a situation similar to the Barclays trader that got caught rigging the London p.m. gold fix to screw his client on options expiry, except that yesterday's move was orchestrated by many players all day long---and had nothing to do with the fixes.  It was strictly a Comex affair, aided and abetted by the CME Group.

Today is the last day for the big traders to roll-out of their futures contracts in the June delivery month---and by the end of Comex trading on Thursday, everyone else has to be out as well, except those contract holders who are standing for delivery.  First Day Notice data will be up on the CME's website by around 10 p.m. EDT on Thursday---and I'll have it all in Friday's column.

Here are the 6-month charts for both gold and silver---and the engineered price declines in both metals stand out like the proverbial sore thumbs that they are.

Well, my hat is off to Ted Butler, as he has always said that there was room for a big move down in gold---and this is how I broached the issue in yesterday's column---" The only thing we're waiting for is to see how JPMorgan et al react when we break out from here.  Silver is pretty much done to the downside, but  the question in gold still remains---will it break up or down?  As Ted Butler has pointed out on numerous occasions, the technical funds still aren't completely loaded up on the short side, so there's room to go to the downside if the HFT traders that do the dirty work for "da boyz" are instructed to go that route."

It's obvious that they were.

Ted figures that, based on volume and price action yesterday, there could have been as much as a 2 or 3,000 contract improvement in the Commercial net short position in silver---and 20 to 30,000 in gold.  Ted also mentioned that JPMorgan et al could also tag the Comex gold market for another 60,000 contracts or so, as that would top up the short positions of the technical funds where they were at the last low.  Ted also said he wouldn't be at all surprised if we saw the bottom yesterday, either.  So we wait.

And as I write this paragraph, the London open is less than 5 minutes away.  Both silver and gold set new lows for this move down in early trading in the Far East---and "da boyz" broke silver below the $19 mark on a few occasions as well.  Both are now trading unchanged from their Tuesday closes in New York.  Net volume in gold is very light---less than 7,000 contracts---with the vast majority of trading involving roll-overs out of the June contract.  Silver's volume is rather light as well, about 5,500 contracts in July.  Platinum and palladium have been more or less holding their own---and the dollar index isn't doing a thing.

Well, with yesterday being a monster day in both volume and price action---and the cut-off for this Friday's Commitment of Traders Report as well---the usual question begs to be asked as to how much of Tuesday's trading data will show up in it.  It should all be reported in a timely manner, of course.  But as you already know, they can be very tardy about reporting it, if it suits JPMorgan et al---and it certainly may suit them on this occasion.

Here's the " Global Indices" chart that Nick Laird slid into my in-box yesterday evening.  It shows the state of the stock market bubble---and as you can tell, the powers that be keep blowing it up ever bigger.

And as I prepare to hit the send button on today's missive at 5:05 a.m. EDT, not much has changed since the London open at least as far as gold, silver and platinum are concerned, as their prices have barely moved in the last couple of hours.  However, palladium has spiked up a percent.  Gold volume isn't overly heavy, but two thirds of what there is, is roll-overs out of June---and silver's volume is about average, with virtually all of it in the July contract.  The dollar index is now up 6 basis points.

Once again, I have no idea what's in store for us as far as price action is concerned as the Wednesday trading session progresses.  But I do know that gold volume will be substantial, regardless.  Let's just hope the worst is over.

See you tomorrow.

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.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs