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TheStreet Open House

Saturday, June 14: Today in Gold and Silver

NEW YORK ( TheStreet) -- The Friday trading session in gold was very similar to Wednesday, as nothing much happened in price or volume terms.  It traded more or less flat throughout Far East and early London trading---and only developed a positive bias worthy of the name starting at the Comex open.  Even that six dollar 'rally' got sold down a couple of bucks in the last hour of electronic trading in New York.

The low and high ticks aren't worth my effort to look up.

Gold finished the day at $1,275.90 spot, up $2.80 from Thursday's close.  Volume, net of  June and July, was 86,000 contracts.

The silver price pattern was virtually a carbon copy of what happened in gold---and their respective charts are almost interchangeable.

The low and high price ticks were recorded by the CME as $19.47 and $19.72 in the July contract.

Silver closed the day on Friday at $19.67 spot, up 14.5 cents.  Net volume was 29,500 contracts, which is about 25 percent more volume than I wanted to see on a day like yesterday.

Platinum rallied ten bucks by 8:30 a.m. Hong Kong time on their Friday---and was still up that amount by 10 a.m. in Zurich.  But by the open of the equity markets in New York, the price was down 11 bucks from Thursday's close---and didn't do much after that.  It closed the day down another 13 dollars from its 37 buck loss on Thursday.

The palladium chart was similar to the platinum chart in many respects, except that the low came shortly after 2 p.m. in Zurich.  The price recovered from there, but sold off as the trading day in New York progressed.  Palladium close down 12 dollars on the day.

The dollar index closed late on Thursday afternoon at 80.59---and then didn't do much until 2 p.m. in Hong Kong when it began to head lower, hitting its low tick of 80.45 around 9:20 a.m. BST in London.  But by half past lunchtime over there, the index was back up to 80.67---and the slid a handful of basis points as the trading day in New York advanced.  The index closed at 80.62, virtually unchanged from Thursday's close.

The gold stocks gapped down at the open, hitting their lows at the London p.m. gold fix---and really didn't start rallying with any authority until noon in New York.  They managed to make it back into the green just before the close--and the HUI finished up 0.12%.  It's better than the alternative.

It was much the same trading pattern for the silver equities, but the trading range was larger.  However, despite that fact, the silver stocks managed to close in the black as well, up 0.33%.

The CME's Daily Delivery Report showed that 103 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The largest short/issuer was Jefferies with 100 contracts and, with the exception of Canada's Scotiabank and HSBC USA, it was "all the usual suspects" as long/stoppers.  You can check you yesterday's Issuer and Stoppers Report by clicking here.

There were no reported changes in GLD---and as of 9:43 p.m. EDT on Friday evening, there were no reported changes in SLV, either.  It's been over a week since these current rallies in both gold and silver began---and as the close of business on Friday, not one troy ounce of either metal has been deposited in these ETFs.  As a matter of fact, 1.2 million ounces of silver have actually been withdrawn from SLV during that period.

There were no reported sales from the U.S. Mint yesterday.

It was pretty quiet in gold over at the Comex-approved depositories on Thursday, as nothing was reported received---and only 996 troy ounces were reported shipped out---all out of Canada's Scotiabank.

But it was a lot more active in silver, as 285,726 troy ounces were reported received---and 523,767 troy ounces were reported shipped out.  The link to that action is here.

As expected, yesterday's Commitment of Traders Report, was not happy reading---at least in silver---and there's no way to sugar-coat it.

In silver, the Commercial net short position blew out by an eye-watering 4,682 contracts, or 23.41 million ounces.  To put that amount of paper silver into some sort of perspective, just under 16 million ounces of real silver was dug out of Planet Earth during the same reporting week.  That big blow-out in the Commercial net short position occurred on the back of a measly 40 cent price increase during the reporting week.  The Commercial net short position is now back up to 71.6 million ounces.

Ted said that it appeared that JPMorgan increased their net short position by something less than a thousand contracts---and the 'Big 8' short holders [which includes JPM] increased their total net short position by a bit under 2,000 contracts.  So it wasn't all raptor long selling that controlled a rising price as the technical funds covered short positions---it was also the 'Big 8' increasing their short position as well.

The COT Report for gold was a bit of a surprise.  The Commercial net short position actually declined by 294 contracts, not even a decent sized rounding error.  That was despite the fact that gold rose about 16 bucks during the reporting week.  Nothing to see here.  I think Ted mentioned that JPMorgan sold a few hundred contracts of its long-side corner in the Comex gold market, but that was about it.

Here's Nick Laird's classic " Days of World Production to Cover Short Positions" for every physically traded commodity on the Comex.  Last week, the 'Big 8' were short 141 days of world silver production---and in this week's chart they're now back up to 145 days, about ten million ounces worth---and right in line with Ted Butler's number of around 2,000 Comex contracts.

I have a pretty decent number of stories for your Saturday/Sunday reading pleasure---a few of which have been sitting in my in-box waiting for a spot in today's column.  I hope you have time to read the ones that interest you.

¤ The Wrap

If there is one single factor responsible for the long term silver manipulation it is the concentrated short position, of which JPMorgan has been the kingpin of since acquiring Bear Stearns in 2008. Given all the history, circumstances and stakes to certain large financial and regulatory institutions, I’m convinced that the price of silver would have already blown off were it not for the concentrated short position.  The concentrated silver short position was always too large; as became clear in time by the damage it did to Bear Stearns. It also seems clear that because the concentrated short position was transferred to JPMorgan, the regulators have looked aside as JPMorgan and the CME Group resorted to a series of dirty tricks to assure silver prices would decline so that the concentrated short position could be protected and reduced. - Silver analyst Ted Butler: 07 June 2014

Today's pop 'blast from the past' will only be familiar to Canadians of a certain vintage, as it was a fairly big hit in this country in its day, although it did make it to #56 on Billboard's Top 100 in the U.S. back in 1979 when it was released.  It was the one and only hit of a German-Canadian group called Deliverance.  I posted this years ago when I first found it on Youtube---and in my humble opinion it's worth revisiting.  The link is here.

Today's classical 'blast from the past' is the Adagio from the Concierto de Aranjuez by Spanish composer Joaquín Rodrigo, which he wrote in 1939.  Very little music was every written for the guitar and orchestra---as an acoustic guitar tends to get buried even during the quiet passages---and every time I've heard the guitar with orchestra, it's always been miked---which is OK.  If I had to pick the most beautiful piece of music ever written for guitar and orchestra---this is it, as it's one of the most recognizable works in 20th century classical music.  The link is here.  Enjoy!

It was another quiet trading day on Friday.  Gold volume was pretty quiet, but as I stated further up, silver's volume was quite a bit higher than I wanted to see---and it's entirely possible that there was quiet short covering going on by the technical funds in silver now that all [except the 200-day] the moving averages have been broken to the upside.  Once again, the preliminary volume numbers for Friday from the CME Group didn't help clear up the situation much.

Here are the 6-month gold and silver charts updated with Friday's price data.  The moving averages plotted are the 25 and 50-day.

As I mentioned further up in this column, we've been in rally mode in both gold and silver for about two weeks now---and there are still no deposits being made into either GLD or SLV.  This is a situation that I'll be watching with great interest---and some concern.  I'm expecting/hoping that all the required gold will show up in GLD, but my major concern is with SLV, because if the authorized participants [read JPMorgan] can't rustle up the metal, they'll short the shares in lieu of---and possibly engineer a price decline in the future that will allow them to buy back those short positions without ever having to deposit the metal itself.

That's why I consider both these ETFs, but SLV in particular, to be totally fraudulent. The current short position in SLV is north of 14 million ounces/shares---and it will be interesting to see what the new short position in this ETF [as of the close of trading yesterday] will be when the numbers show up on the shortsqueeze.com Internet site towards the end of this month.

And as Eric Sprott pointed out in his comments in the last story of the day posted above, there appears to be a gold shortage looming on the horizon---and if that's truly the case for gold, then the coming silver shortage will dwarf that.  It would be here now if the short holders in SLV were required to deposit the equivalent amount of metal, which is why they authorized participants will short the shares, because buying and delivering the physical metal itself would explode the price.

I don't know about you, dear reader, but in my almost 66 years on this planet, I don't remember a time [except for maybe the Cuban missile crisis back in the 1960s] where the whole world seems about to float off the rails.

How long can this charade last, you ask?  It beats the hell out of me, but the closer to the end we get, the more I've convinced that it will end with a bang, rather than a whimper.  So we wait.

That's it for the day---and the week.

See you 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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