Saturday, March 8: Today in Gold and Silver

NEW YORK ( TheStreet) -- I was so wrapped up in yesterday's Commitment of Traders Report, plus the companion Bank Participation Report, that I completely forgot about the job numbers report due out at 8:30 a.m. EST on Friday.

However, JPMorgan et al were kind enough to jog my memory with their usual signature performance, as both gold and silver [along with some spill-over into platinum] got taken out out to the proverbial woodshed.

The gold price didn't do much in Far East trading, hitting its interim low around 9:30 a.m. in London.  From there it rallied quietly back to unchanged from Thursday's close by the 8:30 a.m. EST jobs number release.  Then gold got smacked for almost twenty bucks, before rolling over and hitting its absolute low at 9:30 a.m. EST.  From that point, the price rallied ten bucks in the next couple of hours before trading sideways from about 11:20 a.m. EST into the 5:15 p.m. electronic close in New York.

The CME Group recorded the high and low price ticks as $1,353.20 and $1,326.60 in the April contract.

Gold closed on Friday at $1,339.50 spot, down $10.90 from Thursday.  Net volume was 155,000 contracts, which was 40% higher than Thursday's net volume.

The silver price barely moved during Far East trading on their Friday.  However, the moment that London open, it got sold down to its interim low at the same time as gold.  The subsequent rally didn't quite make it back to Thursday's closing price in New York before the jobs number came out, but it was close.  After that, the chart pattern was a virtually carbon copy of what went on in gold.

The high and low prices were recorded as $21.61 and $20.755 in the May contract, an intraday move of more than 4%.

Silver closed in New York yesterday afternoon at $20.885 spot, down 55 cents from Thursday's close.  Volume, net of March and April, was very chunky at 66,000 contracts.

The platinum price experienced a mini version of what happened to both gold and silver---and palladium got smacked about 8:30 a.m. GMT in London, and then spent the rest of the day clawing its way back to unchanged on the day.  Here are the charts.

Along with gold, silver and platinum---copper really got clobbered, as JPMorgan et al engineered a price decline in that metal that would make your eyes glaze over.  Ted Butler pointed this out to me on the phone yesterday---and I just know that he will have much more to say about it in his weekly commentary this afternoon, but I thought I'd just mention it briefly here.  Here's the 6-month chart that shows just how ferocious the attack on copper was, as it 'lost' 13.8 cent a pound [4.27%] in one trading session

The dollar index closed late Thursday afternoon in New York at 79.65---and began to develop a slight negative bias starting about an hour before the London open.  From there it drifted lower---and then rallied sharply off its 79.45 low tick at the release of the job numbers.  The high tick [79.84] came about a minute or so before 9 a.m. in New York---and from there it drifted lower as the Friday trading session drew to a close.  The index closed at 79.71, which was up 6 basis points from Thursday's close.

Not surprisingly, the gold shares gapped down at the open, hitting their low of the day around 9:50 a.m. in New York.  From that point they rallied a bit until shortly after 10 a.m.---and then chopped sideways for the remainder of the day.  The HUI finished down 1.66%.

The silver equities got sold down about 3% at the open---recovered a bit---and then gold sold off again.  A tiny rally at the end cut the loses, but Nick Laird's Intraday Silver Sentiment Index still closed down 2.87%.

The CME Daily Delivery Report was surprise, as no contracts were posted for delivery in either gold or silver next Tuesday.  According to the CME's preliminary volume/open interest data for the Friday trading day, there are still about 600 silver contracts open in March.

Another surprise was the fact that an authorized participant added some gold to GLD yesterday, as they reported depositing 48,188 troy ounces of the stuff.  And as of 9:48 p.m. EST last evening, there were no reported changes in SLV.

Joshua Gibbons, the "Guru of the SLV Bar List," updated his website with SLV's data from the close of trading on Wednesday---and here's what he had to say:  " Analysis of the 05 March 2014 bar list, and comparison to the previous week's list---1,009,552.5 troy ounces were added (all to Brinks London), 840,890.5 troy oz were removed (all from Brinks London), and 455 bars had a serial number change.

"The bars added were from: Russian State Refineries (0.5M oz), Krasnoyarsk (0.2M oz), JSC (0.1M oz), and 3 others. The bars removed were from: Russian State Refineries (0.4M oz), Krasnoyarsk (0.1M oz), Yunnan Copper (0.1M oz), Britannia Refined Metals (0.1M oz), and 9 others.

"The bars removed were all bars that had been in SLV for quite a few years; the bars added had never been in SLV before.  As of the time that the bar list was produced, it was overallocated 99.8 oz.  All daily changes are reflected on the bar list."  The link to Joshua's website is here.

There was a smallish sales report from the U.S. Mint on Friday, as they reported selling another 140,500 silver eagles---and that was all.

Month-to-date the mint has sold 2,000 ounces of gold eagles---4,000 one-ounce 24K gold buffaloes---and 1,100,000 silver eagles.  Based on these sales, the silver/gold sales ratio checks in at 183 to 1.  Year-to-date this sales ratio is 53 to 1---which is an amazing in its own right.  Ted will have a lot to say about this in his column today as well.

Over at the Comex-approved depositories on Thursday, they reported receiving 100 kilobars of gold and shipped out 3 kilobars---all from the Scotia Mocatta warehouse.  The link to that activity is here.

There was much more activity in silver, as 392,443 troy ounces were received---and 1,304,799 troy ounces were reported shipped out.  The bulk of the in/out activity was at Scotia Mocatta as well---and the link to that action is here.

After expecting the worst with this week's Commitment of Traders Report, I ended up getting something quite a bit less than that.  Yes, there was deterioration in the Commercial net short positions in both gold and silver, but not was bad as I was expecting.

In silver, the Commercial net short position declined by only 784 contracts, or 3.9 million ounces of silver.  The total Commercial net short positions now sits at 198.8 million ounces, which is miles off its December 2013 low.  Ted Butler said that the raptors [the Commercial traders other than the Big 8] sold 2,200 of their long positions---and surprisingly enough, JPMorgan bought back about 500 contracts of its short-side corner in the Comex silver market, which Ted says is down to 18,000 contracts---still an outrageous number.

In gold, the Commercial net short position increased by only 4,486 contracts, or 448,600 troy ounces.  The Commercial net short position in gold currently sits at 12.1 million troy ounces.

Ted says that JPMorgan sold 5,000 contracts of their long-side corner in the Comex gold market---which is now down to 53,000 contracts, or 5.3 million ounces.

Although I was relieved that the report wasn't as bad as I was expecting, it still doesn't change the fact that JPMorgan et al have been aggressive sellers of last resort as these rallies have unfolded, particularly since both gold and silver crossed their respective 200-day moving averages.

As I've been saying for the last few weeks, "da boyz" could pull the plug on these rallies at any time---and ring the cash register while they're at it.  But, on the other hand, they could let them run for as long as they want by just putting their hands in their pockets and not selling long positions or buying short positions as aggressively as they have.  But just looking at the 1-year gold and silver charts, it appears that the tops of these current rallies are already in.

However, with things the way they are in the world right now, it may not be as easy for them this time around---but as I said in The Wrap yesterday---I'm always on the lookout for "in your ear."  So should you.

The March Bank Participation Report [BPR] couldn't have been much worse than it was---and as I go through it, please don't forget that because the BPR data is extracted from the above COT Report, for this one day a month we can compare the data from one report directly with the other.

In gold, 4 U.S. banks reduced their net long position by 18,118 Comex contracts---and is now down to 2.56 million ounces.  Since Ted says that JPMorgan's long position [from the above COT Report] in gold is about 5.3 million ounces, this means that the other 3 U.S. banks have to hold a collective net short position or 2.74 million ounces of gold in the Comex futures market.

Also in gold, 22 non-U.S. banks increased their net short position by 6,751 Comex contracts in the March BPR.  Their collective net short position now sits at 3.69 million ounces.  I suspect that a decent chunk of that is owned by Canada's Scotiabank---so when you divide up what's left of that 3.69 million ounces between the other 21 non-U.S. banks, their respective short positions don't amount to much---and border on immaterial.

Here's Nick's BPR chart for gold.  The "click to enlarge" feature really helps.  Charts 1 and 2 are self-explanatory---but it's charts 3, 4 and 5 that contain the data I refer to above.  In Chart 5 it's also easy to see where JPMorgan switched from being net short the Comex gold market, to being net long.  The data showed up in the June BPR, so the actual event happened in May.

In silver, 3 or less U.S. banks increased their net short position in Comex silver by 4,672 contracts since the February BPR.  The net short position held by the '3 or less' banks is back up to 18,748 contracts, or 93.7 million ounces.  As Ted mentioned in his comments in the COT Report above, JPMorgan's short position in Comex silver is about 18,000 contracts, so it's obvious that if 2 other U.S. banks hold any short positions in Comex silver at all, their positions are immaterial---and it's entirely possible that there is only one U.S. bank holding short positions in the Comex silver market---and that's JPMorgan Chase.

Also in silver---and assuming that there are 3 U.S. banks holding Comex silver contracts---there are 12 non U.S. banks that hold Comex silver contracts.  Their net short position increased by exactly 3,300 contracts from the February BPR---and currently totals 17,437 Comex contracts, or 87.2 million troy ounces.  It's my opinion that well over 50% of that 87.2 million ounces is held by Canada's Scotiabank, so if you divide the remaining ounces up between the 11 remaining non-U.S. banks, their positions are immaterial as well, especially when you consider the fact that somewhere between 90 and 100% of the 18,748 contracts held by the '3 or less' U.S. banks are held by just one U.S. bank.

Here's the Bank Participation Report in silver---and it reads the same as the one for gold.  Two things of note here in Charts 4 and 5---and the first is the blow-out of the U.S. banks' short position back in August 2008 when the Comex short positions held by Bear Stearns were taken over by JPMorgan Chase---and the October 2012 blow-out of the non-U.S. banks' short position in silver when Canada's Scotiabank was forced to report Scotia Mocatta's Comex silver [and gold] short positions to the CFTC for the first time.  Both events stand out like the proverbial sore thumbs that they are.

In platinum, three or less U.S. banks increased their net short position by 2,055 Comex contracts in the March BPR.  They are now short 15,353 Comex contracts in this metal, which represents 23.3% of the entire Comex platinum market.  I would bet some serious money that, like silver, JPMorgan holds virtually the entire position on its own.  This is called a 'concentrated short position'.

Also in platinum, 13 non-U.S. banks [that's a minimum number] increased their short position in that metal by a chunky 2,639 contracts in the March BPR.  These 13 non-U.S. banks now hold 6,264 Comex contracts between them---and unless they're all concentrated in one or two banks, these positions, when divided up more or less equally, are immaterial compared to the Comex short positions held by the 3 or less collusive U.S. banks.

Also note the immaterial Comex platinum long positions [Chart 5] held by the 3 or less U.S. banks.  This would indicate that the short positions they hold are for price-controlling purposes as short sellers of last resort.

In palladium, 3 or less U.S. banks are short 8,448 Comex contracts, a decline of 484 contracts since the February BPR.  This short position still represents 20.9% of the entire Comex futures market in palladium.  These '3 or less' U.S. banks don't hold a single long contract between them, as every Comex contract they own is on the short side.

Also in palladium, 14 non-U.S. banks [and that's a minimum number as well] increased their net short position in Comex palladium futures by a chunky 1,929 contracts.  These 14 [minimum] non-U.S. banks currently hold 4,413 Comex contracts net short in palladium.  And, like platinum, unless they're concentrated in one or two banks, the positions of most of the non-U.S. banks are immaterial as well.

As I say every month at this time, the price management scheme in all four precious metals is virtually 100% "Made in the U.S.A."---with a little international flavour thrown in from Canada's Scotiabank.  And the amazing part about it is that, as Ted Butler says, you don't have to make this stuff up, as the COT Report and the Bank Participation Report provide all the evidence one needs!

The above four charts, along with the two charts I posted in The Wrap section of yesterday's column, would be just about enough to convince any judge and/or jury that JPMorgan et al are guilty as charged in the precious metal price management scheme.

Before heading into the list of today's reading material, here's a FRED chart courtesy of Elliot Simon.  This is the Money Multiplier Chart---and with a ratio of under 1.0---it has deflation written all over it.

I have a decent number of stories for you today, including all the ones about the current situation in the Ukraine---and I hope you have enough time in what's left of your weekend to read all the ones that interest you.

¤ The Wrap

After a quarter of a century, the most remarkable aspect of the growing awareness of price manipulation in silver and gold is in how little the story has changed over that time. For me, it was always a case of excessive and concentrated short selling on the COMEX, mostly by speculators called commercials. For many years, I couldn’t narrow the identity of the manipulative traders beyond the four or eight largest traders thanks to CFTC reporting guidelines.  That’s morphed into being able to pinpoint JPMorgan as the prime manipulator as a result of government reports and correspondence. The fact that JPMorgan was able to flip a short side market corner in COMEX gold to a long side market corner is the real highlight of 2013, as well as providing the ultimate proof of manipulative intent. - Silver analyst Ted Butler: 05 March 2014

Today's pop "blast from the past" is a tune I stumbled across just now when I was looking for something else.  I forgot that I even knew this song---and I'm sure it's been 50 years since I last heard it, because that was year [1964] it was released and I don't believe I've heard it since.  The singer was considered "teen idol" back then---and it sure brings back a lot of memories, as I used to put a nickel in the jukebox at the local cafe and play it all the time.  Those were the days.  The link is here.

Today's classical "blast from the past" dates back to 1874---and started off life as piano suite.  Since then, it's been transcribed for just about every musical instrument that comes to mind, including a full orchestra.  It's Modest Mussorgsky's " Pictures at an Exhibition".  This is the pipe organ transcription---and it's a tour de force and virtuoso piece of the first order.  Organist Jean Guillou does the honours---and the link to the video is here.  The video and audio quality of this recording is first rate, so put it on full screen and turn the sound way up.

I have little to add to what I've already said about yesterday's price action further up in this column.  Precious metal prices could go either way from here---and as Ted Butler so succinctly put it, it's 100% up to JPMorgan which direction they go.  Because as the data from the COT and Bank Participation Reports above shows, this world-wide price management scheme in all four precious metals [plus copper] is "Made in the U.S.A."

Of course, with the problems facing the world on all fronts these days, a black swan out of left field is entirely possible at this juncture.  And depending on what form it takes, there may be no amount of money printing by any central bank, either individually or collectively, that could make things right again.

And, as always, there's the never-ceasing flow of gold from West to East, which is a phenomenon that isn't about to end any time soon regardless of the price.  The Chinese imports through Hong Kong in January have now been officially released---and Nick Laird was kind enough to share the updated chart with that data included.  As always, it's a sight to behold.

That's all I have for the day and for the week, but before heading out, I'd like to remind you once again that it might be worth your while to jump back into, or increase your exposure to the precious metals.  Your best bets for that are Casey Research's monthly BIG GOLD newsletter---and Casey Research's flagship publication--- Casey International Speculator.   If you go for Casey International Speculator, it includes a subscription to BIG GOLD at no extra charge. It costs nothing to check them out---and Casey Research's 90-day money back guarantee applies to both.

I'm off to bed.  See you on Tuesday.

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

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