Saturday, April 12: Today in Gold and Silver

NEW YORK ( TheStreet) -- Looking at the Friday trading session in gold as a whole, not much happened.  There was a bit of a selloff starting an hour before London opened---and the subsequent rally that began around 10 a.m. BST lasted less than two hours---and after that the price drifted lower for the rest of the day.  Not much to see here.

Of course, the low and high weren't much to write home about---$1,314.00 and $1,24.20 in the June contract.

Gold finished the Friday session at $1,318.40 spot, up a whole 30 cents on the day.  Volume, net of May, was only 101,000 contracts.

The price chart for silver was virtually the same as gold.  The early morning rally in London took silver back above the $20 spot price mark---and has been the case for nearly every day for the last 14 consecutive days, it was closed back below that price by the end of trading in New York.

The difference between the low and high price ticks looked to be about two bits---and I'm not even going to bother looking them up on the CME's website.

Silver closed in New York yesterday at $19.96 spot, down 7 cents on the day.  Net volume was only 22,500 contracts---and down substantially from Thursday when "da boyz" threw everything they had at the silver price.

Platinum was similar, although it did a bit more flopping and chopping in a ten-dollar price range during the New York trading session---and it closed unchanged.

Palladium was following the same price pattern as the other three precious metals up until shortly before 10 a.m. EDT---and then it blasted off to the upside, only to run into a seller of last resort shortly after it broke above the $800 price mark.  It got sold down hard from there, but managed to finish above $800 spot.  Just as a matter of interest, the low and high ticks in palladium were recorded as $785.15 and $812.50 in the June contract---and heaven only knows how high the price would have gone if that not-for-profit seller hadn't put in an appearance.

The dollar index closed in New York late Thursday afternoon at 79.41---and just sat there until until an hour before the London open.  It chopped around a bit before hitting its 79.54 'high' about 8:30 a.m. EDT---and then gave a bit of that back going into the close.  The index finished the Friday session at 79.49---up 8 whole basis points.  Nothing to see here, either, folks---please move along.

Once again the gold stocks opened in positive territory, but couldn't hold on---and drifted quietly lower as the New York trading session advanced.  The HUI finished just off its low of the day---and down another 1.49%.

Despite the fact that silver was down only 7 cents on the day, the silver equities declined some more, as Nick Laird's Intraday Silver Sentiment Index closed down 2.34%.

The CME's Daily Delivery Report showed that xx gold and xx silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.

Another day---and another withdrawal for GLD.  This time it was 57,803 troy ounces.  And as of 7:47 p.m. yesterday evening, there were no reported changes in SLV.  I attempted to check the SLV data while I was editing today's column in the wee hours of this morning, but they've changed their website around---and the link I've always used is now inactive.  I hope to have that fixed before Tuesday's column.

There was a tiny sales report from the US Mint for the second day in a row.  They sold 57,500 silver eagles---and that was it.  Month-to-date the mint has sold 17,000 troy ounces of gold eagles---10,000 one-ounce 24K gold buffaloes---1,345,500 silver eagles---and 600 platinum eagles.  Based on these figures, the current silver/gold ratio works out to a hair under 50 to 1.

There was no reported in/out activity in gold over at the Comex-approved depositories on Thursday.  In silver, there was a smallish deposit of 4,958 troy ounces---but a very large 1,179,247 troy ounces were shipped out.  The link to the activity in silver is here.

The Commitment of Traders report was a bit of a strange animal.  I'll just hit the highlights and leave the rest to Ted Butler.  Since I didn't know what to expect, I figured that I wouldn't be surprised by what was in it.  But I was, anyway.

In a week where the silver price didn't do much---and the $20 price was miles below any relevant moving average, the Commercial net short position increased by a rather small 463 contracts.  The Commercial net short position now stands at 144.5 million ounces.  The surprise under the hood here, according to Ted, was that JPMorgan increased their net short position by another 2,000 contracts.  They now hold 22,000 Comex short positions [net] in silver, or 110 million  troy ounces.  That represents 76% of the total Commercial net short position I just computed---and a bit over 16.5% of the entire Comex silver market on a net basis.

It's a complete mystery to Ted---and to me, now that I know about it---as to why JPMorgan would be aggressively going shorter at the same time as the raptors [the Commercial traders other than the Big 8] were aggressively adding to their long positions during the same reporting week.  It's a situation Ted doesn't remember ever seeing before, as normally JPM and the raptors are in sync with each other.

It's entirely possible that all the data from the prior reporting week wasn't  reported in a timely manner---and what didn't make it, ended up in this report, which skewed the numbers.  I mentioned that as a possibility earlier this week.

I know that Ted has noticed something else in the COT numbers that came as a surprise to him---and I'll be interested in what he has to say about this in his report to paying subscribers later today.

As different as silver was, the COT for gold was way out there as well.

Just eye-balling the gold chart, it looks like gold was up between 15 and 20 bucks during the reporting week, which isn't a lot.  However, the COT Report in gold showed that the Commercial net short position improved by a massive 12,286 contracts, or 1.23 million ounces of gold.  The Commercial net short position is now down to 10.17 million  troy ounces.  The technical funds pitched about 8,500 long contracts and went short about 3,100 contracts on top of that amount.

But the real under-the-hood surprise according to Ted, was that despite this massive improvement in the headline number, JPMorgan actually sold another 7,000 contracts of their long-side corner during the reporting week.  Their long-side Comex corner in gold is now down to about 36,000 contracts, or 3.6 million ounces.

I suppose that, like silver, there was a lot of carry-over from the previous reporting week, as that's the only explanation that I can come up with.  I also suppose there could have been reporting errors from the CFTC, but not in both metals at once.  As I said in silver, I'll wait for Ted's take on all this, as he's the real authority on this report.

Here's Nick Laird's most excellent "Days of World Production to Cover Comex Short Positions" chart in each physical commodity traded on the Comex.  It shows the short positions of the four and eight largest traders in each one.  Silver is still nailed to the right hand side of this chart---and only the grotesque short position in palladium knocked it out for a few months a year or so ago---but now the grotesque short position in silver is back in top spot once again.

All this chart does is reconfirm what's in the Bank Participation Report every month as well, as "four or less" U.S. bullion banks have massive Comex short positions in all four precious metals.  Gold's two bars in the above chart would look entirely different if JPMorgan was on the short side in gold instead of the long side.  The revised gold position would muscle out cocoa---and the four precious metals would be in the top four positions on this chart.  JPMorgan's 22,000 contract short-side corner in Comex silver represents about 55 days of world silver production.

And while I'm looking at this chart, I now know one of things that Ted is going to talk about in his weekly review later today---and why.  I'll steal his comments about it for Tuesday's column.

I don't have all that many stories for a Saturday---and only a couple that I've been saving for today---so I hope you have enough time in what's left of your weekend to read the ones you like.

¤ The Wrap

Because silver’s unique dual demand profile makes it fundamentally different from most other metals and commodities, its real production and consumption must be analyzed differently. Whereas one might devote the most attention in evaluating prospective changes in world mine production and industrial consumption in commodities like copper, lead or zinc, such an approach has proven unproductive in silver. None of the price moves over the past 20 years or longer in silver have had much, if anything, to do with real production or industrial consumption. The clearest proof is that silver ran to almost $50 at a time of record high world production and had also lost its leading industrial demand component in the ten years leading up to that high (photography).

Even though industrial demand, combined with all other fabrication demand, makes up close to 90% of the total silver annual production of one billion oz (mine, plus recycling), this demand does not exert a proportionate influence on price. It is the other 10% of silver demand, in the form of investment in 1,000 oz bars that typically moves the price. I think the key to understanding real silver supply and demand is to focus on the 10% investment demand component. After deducting the 900 million oz total silver fabrication demand (industrial, jewelry, the minting of coins, etc.) from the billion ounces of current total production, the remainder of 100 million oz available for investment in the form of 1,000 oz bars will determine the price of silver. - Silver analyst Ted Butler: 09 April 2014

Today's pop "blast from the past" features Nat King Cole with his daughter Natalie Cole singing Nat's most famous number.  You'll know it in an instant---and the link is here.

Today's classical "blast from the past" dates from the early 18 th century.  It's the second Brandenburg Concerto, BWV 1047, but only the first two movements, as I couldn't find the third movement [Allegro assai] anywhere in the right sidebar over at YouTube.  Too bad, as it's the most famous of the movements.  I don't see his name in the credits anywhere, but it looks like the late Karl Richter is conducting from the harpsichord.  It's a wonderful performance, what there is of it---and the link is here.  Note: I had to dig for it while I was editing this column, but I found the third movement.  However I have no time to rewrite this paragraph, so here it is.

With low volume and little interest in the precious metals [excluding palladium's price action, of course] yesterday, you can consider Friday just another day off the calendar.  But I wasn't happy to watch the precious metal stock prices get it in the neck for the second day in a row.  It's obvious that the decline in stocks on the U.S. exchanges are having a spill-over effect.  The precious metal equities have given up over half their gains of 2014 so far---and the premiums [such as they were] on some of the precious metal mutual funds that I follow on a daily basis, are starting to unwind.

Here are the charts for both gold and silver once again---and updated with yesterday's price performance.

Although we closed above the 50-day moving average in gold for the second day in a row, this loss of momentum---entirely caused by JPMorgan Chase et al---will/could set up the chart pattern for a 'failure' at this moving average.  I stated the same thing in this space yesterday, but with one more data point added, my conviction remains unchanged.  And as Ted said on the phone yesterday, the COT set up is such that "da boyz" could peel $100 off the gold price if they really set their HFT foxes amongst the golden pigeons.

The situation in silver is similar, except for the fact the metal is well below any significant moving average but, like gold, the technical funds are still massively long---and JPMorgan and the raptors could harvest these longs and ring the cash register if they so wished.

But the question concerning "all of the above" is---can they, or will they?  The short answer is the same as the long answer---I don't know, and only time will tell.

Before heading off to bed, I'd like to mention [for the second and final time] the Casey Research production titled Meltdown America.  It runs almost 29 minutes and features the harrowing tales of three people who survived economic and political collapse in Zimbabwe, Yugoslavia, and Argentina… with guest commentators Doug Casey; Jeff Opdyke from Sovereign Society; David Walker, former US Comptroller General; Jane Kokan, former BBC/CNN journalist; Dr. André Gerolymatos, former member of the Canadian Advisory Council on National Security; and Scott Taylor, war correspondent and publisher of Esprit de Corps magazine discussing how these powerful stories of hardship foreshadow what soon could be happening in the US.

This absolute must-watch documentary was posted on the Casey Research website on Tuesday---and the link is here.

That's it for the day---and the week---and I'll see you here 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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