Saturday, May 10: Today in Gold and Silver

NEW YORK ( TheStreet) -- The price action in gold on Friday was almost a carbon copy of the price action on Thursday, including the timing of the high and low ticks.  And, once again, the highs and lows aren't worth looking up.

Gold closed the Friday session at $1,290.10 spot, up 30 cents from Thursday's close.  Net volume was extremely light at only 71,000 contracts.

Ditto for silver.  It closed at $19.155 spot, up a whole half penny from its prior closed.  Volume, net of May and June, was 34,500 contracts---the same volume as Thursday.

Platinum and palladium price traded in a pattern very similar to their gold and silver brethren.  Both closed down on the day---and palladium is back under $800 spot once more.  Here are the charts.

The dollar index closed late Thursday afternoon in New York at 79.44---and then didn't do much of anything until a rally began starting at 2 p.m. Hong Kong time on their Friday afternoon.  The rally topped out at 79.91 shortly after 3 p.m. EDT---and then traded sideways into the New York close.  The index finished the day at 79.87---up 43 basis points from Thursday.

Here's the 5-day chart that shows the lead-up to the appearance of the buyer of last resort that saved the dollar index from oblivion on Thursday.  I would guess that yesterday's rally had something to do with the fact that traders who were short the index didn't want to hold those positions over the weekend once it became obvious that 'gentle hands' weren't going allow the dollar index to fail at this juncture.

The gold stocks opened unchanged, but then headed lower starting around 10:30 a.m. EDT as the gold price itself came under some selling pressure.  The index stopped going down and began to rally a bit once the gold price hit its low, which came shortly after 12 o'clock noon in New York.  The HUI  finished the Friday session down another 0.72%---but well off its low tick.

The silver shares followed a similar path, but they got sold down even more, as Nick Laird's Intraday Silver Sentiment Index closed down another 1.32%.

The CME's Daily Delivery Report shows that 3 gold and 241 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  In silver, the only two short/issuers were ABN Amro with 217 contracts and Jefferies with 24 contracts.  These contracts were divided up between ten different long/stoppers---half of whom were the "usual suspects."  Check out yesterday's Issuers and Stoppers Report here to get all the details.

There were no reported changes in GLD yesterday---and as of 8:21 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

Finally the good folks over at Switzerland's Zürcher Kantonalbank had something to say for themselves, as I hadn't heard from them since April 17.  In an e-mail yesterday they reported that their gold ETF had declined by 20,129 troy ounces---and the holdings of the silver ETF had declined by 60,990 troy ounces.

The U.S. Mint had another sales report yesterday.  The sold another 250,000 silver eagles---and 200 platinum eagles.

For the month of May to date, the mint has sold 11,000 troy ounces of gold eagles---2,500 one-ounce 24K gold buffaloes---1,325,000 silver eagles---and 600 platinum eagles.  Based on this data, the silver/gold sales ratio for the month stands at 98 to 1.  Year-to-date the silver/gold sales ratio checks in at 71 to 1.  These are incredible numbers.

And as I've mentioned before, you have to wonder who is buying all these U.S. silver eagles and Canadian silver maples leafs, because it isn't John Q. Public---as the retail precious metal market hasn't been doing much this year.  But whoever it is, has very deep pockets---and isn't buying them because they're expecting silver prices to be cheaper in the future.  Ted Butler thinks it's JPMorgan---and I'm not about to argue with him.

Over at the Comex-approved warehouses on Thursday, there was no reported in/out movement in gold.  But, as always, it was a different story in silver as 600,456 troy ounces was reported received---and 305,658 troy ounces were shipped out the door for parts unknown.  Almost all the action occurred at the CNT Depository---and the link to that activity is here.

Yesterday's Commitment of Traders Report, for positions held at the close of trading on Tuesday, May 6, was interesting in the fact that there was a big difference between gold and silver as far as changes in the Commercial net short position was concerned.  Silver improved quite a bit, but deteriorated quite a lot in gold.  This dichotomy was interesting in the fact that the price pattern in both metals was quite similar during the reporting week---but they are what they are.

In silver, the Commercial net short position improved by 3,007 contracts, or 15.0 million troy ounces.  The Commercial net short position is down to 20,349 contracts, or 101.7 million ounces.  Ted says that JPMorgan's short side corner in the Comex silver market is still around the 20,000 contract mark, which means that they hold virtually the entire Commercial net short position in silver all by themselves.  How outrageous can you get?

Ted said that almost all of the 3,000 contract improvement came from the raptors [the Commercial traders other than the Big 8] who added about 3,000 contracts to their long position---and now hold their biggest long position they've had since the end of June 2013 when silver hit its last big low price tick.  The technical fund short holders are almost at record levels as well---within a thousand contracts of the gross record short position they held on December 3, 2013.  Ted also mentioned that the big long holder hiding in the bushes in the "Managed Money" category actually increased their long position during the reporting week.  As I said before, one has to wonder what they know that we don't---and maybe they're buying silver eagles and silver maple leafs as well?

In gold, the Commercial net short position increased by a chunky 13,300 contracts, or 1.33 million ounces of gold.  The Commercial net short position now stands at 110,471 contracts, or 11.05 million troy ounces.  The Big 8 Commercial shorts [which does NOT include JPMorgan] increased their short position by an additional 6,500 contracts---and the raptors sold the balance of about 7,000 contracts to make up the 13,300 contract change.  JPMorgan actually added about 3,500 contracts to their long-side corner in the Comex gold market---and Ted pegs their new position at 41,000 contracts net long, or 4.1 million troy ounces.

Here's Nick Laird's " Days of World Production to Cover Short Positions" chart that shows the short positions of the Big 4 and Big 8 traders in all physical commodities on the Comex.  And if it wasn't for the fact that JPMorgan is net long the gold market now, all four precious metals, led by silver of course, would be permanently nailed to the far right hand side of this chart, just like they were before JPM got net long.  That's the way they've been for as long as I can remember---and I can remember quite a bit.

On thing that can be said with some certainty, touch wood, is that there should be an improvement in the Commercial net short position in both metals next week, provided things don't get wildly out of control to the upside on Monday and/or Tuesday.

As far as the companion May Bank Participation Report [BPR] is concerned, don't forget that this is the one day a month when we find out what the U.S. and world banks are up to in the Comex precious metals, as the data for this report is extracted directly from the Commitment of Traders Report, so we can compare apples to apples between each report.

In gold, 4 U.S. banks are net long the Comex futures market by 12,159 contracts, a decline of 2,400 contracts since the April BPR.  Since Ted says that JPMorgan has a long position of about 43,000 contracts, that means that the other 3 U.S. banks must be short about 31,000 contracts [give or take] between them to make the math work.

Also in gold, 21 non-U.S. banks are net short the Comex futures market by 42,962 contacts, an increase in their collective Comex short position of 3,985 contracts from the April BPR.  I'm still of the opinion that a decent chunk of this short position is held by Canada's Scotiabank after their wholly-owned subsidiary Scotia Mocatta was forced to report its Comex futures market positions by the CFTC back in October of 2012.  So it's my guess that once you divide the remaining short contracts up amongst the other 20 non-U.S. banks, their positions are immaterial compared to the outrageous positions held by the four U.S. banks---and Scotiabank.

Here's Nick's chart showing the latest monthly data---and the 'click to enlarge' feature works wonders.  Note on Chart #4 the blow out of the non-U.S. banks short position back in October 2012 when Scotia Mocatta was forced to come out of the closet---on both the long and short side.

In silver, '3 or less' U.S. banks were net short 16,485 Comex contracts, a decline of 4,115 contracts from the April BPR.  Since Ted puts JPMorgan's short-side corner in the Comex silver market at around 20,000 contracts, this means that '2 or less' U.S. banks have to be net long the Comex silver market to the tune of 3,500 contracts or so, in order to make the math work.  The other two U.S. banks holding long positions would be HSBC USA---and possibly Citigroup.

And just as a matter of interest, look at the short-side corner blow-out in Comex silver back in August 2008 when JPMorgan took over the silver short position of Bear Stearns.  A short position, most of which, they still hold to this day.  The data is on Chart #4---but stands out on Chart #5 as well.

Also in silver, no less than 13 non-U.S. banks are net short 13,108 Comex silver contracts between them---that's a decline/improvement of 1,613 contracts from the April BPR.  My comments on Canada's Scotiabank/Scotia Mocatta in silver are similar to what I had to say about their short-side corner in gold further up.  When they were outed by the CFTC in October of 2012, their Comex short position blew out the non-U.S. bank category by many hundreds of percent, as you can tell from Chart #4 below.  I'm still of the opinion that two thirds to three quarters of the 13,108 contracts held net short by the 13 non-U.S. banks is held by Scotiabank.  This makes the short positions of the 12 remaining non-U.S. banks immaterial.

In platinum, 4 U.S. banks are net short 11,782 Comex contracts, a decline/improvement of 1,046 contracts from the April BPR.  These four banks are short about 18% of the entire Comex platinum market on a net basis.

Also in platinum, 13 non-U.S. banks are net short 5,559 Comex contracts, an increase of 631 contracts from the April BPR.  Between them, these 13 non-U.S. banks are net short 8.6% of the entire Comex platinum market, which means that their individual positions are immaterial compared to the outrageous short positions held by the 4 U.S. banks.  And I would be prepared to bet big money that JPMorgan holds the lion's share of the short positions held by the U.S. banks.

In palladium, '3 or less' U.S. banks are net short 9,006 Comex contracts between them.  That's a decline/improvement of 647 contracts from the prior month.  These '3 or less' U.S. banks are net short a bit over 20% of the entire Comex palladium market.  It's also a safe bet that JPMorgan hold's the lion's share of these short positions as well.

Also in palladium, not less than 11 non-U.S. banks are net short 4,373 Comex contracts, an increase of 733 contracts from April.  These 11 non-U.S. banks are net short 9.8% of the Comex palladium market, or less than 1% apiece, also immaterial.

As I say every month at this juncture, this is a 100% "Made in America" precious metal price management scheme, with a little international flavour from Scotiabank in silver thrown in.  And the incredible thing about all this is that all these numbers come directly from the CFTC.  I don't have to make them up.  This, along with the four charts in Friday's column, is prima facie evidence that hangs them all.  Case closed.

I have a very decent number of stories for you today, some of which I've been saving for today's column.  I hope you have enough time left in your weekend to read the ones that interest you the most.

¤ The Wrap

There are no markets any more, only interventions. - Chris Powell, GATA---April 2008, Washington, D.C.

Today's pop "blast from the past" dates back to 1975---and it peaked at #3 for three weeks on the Billboard Hot 100---and it was the highest-charting single the band ever recorded under the name Jefferson Starship.  The link is here.

Today's classical "blast from the past" comes from George Bizet's famous opera, Carmen.  It's the Habanera from Act 1 Scene 5 featuring soprano Agnes Baltsa, the Metropolitan Opera Orchestra and Chorus, all under the direction of James Levine.  Everyone's heard this piece in one incarnation or another in their lifetimes---and it's instantly recognizable.  The link is here.

Another day of price management that appear to have no end, at least not at the moment.  But with volumes in gold particularly light, I wouldn't read a lot into yesterday's price action.

But one thing is certain, we're close to the bottom of this current engineered price decline.  There certainly isn't much room left in silver---and the long holder sitting in the bushes in the 'Managed Money' category, isn't likely to be blown out.  They're waiting for pay day.  Aren't we all.

As I've stated before, the only real fly in the ointment is the possibility that JPMorgan et al could force even more technical funds onto the short side in gold---and that would certainly prolong the current agony.  But can they, or will they?

Then it remains to be seen what happens on the next rally in the precious metals.  As the price begins to rise, the technical funds will certainly be moving to cover their grotesque and almost record-breaking short position---and it remains to be seen whether JPMorgan et al will materialize as short sellers of last resort once again when that happens.  Nothing else matters.

Here are the current 6-month charts for both gold and silver as of yesterday's close.  Not surprisingly---and as I mentioned earlier this week---gold was not allowed to break above its 50-day moving average---and is now back below its 200-day moving average as well.

The current silver price is a dollar below any moving average that matters---and until some event changes that situation, not much is going to happen from a price perspective.  The price came close to doing something on Friday, May 2---but "da boyz" have spent this past week taking back all those gains, so we're back at the bottom of the barrel in silver once again.

I'm watching the Ukraine/Russia situation carefully---and if there was a ever a tailor-made event upon which to hang a price explosion in the precious metals, this has the potential to set it off at some point.  As I've said before, Putin could end this Anglo/American price management scheme that has enslaved all nations of the world, with just a few sentences.  But will he, with the co-operation of China, actually play that card?

Right now I get the impression from looking at the price action over the last couple of weeks that prices are just being held in place, as if waiting for some event---preplanned or otherwise---to occur.

The only thing I do know for sure is that the current situation in all four precious metals can't continue on like this indefinitely.  But for the moment, we just have to wait it out.

That's it for the day---and the week---but before heading out the door If you’ve been a reader my daily column for any length of time, you may have seen links to Things That Make You Go Hmmm…, the fantastic free newsletter written by Grant Williams.

Grant just did an interview revolving all around gold—why he considers gold to be “ unsurance,” what price level will trigger another gold mania, a subtle suggestion to the folks at Fort Knox, and the consequences of manipulation in the paper gold markets. You can watch the video here.

Note that the video page also contains an offer for his monthly newsletter, Bull’s Eye Investor—also a good read. If you subscribe today, the folks from Mauldin Economics will throw in a free copy of the documentary film Money for Nothing, a history of the Federal Reserve and the many bubbles it created.  It costs absolutely nothing to check it out.

I'm off to bed---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.

More from Gold

Market Bears Have Devoured Gold Prices

Market Bears Have Devoured Gold Prices

Gold to Skyrocket as Italian Rebellion Unfolds

Gold to Skyrocket as Italian Rebellion Unfolds

2010-Style Crisis Approaches: Prepare For Flight To Safety

2010-Style Crisis Approaches: Prepare For Flight To Safety

Gold Prices Look 'Rich' at Current Levels - Here's What Could Change That

Gold Prices Look 'Rich' at Current Levels - Here's What Could Change That

Watch This If You're Wondering How Much Gold to Have and When to Sell

Watch This If You're Wondering How Much Gold to Have and When to Sell