Another down day for the precious metal equities. No changes in GLD, but another monster deposit in SLV. A tiny sales report from the U.S. Mint. No in/out movement in gold at the Comex-approved depositories on Thursday, but it was another huge in/out day in silver.
NEW YORK ( TheStreet) -- The HFT boyz and their algos didn't waste much time during the Friday trading session in gold, setting three new consecutive low ticks during the trading session. The first came an hour before London opened, another at 10:40 a.m. EDT---and the last one coming in electronic trading about forty minutes after the Comex close. The high and low prices for yesterday's trading session were recorded by the CME Group as $1,242.30 and $1,228.10 in the December contract. Gold finished the Friday session at $1,228.30 spot, down $11.90 from Thursday's close. Net volume was around 130,000 contracts. Once again, the 6 p.m. Thursday evening open in silver started with a down tick. That's happened every day this month so far. Silver's low tick---and new low for this move down---came shortly after 10 a.m. Hong Kong time on their Friday morning. The low was retested shortly before 1 p.m.---and the rally into the London open, ended at the open. After that it chopped sideways and never got a sniff of positive territory for the remainder of the day. The high and low ticks were recorded as $18.72 and $18.455 in the December contract. Silver closed on Friday at $18.61 spot, down 6 cents from Thursday. Net volume was around 37,500 contracts. The platinum and palladium salamis also got sliced to new lows for this move down, but at different times of day. Both precious metals rallied back and closed well off their lows: platinum for a slight loss---4 bucks---and palladium actually closed up 3 bucks. Here are the charts. The dollar index closed late on Thursday afternoon in New York at 84.27---and spent all of Friday chopping quietly lower, as the index closed at 84.22---down 5 basis points on the day. As I said yesterday, what the dollar index is doing doesn't have much to do with the activity in the precious metals, but it makes a great talking point when that's the only thing that the price movement can be pinned on. And, at times, JPMorgan et al use it maximum advantage, like now for instance. The gold stocks opened down a percent---and barely got a glimpse of positive territory, but they did close off their lows by a little. The HUI closed down 1.38%. The price path of the silver equities was very similar but, as usual, they got sold down harder, as Nick Laird's Intraday Silver Sentiment Index closed down 2.39%. The CME Daily Delivery Report showed that 25 gold and 26 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. The link to yesterday's Issuers and Stoppers Report is here. The CME Preliminary Report for the Friday trading session showed that the number of gold contracts open in September rose by 24 contracts---and now stands at 45 contracts. In silver, that number declined by 123 contracts---and there are now 612 silver contracts still open in September. There were no reported changes in GLD yesterday---and as of 6:56 p.m. EDT yesterday evening, there were no reported changes in SLV, either. But I checked back on the iShares.com Internet site about three hours later---and saw to my amazement that another 3,356,976 troy ounces had been deposited by an authorized participant. Almost 8 million ounces of silver has been deposited in SLV during the first ten business days of September---and since the SLV's low of 321.2 million ounces on June 22nd of this year---18.2 million ounces of silver have been deposited. The WTF alarm bells should be ringing loudly that something is definitely going on 'under the hood' in the silver market. There was a small sales report from the U.S. Mint yesterday. They sold 2,000 troy ounces of gold eagles---and 30,000 silver eagles. Month-to-date the mint has sold 23,000 troy ounces of gold eagles---4,000 one-ounce 24K gold buffaloes---810,000 silver eagles---and 200 platinum eagles. Based on these sales, the silver gold ratio for September stands at 30 to 1, which is decidedly on the low side, as silver eagle sales have sagged since the big buyer disappeared several months ago. There was no in/out activity in gold worthy of the name at the Comex-approved depositories on Thursday. But, as usual, it was exactly the opposite in silver, as 1,156,984 troy ounces were reported received---and a further 238,833 troy ounces were shipped out. Most of the in/out activity was at Canada's Scotiabank---and also at the CNT Depository. The link to that action is here. I must admit that I was more than underwhelmed by yesterday's Commitment of Traders Report. Although the numbers were headed in the right direction in both silver and gold, they weren't the big numbers that both Ted and I were expecting. In a word, it was disappointing, considering the fact that we carved new low ticks in both metals every day during the reporting week ending on Tuesday, September 9. In retrospect---and a closer examination of the price charts for the reporting week---even though there were new lows set every day, the salami slices were pretty tiny. In silver, the Commercial net short position only improved by 2,342 contracts, or 11.7 million ounces. The Commercial net short position is still pretty hefty at a hair under 30,000 contracts, or 150 million troy ounces. In the Managed Money category of the Disaggregated COT Report, these brain dead traders continued to pitch longs and go short, which is what their black boxes were telling them to do---so that's what they did. In the latest report they sold 1,842 long contracts---and added another 1,457 short contracts---which is a swing of 3,299 contracts in total. Ted says that JPMorgan reduced their short-side corner in the Comex silver market by about 3,000 contracts---and he pegs their current position around 14,000 contracts, or 70 million ounces, just under half of the current Commercial net short position. And I'd be happy to bet $100 in the currency of your choice that Canada's Scotiabank is short the rest---and more. In gold, the Commercial net short position declined by only 5,752 contracts, or 575,200 troy ounces of gold. The Commercial net short position declined marginally to 9.80 million troy ounces. Ted said that JPMorgan added a couple of thousand contracts to their long-side corner in the Comex gold market---and it now stands at 25,000 contracts, or 2.5 million troy ounces. Without a doubt there was further improvement since the 1:30 p.m. cut-off on Tuesday, as the HFT boyz that work for JPMorgan et al continued to slice the salamis to the downside in all four precious metals. Undoubtedly, this will manifest itself in next Friday's COT Report, but after a disappointing report yesterday, I shan't hazard a guess as to how much improvement there might be. However, there are still two more reporting days to go between now and the Tuesday cut-off---and anything can happen between now and then in the silver market, which is getting more psychotic with each passing day. I have much more to say about this situation in The Wrap at the bottom of today's column. Even though it's my Saturday column, I don't have all that many stories. Normally I have a decent amount. I hope you have enough time in what's left of your weekend to read the ones you like.
¤ The Wrap
Looking ahead, given the extremely bullish COT set up at hand, it is not unreasonable to contemplate the nature of the next rally, even as the last few price slices to the downside are observed. Specifically, will the collusive commercials rush to aggressively sell to the technical funds who will, most assuredly, be buying aggressively as and when prices climb above the moving averages. You don’t need an IBM 360 to figure out that the technical funds will buy on higher prices, just what will be the commercials’ reaction.Many would contend that the reasonable bet would be that, of course, the commercials will sell as much as necessary to cap prices on the next rally because that has almost always been the case. While I can’t argue that might occur yet again, I can argue that commercial price capping will end someday and with it the silver manipulation itself. That day is unknown to me but its coming is certainty why I hold silver (and buy call options). - Silver analyst Ted Butler: 10 September 2014 Today's pop 'blast from the past' dates from 1977---and neither the song nor the group that performs it, needs any introduction. I've posted this before, but it's been a couple of years. The link is here. Today's classical 'blast from the past' dates from baroque era in the mid-18th century. It's J.S. Bach's Concerto for Violin and Oboe in C minor, BWV 1060R which has a very interesting history, as it was a reconstruction from Bach's Concerto for two harpsichords. This youtube.com video was recorded at the Vilnius National Philharmonic Hall in Lithuania in December of 2010. The link is here---and it's a good a recording of this work as you're likely to hear. The soloists are first rate---and not hard on the eyes, either. Not unexpectedly, it was another salami-slicing day in all four of the precious metals, as the engineered price declines continued. What I found interesting about them was the fact that they occurred at different times during the Friday session. Normally they occur all at the same time, or close to the same time, but not yesterday. Here are the 6-month charts for all four precious metals, updated with Friday's price/volume data. Gold and silver prices are now lower than they were at the lows back in late May, early June of this year---and platinum hasn't been this oversold since mid-May of 2012. If forced to bet ten bucks, I'd say we saw the lows for this move down yesterday---and if not, they aren't far off in time or in price. Where we go from here was nicely summed up in Ted Butler's quote further up, so I won't bother reinventing the wheel by trying to say the same thing in my own words. I mentioned in yesterday's column that " there's the possibility that the price management scheme may blow up before Tuesday's cut-off, as this sell-off appears to have some sort of urgency attached to it." And if it does blow up, it will certainly be centered around the Comex futures market in silver. Along with the reasons I gave in The Wrap yesterday---the frantic in/out movement in silver at the Comex for the last three plus years, the huge increase in SLV deposits since June, despite the negative price action---and one I forgot to mention was the non-technical fund long holder sitting in the bushes in the Managed Money category of the Disaggregated COT Report. If they added to their long position during the last reporting week, it wasn't much--and was disguised by other traders pitching their long positions. The last thing I have my eye on is the lead story in my Tuesday column which was headlined " CME Group Admits Its Exchanges Have Been Allowing Manipulative Trading Practices". This Zero Hedge piece mentions [and posts it in its entirety] a letter from the CME Group to the CFTC dated August 28, 2014. In that letter it states that " starting September 15, 2014 the CME will no longer tolerate "Disruptive market practices."---and you can read the complete list in the ZH article, which I urge you to do, even if you've already read it once. Anyway, March 15 is Monday---and we should find out in reasonably short order if this "new rule 575" makes any difference. I'm expecting that it will, but it's impossible to tell. Along with that situation, I'm completely at ease with what Doug Noland said in his weekly Credit Bubble Bulletin which, if you haven't read, you can redeem yourself now by clicking here. The salient paragraph reads " It’s no surprise that I see the greatest financial Bubble in history. I believe asset market inflation and Bubbles have been fueled by speculative leverage exceeding pre-2008 crisis levels. I see global financial and economic imbalances that have been exacerbated by six years of the most extreme monetary policy measures. By now, this type of analysis has been completely discredited. Few will care that I discern acute vulnerabilities." Amen to that! The world's economic, financial and monetary system are now totally out of control---and I'm sure the Jim Rickards is looking around for snowflakes, as the avalanche he predicted is most certainly at hand. I await the Sunday night open in New York with more than the usual amount of interest, along with the remainder of the Monday trading session that follows. I'm done for the day---and the week. But before heading off to bed, I'd like to remind you one final time that this coming Monday is the last day you can sign up for that special discount for Casey OnePass and still save $1,749 on the full subscription package. As you may already know, with the Casey OnePass, you get ALL of Casey’s newsletters (no CIA or CEC alert services) at a significant saving of $1,749 per year. But more importantly, Casey Research has got some good opportunities across all sectors---and what better way to keep track of them, then to sign up for a service that includes them all? You can find out all you need to know by clicking here---and it costs nothing to have a look. Enjoy what's left of your weekend---and I'll see you here on Tuesday.