Saturday, April 11: Today in Gold and Silver

NEW YORK ( TheStreet) -- After doing nothing from a price perspective all through Far East trading on their Friday, the gold price caught a bid shortly after 9:00 a.m. BST.  It chopped higher, but got capped at the London p.m. gold fix---and then was sold down in the 1:30 p.m. COMEX close before rallying a bit more---and then trading sideways into the 5:15 p.m EDT close of electronic trading.

The low and high ticks were reported by the CME Group as $1,192.90 and $1,210.60 in the June contract.

Gold finished the Friday session in New York at $1,207.30 spot, up $13.80 on the day.  Net volume was 116,000 contracts, which was only 6,000 more contracts than on Thursday.

Here's the 5-minute tick chart for gold.  The Friday open is at 1600 MDT on this chart---and midnight EDT is 2200 MDT, the grey line on the chart.  Note all the heavy selling into the rallies starting shortly after 02:00, which was 4 a.m. EDT, 9:00 a.m. BST.  This chart is Denver time, so add two hours for New York, plus five more for British Summer time.  The ' click to enlarge' feature is a must---and I thank Brad Robertson for sending it along.

It was almost an identical chart pattern for silver, so I shall spare you the play-by-play.  And, like gold, prices would have closed materially higher if JPMorgan et al hadn't shown up at the London p.m. gold fix.

The low and high ticks were reported as $16.14 and $16.65 in the May contract.

Silver closed yesterday at $16.485 spot, up 33.5 cents, but well off its high tick.  Net volume was 33,000 contracts---and only a couple of thousand more than on Thursday.

The platinum and palladium charts were similar, but palladium hung on to most its gains after the London p.m. gold fix.  Platinum closed on Friday at $1,172 spot, up $18 on the day.  Palladium did even better, as it finished the Friday session up 14 dollars, almost two percent---and closed at $775 spot.  Here are the charts.

The dollar index closed late on Thursday afternoon in New York at 98.97---and developed a slightly negative bias at the early morning open in Far East trading.  All that changed a few minutes before 2 p.m Hong Kong time, as the index roared to life---and topped out at 99.69 about ten minutes before the COMEX open.  It dropped back to the 99.20 level at, or shortly before, the London p.m. gold fix---and then rallied a bit into the COMEX close, before selling off from there.

The dollar index closed on Friday at 99.35---up 38 basis points from its Thursday close.

The gold stocks gapped up---and stayed up, closing almost on their high tick.  The HUI finished the Friday session up 2.92 percent.

The silver equities blasted skyward at the open---and within twenty minutes all their morning gains were in---and they drifted quietly lower until a few minutes before 3:00 p.m. EDT.  from there they rallied into the close.  Nick Laird's Intraday Silver Sentiment Index finished the day up 2.85 percent.

The CME Daily Delivery Report showed that, for the second day in a row, there were no gold or silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

This is the first time I can remember back-to-back days where there were no deliveries in either precious metal---and considering the contracts outstanding in the current delivery month, especially in gold, I'm not sure what to make of it.

The CME Preliminary Report for the Friday trading session showed that gold open interest in April rose by 8 contracts---and now sits at 2,470 contracts still open.  Open interest in silver for April was up 5 contracts to 175.

After a deposit on Thursday, an authorized participant made a withdrawal from GLD on Friday.  This time they took out 56,377 troy ounces.  And as of 6:54 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I was editing this column at 4:20 a.m. EDT this morning, I saw that 2,390,780 troy ounces had been deposited---and it's a good bet that it was used to cover an existing short position.

There was a sales report from the U.S. Mint yesterday.  They reported selling 500 gold eagles---1,000 one-ounce 24K gold buffaloes---and 60,000 silver eagles.

Month-to-date the mint has sold 4,000 troy ounces of gold eagles---4,000 one-ounce 24K gold buffaloes---and 843,000 silver eagles.  Based on these sales, the silver/gold ratio so far in April is 105 to 1.

If that large silver eagle buyer wasn't there, read JPMorgan, silver eagles sales would be in the dumpster as well.  Retail bullion demand in North America is almost nonexistent at the moment, despite what the lunatic fringe may say.

At the COMEX-approved depositories on Thursday, no gold was reported received, but 56,172 troy ounces were shipped out of Canada's Scotiabank.

In silver, it was another huge day, as 893,037 troy ounces were received, all of which went into JPMorgan's vault---and another 2,198,179 troy ounces were reported shipped out the door.  The link to that activity is here.

Combined with the 2.39 million troy ounces that went into SLV yesterday---and adding in the last three days worth of frantic in/out activity at the COMEX-approved depositories---it's been a hell of a week in the physical silver market---and it's a good bet that most of the bars involved now have "frequent flyer" points up the wazoo.

In Hong Kong at the COMEX-approved gold depository at Brink's, Inc.---it was another busy day as well, as 8,154 kilobars were received---and another 6,055 kilobars were shipped out.  The link to this action in troy ounces is here.

While on the subject of Hong Kong, Nick Laird has now obtained the official gold import data by China through Hong Kong during February---and during that month it was reported that 67.575 tonnes was imported.  This data was leaked to the main stream media about two weeks ago, but until Nick gets the actual data from the government website, he can't update his charts.  Now he has---and here it is.

While we're in this part of the world, the Shanghai Gold Exchange withdrew 40.003 tonnes, for the week ending April 3---and here's Nick Laird's updated chart.

Although I had no preconceived notions of what yesterday's Commitment of Traders Report was going to look like, I must admit that I was still shocked by the huge deterioration in gold.

In silver, the report was pretty neutral, as the Commercial net short position only increased by 577 contracts, or 2.9 million troy ounces.  The Commercial net short position now stands at 252 million troy ounces.

The Big 4 added something under 300 contracts to their current short position, the '5 through 8' large traders went short another 400 contracts---and the Commercial traders other than the Big 8 sold 1,300 long contracts.  Ted's estimate of JPMorgan's short side corner in the COMEX silver market last week was 18,000 contracts---and that was reconfirmed by the numbers in yesterday's companion Bank Participation Report, so he's been right on the money with that call throughout March.

Under the hood in the Disaggregated COT Report, it was mostly the technical funds in the Managed Money category on the losing side of the trade once again.  They sold 2,621 long contracts---and also decreased their short position by 1,771 contracts.

But the gold numbers were shocking, as the Commercial net short position blew out by a further 27,174 contracts, or 2.72 million troy ounces.  The Commercial net short position has now risen to 10.83 million troy ounces---and Ted says that we are now market neutral in gold, just like we are market neutral in silver from a COT perspective.

I have a 30-day gold chart below that shows what happened during the reporting week, but I want to get the rest of the gold numbers out of the way first.

Ted says that in response to last week's gold "rally," the Big 4 added 3,000 new short contracts---and the '5 through 8' Commercial traders added another 4,200 new short contracts---and the small traders, Ted's raptors, sold almost 20,000 long contracts for a profit.

All this happened in response to the technical founds in the Managed Money category, as they bought longs and sold shorts.  They added 8,939 long contracts---and decreased their short position by 10,680 contracts, for a total of 19,619 contracts.  The balance of the 27,174 contract change in Commercial net short position came from the small traders in the Nonreportable category.

Here's the 30-day gold chart.  The huge deterioration for the week came on April 1 through 6---Easter weekend---and JPMorgan et al were standing there sledgehammer in hand to make sure that the explosion in the gold price that would have occurred at that point never happened.  It was price management at its most ugly and crass---and exactly the same as what happened in silver a couple of weeks ago.

Before leaving the COT Report, here's the updated " Days of World Production to Cover COMEX Short Positions" using Tuesday's data.

And as I mention in my comments about silver in the Bank Participation Report below, it's my opinion that  between JPMorgan and Canada's Scotiabank, they are short about 90 days of world silver production between them,  That's about 90 percent of the short position held by the 4 largest traders---and about 60 percent of the 8 largest traders.  How's that for a concentrated short position?  And not a word out of the miners about it.

Along with yesterday's Commitment of Traders Report came the companion Bank Participation Report [BPR] for April, for positions held in March  And as I've said in the past---" This is data extracted directly from the above COT Report, which shows the COMEX futures contracts, both long and short, that are held by the U.S. and non-U.S. banks as of Tuesday's cut-off."

In gold, '3 or less' U.S. Banks were net short 29,595 gold contracts in the April BPR, compared to the 38,457 contracts they were net short in the March BPR.  I would guess that JPMorgan is  close to market neutral in gold, if they even hold a COMEX position at all, either long or short---and all of this short position is held by HSBC USA and Citigroup.

Also in gold, '19 or more' non-U.S. banks are net short 44,592 COMEX contracts, which is a slight improvement from the 51,151 COMEX contracts in the March Bank Participation Report.  It's my opinion that Canada's Scotia bank holds about a third of this short position all by itself, so the remaining 30,000-odd contracts spread out over the remaining '18 or more' non-U.S. banks are pretty much immaterial.

Here's Nick's chart of the Bank Participation Report for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank's COMEX gold positions [both long and short] were outed in October of 2012.

In silver, '3 or less' U.S. banks were net short 15,055 COMEX contracts in the April BPR.  That compares to the 13,499 COMEX contracts they were net short in the prior month.  Since Ted says that JPMorgan currently holds an 18,000 contract short-side corner in the COMEX silver market, that means that HSBC USA and Citigroup must be net long about 3,500 contracts to make the numbers work.

Also in silver, '15 or more' non-U.S. banks are net short 26,466 COMEX contracts in this month's report.  That compares to the 22,734 contracts these same banks were short in the prior BPR report.  Since October of 2012 when Scotiabank got outed, it's my firm belief that at least 80 percent of the above short position is held by Canada's Scotiabank---and the chart below confirms that.  This means that the short positions of the remaining '14 or more' non-U.S. banks are immaterial in the grand scheme of things.

Here's the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns---the red bars.  It's very noticeable in Chart #4---and really stands out like the proverbial sore thumb in chart #5.

I estimate that between JPMorgan and Scotiabank, they are currently net short about 39,000 COMEX silver contracts between them.

In platinum, '3 or less' U.S. banks are net short 6,648 COMEX contracts in the April BPR.  In the March BPR these same three banks were short only 5,226 contracts, so they've increased their net short position by 27 percent in just one month.

Also in platinum, '16 or more' non-U.S. banks are net short 9,132 COMEX contracts, up about 8 percent from the March BPR.  I would guess that maybe only one foreign bank has a material short position in platinum, so the rest don't matter.  But none of the non-U.S. banks matter in the face of the gargantuan short positions held by the '3 or less' U.S. banks.

Here's the BPR chart for platinum---and please note that the banks were never a factor in platinum until mid 2009.  Now look at them.  If you want to know why the platinum price isn't going anywhere, despite the supply/demand fundamentals, look at the total long positions the banks have vs. their collective short positions.  Palladium too!  That tells you all you need to know.  The banks are net short about 23 percent of the entire COMEX futures market in platinum.

In palladium, '3 or less' U.S. banks are net short 8,234 COMEX contracts.  This number has been virtually unchanged for the last six months.

Also in palladium, '11 or more' non-U.S. banks are net short 2,319 COMEX contracts, a decline of 25 percent from their net short position in the March BPR.  This number of contracts spread over 11 banks is immaterial when compared to the short positions in the '3 or less' U.S. banks.

Here's the BPR chart for palladium updated with the April report's data.  Just look at the long positions vs. the short positions held by the U.S. banks in Chart #5.  You couldn't make this stuff up!  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007---and they became the predominant and controlling factor by the end of Q1 of 2013, where they remain today.  I would bet that JPMorgan holds the vast majority of the U.S. banks' short position---and maybe all of it.  Palladium as well.  And how about silver?  And just as matter of interest, the banks, in total, are net short about 33 percent of the entire COMEX futures market in palladium, but it's the '3 or less' U.S. banks that are calling the shots in this metal---and the other three as well.

As I said last month at this time---along with a couple of Wall Street investment houses, these are "da boyz'---the sellers of last resort---and you can call them what you like.  Until they decide, or are instructed to stand back, the prices of all four precious metals are going nowhere---supply and demand fundamentals be damned!

As Jim Rickards so correctly put it, the price management scheme is now so obvious, they should be embarrassed about it.

But they obviously aren't.

I've tried to cut back on the number of stories, but I have a huge number anyway---and I hope you find some that you think are worth your while.

¤ The Wrap

Aside from the massive 7.5 million ounce of silver that JPMorgan acquired in the March delivery month, the key difference between its acquisition of silver and the Hunt Bros. or Buffett’s acquisitions, is that JPMorgan was the largest paper short seller on the COMEX over the time of its physical accumulation. This is manipulation on its face and just today [Wednesday] the federal commodity regulator, the CFTC, brought charges against Kraft for manipulating wheat futures in the same manner as I allege JPMorgan has used in acquiring silver at depressed prices.

JPMorgan is now in position to reap a fortune on sharply higher silver prices and that is almost tantamount to a personal invitation to investors to join in and reap a fortune as well by buying silver. When what is arguably the most powerful and well-connected financial institution in the world sets itself up for a score on the upside by buying more of something than ever bought before, that is an invitation to all investors to buy silver. Of course, JPMorgan is not intending to encourage you to buy silver due to their own actions; that’s just an unintended consequence.

Still, JPMorgan has been in the driver’s seat for silver for more than seven years (since acquiring Bear Stearns) and the unmistakable evidence that they have acquired a truly massive position in physical silver points to the bank driving silver prices higher. That’s as close to an insider investment invitation as it gets. - Silver analyst Ted Butler: 08 April 2015

Today's pop 'blast from the past' is is 38 years old already!  How the #@$% is that possible!!!  Where the hell has the time gone---and I really mean it this time?  The song and the group need no introduction---and the link is here.

Today's classical 'blast from the past' is a short work by Johannes Brahms, his Hungarian Dance No. 5---and everyone and his dog has heard this piece in one form or another in their lives.  Here is, fittingly, the Hungarian Symphony Orchestra doing the honours.  The quality of the video and audio is world class, so put it on all full screen and enjoy!  The link is here.  Here's the same piece played on the glass harp---and in some ways it's even more incredible than the orchestral version.  The link to that is here.

I was happy to see the rallies in all four precious metals yesterday, especially considering the strength in the dollar index.  It's a clear sign that these metals want to fly if given the opportunity---and regardless of what the dollar is doing as well.

The only thing keeping precious metal prices in check, are the efforts of the sellers of last resort, JPMorgan et al, just like they were on either side of the Easter long weekend.  Precious metal prices would have exploded to the upside, regardless of what the currencies were doing---and as the current COT Report showed, "da boyz" were standing there with the proverbial sledgehammer.

Here are the 6-month charts for all four precious metals---and you can see that yesterday's rallies were capped at, or just below, all of their respective 50-day moving averages.  If JPMorgan et al hadn't shown up with the lumber at the London p.m. gold fix, precious metal prices would be well beyond these moving averages at the moment.

Just as the American government sends in the warplanes and the Tomahawk cruise missiles, or the drones replete with their respective munitions, the U.S. dollar, the price of gold, silver and the other precious metals are just other weapons in the arsenal of the Anglo/American empire.

These financial weapons have their own delivery systems in the U.S.  They would include the Treasury Department, The Exchange Stabilization Fund, JPMorgan, HSBC USA---and Citigroup.  I'm sure I've left some out.  Sometimes they contract out to the Canadian, British, or Germany banking systems, but it's all run by New York and Washington.

Both Russia and China could put an end to all of this---and as I've said on several occasions in the past, they may do exactly that if push becomes shove.

Will it end?  Yes, of course, all price management schemes end at some point---and if you've spent any time reading stories in the Critical Reads section above, you've probably already figured that the end will come quickly, but probably loaded with uncertainty, along with some of Jim Rickard chaos thrown in for good measure.

I'm not exactly sure how it will all end, either.  But the invitation by JPMorgan to load the boat with physical silver is something that should be considered by all serious investors.

As the title to Thursday's column stated, the " Big Reset" is coming---and five minutes after that happens, it will be far to late to make any changes---so best do it now, whatever you plan to do.

That's all I have for the day---and the week---which is more than enough.

See you on Tuesday.

Ed Steer

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