Saturday, May 9: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price traded basically flat until 2 p.m. Hong Kong time on their Friday afternoon.  The smallish rally that began at the point got capped sometime after 8:30 a.m. in London trading.   From there it chopped quietly lower into the jobs report.  The price went vertical at that point---and got hammered to its low of the day within ten minutes. [But if you check the New York Spot gold chart carefully, the rally actually began about a minute before the jobs numbers hit the tape.]  The tiny rally that started at that point met the same fate about five minutes before the open of the equity markets in New York---and then gold was sold down into the London p.m. gold fix.  The rally from 11:00 a.m. EDT got capped just after 12 o'clock in New York---and the price didn't do much after that.

The price traded in a ten dollar range all through Friday, so the highs and lows aren't worth the effort of looking up. 

Gold closed in New York yesterday at $1,187.50 spot, up $3.30 from Thursday.  Net volume was 110,000 contracts, which is amazing considering the tiny price range that gold traded in on Friday.

Here's the 5-minute tick gold chart courtesy of Brad Robertson---and as you can tell, the volume needed to kill that spike at 8:30 a.m. EDT was pretty chunky, something north of 20,000 contracts.  About fifteen minutes after the London p.m. gold fix was done, the volume fell off to next to nothing.  Midnight EDT is the vertical dark gray line---and don't forget to add two hours, as the chart is Denver time.  Please use the ' click to enlarge' feature.

The silver chart was, almost tick for tick, a virtual carbon copy of the gold chart, so I shall spare you the play-by-play.

Silver was also forced to trade in a tight range as well, as the low and high ticks were recorded by the CME Group as $16.26 and $16.555 in the July contract.

Silver finished the Friday session at $16.395 spot, up a thin dime.  Considering the price range, net volume was pretty chunky at 31,000 contracts, as JPMorgan et al kept silver in a vice grip as well.

Ditto, for the most part, for platinum---and it finished at $1,139 spot, up 9 dollars from Thursday's close.

It was virtually the same for palladium, except its jobs number rally was allowed to run---and except for a brief sell-off between 9 and 10 a.m. EDT, the price continue to rise, only getting capped once it broke the $800 spot mark, which also happened to be its 200-day moving average.  After that it was sold down a few dollars into the close of electronic trading.  The metal closed at $798 spot, up 20 bucks on the day.

The dollar index closed late on Thursday afternoon at 94.62---and rallied up to 94.85 shortly before noon in Hong.  From there it traded in a very broad range for the rest of the day---and it closed at 94.77---up 15 basis points.

The gold stocks opened just above unchanged and plunged briefly into negative territory at the fix.  They rallied until just after 12 o'clock noon EDT---and traded sideways for a while before rolling over in mid-afternoon trading in New York.  But in the last forty minutes, buyers reappeared and the HUI closed up 1.13 percent.

The silver equities followed a somewhat similar path, but came close to closing in the red until the late-day rally began just before the close.  Nick Laird's Intraday Silver Sentiment Index finished up 0.68 percent.

The CME Daily Delivery Report showed that zero gold and 8 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  JPMorgan stopped 6 of them: 3 for clients---and 3 contracts for itself.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Daily Delivery Report for the Friday trading session showed that another 37 gold contracts disappeared from May open interest, and the total left is now down to 156 contracts.  In silver, the May o.i. fell by 71 contracts down to 675 remaining---minus the 8 above.

There was a huge withdrawal from GLD yesterday, as an authorized participant withdrew 345,317 troy ounces.   That's north of 10 metric tonnes.  There has been no price activity during the last week or so that would justify a withdrawal of that size.  One is left wondering why it was taken out.  And as of 10:22 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was no sales report from the U.S. Mint.

Over at the COMEX-approved depositories on Thursday, it was another busy day for gold.  only 1,607 troy ounces were received, but 137,458 troy ounces were shipped out.  Almost all of the 'out' activity was from Brink's, Inc.  The link to that action is here.

It was another big day in silver as well.  1,018,832 troy ounces were reported received---and 392,119 troy ounces were shipped out.  The link to that action is here.

There was activity at both of the COMEX-approved gold kilobar warehouses in Hong Kong on Thursday.  At Brink's, Inc. exactly 1,000 kilobars were reported received---and 6,099 kilobars were shipped out.  Over at the Malca-AmitFar East Ltd depository they received a very tiny 26 kilobars.

There's been a lot of physical gold and silver movement this week.

Nick Laird was a busy boy at his home near Cairns, Australia on their Saturday afternoon---as he has three charts for us.

The first are the official India gold imports for February.  They bought only 50.2 tonnes.  The media in that country has already stated on numerous occasions that March and April gold imports are north of 100 tonnes per month, so we'll see it that's what the official numbers show.  But as you can tell, the official numbers sure take the slow boat before they get released in the public domain.

Nick's next chart shows gold imports to China via Hong Kong for the month of March.  During that month there was 66.363 tonnes imported.  Although Hong Kong may have diminished in importance as far a gateway for gold into China, it's obviously from the chart below that it remains an important one nonetheless.

Over at the Shanghai Gold Exchange for the week ending on May 1, they reported withdrawing 38.353 metric tonnes---and here's Nick's most excellent chart.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday showed an increase in the Commercial net short position in silver---and a monster drop in gold's Commercial net short position.

In silver, the Commercial net short position actually increased by 3,251 contract, which was a bit of surprise---and it now stands at 186.2 million troy ounces, or .  The 'Big 4' short holders covered 600 of their short contracts---and the '5 through 8' traders covered another 1,000 short contracts as well.  Ted's raptors, the Commercial traders other than the 'Big 8', sold about 4,900 of their long contracts.

With the new Bank Participation Report in hand, Ted Butler pegs JPMorgan's silver short-side corner in the COMEX futures market at around 14,500 contracts.  Ted also said that JPM is no longer the big short in COMEX silver.  He's right about that, as the undisputed King Short is now Canada's Scotiabank---and they have been for a long time now.  I'd peg their short position something north of 20,000 COMEX contracts.  I'll have more on this in my comments on the Bank Participation Report further down.

Under the hood in the Disaggregated COT Report the technical traders in the Managed Money category decreased their short position by 3,806 contracts---and they also added 1,861 long positions.

This past week's COT Report for silver was just as much a surprise as the previous week's report in silver was, but in the other direction---and I'll guess that it's another case of where the past two reporting weeks for silver should be looked at from a combined perspective.  It appears that data is not being reported in a timely manner, but is being reported---eventually.  I look forward to what Ted has to say to his paying subscribers later this afternoon.

In gold, the Commercial net short position declined by a whopping 32,710 contracts, or 3.27 million troy ounces.  The Commercial net short position now stands at 7.42 million troy ounces.  that's not the lowest number we've seen in a while, but it's close.

The Big 4 traders covered 6,500 of their short contracts---and the '5 through 8' covered an additional 5,500 contracts.  The raptors added almost 21,000 contracts to their already impressive long position.

Under the hood in the Disaggregated COT Report, the Managed Money sold 15,995 long contracts---and added 11,731 contracts to their already impressive short position.

Overall there was a bit of deterioration in the COT's internal structure during the reporting week, but nothing that really mattered.  Rock bottom in gold is about thirty bucks lower at most from this point---and maybe 50 cents in silver.  But as I've said before, it's not the price that matters, but the number of contracts that JPMorgan et al can trick the technical funds in the Managed Money category from either selling [long positions] or buying [short positions].  JPM just stands back, lets their HFT boyz and their algorithms do the dirty---and scoop up whatever falls off the table.

Of course this close to the price bottom, there ain't much to scoop, but they may give it the old college try before we move higher.  So we wait some more.

Here's Nick Laird's " Days of World Production to Cover COMEX Short Positions" for each physical commodity traded on that exchange.  Nothing material has changed in this chart for the 15 years I've been tracking it, as the egregious short positions in all four precious metals stand out like the proverbial sore thumbs that they are.  Especially silver, as it has barely moved from the spot you see it in now.

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 75 days of world silver production between them,  That's about 80 percent of the short position held by the 4 largest traders---and just under 50 percent of the 8 largest traders.  How's that for a concentrated short position?  And not a word about this 1,000 pound gorilla from CPM Group, GFMS, The Silver Institute, or the miners.

Along with yesterday's Commitment of Traders Report came the companion Bank Participation Report [ BPR] for May, for positions held in April.  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, 4 U.S. banks were net short 22,885 COMEX gold contracts, an improvement of about 7,000 contracts from the April BPR. I would speculate that almost all of the 6,966 contracts held long by these four U.S. banks are held by JPMorgan.  Two of the other three U.S. banks are Citigroup and HSBC USA for sure.  But now even Goldman Sachs may be involved as well, as this is the first time in a year that there have been more than 3 U.S. banks involved in the COMEX futures market in gold.  GS is now involved the London gold fix, so it makes a certain amount sense that the fourth bank would be them.

Also in gold, 20 non-U.S. banks are net short 33,934 COMEX contracts---and that's about a 12,000 contract improvement from April's BPR.  It's my opinion that Canada's Scotiabank holds about half of this short position all by itself, so the remaining 17,000-odd contracts spread out over the other '19 or more' non-U.S. banks are pretty much immaterial---unless they're all trading as a group, but I don't think that's the case at all.

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.  Also note the vanishingly small short and long positions held by the four U.S. banks as of this month's BPR.  You have to go back to before Bear Stearns on this chart [August 2008] to see a better set up than that.  And the situation has improved a bit more since Tuesday's cut-off.

In silver, '3 or less' U.S. banks are net short 13,812 COMEX silver contracts, which is a 1,200 contract improvement since the April BPR.  Since Ted puts JPMorgan's short position at 14,500 contracts, that make it a given that the two remaining [or maybe only 1] U.S. banks are net long the COMEX silver market by a bit.  If two banks are involved, they would be HSBC USA and Citigroup.

Also in silver, '13 or more' non-U.S. banks are net short 19,921 COMEX silver contracts---and that's an improvement of about 6,500 contracts from April.  Since October of 2012 when Scotiabank got outed, it's my firm belief that at least all if not more of the above net short position is held by Canada's Scotiabank---and the chart below confirms that.  This means that the short positions of the remaining '12 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 35,000 COMEX silver contracts between them.

In platinum, '3 or less' U.S. banks are net short 7,199 COMEX contracts which is up about 500 contracts from the April BPR.  I'd guess that JPM is short over half this amount by itself---and maybe only HSBC USA is short the rest.  Citi would be a small player, if they are at all.

Also in platinum, '13 or more' non-U.S. banks are net short 9,678 COMEX contracts, which is also an increase from the April BPR.  If there is a large player in platinum amongst the non-U.S. banks, I wouldn't know which one it is, but 13 divided into 9,678 contracts isn't a lot anyway, unless they're all operating in collusion---which I doubt it.  Platinum price management is an American show as well.

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 24 percent of the entire COMEX futures market in platinum.

In palladium, '3 or less' U.S. banks are net short 7,875 COMEX contracts, which is an improvement of about 500 contracts from the April BPR.

Also in palladium, '13 or more' non-U.S. banks are net short 3,169 COMEX contracts which is a deterioration of about 800 or so contracts from the April BPR.

Here's the BPR chart for palladium updated with the May BPR 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.  Platinum as well.  And how about silver?  And just as matter of interest, the banks, in total, are net short about 34 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 in the other three precious metals as well.

As I said last month at this time---along with the odd Wall Street investment house, 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 have a lot of stories today, along with quite a few I've been saving for length or content reasons---and I hope you can find time in what's left of your weekend to read the ones that interest you the most.  But as is always the case, the final edit is up to you.

¤ The Wrap

After complaining to the CFTC about a COMEX silver manipulation for 30 years and having the agency forcefully deny that such a manipulation by means of a concentrated short position existed in May of both 2004 and 2008, it turned out that the largest silver (and gold) COMEX short (Bear Stearns) went, effectively, bankrupt in March 2008, months BEFORE the CFTC’s 2008 public denial that anything was wrong on the short side of COMEX silver. Please think about that for a moment. The CFTC denied both before and after that there was no manipulation in COMEX silver and no problem with the unreasonably large concentrated short position even though the largest such short, Bear Stearns, went belly up on a rise in silver prices to $21 in March 2008.  Any CFTC official who participated in that lie that should be in prison.

After the crooked bank JPMorgan took over the concentrated and manipulative COMEX silver short position at the U.S. Government’s request after I and many complained, the CFTC initiated a formal investigation by its enforcement division that stalled and wasted taxpayer money for five years without any clear findings as JPM continued to manipulate silver prices. It was only when, in April 2011 with silver prices close to $50---and with JPM looking into the financial abyss, that the big rig job to the downside took place. Only this time, JPMorgan had decided to buy as much silver as possible to score to the upside.

Comparing what took place with Bear Stearns and JPMorgan and the shocking participation by the CFTC and the CME Group in what must be called the silver crime of the century, I’m not the least bit shocked by JPMorgan’s acquisition of the largest private stockpile of silver in history. If others wish to be shocked by my conclusions, that’s their business, but how they aren’t shocked by what preceded it is, well, shocking to me. To top matters off, as subscribers are aware, I send everything I write to the crooks at JPMorgan, the CFTC and the CME never hear a peep back from these dirt bags. Yeah, I know, I’m going to get in trouble for this one day. Rant off. - Silver analyst Ted Butler: 06 May 2015

Today's pop 'blast from the pasts' are somewhat of a rare bird for me, as they're both from the 21st century.  Although I'm not really a fan of the artist or her music, these two songs of hers will certainly stand the test of time.  I'm not wild about the official video it's embedded it, either---but it is what it is---and the link is here.  Her other hit of hers that I like is here.

Today's classical 'blast from the past' is Antonín Dvořák's Serenade for wind instruments, cello and double-bass in D-minor Op. 44 which he composed in 1878.  It premiered in Prague in the same year.  It's in two parts, with part #2 in the right side bar.  I've posted this before, but it's been a couple of years, so here it is again.  The link to part #1 is here.

Although there certainly wasn't a lot of price movement allowed in either gold or silver, the volume was high enough in both to indicate that there was lots going on under the surface.  The most obvious thing was the fire power that was used by "da boyz" to keep the gold price under wraps at 8:30 a.m. EDT.

This sort of price action at the job numbers is pretty representative of what happens on this one day a month, but it was obvious that the powers-that-be were leaving nothing to chance.

Here are the 6-month charts for all four precious metals updated with Friday's price/volume data.

We're virtually at the lows from a Commitment of Traders perspective---and even though there's a bit of room if JPMorgan et al want to push it, from a price perspective, the bottom is basically within spitting distance from where we sit today.

As to what comes next---and when---I haven't a clue.  But one has to sense that the current supply/demand fundamentals in both silver and gold, backed by a 'locked and loaded' COT structure, is going to result in a significant repricing of the precious metals at some point.

It will be interesting to see if this repricing rally, if and when it does materialize, will be allowed to burn itself out to the upside---or will JPMorgan et al step in at some point with another ceiling on the price, albeit at a much higher level?

If you read Doug Noland's Credit Bubble Bulletin in the Critical Reads section, his weekly commentary " The End is Near" comes as a final signpost as the edge of the economic, financial and monetary precipice looms into view.

All we can do is sit and wait with our fingers in our ears, hoping that we will survive it all.

But while I'm waiting, I think I'll have a beer.

I'm done for the day---and the week.

See you on Tuesday.

Ed Steer

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