Thursday, May 14: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price flat-lined all through Far East and early London trading on their Wednesday.  There was a bit of bump up at the noon London silver fix, but the real fireworks didn't start until the 8:20 a.m. EDT COMEX open.  At that point the dollar index headed south---and the gold price headed north.  Volume exploded as JPMorgan et al stepped in front of the technical funds in the Managed Money category.  Most of the gains were in by 10:30 a.m. in New York---and the absolute high tick came at the 1:30 p.m. EDT COMEX close.  It sold off a few bucks from there, before trading flat for the remainder of the electronic trading session.

The low and high ticks were recorded by the CME Group as $1,190.40 and $1,218.50 in the June contract.

Gold finished the Wednesday session at $1,215.10 spot, up $22.10 from Tuesday's close.  Gross volume was north of 283,000 contracts, but netted out to 'only' 200,000 contracts.  It should be obvious that "da boyz" threw everything they had at this rally.

Here's the 5-minute tick chart courtesy of Brad Robertson once again---and as you can see, the big volume came between the COMEX open and close, with most of it occurring between the COMEX open and 10:30 a.m. in New York.  Add two hours for EDT---and the ' click to enlarge' feature is more than helpful here.

After trading more or less sideways through most of the Far East session, silver developed a positive bias starting at 2 p.m. Hong Kong time on their Wednesday afternoon---and after that, the price chart was a virtual carbon copy of the gold chart---and certainly requires no further explanation.

The low and high ticks for silver were reported as $16.48 and $17.235 in the July contract.

Silver closed in New York yesterday at $17.09 spot, up 61 cents from Tuesday.  It would have closed up at least $61 if "da boyz" hadn't showed up.  Net volume was over the moon at 72,000 contracts, more than double what it was on Tuesday.

The platinum chart was a reasonable facsimile of the price action in gold and silver.  That white metal finished the Wednesday session at $1,147 spot, up 16 bucks on the day.

Palladium didn't do much---and it closed yesterday at $786 spot, up a dollar.

The dollar index closed very late on Tuesday afternoon in New York at 94.56---and began to weaken slightly during the Far East trading session.  It was down over 25 basis points by the London open---and rallied back to almost unchanged by the COMEX open.  Then the roof caved it.  The 93.50 low tick came about ten minutes before noon in New York---and it rallied a hair during the remainder of the Wednesday session, closing at 93.62 and down 94 basis points on the day.

Here's the 1-year U.S. Dollar chart so you can see how far it has dropped---and how much further it has [potentially] left to go.

The gold stocks gapped up and stayed up.  Their highs came at gold's high, the COMEX close---and they faded a bit from there.  The HUI finished the Wednesday session up 2.23 percent.

The silver equities rallied sharply, with almost all of their gains coming by 10:30 a.m. in New York.  After that they chopped more or less sideways for the remainder of the day.  Nick Laird's Intraday Silver Sentiment Index closed up a very decent 4.51 percent.

The CME Daily Delivery Report showed that 4 gold and 31 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  In silver, the only short/issuer of note was the Japanese bank Mizuho with 28 contracts out of its client account.  Not surprisingly, JPMorgan stopped 19 contracts---8 for clients and 11 for itself.  HSBC USA stopped 12 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in May fell by 3 contracts down to 145, minus the 4 mentioned in the previous paragraph.  In silver, May o.i. dropped by 34 contracts, leaving 375 contracts still open, minus the 31 in the previous paragraph.

There were no reported changes in GLD yesterday, but over at SLV an authorized participant added 955,880 troy ounces.  I would expect that a very decent chunk of physical silver is owed SLV after yesterday's price action---and it's a given that the authorized participants, principally  JPMorgan, will short the shares in lieu of depositing metal, as the metal doesn't exist to satisfy that kind of demand.  It's also a given that JPMorgan won't be providing it out of their private stash, either.

The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs as of the close of business on Friday, May 8---and here's what they had to report.  Their gold ETF added 4,914 troy ounces, but they removed 8,429 troy ounces from their silver ETF.

For the second day in a row there was no report from the U.S. Mint.

It was a very quiet in/out session at the COMEX-approved depositories on Tuesday.  In gold, there was 2,101 troy ounces received---and 16,170 troy ounces shipped out.  In silver there was nothing received---and only 38,356 troy ounces shipped out the door.  No need to link that activity.

It was quite a bit busier at the COMEX-approved gold kilobar depositories in Hong Kong.  They received 5,507 kilobars---and shipped out 6,110 kilobars.  All of the action was at Brink's, Inc.  The link to that activity in troy ounces is here.

I have a decent number of stories for you today---and I hope you'll find some in the list below that you'll find worth reading.

¤ The Wrap

How did it get to the point where, as a silver analyst, I spend almost all of my time talking about price manipulation---and not about actual market fundamentals? Where I make consistent ugly accusations about the nation’s most important bank, the world’s leading derivatives exchange---and the federal commodities regulator?  Where I raise issues that I know are substantive and that should be forcefully addressed by these entities, yet am met only with silence?

I’ve been thinking about these questions and of little else. Either JPMorgan has had nothing to do with the silver manipulation since taking over Bear Stearns in 2008 or everything to do with it, including amassing hundreds of millions of actual ounces over the past four years at prices the bank deliberately rigged lower. Either the CME Group is running a modern day bucket shop with little participation by real producers and consumers, proven by the U.S. Government’s own data and one’s own eyes, or I am out to lunch and know little of what I speak. Either the CFTC has convincing logical explanations that refute my allegations that it is turning a blind eye to its most important mission and chooses to keep those explanations to itself, or it is afraid to openly address the issues for fear it will expose itself as an enabler of the manipulation.  - Silver analyst Ted Butler: 13 May 2015

The COMEX open was the starting gun for a sell-the-dollar/buy-gold frenzy that we haven't seen for a while.  A similar situation in the dollar index occurred 24 hours prior to that, but precious metal prices were held in place by the "da boyz" and their algorithms.  You have to wonder what was so different about the dollar decline on Tuesday vs. yesterday.  The answer is---I don't know.

Anyway, JPMorgan et al were on the job within minutes of the COMEX open---and literally threw everything they had at precious metal prices to prevent them from blasting to the outer edges of the known universe, which is where they would have ended up if they hadn't stepped in front of these rallies.  As I mentioned at the top of this column, net gold volume was over the moon at 200,000 contracts---and silver's net volume was sky-high as well at 72,000 contracts.

Without doubt the technical funds in the Managed Money category were buying longs and selling shorts---and 'da boyz' were in there as sellers of last resort on the other side of all these trades.  If they hadn't been there, we would be looking at gold and silver prices that would have made your eyes water.

Unless I'm reading this all wrong---and the Commercials are pulling a fast one behind a lot of spread trades---there was massive deterioration in the Commercial net short positions in gold, silver and platinum yesterday.  But, as I carefully noted---and as Ted Butler pointed out on the phone---all this activity occurred on Wednesday, the day after the cut-off for tomorrow's Commitment of Traders Report.  That's a trick of theirs that I've seen them pull many times over the last ten years or so.  We'll have to wait more than a week before we can see what really happened yesterday---and anything can happen between now and then, and it just might.

Here are the 6-month charts for all four precious metals.  Not only did the 50-day moving averages get obliterated to the upside in both gold and silver, but both metals also closed just below their respective 200-day moving averages as well.

Just checking the RSI traces on gold and silver, you can see that we're not anywhere near overbought, but a couple of more days of price action like yesterday---and we'll be there.  So we'll just have to wait it out and see what JPMorgan et al have in store for us in the days ahead.  Yesterday's price action was strictly a COMEX affair---Managed Money vs. the Commercials, as always---and had nothing to do with supply/demand fundamentals.

And as I write this paragraph, the London open is about fifteen minutes away.  Both gold and silver sagged a hair in morning trading in the Far East, but around 1:45 p.m. Hong Kong time, prices turned higher---and both gold and silver are trading a bit above their Wednesday closing prices in New York.  Ditto for platinum and palladium.

Net gold volume is approaching 18,000 contracts, but most of the volume is of the HFT variety.  Silver's net volume is very respectable at 5,600 contracts.  The dollar index has been sliding quietly lower through the entire Far East and Middle East trading sessions---and is currently down 14 basis points.

Although was I was happy to see these rallies, I was disappointed that it appears that it's the same old, same old---as "da boyz" stepped in front of them as well.  Using past as prologue, they'll end the same way as they always have.  But, having said that, we could have quite a ride between now and then---and as I said a few paragraphs ago, we'll just have to wait it out and see what the powers-that-be have in store for precious metals.  Things might be different this time, but I doubt it.

And as I send today's effort off into cyberspace at 5:05 a.m. EDT, I note that the tiny rallies that began an hour or so before the London open, all ended there---and all four precious metals are back to unchanged or down a bit on the day.  Net gold volume is now pushing 32,000 contracts---and silver's net volume is about 9,800 contracts.

Virtually all of this is of the HFT variety---and it's obvious, at least to me, that precious metal prices are being held firmly in place as the dollar index continues to sink.  At the moment it's down 17 basis points, but was down over 40 basis points about forty-five minutes before London opened.

Yesterday's price action during the COMEX trading session came as a surprise---and for that reason, nothing I see on my computer screen later this morning will come as a shock, either.

I hope your day goes well---and I'll see you here tomorrow.

Ed Steer

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