Thursday, May 28: Today in Gold and Silver

NEW YORK ( TheStreet) -- Well, the HFT boyz, along with their algorithms and spoofing, were nowhere to be seen on Wednesday as the gold price traded in about a seven dollar price range.  However, a new low price tick was set for this move down minutes after the COMEX open.  The highs and lows from yesterday aren't worth the effort of looking up.

Gold closed in New York yesterday at $1,188.00 spot, up the magnificent sum of 20 cents the ounce.  Gross volume, as expected, was over the moon at 363,000 contracts, but it all netted out at only 37,000 contracts as the large traders had to be out at the close of COMEX trading.

Silver traded basically unchanged until shortly after the morning gold fix in London yesterday---and its new low tick for this move down also came minutes after the COMEX open---no coincidence, I'm sure.  The silver price rallied a bit until 10:20 a.m. EDT, before getting sold down until 11:15 a.m. EDT.  From there it traded flat into the close of electronic trading.

The high and low ticks in silver were recorded by the CME Group as $16.81 and $16.58 in the July contract.

Silver finished the Tuesday session at $16.65 spot, down 7 cents from Tuesday's close.  Gross volume was 38,500 contracts, but netted out to only 25,500 contract.  The surprise in these numbers was the heavy roll-overs out of July, with 2,156 contracts into September---and 3,918 contracts into December.  I don't know if it means anything---and I'll try to remember to ask Ted today.

The platinum price traded a small handful of dollars higher through all of Far East trading---and into early trading in London.  Then, like silver, the price got rolled over just after 10:30 a.m. BST/11:30 a.m. in Zurich---and its new low price for this move down came shortly before and after the close of COMEX trading at 1:30 p.m. EDT.  Platinum finished the Wednesday session at $1,117 spot, down 6 bucks from Tuesday.

Palladium followed platinum pretty closely up until the price got turned over at 11:30 a.m. Zurich time as well.  Its low of the day came during early trading in New York---and it rallied back to unchanged---$778 spot---by the close.

The dollar index closed late on Tuesday afternoon in New York at 97.22.  It rallied about 15 basis points in early Far East trading on their Wednesday morning before heading lower.  It dipped to its 96.90 low of the day around 2:45 p.m. Hong Kong time, but at that point 'gentle hands' appeared and brought it back above the 97.00 mark.  After trading flat for a couple of hours, a 'rally' began that took it to its 97.78 high minutes after 9 a.m. in New York---and from there it chopped lower in the close.  It finished the Wednesday session at 97.30---up 8 basis points from Tuesday's close.

The gold stocks gapped down about 2 percent at the open---and managed to rally into positive territory shortly after 10:30 a.m. EDT on gold's tiny rally after its new low tick---and then they faded from there, with the HUI closing down 0.32 percent.

The silver equities got sold down at the open as well, but they never got a sniff of positive territory---and Nick Laird's Intraday Silver Sentiment Index closed down 1.38 percent.

The CME Daily Delivery Report showed that 10 gold and 51 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The largest short/issuer was Canada's Scotiabank with 39 contracts---and the largest long/stopper was JPMorgan with 42 for its in-house [proprietary] trading account.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in May fell by 26 contracts---and is now down to 10 contracts remaining.  Those contracts are being delivered tomorrow as per the above paragraph.  Silver's open interest fell an amazing 147 contracts, leaving 71 still open, but only 51 were posted for delivery on Friday.  What's with the other 20 contracts left over undelivered?  Beats the hell out of me---and I await the First Notice Day report this evening for some sort of resolution to this.

There were no reported changes in GLD yesterday---an an authorized participant added a smallish 143,355 troy ounces to SLV.

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

It was another quiet day in gold at the COMEX-approved depositories on Tuesday, as only 2,500 troy ounces were received, all at HSBC USA---and nothing was shipped out.  And it was pretty quiet in silver as well.  Only 94,733 troy ounces were received---and 130,239 troy ounces were shipped out.   The 'in' activity was at HSBC USA---and most of the 'out' activity was at the CNT Depository.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they received 4,092 kilobars---and shipped out 3,416 of them.  The link to that activity, in troy ounces, is here.

I have a decent number of stories for you today, but I'm a little short of precious metal-related stories, as not much has been happening this week.  I hope you'll find a few that you feel are worth reading.

¤ The Wrap

If, for instance, copper futures experienced 53 or 61 days of world copper production (50,000 tons per day) being bought and sold by speculators on the COMEX during one week, as just occurred in silver futures, that would mean between 210,000 to 240,000 COMEX copper contracts would be repositioned, an impossibility for a market with a total open interest of less than180,000 contracts. Further, the concentrated short position of the eight largest traders in COMEX copper comes to 15 days world production, less than a tenth of the 163 days of world production in COMEX silver.

If NYMEX crude oil experienced 53 days of world oil production (93 million barrels a day) being sold in one week, as just occurred in COMEX silver, that would be the equivalent of 5 billion barrels of oil or 5 million NYMEX futures contracts. NYMEX crude oil is the largest oil futures contract in the world and has a current total open interest of around 1.6 million contracts and it would be impossible for any group of speculators to sell or buy 53 days of world production in a year or longer, no less in a week as just occurred in COMEX silver. In terms of the concentrated short position of the 8 largest traders in NYMEX crude oil, it comes to less than 4 days of world oil production, compared to the 163 days of production held short in COMEX silver.

It is only when you compare what just occurred in COMEX silver to other commodities does the extent of the manipulation come through. I’d use the words preposterous and absurd to describe the situation, but the COT report is factual and as real as rain. Instead, what is preposterous and absurd is for anyone to pretend that what is going on in silver is somehow normal. This is particularly true for silver investors and mining companies and their shareholders which are being held hostage to the most defective price discovery process in history. -- Silver analyst Ted Butler: 27 May 2015

It was a very quiet trading day from a price perspective, but three of the four precious metals set new lows for this move down yesterday, although they did not close at them---so the slicing continues.

Volume in gold, of course, was enormous as the big traders had to be out yesterday at the COMEX close---and all the rest have to be out by the end of today's close.  Volume will be lighter, but still very decent.

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

If you read Ted's quote above, I urge you to read it one more time---and if you didn't, it's not too late to make amends.  Here's Nick Laird's " Days of World Production to Cover COMEX Short Positions" graph in all physically traded commodities on the COMEX.  This chart was in my Saturday column, but I thought I'd post it here for reference purposes.  Ted mentions that the Big 8 traders are short 163 days of world silver production, but Nick's chart indicates the number is actually 178 days.

And as I type this paragraph, the London open is about fifteen minutes away.  Gold, silver and platinum are up a hair---and palladium is flat.  Nothing to see here.  Net gold volume is around 10,500 contracts at the moment, with virtually all of it in the new front month, which is August.  Net silver volume is a bit over 3,600 contracts.  Nothing to see in the volume data, either.

The dollar index made it up to 97.39 around 11 a.m. Hong Kong time on their Thursday morning---and it's been heading south at a goodly pace since.  It kissed the 97.00 mark around 2:30 p.m Hong Kong time, but 'gentle hands' were at the ready.  However, it's still hovering very close to that mark with the London open less than five minutes away at this point---and is currently down 28 basis points.

Today is the last trading day in the June contract---and First Day Notice numbers will be posted on the CME's website this evening---and I'll have them for you in tomorrow's column.

And as I send today's effort off into cyberspace at 5:35 a.m. EDT, I see that all four precious metals have crept a bit higher, but it's obvious that a willing seller was present shortly after 9 a.m. BST in London, as gold, silver and platinum all got sold down a bit.  With three wildly different supply/demand fundamentals, this sort of co-ordinated 'action' would never happen in a free market.

As expected, gold's gross volume is getting up there, but the net volume is only 21,000 contracts.  Silver's net volume is sitting right at 6,000 contracts---and the dollar index, which has bounced off the 97.00 mark three times in the last couple of hours, is down 22 basis points.  I get the impression that it would like to move a lot lower, but those 'gentle hands' are obviously still around.

I have no idea what will happen during the Thursday trading session, but we certainly aren't out of the woods yet from a down-side perspective.  Of course there's always a chance that JPMorgan et al could get over run with some black swan event coming out of left field.  But if it does happen, it will be---as Ted Butler has been saying for at least a decade now---the first time.

So we wait.

I'm off to bed---and I'll see you here tomorrow.

Ed Steer
This is an abbreviated version of Could South Africa's Gold Mining Industry Be Gone By 2020?, from Ed Steer's Gold & Silver Daily. Sign-up to have to the complete market review delivered to your email inbox each morning for free.

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