Saturday, May 30: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price chopped around in a five dollar price range all through Far East and the first half of London trading on their Friday, but at 8:30 a.m. EDT the price began to rally, but ran into the usual not-for-profit sellers right away.  The high tick came at, or shortly before the London p.m. gold fix, before getting sold back to almost unchanged.  It rallied a bit starting around noon in New York, but didn't do much after that.

The low and high tick were recorded by the CME Group as $1,186.00 and $1,194.40 in the August, which is the new front month.

Gold finished the Friday session at $1,190.00 spot, up $2.20 on the day. Net volume was only 108,000 contracts, which wasn't a lot.

As always, it was almost an identical price pattern in silver, which is obvious from looking at the charts, so I shall spare you the play-by-play.

The low and high ticks in the metal were reported as $16.64 and $16.85 in the July contract.

Silver closed on Friday in New York at $16.70 spot, up 4 cents from Thursday's close.  Net volume was only 25,500 contracts.

Platinum chopped sideways until shortly before 11 a.m. in New York---and then it got sold down into the COMEX close.  Platinum finished the Friday session at $1,109 spot, down 5 bucks from Thursday.

Palladium chopped around a couple of bucks either side of unchanged until 2 p.m. Zurich time---and then got sold down 7 dollars by the COMEX open, which was twenty minutes later.  By around 10:30 a.m., EDT, the price was back in the green.  But within two hours it had been sold down 11 bucks---and didn't do a lot after that.  The metal was closed down 8 dollars on the day to $775 spot.

The dollar index closed at 96.88 late on Thursday afternoon in New York---and it chopped around that number in a wide range throughout the entire Friday session, closing at 96.85---down 3 basis points from Thursday's close.

The gold stocks opened unchanged, but blasted to their highs of the day, along with the gold price, shortly before 10 a.m. in New York.  From there they slid into negative territory, hitting their low tick around 11:30 a.m.  They rallied back into positive territory in the next hour or so, but couldn't hold it, as the HUI closed down 0.17 percent.  I thank Nick Laird for the chart.

The silver stocks followed almost the same pattern as their golden cousins, but they managed to close in the green, as Nick Laird's Intraday Silver Sentiment Index closed higher to the tune of 0.42 percent---but well off their highs.

Nick advised us that for the week just past the HUI and the Intraday Silver Sentiment Index both closed down another 2.6 percent apiece.

The CME Daily Delivery Report for Day 2 of the June delivery month showed that only 3 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  Nothing to see here which, I must admit, is a bit of a surprise.

The CME Preliminary Report for the Friday trading session showed that gold open interest in June fell by 2,830 contracts, down to 5,550 contracts.  That's a pretty decent amount of gold for a delivery month---and that's why I'm surprised that the first two delivery days have been as quiet as they were.  Obviously that will change---and in rather short order I would think.

June open interest in silver fell by 195 contract, leaving only 32 left for delivery, minus the 2 posted in the previous paragraph.  Unless some surprise deliveries show up as the month progresses, silver deliveries are going to be a real yawner.  But that should come as no surprise, as June is not a traditional delivery month for silver anyway.

There were no reported changes in either GLD or SLV yesterday.

I wasn't expecting a sales report from the U.S. Mint yesterday, but we got one.  They sold 6,500 troy ounces of gold eagles---2,500 one-ounce 24K gold buffaloes---and 375,000 silver eagles.

Month-to-date the mint has sold 21,500 troy ounces of gold eagles---9,500 silver eagles---and 2,023,500 silver eagles.  Based on these figures, the silver/gold sales ratio works out to 65 to 1.

And as Ted has been mentioning for most of the month, the big buyer of silver eagles appears to have stepped away from the table---and in obvious response to that, the U.S. Mint has ended rationing of silver eagles.  I have a story about this in the Critical Reads section below.

It was another 'nothing' day for gold deliveries at the COMEX-approved depositories on Thursday.  Nothing was received---and only 1,286 troy ounces were shipped out.

There was a decent receipt in silver, as 601,024 troy ounces were reported received---all at Brink's Inc.---but only 30,186 troy ounces were shipped out the door.  That silver came out of the depositories over at HSBC USA.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 5,843 kilobars---and shipped out 5,024.  I'm on the road at the moment---and don't have the links to any of the above movements, as they're on my home computer. 

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday was a crushing disappointment in silver---and pretty decent in gold.

In silver, the Commercial net short position only declined by 983 contracts, which is nothing.  The Commercial net short position is still way up in the stratosphere at 61,502 contracts, which translates into 307.5 million troy ounces, a hair under 134 days of world production.

The Big 4 were unchanged---and Ted thinks that JPMorgan's short position is basically unchanged at 20,000 contracts, with a possible revision with next week's Bank Participation Report.  The big '5 thru 8' upped their short position by 300 contracts to a new six year record of 75,529.  The raptors, the Commercial traders other than the Big 8, added 1,200 new longs and sit at 14,000 contracts net long. The traders in the Managed Money category in the Disaggregated COT Report did next to nothing.

In gold, the Commercial net short position declined by 22,614 contracts, or 2.26 million ounces, which was in line with Ted's expectations.  The Commercial net short position is now down to 10.97 million troy ounces.

The Big 4 bought back 7,600 short contracts, the big '5 thru 8' bought back a little over 4,000 shorts---and the raptors added 10,500 new longs. On the sell side, Managed Money only accounted for 12,373 contracts.  They did this by reducing their long position by 7,237 contracts and going short an additional 5,136 contracts.

I'm less than amused with the silver situation in this past week's COT Report---and I'd like to blame it on tardy reporting standards, but if that was the case, then it should have equally applied to gold as well, which it obviously didn't according to Ted.  I'll have more on this in The Wrap.

Here's Nick's " Days of World Production to Cover Short Positions" for all physically traded commodities on the COMEX---and you can see why I said that the short position in silver was still in the stratosphere.  Not that I wish to bore you with this minor detail, but it's my opinion based on the Bank Participation Report figures that JPMorgan and Canada's Scotiabank combined, are short about 90 days of world silver production between them.  The Big 8 are short 179 days of world production in total, but these two banks alone are short exactly half of that amount.  How's that for a concentrated short position?

Another week---and another decent withdrawal from the Shanghai Gold Exchange.  They reported taking out 42.493 tonnes on Friday, May 22.  Here's Nick's most excellent chart.

I've tried to cut the number of stories down to a bare minimum---and was only partly successful.  I also have a few that I've been saving for today's column.

¤ The Wrap

Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation---and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences. - Susan B. Anthony

Today's pop 'blast from the past' is actually a ballad by Marty Robbins from way back in 1960.  This B&W video was taped at the Grand Ole Opry---and it's a classic.  The link is here.

Today's classical 'blast from the past' is one I heard on CBC FM as I was driving to work earlier this week---and couldn't get out of my head, so I thought posting it in today's column would help.  I've posted it before, but it's been a while.  It's Mozart's third violin concerto, his most popular of the five he composed when he was 19 years young.  Here's the delightful Hilary Hahn doing the honours along with the Stuttgart Radio Symphony Orchestra.  Gustavo Dudamel conducts---and the link is here.  By the way, the pope at the time was in attendance.

It was another trading session where gold, silver and platinum wanted to rally during the COMEX trading session, but it was equally obvious that "da boyz" weren't about to allow it to happen.  Volumes were pretty light, so it didn't take much to keep prices under wraps.

Here are the 6-month charts for all four precious metals as of the close of trading on Friday.

As I mentioned in my comments on Friday's Commitment of Traders Report, I was not amused by what the silver numbers showed.  During the reporting week, silver smashed through its 200-day moving average---and kissed the 50-day moving average---and the COT Report showed basically unchanged.  Assuming all the data from Tuesday's engineered price decline was reported in a timely manner---and that's a big assumption---I'm not overly optimistic about the silver price going forward.  Of course the critical 50-day moving average hasn't been broken, but that's almost beside the point at this juncture.  The fire power to the downside that JPMorgan et al currently have is awesome---and it's only a matter of time before the unleash it.

On that happy note, I'm signing off, as it's almost 4 a.m.---and I've had enough, as I'm in Vancouver at the moment.

I'll see you on Tuesday.

Ed Steer

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