Thursday, June 4: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do much until about 1:30 p.m. Hong Kong time on their Wednesday afternoon.  From there the price declined into the London a.m. gold fix.  It rallied a hair from there until "da boyz" showed up minutes before 12:30 p.m. EDT---and in short order they'd peeled another ten spot off the price.  The price rallied a bit until 2 p.m. EDT---and then didn't do a lot after that.

Gold finished the Wednesday session in New York at $1,185.00 spot, down $7.70 from Tuesday's close.  Net volume, which was almost all of the HFT variety, was around 118,000 contracts.

The high and low ticks were reported by the CME Group as $1,195.60 and $1,179.10 in the August contract.

Here's the 5-minute tick gold chart from yesterday, courtesy of reader Brad Robertson---and you can see the big volume spike associated with the engineered price decline during the New York lunch hour yesterday.  Midnight EDT is the dark gray vertical line---and you have to add two hours for EDT, as this chart is scaled for MDT.  The ' click to enlarge' feature really helps as well.

The silver price was pretty comatose up until around 1:30 p.m. Hong Kong time on their Wednesday afternoon as well.  At that point it developed a negative bias---and that culminated in a down/up move courtesy of the HFT boyz during the New York lunch hour, the same as gold.  From its low at 12:45 p.m. EDT, the silver price rallied quietly until around 3:30 p.m., before getting sold down a hair into the close of electronic trading.

The high and low ticks were recorded as $16.795 and $16.375 in the July contract.

Silver finished the Wednesday session at $16.475 spot, down 27 cents on the day.  Net volume was pretty decent at around 38,000 contracts---and there was big roll-over action out of July, as gross volume was way up there at 74,838 contracts.

In most respects the platinum chart was just a variation of the gold and silver charts, with the low tick coming shortly before 1 p.m. in New York.  Platinum was closed at $1,101 spot---down 9 bucks from Wednesday, the same closing price as on Monday.  You should note that the $1,100 spot level has been tested for three days in a row---and it's still holding---for now, that is.

Ditto for palladium---and at its 12:45 p.m. EDT low tick, it was down $16 on the day.  It recovered a bit and closed at $756 spot, down an even 10 dollars from Tuesday.

The dollar index closed late on Tuesday afternoon in New York at 95.95---and poked its nose ever-so-briefly above the 96.00 level in early Far East trading before heading lower.  'Gentle hands' showed up around 2:35 p.m. Hong Kong time on their Wednesday afternoon---and by the time the rally was done by around 8:55 a.m. in New York, the index was back around the 96.34 mark.  It got sold off at that point, with Wednesday's absolute low tick of  95.28 coming at noon on the button in new York.  It rallied a hair during the remainder of the trading session and closed down 42 basis points at 95.37.

Here's the 1-year U.S. Dollar chart so you can keep an eye on the bigger picture.

The gold stocks got close to breaking into the black shortly after the London p.m. gold fix---and then headed lower until 12:45 p.m. at gold's engineered price low.  From there they chopped a hair higher into the close, as the HUI finished the Wednesday session down an even 2.00 percent.

The silver equities actually did make it into positive territory for around an hour, but after that, the price pattern was identical to the HUI's---however their post-low recovery was a hair more robust than their golden brethren.  Nick Laird's Intraday Silver Sentiment Index closed down 'only' 1.19 percent.

The CME Daily Delivery Report for Day 4 of the June delivery month showed that 10 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday.   The only short/issuer was JPMorgan out of its client account.

The CME Preliminary Report for the Wednesday trading session showed that 518 gold contracts disappeared into thin air yesterday, as the new o.i. number is now down to 1,544 contracts.  And for the third day in a row, June open interest remained unchanged at 33 contracts.

There were no reported changes in GLD---and as of 9:10 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

There was another sales report from the U.S. Mint, the fourth in a row.  They sold 3,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and another 150,000 silver eagles.

In the last four business days the mint has sold 1,302,000 silver eagles, but only 16,000 troy ounces of gold eagles and one ounce gold buffaloes combined.  Ted's big buyer, JPMorgan, appears to be still there---and he mentioned that in his mid-week commentary to his paying subscribers yesterday.

It was another quiet in/out day in gold at the COMEX-approved depositories on Tuesday, as nothing was received---and only 2,339 troy ounces were shipped out.   But silver more than made up for it as 1,196,312 troy ounces were reported shipped in---and 618,352 troy ounces were sent out the door.  The link to the silver action is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they received 5,119 kilobars---and shipped out 6,319.  As usual, all of the activity was at Brink's, Inc.  The link to that, in troy ounces, is here.

I have the usual number of stories for a mid-week column---and I hope you'll find a few that interest you.

¤ The Wrap

Adding to the insult of blatant commercial manipulation in capping the price of silver was the fact that there was no legitimate hedging by miners in the selling; this was all financial selling by banks and other financial institutions with no economic legitimacy. If it wasn’t perfectly clear then I would never be able to get away with calling JPMorgan and the CME as crooked.

The single biggest key to the silver manipulation has always been if the concentrated short position increases on any price rally and that is exactly what occurred on the latest (snuffed out) rally. The concentrated short position of the 8 largest traders in COMEX silver is now 75,529 contracts, or 377,645,000 million oz, the most in six years. Eight traders, not one of them a miner or representing miners is short almost 50% of what the CPM Group claims is world annual silver mine production (790 million oz). No other commodity has such a concentrated short position and this is why silver miners everywhere should be complaining and screaming with the loudest voices possible.

I haven’t done so in a while, but let me point out something I used to bring up in the past that is more relevant today. As crazy as it is that COMEX silver has the largest concentrated short position of any commodity traded in terms of actual world production, it’s even crazier than that. Not only is the concentrated short position in COMEX silver so large as to be impossible to justify economically, the concentrated short position is almost double the size of the concentrated long position, a situation not witnessed in any other metal and few other commodities in general. -- Silver analyst Ted Butler: 03 June 2015

JPMorgan et al took another tiny slice out of the gold and platinum salamis yesterday, but a much bigger chunk in silver and palladium.  In silver, the price closed below its critical 50-day moving average for the first time during this engineered price decline---and although volume was elevated, I wouldn't call it over the moon by any stretch of the imagination.  Unfortunately, none of this data will be in tomorrow's Commitment of Traders Report, as it's one day past the cut-off.

Just eye-balling the charts below, I'd guess that "da boyz"---along with their HFT buddies and their algorithms---could peel close to 50 bucks off the gold price and a buck and change off silver before this all done to the downside.  Of course it has to do with the number of contracts, not the price---and the way things are proceeding at the moment, these guys could use a month or more to get the job done, as they're in no hurry.  It's the "summer doldrums" don't you know?

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

And as I type this paragraph, the London open is less than ten minutes away.  Gold has been trading a bit lower in a very tight range all through Far East trading on their Thursday.  Pretty much the same can be said about the other three precious metals as well.  Net gold volume is north of 17,000 contracts already---and 99 percent of it is in the current front month, so it is---as usual---all of the HFT variety.  The same can be said of silver, as net volume is around 4,300 contracts.

Ted is quite right in his statement that only a small fraction of one percent of all trading volume in the precious metals is driven by legitimate supply/demand considerations.  The rest is HFT liquidity/noise---and is solely there for price management/profit purposes of JPMorgan et al.  The dollar index has traded virtually ruler flat all night long.

Tomorrow morning at 8:30 a.m. EDT we get the new job numbers---and it's a semi-sure thing that the powers-that-be will use that opportunity to hit the precious metals in general---and silver in particular.

We also get the latest COT Report tomorrow, along with the companion Bank Participation Report.  And as I said in Wednesday's column, I'm not about to hazard a guess as to what the latest COT Report will show---and Ted never mentioned it his mid-week commentary yesterday.

And as I hit the 'send' button on today's column at 5:30 a.m. EDT, I note that all four precious metals are still trading in a very tight range both below and above unchanged from Wednesday's close in New York.

Gold volume is now north of 34,500 contracts, which is huge ----and silver's net volume is around 7,800 contracts, not exactly tiny, either.  There are virtually no roll-overs in either metal, so the HFT boyz and their algorithms are hard at work keeping prices in line now that London has been open a bit more than two hours.

Now that I check the dollar index, which began to head south with a vengeance at precisely 9 a.m. in London, I can see why volume has blown out as much as it has, as the index crashed about 70 basis points in less than forty minutes until 'gentle hands' showed up.  Right now it's only down 49 basis points.

It's obvious that the powers-that-be don't want the precious metal prices to reflect what's happening in the currency markets---and that's why the HFT boyz are spinning their algorithms with such fury at the moment.

This reminds me of the shenanigans that were going on when the SNB dumped the Euro peg earlier this year, as they killed the gold price at that time, when it should have exploded to the upside.  It's obvious that JPMorgan et al---along with the BIS---are at battle stations.

I have no idea what the rest of the Thursday session will bring, but based on what's going on right now, nothing will surprise me when I check the charts later this morning---nor should it you.

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

Ed Steer
This is an abbreviated version of Gold Declines For Second Day As Investors Await U.S. Jobs Data, 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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