Friday, June 5: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price chopped around, mostly lower, during the Far East trading session on their Thursday---and both the rally attempt in the Far East---and the one in early London trading, met with a resolute seller the moment that the price attempted to break above unchanged.  JPMorgan et al, HFT algorithms in hand, did the dirty starting the moment that COMEX trading began---and by around 11:20 a.m. EDT, their work was done for the day, with another low for this move down.  The gold price rallied quietly after that, before chopping sideways starting around 2:40 p.m. in electronic trading.

The high and low tick were recorded as $1,186.60 and $1,172.40 in the August contract.

The gold price closed in New York yesterday at $1,176.40 spot, down another $8.60 from Wednesday's close.  Net volume was very decent at 148,000 contracts.

Here's the 5-minute gold tick chart courtesy of Brad Robertson.  As you can tell by the volume spikes, "da boyz" stuck it to the Managed Money traders real good once again during the COMEX trading session.  Midnight Wednesday is the vertical gray line---and you have to add two hours for EDT---and the ' click to enlarge' feature is a must.

The silver chart was similar to gold's, right up until 3:30 p.m. in the New York Access market.  At that point a willing seller stepped in and ensured that silver closed on its absolute low tick of the day.

The high and low ticks were reported by the CME Group as $16.50 and $16.065 in the July contract.

Silver finished the Thursday session at $16.075 spot, down 40 cents on the day.  Gross volume was very decent, as was net volume---46,000 contracts.

Platinum prices were a mini version of the gold price chart---and palladium was a mini version of the platinum chart.  Platinum closed on Thursday at $1,098 spot, down three bucks, finally cracking the $1,100 spot price to the downside.  Palladium also closed 3 dollars lower at $753 spot.  Here are the charts.

The dollar index finished the Wednesday trading session in New York at 95.37---and traded virtually ruler flat until about 1:30 p.m. Hong Kong time.  At that juncture it rallied 20 basis points, hitting 95.56 at 8:30 a.m. BST in London trading.  It fell of a cliff at 9 a.m. right on the button, hitting its 94.72 low about thirty five minutes later.  Then at noon BST it appeared that 'gentle hands' showed up---and the dollar rallied to a handful of basis points above unchanged minutes before trading began in the equity markets in New York.  It rallied higher from there in a rather choppy manner---and closed yesterday at 95.58---up 21 basis points from Wednesday.

It's obvious to me that the dollar would crash if given the opportunity to do so---and it's equally as obvious that the powers-that-be are at hand to prevent that from happening.

Here's the 6-month U.S. Dollar chart as a reference.

The gold stocks opened down---and chopped more or less sideways for the remainder of the day, as the HUI closed down another 1.35 percent.

It was more or less the same thing in the silver equities, although the trading day had more shape to it.  The big drop because someone sold a boat load of shares in Peñoles right at the close, at least that's what Nick said yesterday when I asked him.  Because of that, Nick's Silver Sentiment Index got hit for 2.26 percent.  Without that share dump, the loss would have been about 0.5 percent.

The CME Daily Delivery Report for Day 5 of the June delivery month showed that zero gold and 9 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  Nothing to see here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest for June dropped another 282 contracts, leaving 1,262 still open.  June o.i. in silver was up 7 contracts to 40.

There was no reported change in GLD, but another deposit was made in SLV.  This time it was 1,433,379 troy ounces.  So far this week, there has been a bit over 2.5 million ounces deposited in SLV.  Since the price action indicates that silver should be flowing out of that ETF, the deposits must have been used to cover an existing short position.  We'll have to wait until about June 23 when the next short position report comes out of the folks over at shortsqueeze.com in order to get a hint of what might be going on.

Since yesterday was Thursday, Joshua Gibbons, the Guru of the SLV Bar List, updated his website with the goings-on over at the iShares.com Internet site at the close of trading on Wednesday---and this is what he had to report.

"Analysis of the 03 June 2015 bar list, and comparison to the previous week's list:  1,138,121.2 troy were added (all to Brinks London), 893,539.6 oz were removed (all from Brinks London), and 113 bars had serial number changes."

"The bars removed were from: Solar Applied Materials (0.3M oz, Krasnoyarsk (0.2M oz), and 10 others.  The bars added were from: Krasnoyarsk (0.2M oz), Prioksky (0.1M oz), and 13 others.

"As of the time that the bar list was produced, it was overallocated 384.9 oz.  All daily changes are reflected on the bar list."

Over at Switzerland's Zürcher Kantonalbank for the week ending May 29---they reported tiny declines in both their gold and silver ETFs.  Their gold ETF shed 1,804 troy ounces---and their silver ETF dropped only 7,123 troy ounces.

After four straight day of sales, it should come as no surprise that there was no report from the U.S. Mint yesterday.

Over at the COMEX-approved depositories on Wednesday, there was 50,092 troy ounces of gold transferred from Canada's Scotiabank to HSBC USA.  Other than that, there was no activity worth mentioning, but the link to what there was, is here.

It was another huge in/out day in silver, as 411,788 troy ounces were received---all at JPMorgan's vault---and 1,012,058 troy ounces were shipped out.  All of the 'out' movement was from Canada's Scotiabank, including the 411,788 troy ounces that JPMorgan received.  The link to that action is here---and it's worth a quick look.

There wasn't a lot of activity at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, as only 775 kilobars were reported received---and another 475 were shipped out.  All of the action was at Brink's, Inc. as usual.  The link to that activity is here.

I have a fair number of stories for you today---and I'll happily leave the final edit up to you.

¤ The Wrap

Since we penetrated for the first time to the downside the key 50-day moving average in silver on Wednesday, I suppose the official price take-down cycle is now in effect. Gold, you’ll remember, had penetrated its 50-day moving average a week or so ago, so the market structure there is more advanced than it is in silver. Therefore, in silver, it’s more a question of how many contracts the commercials can induce the managed money traders to sell than it is how low prices must fall. It’s more about contracts sold than prices, although successive lower prices (salami slicing) are necessary to effect the full contract count outcome. In other words, it’s not necessary that we drop dramatically in price, just enough---and in the manner necessary to accomplish whatever complete managed money selling results this go around.

Of course, please dismiss any suggestion that I (or anyone else) know for sure the direction of prices in the short term. This is about probabilities based upon the same thing that those probabilities have always been based on – past and prospective COT patterns. And even though those probabilities suggest lower silver prices ahead, any such decline should prove minor compared to the eventual much higher prices that the actual fundamentals and facts point to. While I hope my COT analysis is beneficial, please understand it is not my intent to handicap silver prices in the short term, although many others do seem so engaged.

Instead, my intent is to use my analysis of the COT market structure to show just how screwed up is the price discovery process on the COMEX and, after 30 years, it is encouraging to see that at least one silver miner may feel the same. In the unfortunate circumstance that the probabilities once again prove correct and we do witness further declines in the price of silver, perhaps that might aid in convincing other silver producers to step up to the plate and write to the CFTC. Trying to come up with rational explanations for why silver and gold prices behave as they do, while leaving out the COT market structure on the COMEX, is guaranteed to reduce one to the babbling idiot level. --  Silver analyst Ted Butler: 05 June 2015

Another day---and more salami slicing in the all four precious metals, particularly gold and silver.  There was decent volume associated with both metals, so it's an absolute certainty that the Managed Money was puking longs and piling on the short side, while JPMorgan et al gobbled up everything on the opposite side of those trades for fun, profit and price management purposes.  And it was a very profitable day for "da boyz" yesterday.

Here are the 6-month charts for all four precious metals---and new lows were engineered in three of the four precious metals.

We're beginning to approach oversold territory and, as you probably already know, how soon we get to those lows will depend on how quickly the powers-that-be take the remaining slices.  A re-read of Ted's quote above would be useful at this point.

And as I type this paragraph, the London open is just under ten minutes away.  Gold, platinum and palladium prices are unchanged---and silver is up a nickel.  Gold's net volume is very light at just under 11,500 contracts---virtually all of it of the HFT variety---and silver's net volume is around 4,200 contracts, with decent roll-overs out of July already.  And after rallying about 20 basis points in the early going in Hong Kong trading on their Friday morning, the dollar index is back to unchanged.  Without doubt, all eyes will be on the job numbers this morning in New York---and what trading 'action' will accompany their release.

Of course the job numbers should make no difference to the gold price at all, but a long history shows that JPMorgan et al use that as an excuse on many occasions to drive the precious metal prices into the dirt---and I'll be amazed if that doesn't happen this morning.

Today we get the Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday---and I doubt if we'll see much, if any, improvement in the Commercial net short positions in either gold or silver, as the reporting week was pretty flat from a price perspective.  All the price action that mattered most didn't start until the day after the cut-off---and it's a very safe bet that it was no accident that it happened this way, as "da boyz" have used this trick for at least a decade when they want to hide their tracks for as long as possible.

We also get the companion Bank Participation Report as well.  This is data that's extracted directly from the COT Report---and shows what the world's banks have been up to during the month that was and, as I always say at this juncture, they're usually up to quite a bit.  I'll have all that data in my Saturday column.

And as I send the Friday edition of today's column out the door at 5:25 a.m. EDT, I see that gold began to develop a slight negative bias starting at 2 p.m. Hong Kong time on their Friday afternoon. Ditto for silver.  Gold is down a couple of bucks, but silver is still up a nickel.  Platinum and palladium are trading flat.

Gold's net volume is now a bit over 22,000 contracts---and silver's net volume is pretty decent as well at 6,500 contracts, but there's been no increase in roll-over activity from over two hours ago.

The dollar index was slowly heading south, but has recovered a bit in the last half hour---and is currently down only 3 basis points.

As I said above, all eyes will be on the 8:30 a.m. EDT jobs report---and if you're feeling a bit like that poor chap in the last cartoon posted above, I'll certainly understand---as I feel that way myself at the moment.

Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see you here tomorrow.

Ed Steer
This is an abbreviated version of Ted Butler: Stepping Up to the Plate, 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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