Tuesday, May 26: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price got sold down five bucks the moment that trading began at 6 p.m. EDT in New York on Sunday evening.  It chopped around that new price all through Far East and the London trading session, although London was also closed for some sort of bank holiday.  Then at 8:30 a.m. EDT a rally began which got capped minutes after 9:30 a.m. EDT.  The second smallish rally after that also met the same fate about 12:20 p.m.---and then it got sold down a bit into the 1:00 p.m. early close.  All this trading occurred on the Globex system outside the U.S., as the U.S. [and London perhaps] were closed for Memorial Day.  But there was obviously trading going on from somewhere.

With the CME closed, there were no low and high ticks available.

Gold closed on Monday at $1,207.00 spot, up $1.10 from Friday.  Net volume was a tiny 20,800 contracts.

Silver also got sold down on the Sunday evening open in New York---and it's price pattern was identical to gold's, which it almost always is.

There are no low and high ticks, either, but it traded in a two bit range for the entire Monday session---such as it was.

Silver finished the day at $17.105 spot, up a whole 3 cents.  Net volume was a microscopic 6,000 contracts.

The platinum price eked out a tiny two dollar gain and closed on Monday at $1,148 spot.

Like gold and silver, palladium's price pattern had some structure to it.  It began to rally at 2 p.m. in Zurich---and by the time the markets closed at 1 p.m. EDT, the metal had tacked on another 7 bucks, finishing the day at $786 spot.

The folks over at ino.com stated that the dollar index closed at 96.01 on Friday afternoon in New York, but that's not what the closing numbers stated yesterday.  They showed that dollar closed on Monday at 96.37---up 5 basis points from Friday's close.  I don't know what to make of that, but I thought I'd point it out.  Here's the 3-day chart so you can see it for yourself.

With everything shut tight in New York yesterday, there's nothing from either GLD or SLV, the U.S. Mint, or the COMEX-approved depositories.  There's no CME Daily Delivery Report or Preliminary Report, either.

All the large traders in the COMEX futures market that aren't standing for delivery in the June gold contract have to be out of their positions by the COMEX close tomorrow---and the rest have to be out by the COMEX close on Thursday, so it's going to be a pretty wild from a volume perspective for the rest of the month.

And as I stated in Saturday's column, whatever outstanding May contracts that haven't been posted for delivery yet, have to be in this evening's report from the CME---and it will be interesting to see who the hold-out short/issuers were in both silver and gold.  More to the point is how many of the remaining silver contracts were picked up by JPMorgan for its own account.

Here's a nifty chart that reader U.D. passed around yesterday.  It's the Euro Interbank Offered Rate.  It is, as reader U.D. so succinctly put it---" mass insanity".

I have don't have all that many stories for you today---and I hope there are a few in here that you'll find of interest.

¤ The Wrap

Unlike the situation in gold where there was a record weekly change but nowhere near a record level of total commercial shorts; in silver not only was there a record change for the week, the resultant level of total commercial net shorts was the highest since September of 2010. The total commercial net short position in gold is still way below where it was a few months ago, yet the total commercial net short position [in silver] is higher than it has been in more than four and a half years. My point? This is clear evidence that silver is much more manipulated in price than is gold, or any other commodity.

Eight non-silver producing speculators, euphemistically classified as commercials by the CME and CFTC, hold more than 376 million oz of equivalent silver net short in COMEX futures according to the current COT report, the most in six years. That’s the equivalent of more than 47% of total world mine production according to the CPM Group (790 million oz) and  more than 42% of the 877 million oz reported by GFMS (why there are such disparities in world silver production is beyond me – I don’t trust either organization).

The one key feature which I have long identified as at the core of the silver manipulation - the concentrated short position on the COMEX - has just rocketed to a multi-year record extreme on an anemic silver rally to just over $17 an ounce, a level at which most primary silver miners can’t turn a profit. What kind of madness is this? - Silver analyst Ted Butler: 23 May 2015

It was a nothing sort of day in the precious metals yesterday.  But, having said that, one has to wonder who the traders were in gold and silver that showed up to play at 9 a.m. EDT when New York was supposedly shut.  And as I also mentioned, there appeared to be an entity riding shotgun over them, as the tiny rallies in both metals weren't allowed to get far.

And as the Zero Hedge story in the Critical Reads section headlined " Did Someone Forget to Tell the Machines the U.S. is Shut Today?" pointed out, you have to wonder what machines are really running the show in the S&P futures market as well.  Based on that, it's not much of a stretch to think that JPMorgan et al are on top of the precious metal markets 24/7--- U.S and U.K. holidays notwithstanding.

So here we sit, looking at the ugliest Commitment of Traders Report in a very long time---and just waiting for the hammer to fall.  When that will happen is unknown, but unless JPMorgan et al get overrun, fall it will.

And as I write this paragraph, the London open is about ten minutes away---and I see that the 'salami slicing' has begun in all four precious metals, starting shortly after 2 p.m. Hong Kong time.  Gold came within a dollar of taking out its 50-day moving average to the downside---and silver is now about 30 cents away from its.  JPMorgan et al took out platinum's 50-day moving average with ease.

Gross volume in gold is at 55,000 contracts, with 17,000 of that being roll-overs out of the June contract, with most of that activity now in the new front month, which is August.  Silver's net volume is also enormous at just a hair over 11,500 contracts.  Not surprisingly, this is all being hidden behind what has all the hallmarks of a short-covering rally in the U.S. dollar index, which is currently up 53 basis points.  Like the engineered price declines in the precious metals going on at the moment, it's pretty much a given that this short-covering rally in the U.S. dollar index had some help getting started---and "da boyz" are cleaning up there as well.  The dollar rally began almost the moment that trading began in the Far East on their Tuesday morning.

Of course the technical funds in the Managed Money category are now in the process of selling their newly-acquired long positions---and probably going short as well.  The commercials are taking the other side of the trade and ringing the cash register in the process.  What a scam JPMorgan et al have going for themselves.  I wonder what percentage of the profits are ending in the pockets of persons at the CME Group and the CFTC as their 'cut'.

As I mentioned in the first section of today's column, it's going to be a busy three days in the COMEX futures market in gold in particular, as all the traders, both big and small not standing for June delivery, have to be sell or roll by the close of COMEX trading on Thursday---no "ifs, ands or buts" about it.

And as I fire today's missive out the door at 5:25 a.m. EDT, I note that gold, silver and platinum have all hit new lows for this move down once again now that London has been open for a couple of hours.  Gold's 50-day moving average has now been taken out by a bit---and the silver price is lower still.  "Da Boyz" are putting the lumber to the platinum price as well.  Here's the silver chart as of 5:37 a.m. EDT.

Net gold volume is now 51,000 contracts---and silver's net volume is just north of 15,500 contracts.  The dollar index is now back above the 97.00 mark---and up 69 basis points from Monday's close.

One thing I should point out is that the net volumes shown above includes Monday's net volumes, so you have to subtract out 20,800 contracts in gold---and 6,000 net contracts in silver to get a true picture of Tuesday's trading volume so far.  Once you do that, the volume for Tuesday isn't overly heavy.  I expect that will change once trading begins on the COMEX at 8:20 a.m. EDT.

Well, the final three days before First Notice Day are turning out to be pretty wild right out of the gate.  Today, at the close of COMEX trading in New York, is also the cut-off for this Friday's COT Report---and it will be interesting to see how much of Tuesday's [and Monday's] volume data actually makes it into that report.

I must admit that the slices out of the precious metal salamis so far today are much bigger than I was expecting, so maybe the powers-that-be are in somewhat of a rush for reasons that we don't know about.  Time will tell.

With all the insanity out there as far as the eye can see, I was reminded of how bad things really are by the quote below that has graced this column before.  I found it embedded in an e-mail that I received from reader Jim Akers yesterday.

" When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you…you may know that your society is doomed." - Ayn Rand

That pretty much sums up where we are in the world today.

Based on the current price 'action'---absolutely nothing will shock me when I check the charts later this morning.

See you tomorrow.

Ed Steer
This is an abbreviated version of 60 Countries Invest in Chinese Fund to Facilitate Central Bank Gold Purchases, 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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