Tuesday, June 2: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price popped for about five bucks at the New York open on Sunday evening, but "da boyz" were there within fifteen minutes to put the kibosh on that.  From there it traded pretty flat until the London open---and then the selling pressure began anew.  By the COMEX open, the price was down five dollars.

Then ten minutes after the open, the gold price began to rally in earnest, breaking through its 50-day moving average in the process---and JPMorgan et al were there at the London p.m. gold fix to put an end to it all.  By the 1:30 p.m. EDT COMEX close, the price was engineered to slightly below its Friday close---and it traded flat from there.

The low and high ticks were reported by the CME Group as $1,184.00 and $1,204.70 in the August contract.

Gold was closed in New York yesterday at $1,188.80 spot, down $1.20 from Friday.  Net volume was huge at 165,000 contract, with virtually all of it in the current front month, which is August.

Here`s a partial 5-minute gold chart courtesy of Brad Robertson---and as you can tell, the volume to the upside on the rally was much higher than the volume required to engineer the gold price back to unchanged---and Ted Butler has a comment on that in The Wrap section.

It was more or less the same price pattern in silver, so I'm sure you can fill in the blanks on this metal on your own.

The low and high tick in that precious metal was recorded as $16.59 and $17.17 in the July contract.

Silver finished the Monday session at $16.705 spot---up a whole half a cent. Aren't these HFT guys and their algorithms just too cute for words?  Net volume was pretty high at 52,000 contracts, with about 8 percent of that amount being roll-overs out of the July contract. 

Ditto for platinum which, by the London p.m. gold fix, was up 11 dollars, but by the COMEX close, JPMorgan et al had the price at a 9 dollar loss, closing it at $1,101 spot.

The palladium chart was a mini version of the other three precious metals, but it was only closed down three dollars at $772 spot.

The dollar index closed late on Friday afternoon in New York at 96.85---and then had a pretty wild time of it starting on Sunday evening in New York. It made it back above the 97.00 level by mid-morning trading in the Far East on their Monday.  The two attempts it penetrate the 97 mark to the downside after that were met with the usual 'gentle hands'---except these same hands hit the 'sell precious metals' button at the London p.m. gold fix at the same moment they ramped the dollar.  The dollar index finished the Monday session at 97.43---up 57 basis points.

Here`s the 6-month U.S. Dollar Index chart so you can see the progress of the current `rally`.

The gold stock opened up, but began to head lower immediately, even though the gold price was till heading for the moon and the stars.  They stopped falling around the COMEX close and did little for the remainder of the day.  The HUI closed down 0.76 percent.  I thank Nick Laird for this chart.

The silver equities rallied against strong selling until their high ticks, which came at 11:00 a.m. EDT.  The low came about fifteen minutes before the COMEX close and, like their golden brethren, didn't do much after that.  Nick Laird's Intraday Silver Sentiment Index closed virtually unchanged, down only 0.08 percent.

Based on the price action in the precious metal shares, there can be little doubt that there was an active seller lurking in the background to ensure that their respective rallies didn't go anywhere.

The CME Daily Delivery Report for Day 3 of the June delivery month showed that 2,468 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. The only short/issuer was JPMorgan out of its in-house [proprietary] trading account.  The three largest stoppers were HSBC USA in its in-house account with 1,570 contracts, JPMorgan in its client account with 422---and Canada's Scotiabank with 387 contracts. The link to yesterday's Issuers and Stoppers Report is here---and it's worth a look.

The CME Preliminary Report for the Monday trading session showed that gold open interest in June fell by 444 contracts, leaving 5,091 still open---minus the 2,468 shown above, of course.  In silver, June o.i. increased by 1---to 33 contracts outstanding.

There was a withdrawal from GLD yesterday.  This time an authorized participant removed 57,539 troy ounces.  And as of 8:55 p.m. EDT, there were no reported changes in SLV.

The folks over at Switzerland's  Zürcher Kantonalbank updated their website with that changes in their gold and silver ETFs as of Friday, May 22---and both had withdrawals for the reporting week.  Their gold ETF declined by 21,118 troy ounces---and their silver ETF dropped by a chunky 285,063 troy ounces.

The U.S. Mint had a sales report to start the new month.  They sold 500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 400,000 silver eagles.  Those silver eagle sales go along with the 375,000 they reported selling on Friday.

There was no in/out activity in gold worth mentioning at the COMEX-approved depositories on Friday.  There was more activity in silver, as 629,943 troy ounces were received---but only 3,056 troy ounces were shipped out.  Most of the 'in' activity was at the CNT Depository---and because I'm on the road, I don't have the link to that activity.

It was fairly quiet at COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  Only 3,208 kilobars were received---and 397 shipped out.  All the action was, as usual, at Brink's, Inc.

Here's a new chart that Nick Laird sent our way yesterday.  The top of the chart shows the China [in red] and India [in green] monthly gold demand going back to the start of 2008.  Please note the bottom chart, which shows monthly demand from these two countries vs. total monthly mining production.  Add in Russia---and you're about 100 percent.  Minus scrap, the rest of the world's gold demand is coming out of central bank vaults.

Because I'm still on the road, I've cut the stories back to the minimum which, in this case, is still quite a few.

¤ The Wrap

In the case of a cooling off of the weekly COMEX silver turnover, since I trace JPMorgan’s accumulation of hundreds of millions of ounces of silver as having started precisely when the unprecedented turnover began in April 2011 , I can’t help but think that a cessation of the unusual weekly turnover may indicate the bank has completed or is close to completing its historic silver acquisition. This is highly speculative on my part, but there are other indications this may be the case. Of course, these are matters that must involve speculation for the simple reason that there is no reason to expect JPMorgan to disclose anything. 

As expected, JPMorgan did take (stop) 808 silver contracts in the just completed delivery period for the May COMEX futures contract in the bank’s own proprietary or house trading account. This is in addition to the 1500 maximum allowed amount taken in the March delivery contract. In ounces, that’s 4 million oz in May and 7.5 million oz in March. This is only a tiny part of the 350 million+ oz I claim JPM has acquired, but it is highly visible and (also) might be suggestive of conforming to my speculation that the bank is finishing up its silver accumulation. - Silver analyst Ted Butler: 30 May 2015 

Yesterday`s price action in all four precious metals was about the most blatant example of price management that one could hope to see.  Not that it matters, as no one will raise a finger in protest.

In an e-mail from reader David Caron yesterday, he pointed out the obvious---` Arguing that you don't care about manipulation of the markets, is like saying you don't care about your wealth or your net worth!`.  Since the mining executives can get their respective boards of directors to reprice their stock options at any time, they really don`t care.  But what about us shareholders on the outside looking in.

In my chat with Ted yesterday, he feels that because the `up` volume was so much larger than the `down` volume on yesterday`s price spikes, there was most likely more deterioration in the Commercial net short positions in both silver and gold---as the technical funds in the Managed Money category poured in on the long side once the critical 50-day moving averages were violated.

Here are the 6-month charts for all four precious metals as of the close on Monday, so you can see what ``da boyz`` did to us again.

And as I type this paragraph, the London open is a bit under twenty minutes away---and with the exception of platinum, which is up two bucks, the other three precious metals are down a hair from Monday`s close in New York.   Gold`s net volume is just a bit under 17,000 contracts, which is very high considering the lack of price action---and virtually all of it is in the August contract, which is the current front month, so it`s all of the HFT variety.  Silver`s net volume is 3,800 contracts, which is nothing special.  The dollar index has been chopping quietly lower all through Far East trading on their Tuesday---and is down 14 basis points at the moment.

Since today is Tuesday, the cut-off for this Friday`s Commitment of Traders Report is at the close of COMEX trading.  Hopefully all of Monday`s price action will be in it---and unless we have another volatile price day courtesy of JPMorgan et al, all today`s data should be in it as well.

And as I sent today`s column off to Stowe, Vermont at 4:40 a.m. EDT I note that only platinum is up on the day.  Gold`s net volume is approaching 25,000 contracts, which is very high---and silver`s net volume is pretty chunky as well, a bit under 6,000 contracts.  The dollar index made another attempt to take out the 97.00 level to the downside, but `gentle hands` were at the ready once again---and the index is now down only 25 basis points, but was down over 40 at one point.  I would guess that all this HFT volume is associated with keeping precious metal prices under control as the dollar index falls.

I have no idea what the Tuesday trading session in New York, but based on what I see at the moment, I`m not overly optimistic.

That`s all I have for today.  I have a plane to catch early this morning, so I`m off to bed.

See you tomorrow.

Ed Steer
This is an abbreviated version of China Gold Demand Holding Up Well: New Record Ahead?—Lawrence Williams, 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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