Gold & Silver Daily
"This does not bode well for precious metal prices going forward"

¤ Yesterday In Gold & Silver

The gold price chopped quietly lower in Far East trading on their Tuesday---and the HFT boyz and their algorithms/spoofing showed up around 2:15 p.m. Hong Kong time.  Once they were done, the price drifted quietly lower until the London morning gold fix was done at 10:30 a.m. BST.  It rallied a hair into the COMEX open, but JPMorgan et al were laying in wait once again---and within thirty-five minutes had gold down another ten bucks to its low tick of the day.  The gold price didn't do much after that.

The high and low ticks were reported by the CME Group as $1,108.20 and $1,184.80 in the June contract.

Gold closed on Tuesday in New York at $1,187.80 spot, down $18.10 from Monday's close.  Not surprisingly, gross volume was sky-high at 345,000 contracts, but it only netted out to about 142,000 contracts.  And once you take out the 21,000 net contracts from Monday, net volume yesterday wasn't overly heavy at 121,000 contracts.  On a $20 engineered price decline, that's not a lot.  I'll have more on this in The Wrap.

Here's the 5-minute gold tick chart courtesy of Brad Robertson.  Note the lack of volume on the engineered price decline in Hong Kong vs. the volume on the engineered price decline at the COMEX open.  The grey line is midnight EDT---and you need to add two hours to this chart for EDT, as it's scaled for Denver time.  The 'click to enlarge' feature is a must.

"Da boyz" laid the same lumber on silver---and the only real difference was that the metal rallied sharply off its 9 a.m. EDT low---and that was summarily dealt with.  From around 12:30 onward it traded pretty flat.

The high and low tick in that precious metal was recorded as $17.18 and $16.645 in the July contract.

Silver finished the Tuesday session at $16.72 spot, down 35.5 cents from Monday's close.  Net volume was pretty decent at 45,000 contracts.

Platinum got hammered as well---and in the same way---closing at $1,123 spot, down 25 bucks on the day.

Palladium was also affected, but mostly as an afterthought, as it closed down 8 dollars at $778 spot.

The dollar index closed late on Monday afternoon in New York at 96.37---and began to rally almost the moment that trading began in the Far East on the their Tuesday morning.  It was above by the 97.00 mark by the London open---and dipped to 96.82 at exactly 8:00 a.m. EDT.  From there it rallied up to about 97.35 just after 3 p.m. before sliding a bit into the close.  The dollar index closed on Tuesday at 97.22---which was up 85 basis points on the day.  Here's the 2-day chart so you can see the complete move over the last twenty-four hours.

Here's the 6-month dollar chart so you can see the progress of this counter-trend rally.

The gold stocks gapped down over 2 percent at the open---and never looked back.  The low tick came around 1:45 p.m. in New York---and they barely crawled off the floor after that, as the HUI closed down 3.71 percent.

The silver equities turned in a very similar performance---right down to the timing of the low tick.  Nick Laird's Intraday Silver Sentiment Index closed down 3.80 percent.

The CME Daily Delivery Report showed that only 1 gold and 66 silver contracts were posted for delivery on Thursday.  The big short/issuer in silver was the Japanese bank Mizuho.  HSBC USA stopped 23 contracts---and JPMorgan stopped 38 contracts---15 for clients, and 23 for its own account.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in May dropped another 6 contracts, leaving 76 open---minus 1 whole contract mentioned in the previous paragraph.  Silver May o.i. fell by 35 contracts down to 254---minus the 66 above.

As I mentioned in yesterday's column, I was expecting all the remaining May open interest to be posted for delivery in the above Preliminary Report, but they weren't.  That leaves the rest to be delivered on Friday---First Notice Day---and one way or another May's remaining open interest in gold and silver has to be zero in tomorrow's report.  They have to be delivered into---or sold.  There are no other options.  So we wait.

There was movement in both GLD and SLV yesterday.  In GLD, an authorized participant deposited a tiny 19,181 troy ounces.  In SLV an authorized participant withdrew 1,003,544 troy ounces.

There was no sales report from the U.S. Mint yesterday---and that was a bit of a surprise.  It appears that Ted was right.  JPMorgan, the big buyer, has stepped away from the table this month, probably for the same reason they did last year---and that was because they knew they were about to hammer the silver price into the dirt, so why buy expensive when you can buy cheaper later at a price they set themselves.  What a racket!

Of course the other reason Ted gave was that they may have stopped buying silver eagles altogether, but that fact won't be knowable for months, either.  So we wait.

There was little in/out activity in gold at the COMEX-approved depositories on Monday---3,500 troy ounces in---and 101 troy ounces out.  There was little activity in silver either, as only 19,496 ounce were received---and 5,192 shipped out the door.

Over at the COMEX-approved gold kilo depositories in Hong Kong on their Monday, they received 1,866 kilobars and shipped out 3,977 kilobars.  All of the activity was at the Brink's, Inc. warehouse---and the link to that action, in troy ounces, is here.

I don't have all that many stories again today---and I'll leave the final edit up to you.


¤ Critical Reads

The world is drowning in debt, warns Goldman Sachs

The world is sinking under too much debt and an ageing global population means countries' debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned.

Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy.

"There is too much debt and this represents a risk to economies. Consequently, there is a clear need to generate growth to work that debt off but, as demographics change, new ways of thinking at a policy level are required to do this," he said.

"The demographics in most major economies – including the US, in Europe and Japan - are a major issue – and present us with the question of how we are going to pay down the huge debt burden. With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we've managed to do in the past."

This story from The Telegraph is datelined at 6:25 p.m. BST yesterday evening, which is a pretty neat trick considering that our man in Greece, Harry Grant, sent it to me at 5:37 a.m. EDT yesterday morning, so it's obviously been edited in the interim.


El-Erian: Correction in stocks could happen if…

There could be a "big air pocket" in stocks if fundamentals, at some point, don't validate valuations, Mohamed El-Erian said Tuesday.

The market has been supported by "ultra-loose" monetary policy around the world and cash from corporate balance sheets being put to work in the form of dividends, buybacks and mergers and acquisitions, Allianz' chief economic adviser said on CNBC's "Squawk Box."

While the Federal Reserve will probably hike interest rates this year for the first time in nearly a decade, El-Erian advised investors against obsessing over it.

This 4:11 minute CNBC video clip, along with a transcript, appeared on their website at 8:40 a.m. EDT yesterday morning---and I thank Dan Lazicki for his first story of the day.


JPMorgan Chase Writes Arrogant Letter to Its Swindled Forex Customers

As the U.S. Department of Labor deliberates giving JPMorgan Chase a waiver to continue business as usual after it pleaded guilty to a felony charge for engaging in a multi-bank conspiracy to rig foreign currency trading, a letter the bank sent to its foreign currency customers should become Exhibit A in the deliberations. The letter effectively tells JPMorgan’s customers, here’s how we’re going to continue to rip your face off.

Two sections of the letter stand out in particular. One section reads:

“As a market maker that manages a portfolio of positions for multiple counterparties’ competing interests, as well as JPMorgan’s own interests, JPMorgan acts as principal and may trade prior to or alongside a counterparty’s transaction to execute transactions for JPMorgan…” (Italic emphasis added.)

I posted the JPMorgan "I'm so sorry" letter in Tuesday's column, or on Saturday---and here's what the good folks over at the Internet site had to say about it yesterday.  I thank Richard O'Mara for sending it along.


JPMorgan’s Guilty Plea Puts Wealth Unit in Spot With Regulators

JPMorgan Chase & Co. put allegations of currency-fixing largely behind it with a guilty plea, but it’s not out of the woods yet.

With its new felony record, America’s biggest bank needs to seek the Department of Labor’s permission to keep managing money in the $8 trillion private pension market. At the same time, there’s a cloud over the JPMorgan unit where pensions are managed: The Securities and Exchange Commission is well along in an investigation into conflicts of interest in the bank’s wealth-management unit, whose products include individual retirement accounts.

That puts the bank in a sticky position -- arguing that a criminal conviction shouldn’t keep it from managing Americans’ retirement savings, while the SEC is investigating possible wrongdoing in the same division.

“When a bank has enforcement action after enforcement action, it becomes hard to argue that it won’t happen again,” says Urska Velikonja, an assistant law professor at Emory University whose research focuses on securities law.

Of course there will be no end to it, but the precious metal price management scheme is still the 1,000 pound gorilla in the living room.  This Bloomberg article showed up on their website at 3:00 a.m. Denver time on Tuesday morning---and it's the first offering of the day from West Virginia reader Elliot Simon.


After a Political Reversal in Alberta, ‘Anything Seems Possible’

This is the Canadian province known for oil, cowboys and rodeos, and as the adopted home of Prime Minister Stephen Harper, whose Conservative Party has long dominated politics.

So it seemed especially jarring when a boisterous crowd in this bastion of conservative voting known as Canada’s Texas celebrated its new premier this weekend: a woman regarded by much of the country as a leftist who vows to take on big oil and champion the poor.

The 51 newly elected New Democratic Party members who sat behind the premier, Rachel Notley, their leader, in the swearing-in ceremony on Sunday did not resemble typical revolutionaries. Largely political novices, they dressed like junior bank managers. They include nurses, a phone technician and a yoga instructor.

The ceremony on the steps of the Alberta provincial legislature, cheered by members of a large and enthusiastic crowd who could have easily passed for hockey fans celebrating a rare Edmonton Oilers victory, signified an exceptional moment in politics in both Alberta and Canada.

Yep---and if I were Prime Minister Stephen Harper, I'd be shaking in my boots right now, as the Canadian people are just itching to give this guy, along with the rest of the Federal conservatives, the old 'heave ho'---and they'll have their chance this fall.  This is another article from The New York Times.  This one was posted on their website on Monday---and I thank Roy Stephens for sending it along.


Vancouver: Real estate ‘pandemonium’

Mortgage broker David Ford thinks he has found the right way to describe the Lower Mainland’s market for single-family homes.

“Detached housing is BANANAS.

“It’s real estate pandemonium,” he writes in his latest Shop Talk newsletter for clients, realtors and financial advisers.

It’s not just single-family homes that are hot. Vancouver Mayor Gregor Robertson and former wife Amy received five offers recently for their 1,666-square-foot Stephens St. half-duplex in Kits with ocean views, purchased in 2013 for $1.57 million. Listed for $1.798 million. Sold for $1.982 million.

This story showed up on The Vancouver Sun website yesterday---and it's the second offering in a row from Roy Stephens.


Germany sees progress on Greece, E.U. officials to confer on Thursday

A senior German official said on Tuesday there was no reason to believe Greece would be in default after a 300 million euro payment to the IMF falls due on June 5.

Separately, euro zone officials said deputy finance ministers would hold a teleconference on Thursday to follow up on days of negotiations between representatives of Greece and creditors the International Monetary Fund (IMF), the European Central Bank and the European Commission.

Greece must repay four loans totaling 1.6 billion euros ($1.76 billion) to the IMF next month, starting with a 300 million euro payment on June 5.

If no deal is reached within EU/IMF for new loans to be disbursed to Athens, Greece is likely to default on the IMF loan repayment. This would start a process that could lead Greece out of the euro zone.

Will they?---Won't they?  What a soap opera.  This Reuters article co-filed from Berlin and Brussels, put in an appearance on their Internet site at 11:00 a.m. EDT yesterday morning---and it's the second offering of the day from Elliot Simon.


With Money Drying Up, Greece Is All but Bankrupt

Bulldozers lie abandoned on city streets. Exhausted surgeons operate through the night. And the wealthy bail out broke police departments.

A nearly bankrupt Greece is taking desperate measures to preserve cash. Absent a last-minute deal with its creditors, the nation will run out of money early next month.

Two weeks ago, Greece nearly defaulted on a debt payment of 750 million euros, or about $825 million, to the International Monetary Fund.

For the rest of this month, Greece should be able to cover daily cash deficits of around 100 million euros, government ministers say. Starting June 5, however, these shortfalls will rise sharply, to around 400 million euros as another I.M.F. obligation comes due. They will then double in size on June 8 and 9.

This article, filed from Athens, appeared on The New York Times website on Monday sometime---and it's another contribution from Elliot Simon.  David Stockman gave it the headline "At the Street Level, Greece is Grinding to a Halt".


Russia Officially Gives Up on Mistral Deal

Moscow has finally given up on the Mistral deal. Now Russia and France will discuss only the sum that Paris should pay Russia for the failed contract.

During the negotiations on the Mistral deal Russia and France have discussed only one question — the sum of the compensation.

"We switch the conversation to business — give us our money back… We're now discussing just one thing — the exact sum of money France owes Russia," Oleg Bochkaryov, a deputy chairman of the Russian Military Industrial Complex said.

Russia and France signed a $1.3-billion deal for two Mistral-class helicopter carriers in 2011. The handover of the first ship to Russia was scheduled for November 2014, but never happened. French President Francois Hollande put the delivery on hold due to Moscow's alleged interference in the Ukrainian crisis.

This news item appeared on the Internet site at 5:02 p.m. Moscow time on their Tuesday afternoon, which was 10:02 a.m. EDT in Washington.  It's courtesy of Dan Lazicki.  The Zero Hedge spin on this is headlined "Russia Tells France It Gives Up on Mistral Ship Deal"---and it's also courtesy of Dan L.


Muslim world reacts to Obama's latest speech

This 2:20 minute video clip appeared on Egyptian television last week---and it falls into the absolute must watch category.  I could hardly believe what I was hearing---and I thank reader U.D. for passing it around yesterday.


ISIS rise provoked by outside interference into Middle East, North Africa – Putin

There was previously no terrorism in countries where Islamic State militants “now prosper” until outside forces “not sanctioned by the UNSC” interfered, Russian President Vladimir Putin said, stressing the “serious consequences” that followed.

“We know what is happening, for example, in the Middle East, in North Africa; we know the problems associated with a terrorist organization, which has appropriated the right to be called the ‘Islamic State” (IS, formerly ISIS/ISIL),” Putin said during a meeting with security officials from the BRICS block in Moscow.

“But there was no terrorism in the countries where it [IS] flourishes today before an unacceptable interference from the outside happened, not sanctioned by the Security Council of the United Nations,” he stressed.

Russia’s president describe the consequences of such interference as “serious,” with the Islamic State currently controlling territory in Syria, Iraq, Libya, Lebanon, Afghanistan and Nigeria.

This news item showed up on the Russia Today website at 9:37 p.m. Moscow time on their Tuesday evening---and I thank Roy Stephens for sending it along.


Saudi Arabia, partners turn down Chinese requests for extra oil

Saudi Arabia and its main Middle East OPEC partners are turning down Chinese requests for extra oil as they hold back fuel for their own refineries just as demand from the world's biggest crude importer hits new records.

While the Saudi and other refusals for additional crude supplies may not be part of a new pricing strategy, the rejections to their biggest client help explain a 40 percent rise in oil prices this year as Chinese importers have had to seek more oil from other suppliers in what analysts say is still an oversupplied market.

Saudi Arabia "used to provide as and if we asked for extra cargoes on top of contract during the first four months of the year, but not for May and June," said a trader with one of China's biggest oil importers on condition of anonymity as he had no permission to talk to media.

Another source with a Chinese refinery that takes Saudi oil said Saudi heavy crude was "a bit tight" in May and June.

This Reuters article, co-filed from Beijing and Singapore, was posted on their website a week ago today---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.


Iraq About to Flood Oil Market in New Front of OPEC Price War

Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.

The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.

While shipping schedules aren't a promise of future production, they are indicative of what may come.

This Bloomberg article showed up on their Internet site at 8:37 a.m. EDT yesterday morning---and I thank International Man senior editor Nick Giambruno for passing it around yesterday.


China's currency 'no longer undervalued,' IMF says, clearing entry to SDRs

The International Monetary Fund has declared that China's currency is "no longer undervalued," marking a significant shift after more than a decade of criticism of Beijing's tight management of the renminbi.

The move amounts to a major vote of confidence in Beijing and the renminbi at a critical time. It also puts the IMF at odds with its biggest shareholder, the United States, which insists that China continues to draw an unfair trade advantage from a renminbi that it considers "significantly undervalued."

The renminbi has gained 25 per cent against the US dollar since it was allowed to adjust upward within a narrow band a decade ago, and has held its value even as the dollar has strengthened against other major currencies over the past year.

Eswar Prasad, the former head of the IMF's China unit, said the shift by the fund was important as it marked the first time since the Asian financial crisis of the late 1990s that the fund had not deemed the renminbi to be undervalued. It also presaged the likely adoption later this year of the renminbi as one of the small number of major currencies in a basket used to determine the value of the IMF's de-facto currency, the Special Drawing Rights.

This is only part of the story that appeared on the Financial Times website yesterday.  There's a bit more in the GATA release, but you'll have to go to the FT site for the rest---and a subscription is required.  The part that's posted in the clear is worth reading.


Texas Senate Passes Bill to Establish Bullion Depository, Help Facilitate Transactions in Gold and Silver

A bill taking a step towards gold and silver as commonly-used legal tender in Texas passed in the state Senate today by an overwhelming 29-2 vote.

Introduced by State Rep. Giovanni Capriglione (R- Southlake) and four co-sponsors on Feb. 12, House Bill 483 would create a state bullion depository.

What the bill essentially does is create a means for transactions to occur in precious metals. It allows people  to open an account and deposit their precious metals in the state depository. They could then use the electronic system to make payments to any other business or person who also holds an account.

This opening of the market is considered by many insiders to be the most important first step towards bringing sound money to mainstream acceptance.

This news item, filed from Austin yesterday, appeared on the Internet site---and it's something I found over at Sharps Pixley in the wee hours of this morning.


MIT developing platinum replacement

Fears of a looming crunch in platinum supply, driven mainly by a four-month-long ongoing strike at the world’s top producers of the metal in South Africa, may be about to fade.

MIT graduate student Sean Hunt, postdoc Tarit Nimmandwudipong, and Yuriy Román, an assistant professor of chemical engineering, are working on a new process to replace platinum-group metals (PGMs) with more widely available elements in renewable energy technologies.

In a paper published last week in the journal Angewandte Chemie, the team explains their proposed new method for synthesizing alternative catalysts.

This is another one of those cases of "I'll believe it when I see it!"  This short article was posted on the Internet site  back on May 18---and I thank Patrick Leavens for sending it our way.


Platinum price: The cheese and biscuits analogies -- Lawrence Williams

Platinum has been in a large deficit for the last two to three years – and a substantial one at that, last year in particular with the five-month long platinum miners’ strike in South Africa taking perhaps a further 1 million ounces away from the production picture. But, over this same period, the price has not risen, but has fallen, thus seemingly being counter to the normal supply/demand process.

An interesting panel discussion at last week’s Bloomberg Precious Metals Forum in London did not see an immediate end to this price malaise, although looking further ahead did feel there would be a stage when fundamentals would start to impact price positively. Panel members were David Jollie of Mitsui Global Precious Metals, Jonathan Butler of Mitsubishi and James Steel of HSBC, ably led by Rupen Raithatha of Johnson Matthey who had previously given the audience insights on the very significant demand for platinum in the Chinese jewellery sector.

The weak price has been all to do with the levels of above-ground stocks which some had put at over 4 million ounces, which meant there has been adequate supply out there to service demand. This without impacting positively on the price which, if anything, has allied itself to the fortunes of the gold price however illogical this might be. Indeed it was felt that we may still not yet have seen the platinum price lows if gold hits a spot of further weakness as some analysts have been predicting. Although platinum is very much an industrial metal, it is also classified by the markets as a precious metal and all the precious metals complex tends to move, to an extent at least, with the upwards and downwards movements in the gold price.  This in turn seems to move due to the huge speculative element played out for the moment primarily on the COMEX futures market.

This commentary by Lawrie appeared on the Internet site mid-afternoon BST in London---and if you're a PGM fan, this is worth reading.


Don’t Believe Everything You Read On The Internet -- Koos Jansen

Recently a website called Want China Times published a story titled, “China Could Crash U.S. Dollar With 30,000 Tons Of Gold: Commentary”. I would like to share my opinion on this story about the Chinese gold market that has directly or indirectly reached many readers.

Alasdair Macleod has written an article in 2014 stating “the Chinese state has probably accumulated between 20,000 and 30,000 tonnes since 1983”. In my humble opinion this estimate is based on no evidence, but you can read the article and make up your own mind. Now, was the 30,000 tonnes number conceived by MacLeod or Jin? The only source I could find on the 30,000 tonnes number is MacLeod’s estimate. In a new Chinese jacket (Duowei, Jin) the story was transformed and made additional rounds. (if someone else has an additional source I would love to read it, please comment below.)

Starting from BWChinese via Duowei and Want China Times the 30,000 tonnes story was re-ignited and has spread over the internet. Shortly after Russian website published, “China Saves Up 30,000 Tons Of Gold To Topple US Dollar From Global Reign”. Pravda did not include any links, but they mention Duowei as the source (so again, this was MacLeod’s estimate). Sputnik published "Dragon Rising: China's Gold Will Break World's Dependence on the U.S. Dollar".

This very interesting commentary appeared on the Internet site yesterday---and it's worth reading.  I thank Koos for sending it our way.


Russia acquires gold as defense against 'political risks,' central banker explains

Russia is increasing its gold holdings because gold is a reserve asset free from legal and political risks, a senior central banker said on Tuesday.

The comments by Dmitry Tulin, who manages monetary policy at the central bank, reflect Russian fears that the country's overseas assets could be frozen as part of a possible toughening of Western sanctions over the Ukraine crisis.

"As you know we are increasing our gold holdings, although this comes with market risks," Tulin told lawmakers in the lower house of parliament. "The price of it swings, but it is a 100-percent guarantee from legal and political risks."

This Reuters article from late Tuesday morning EDT was something I found in a GATA release.


Gold smuggling in India rises 900% to record

For the first time in the history of gold smuggling in India, the seizure in illicit trade has crossed the rupees 1,000 crore mark in one financial year with customs, police, and revenue agencies seizing more than 3,500 kilograms of gold in 2014-15.

In 2012-13 the same figure stood at merely Rs 100 crore with just about 350 kilograms of gold seized. In two years, since the government increased duty on gold to 10 percent to rein in a yawning current account deficit, gold smuggling has grown by 900 percent.

Since as an accepted principle seizures could be less than 10 percent of actual smuggling, the figures look even more ominous.

Sources say gold has also begun to be smuggled in unique ways and from rather unexpected corners.

This article showed up on the Times of India website at 4:31 a.m. IST on their Wednesday morning---and I found this one the Internet site yesterday.  It's worth reading.


Turn out the lights: Australia calls commodity spending boom end

Gold miners are spearheading a wave of merger and acquisition activity in Australia, riding a rebound in local gold prices to pounce on projects promising quick growth.

In the first signs of life since the country’s mining boom went bust three years ago, companies are buying assets from international rivals tightening their belts, and partnering with fellow Australian miners.

“Everyone is looking for assets that enable them to grow. We’ve seen more M&A in Australia in 2015 than in the past five years,” Ian Murray, chairman of Perth-based Gold Road Resources Ltd told Reuters, referring broadly to the level of interest in the sector.

Progressive central bank interest rate cuts aimed at knocking down the Australian dollar and falling labour and mining costs are adding fuel to the frenzy.

This Reuters article appeared on the Internet site yesterday morning BST---and I found it all by myself.



¤ The Funnies

This little fellow---and he is little---is a pied-billed grebe, and is about a foot long, tops.  Both sexes are similar in appearance, so I'm not sure whether this is a male or female---not that it matters, I suppose.  It showed up right in the middle of my photo shoot with the yellow-headed blackbird that appeared in yesterday's column.  It's only because I was in my car that he got as close as he did, so I made the most of the opportunity.

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¤ The Wrap

It occurred to me that it has come down to JPMorgan and other big banks being found guilty of manipulation in most of the markets they deal in, except for a very few; even though their behavior was the same in all markets. It took me a while to figure out why the banks could be found guilty in most markets, but not in others. The difference is that in the markets where the banks were found guilty were all markets where the chance of pile-on civil litigation was virtually non-existent.

OK, the banks conspired and colluded in LIBOR and foreign exchange, for instance, but who was damaged was very hard to prove and this virtually eliminated waves of follow on civil litigation. Plus, there were no strong public allegations of manipulation beforehand that I am aware of – just a sudden finding that the banks did something wrong and they agreed to settle. It was almost like the authorities and banks agreed that something was done wrong to throw everyone off the real trail.

In contrast, in the markets where the banks’ manipulation is clear, like silver, gold, copper and elsewhere, neither the Justice Department nor the CFTC would dare bring charges for fear of the avalanche of civil lawsuits that would follow. Let’s face it, it would be pretty easy for many thousands of market participants and investors to prove they were damaged by the silver manipulation were the regulators to level charges against the banks along the lines of what I write about weekly. In addition to subjecting JPMorgan and the CME to endless and unlimited litigation, it would necessarily end the manipulation in an instant and send silver prices to the heavens. - Silver analyst Ted Butler: 23 May 2015

There should be no doubt in your mind as to what's going on---and who is behind it.  JPMorgan et al took a decent chunk out of all four precious metals yesterday, but the thing that didn't impress me was the lack of net volume, something I mentioned at the top of today's column.  With the 50-day moving average taken out to the down-side in gold, I was expecting much more than we got.  Silver didn't take out any of its moving averages, but I was still expecting higher net volume there as well.  This does not bode well for precious metal prices going forward.

Here are the 6-month charts for all four precious metals so you can see the slices that "da boyz" took off the prices yesterday.

As to how bad it could get---it is, as Ted Butler keeps pounding into me, the number of contracts---not the price.  And based on yesterday's volume, there are still a boatload of long contracts left in the Managed Money category that have to puked up---and that doesn't include how far the powers-that-be can get these same traders to go on the short side.

As to how long this might take, as I said yesterday, it will either be death by a thousand cuts, or a couple of massive slices.  Their usual procedure is to slice thinly over a long period time, but make no mistake, the process started yesterday.  Just look at the 6-month gold and silver charts above and take a look at the length of time between the tops and the bottoms.

Of course the critical 50-day moving averages are much closer, and we're already through gold's, but with the Commitment of Traders numbers what they are at the moment, JPMorgan et al could engineer prices much, much lower.  Just eye-balling the above charts, I'm guessing that it could be as bad as $40 in gold---and $1.25 in silver.  Maybe more.  Ted was surprised that they didn't go after the precious metals even harder than they did yesterday, but I guess 'thinner slices' are back in vogue.

So we wait.

And as I type this paragraph the London open is just under ten minutes away, the gold price is crawling higher, silver is about unchanged, platinum is up a few bucks---and palladium is up six.  Net gold volume is very light at the moment, a bit under 10,000 contracts---and silver's net volume is around 3,300 contracts.  All is quiet at the moment, but this state of affairs won't last.

The dollar index topped out in mid-morning trading Hong Kong time---and is currently down 26 basis points.

As I said in Saturday's column---and Tuesday's as well---with all futures traders [except those standing for delivery] having to be out of the June contract by the close of COMEX trading tomorrow, roll-over volumes will be huge---and they have been.  But its the net volumes I'm not happy with.

Yesterday was the cut-off for this Friday's COT Report---and because of the high volume, most of which occurred during the New York trading session, it's doubtful that all of Tuesday's data will be reported in a timely manner.

And as I send today's column out the door at 5:20 a.m. EDT, I note that gold and silver are trading very flat---and basically unchanged. Platinum and palladium are up a bit.  The dollar index is down 20 basis points.

Not surprisingly, gold's gross volume is very high, as all the large traders have to be out by the end of the COMEX trading session today. But net volume is just under 14,000 contracts, which is very light. Silver's net volume is just under 5,000 contracts.  Nothing to see here.

It's obvious that the HFT boyz and their algorithms are not around at the moment---and it's entirely possible that they may not put in an appearance again until next week, when the June contract is off the board.  However, I wouldn't bet the ranch on that.

Whichever way it turns out, we're not out of the woods yet by any stretch of the imagination.

And on that cheery note, I'm off to bed---and I'll see you here tomorrow.

Ed Steer