I wasn't overly surprised by the fact that there was no follow-through from Friday's market actions, as there hardly ever is after a big one-day rally like that...and Ted Butler has more to say about that in his commentary further down. Gold got sold down about ten bucks early in Far East trading...and then hit its high of the day shortly before 3:00 p.m. Hong Kong time, which was about an hour before London opened.
After that, gold got sold down to its low of the day, which came about 10:50 a.m. in New York...and from there it rallied a bit going into the close.
The gold price finished down an even $8.00 on the day...and net volume was pretty decent at around 125,000 contracts. I was out for dinner until late last night, so I didn't get the gold and silver charts saved in time before they flipped over into the Tuesday trading day...as a result, the Friday trading day disappeared,
Silver got sold off about 40 cents during the first three hours of trading in the Far East during their Monday morning, but by the noon silver fix in London, the silver price had gained most of that back. But that proved to be the high of the day, as once 'the fix was in', silver got sold off another 60 cents...and the low of the day came shortly after 12:30 p.m. in New York.
This silver price didn't do much after that until shortly before Comex trading ended at 1:30 p.m. Eastern time...and the subsequent rally in the electronic trading session erased about half of the loss from the London silver fix.
Silver closed at $28.26 spot...down 42 cents from Friday's close...erasing almost all of last Friday's gains. Net volume was a bit over 29,000 contracts.
The dollar index opened at 82.80...and then rose about 25 basis points within the first three hours of trading. From there it began a long, slow slide...and closed at around 82.55...closing down about 25 basis points from Friday.
The gold stocks opened in positive territory, but that didn't last long...and they dipped into the red and hit their low of the day at gold's low price tick, which was around 10:50 a.m. Eastern time. From there they traded sideways until the gold price began to rally shortly before the Comex close. The stocks sailed higher...and despite the fact that gold finished down on the day, the HUI finished up 1.46%.
Most of the silver stocks finished in the plus column as well...and Nick Laird's Silver Sentiment Index closed up 1.03%
(Click on image to enlarge)
The CME's Daily Delivery Report showed that only 97 gold contracts were reported for delivery tomorrow...and that was it
GLD reported no changes on Monday...but over at SLV they reported a tiny withdrawal of 137,357 troy ounces, which was probably a fee payment of some kind.
There was no sales report from the U.S. Mint yesterday.
But it was a fairly busy day over at the Comex-approved depositories on Friday, as the reported receiving 596,820 troy ounces of silver...and shipped 768,443 ounce of the stuff out the door.
Silver analyst Ted Butler had a thing or two to say about Friday's big rally in gold...and here's the 3-paragraph Reader's Digest version...
"As I mentioned in last week’s review, there had been a build up in the gross short position of the technical funds in gold, as indicated in the long form disaggregated futures –only COT report. I gave the numbers for silver but not for gold, so let me do so now. This is the category of trader that the commercials lured onto the short side by the process of engineering lower successive prices. This “slicing of the salami” was the prime inducement for getting the tech funds to go short and the commercials pulled it off this time brilliantly. From the time of the first drop in gold below $1,600 (early May) to this week’s COT, the short side of the managed money category increased by more than 30,000 contracts, from under 10,000 contracts (COT of May 1) to almost 41,000 contracts as of the Tuesday cut-off. I would calculate that the average price at which the tech funds sold short these 30,000 contracts to be around $1,575."
"As I tried to explain, this type of pure tech fund short seller is always a bullish factor in the market because once they are done selling, you know they will buy back as prices rise (as opposed to the commercials who rarely, if ever, buy back shorts on higher prices). You don’t know when or where these tech funds shorts will buy, but you know they will buy at some point. And they have a tendency to go through the door and buy all at once, if important moving average signals are flashed. Those signals were flashed on Friday and it was tech fund buying that was solely responsible for the explosion in gold prices. The only thing I don’t know is if all 30,000 tech fund short contracts were bought back or is there some number remaining to be bought (the more remaining to be covered, the better). Of course, this tech fund short-covering is separate from the buying of long contracts by other tech funds. As always, this is what moves prices."
"If the tech funds bought back these 30,000 gold short contracts at prices where the majority of volume was transacted on Friday, I would calculate that the tech funds lost (or will lose) up to $150 million. Not bad for one day’s pay for the commercials who made or improved their bottom lines by that same amount, even if it needs to be split 30 or 40 ways. And this is just a partial take for the commercials on a single trade that occurred within a month’s period of time. It was a pretty big one, but just a single ringing of the commercials’ collusive cash register. This is a cash machine that has been rung hundreds of times over the years, to the great shame of the regulators."
I'm still in Vancouver until about noon Eastern time this morning, so I'm just posting the linked headlines just as I did on Saturday...and there are lot of stories for you today.
3. Obama's Cyberwar could lead to a military war. - CNN/BrasscheckTV
4. Merrill Losses Were Withheld Before Bank of America Deal - The New York Times
6. GM to cut about one-fourth of U.S. pension liability - Reuters/Yahoo
8. Greek Election Aftermath In 1000 Years Of Context - Zero Hedge [INTERESTING!]
9. Doug Casey: End of the Nation-State - Casey Research
10. Spanish rescue draws closer as Cyprus buckles - The Telegraph
11. Faber On Europe's Dilemma And China's Hard Landing - Zero Hedge/CNBC
12. Euro Zone Nears Moment of Truth on Staying Together - The New York Times
13. The week that Europe stopped pretending - The Telegraph
14. The political economy of euro break-up - The Telegraph
15. Rising Currency: Concerns Berlin Wants Spain to Accept Bailout Money - SpiegelONLINE
16. Banking Woes: Ireland Still a Long Way from Overcoming Debt Crisis - SpiegelONLINE
17. Egan-Jones Cuts UK's Sovereign Credit Rating - CNBC
18. Gold bushwhacks bears, again: Peter Brimelow - Marketwatch.com
19. Hong Kong-China gold flow jumps 62 pct in April - Reuters
21. The Table Is Set for a Mania: Jeff Clark - Casey Research
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As I said in my opening remarks at the top of the page, gold and silver weren't allowed to do much yesterday...and silver gave back almost all its gain from Friday in the process. I don't doubt for a second that someone was riding shotgun over the precious metals on Monday...especially since volumes were so high on little price action in gold. I was expecting a more positive price performance than this considering the fact that the 50-day moving average had been broken to the upside, but that was not to be. Of course silver has miles to go before it will even get a sniff of its 50-day moving average, so this rally may take a while.
I'm still happy about the price action in the precious metal shares...and my only hope is that it's not the bad guys loading up on cheap shares to sell into any major rally we might have down the road. Both John Embry and myself are very watchful for this sort of thing...although they were nowhere to be found on Friday. But as I've said before, maybe I'm looking for black bears in dark rooms that aren't there.
Today, at the close of Comex trading, is the cut-off for this Friday's Commitment of Traders Report...and unless we have a major price move in either direction in both gold and silver during the New York trading session, the COT should tell us quite a bit about how much of Friday's price action in gold and silver was either short covering, or new speculative longs being placed...or both.
Neither gold nor silver did much in Far East trading overnight...and as I hit the send button about 3:35 a.m. Eastern time...gold is down a few dollars and silver is down about a dime. Gold volume is pretty light...and silver's volume is light as well...and half that volume is roll-overs out of the July delivery month.
I'm off to bed, as I have a plane to catch later this a.m.
See you tomorrow.