The gold price gained about five bucks in Far East trading on Friday... and then basically flat-lined for four and a half hours between the London open and the New York open. The moment that trading began on the Comex, a big not-for-profit seller showed up... and gold was sold down to its low of the day of $1,235.70 within the next thirty minutes.
Then the selling stopped... the gold price turned on a dime... and around 11:15 a.m. gold hit its high of the day at $1,252.30 spot. From there it got sold off once again and closed the Friday session up $2.70 from Thursday's spot close.
The silver price, as they say, was more 'volatile' yesterday. Starting around lunchtime in Hong Kong, silver rallied to its London high around 11:30 a.m. their time. From that point, silver got sold off into the New York open where the not-for-profit seller took it even lower, with silver's low price [$19.71 spot] coming at precisely the same instant as gold's low price... around 8:45 a.m. Eastern.
An hour after silver hit its low price, it broke through $20 to the upside... and hung in there... setting its high price of the day [$20.06 spot] shortly before 11:30 a.m. Eastern time. Needless to say, silver was not allowed to close anywhere near the $20 mark... but still managed to close up fourteen cents from Thursday's spot close.
The world's reserve currency was all over the place in a very tight trading range yesterday... and obviously had no bearing on what happened with the gold and silver prices yesterday. Here's the US$ chart for information purposes only.
The HUI pretty much followed the gold price around yesterday... and managed to finish the Friday trading day up 0.50%. Here's the HUI for the week that was... and, in case you're interested, the HUI is up 12% year-to-date.
The CME Delivery Report on Friday showed that zero gold and 274 silver contracts were posted for delivery on Tuesday. For the second day in a row, R.J. O'Brien was the big issuer with 267 contracts, with JPMorgan being the biggest stopper. They received 153 contracts in their proprietary trading account, plus an additional 37 contracts in their client account. There was a lot of other activity in yesterday's delivery report... and it's worth a look. The link is here.
There was no activity reported in either GLD or SLV yesterday... but the U.S. Mint had a smallish sales report. They showed that 4,500 ounces of gold were sold in their gold eagle program... along with an additional 1,000 24K gold one-ounce buffaloes. They also reported selling another 175,000 silver eagles. Month-to-date, the U.S. Mint has sold 18,000 ounces of gold in their gold eagle program... 3,500 24K gold one-ounce buffaloes... and 320,000 silver eagles. These are hardly earth-shaking numbers, dear reader.
Thursday was a fairly busy day over at the Comex-approved depositories. There were silver withdrawals from all four warehouses... and the total came to 294,289 troy ounces. The link to that action is here.
Well, one of the first things I looked at after my computer was up and running yesterday morning was the September Bank Participation Report for positions held at the end of trading on Tuesday, September 7th. Even without looking back to the August numbers, I could tell that there was big deterioration in both silver and gold.
In a nutshell... here it is for silver. '3 or less' U.S. bullion banks increased their net short position in Comex silver by 5,637 contracts from the August report to the September report. Without doubt, JPMorgan was the culprit. The '8 or more' Non U.S. banks that hold Comex silver contracts were exactly market neutral... holding the same number of longs as shorts. However, this is a deterioration from the August report... as that report showed that foreign banks were net long 1,015 Comex contracts.
In gold, four U.S. banks were net short 109,826 Comex contracts in the September report. This is an increase in net short position of around 11,400 Comex contracts since the August report. The thirteen Non U.S. banks were net short 20,586 Comex contracts. This is also a big deterioration since the August report... as the August report showed that these same 13 Non U.S. banks were only net short 9,317 Comex contracts.
From the August report to the September report, these bullion banks [U.S. and foreign] have increased their total net Comex short positions by 6,652 contracts in silver and 29,903 contracts in gold.
And, without a doubt, a lot of the short position increase by the U.S. bullion banks was put on by JPMorgan. This especially applies to silver where, without doubt, they put on the lion's share of the 5,637 Comex short position increase that was reported by the '3 or less' U.S. bullion banks.
In a report to private clients yesterday, Ted Butler had this to say... "Here's why I think JPMorgan shorted more, putting its head back into the lion's mouth, after closing out a bunch of silver short positions. I don't think they thought they had any other choice. On August 24th, the price of silver was around $18 the ounce. Over the next couple of days it jumped sharply to $19... and then continued to move up from there. The technical funds were buying aggressively and the Commercials [as a group] sold to them. Without JPMorgan's additional 5,000 or 6,000 or more short contracts, the Commercials stood a good chance of being over run to the upside. I'm sure JPMorgan was afraid of this and helped out their collusive commercial brother crooks. I'm also sure that without JPMorgan's pile-on, the price of silver would have exploded upward." If you wish to read more about this, you can check out Ted's subscription service here.
The Commitment of Traders wasn't happy reading either. It showed that the bullion banks went net short another 2,421 contracts in silver. The Commercial net short position [where the bullion banks play] now sits at 61,798 contracts, or 309.0 million ounces of silver. The '4 or less' traders are short 256.0 million ounces... and the '8 or less' traders are short 337.6 million ounces. The link to the full colour COT silver graph is here... and the further deterioration is very obvious.
In gold, the bullion banks increased their net short position by a smallish 3,119 contracts, or 311,900 ounces. The Commercial net short position in gold is now 28.8 million ounces... of which the '4 or less' traders hold 21.0 million ounces short... and the '8 or less' bullion banks are short 28.3 million ounces. The full colour COT graph for gold is linked here. The page was very slow to load earlier this morning.
These increases in net short position in the Commitment of Traders report are part of the numbers reported in the September Bank Participation Report... not an addition to them.... as the cut-off date for both reports was this past Tuesday at the close of trading.
Here's Ted's graph of "Days of World Production" for all Comex-traded commodities... courtesy of Nick Laird over at sharelynx.com. Needless to say, the bullion banks increased their 'days to cover' in both silver and gold. In silver, the '4 or less' traders would take 132 days of world silver production to cover their short positions... and the '8 or less' traders are now up to 174 days.
I have very few stories today, which suits me just fine. The first one is courtesy of reader Roy Stephens. China's top-ranking UN diplomat embarked on a drunken rant against the UN Secretary General Ban Ki-moon, telling his boss he'd "never liked" him, and adding for good measure that he didn't like Americans either. It's a story from Thursday's edition of The Telegraph... and the headline reads "China's UN diplomat in drunken rant against Americans". It's not a long read... but definitely worth your time... and the link is here.
My second offering today is courtesy of reader U.D. A survey performed by the polling firm StrategyOne came up with some pretty ugly data. The public is fearful about prospects for economic recovery... and almost half see America’s ‘best days’ behind them... and 7 in 10 concerned that the country is ‘fundamentally broken and not working’. The headline reads "Two-Thirds of Americans Expect Double-Dip Recession, Brace for Second Hit Worse Than the First". It's posted over at the strategyoneinsight.com website... and the link is here.
Here's a graph that Nick Laird sent me yesterday evening. It's not one of his, but it certainly is worth looking at. No explanation is needed, as the graph says it all.
Here's a story that just arrived in my in-box from Thomas John Mullen. For the last couple of days I've posted stories about the Anglo Irish Bank that were in The Telegraph out of London. Here's one that's posted in Thursday's edition of The Irish Times. While all the focus has been on losses at Anglo Irish, the other Irish banks are in denial about the scale of State support needed. It is time to face the facts: the three viable banks need over €17 billion. The headline reads "Stark reality of losses at AIB and BoI must be faced"... and the link to this must read articles is here.
My only precious metals-related story today comes from the September 8th edition of The Miami Herald. It falls into the "you can't make this stuff up" category. A rare 18th century coin worth $9,000 was stolen in Vero Beach - but not for long! The headline reads "Florida man steals $9,000 coin, sells it for $167". The story [courtesy of Florida reader Donna Badach] is only four paragraphs long... and it's well worth the read. The link is here.
My last story... and big read of the day... is courtesy of Washington state reader S.A. It's from the October edition of Vanity Fair magazine. The headline reads "Beware of Greeks Bearing Bonds". Like every major essay that appears in Vanity Fair... it's very well written and very well researched. It's also a must read from one end to the other... and the link is here.
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Today's 'blast from the past' doesn't need any introduction either... as the artist and the song are know world-wide. So turn up your speakers and click here.
Well, neither Ted Butler nor myself were exactly overjoyed to see JPMorgan show up again on the short side of the silver market. Ted had suspected that that was the case about ten days ago... and I mentioned it in passing at least once in this column... but now its been confirmed by yesterday's Bank Participation Report.
Unless JPMorgan and the other bullion banks get over run with this full short position on, I must admit that the chances for either silver or gold to blast off to new highs from this point are pretty remote. If I had to bet a dollar, I'd say that unless world events [financial, monetary... or otherwise] dictate it, the bullion banks will engineer another sell-off to blow the brain-dead tech funds out of their current leveraged long positions... which will allow them to ring the cash register one more time.
As Ted mentioned in his closing comments in his letter to clients yesterday... "The most concentrated and manipulative short position in history just got a lot more concentrated. Where is the CFTC? JPMorgan reveals it is exiting proprietary trading and then increases its giant silver short position? The new Financial Regulatory Reform law intends that big banks stop manipulating markets and thereby creating a danger to us all, and JPMorgan drastically ups the danger meter? And all this is taking place as the two-year mark has come in what is supposed to be a silver investigation into this very matter?" Once again, Ted Butler's website is linked here.
Volumes in both gold and silver on Friday were reasonably robust... and I won't know until Monday how the open interest numbers fared, as the preliminary numbers don't give much of a clue. One thing that I did note, however... was that despite the reasonably large deliveries reported on Thursday and Friday, there are still 1,497 silver contracts open for delivery in September. It will be interesting to see how this resolves itself as the month wears on.
Enjoy what's left of your weekend... and I'll see you here on Tuesday morning.