The July 4th holiday in the U.S. resulted in very quiet markets in both gold and silver elsewhere on Planet Earth...with gold up about $10...and silver up the magnificent sum of 30 cents. Gold volume was around 20,000 contracts net of all roll-overs...and silver's net volume was around 5,000 contracts.
I went to bed in the wee hours of Tuesday morning, just shortly before London opened for trading at 8:00 local time:...and things weren't looking too rosy, so I was delighted to see that the prices for both metals had turned around substantially when I finally fired up the computer yesterday morning.
The rally began right at the London open at 3:00 a.m. Eastern time. There was a secondary low at the London p.m. gold fix at 3:00 p.m. local time [10:00 a.m. in New York]...and from that point, the gold price trended sideways to down until minutes after noon on the east coast...then worked its way higher through the balance of the Comex session...and the electronic session that followed...closing virtually on its high of the day. Tuesday's net trading volume [minus Monday's] was around the 100,000 contract mark.
Silver's price path on Tuesday was very similar to gold's, with the exception that silver got sold off a bit after its high tick [$35.79 spot] in the New York Access Market around 3:30 p.m. Eastern time. Tuesday's net volume [less Monday's] was a very tiny 33,000 contracts.
The dollar was up about 40 basis points over the Tuesday trading day...and it's obvious that its price movement had little affect on either metal once London opened yesterday.
The precious metals stocks gapped up...and stayed up all day long, although they got sold off a hair going into the close. The HUI closed up a very respectable 2.98%.
With silver up well over a buck yesterday, most junior silver shares did very well for themselves...and lots better than most gold stocks. Considering the price performance of both metals since the beginning of the rally last August, this should come as no surprise to anyone. Nick Lairds' Silver Sentiment Index was up a hefty 3.34%
The CME's Daily Delivery Report showed that zero gold, along with four whole silver contracts, were posted for delivery tomorrow. We're three days into the July delivery month for silver...and only 143 contracts have been delivered so far.
There were no reported changes in the GLD ETF yesterday...but the silver ETF, SLV, reported a smallish withdrawal of 136,495 troy ounces.
The U.S. Mint had its first sales report of the new month. They sold 3,500 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 386,000 silver eagles.
While on the subject of how much silver the U.S. Mint is using, reader T.B. did some heavy lifting on our behalf over the weekend...and figured out from the published mint production data, that along with the 22,303,500 silver eagles produced up to June 30th, the mint used an additional 3.1 million ounces of silver producing other silver commemoratives during the first half of the year. If this keeps up, the U.S. Mint will go through 50,000 silver good delivery bars this year. That's about 20% more than all the silver mined in the U.S.A. in an entire year.
Over at the Comex-approved depositories on Friday, they reported receiving 703,844 ounces of silver...and shipped a smallish 13,675 ounces out the door.
Here are three paragraphs about Friday's Commitment of Traders Report that I stole from silver analyst Ted Butler's weekly commentary on Saturday.
"If there is one word to describe the changes in this week’s COT for gold and silver, it is spectacular. Make that two words, spectacularly bullish. Rarely do we see the reductions in speculative long/commercial short positions witnessed this week. The total commercial net short position was reduced by 6,400 contracts in silver and by 42,500 in gold. Even for someone who believes (me) that the commercials control and manipulate the price of both silver and gold, I stand somewhat in awe of how brazenly and collusively the commercials pulled off this recent sell-off rig job. I don’t use the word collusively loosely. In both gold and silver, all the commercial categories, the big 4, the big 5 thru 8, and the raptors, seemed to divide evenly the speculative selling they were able to induce. I don’t know how that could be accomplished so efficiently without collusion."
"In silver, the total commercial short position dropped to 29,200 contracts, the lowest level since April 2009, when silver traded at $12. The big 4 shorts (JPMorgan) bought back more than 2,200 short contracts, reducing that concentrated short position to the lowest level since October 2006, when silver traded at $11. The raptors (the smaller commercials apart from the big 8) bought 3,400 of the 6,400 commercial contracts bought during the reporting week, increasing their net long position to 12,400, their largest since last November. The 5 thru 8 largest commercial shorts bought the balance, reducing their net short position to among the lowest in years. The obvious takeaway here (aside from all the commercials behaving collusively) is that the commercials are all buying because they expect the price of silver to be higher in time. That’s what you should expect as well."
"As painful as these deliberate sell-offs may be, they are also setting the stage for a rally of monumental proportions in silver. That’s the essence of the COT. I make a point of telling you what the price of silver was the last time the short position was as low as it is now because I believe you should look at silver as if it is $11 or $12. The beauty of the COT is that it does not consider price; all it is concerned with is structure. If the structure indicates a large speculative long/commercial short position, then the danger of a significant sell-off looms large. If there is a small historical speculative long/commercial short position, a large price rally would seem to be in the cards. Currently, there is a small historical speculative long/commercial short silver position."
I have a lot of stories today, as it was a busy weekend...and I had no report yesterday, which didn't help things...and less than half a report on Saturday, which I'm still very unhappy about.
Anyway, there are lots of good stories, audio interviews and video interviews that are more than worth your time in today's column, so I really hope you can fit them all in. I had to do a hard edit on my list of stories...but the final edit, as always, is up to you.