I’m not expecting a lot to happen as the March contract goes off the board

As I noted in The Wrap section of yesterday's column, there was a decent rally in gold in early Far East trading on their Wednesday.  But that all ended/got capped around 3 p.m. Hong Kong time—and an hour before the London open.  It was all quietly down hill for the remainder of the day, with the New York low coming shortly before the 1:30 pm. EST COMEX close.  From there, it rallied a few dollars into the close.

The high and low were reported by the CME Group as $1,211.70 and $1,200.70 in the April contract.

Gold closed yesterday at $1,284.20 spot, up $2.90 from Tuesday's close.  Net volume was very much on the lighter side at only 95,000 contracts, with a bit more than a third of that coming before the London a.m. gold fix at 10:30 a.m. GMT.

The rally in silver in morning trading in the Far East was much more substantial, with the high tick of the day coming shortly before 11 a.m. Hong Kong time—and from there it followed a very similar price path to gold.

The high and low ticks were recorded as $16.28 and $16.70 in the March contract.

Silver finished the Wednesday trading session in New York at $16.535 spot, up 22.5 cents on the day—and well of its high.  Gross volume was almost 100,000 contracts, but netted out to a tiny 1,600 contracts, as almost all of it was roll-overs out of the March contract.

Platinum also had a decent early morning rally in Far East trading but, like gold, a willing seller appeared at 3 p.m. Hong Kong time—and the low tick of the day came shortly before the COMEX close, just like gold and silver.  Platinum closed at $1,168 spot, up 5 bucks on the day.

Palladium inched higher through the entire Wednesday session—and broke through the $800 spot price mark for the final time shortly before lunch in New York.  It closed at $804 spot, up 12 dollars on the day.

The dollar index closed late on Tuesday afternoon in New York at 94.47—and then spent the entire Wednesday session chopping lower in a fairly wide range, much like it did on Tuesday.  The 91.16 low tick came about 9:20 a.m. in London—and it rallied back to about unchanged on the day at precisely 8 a.m. in New York.  From there it chopped lower into the close, finishing the Wednesday session at 94.20—which was down 27 basis points from Tuesday.

The gold stocks opened up—and stayed in positive territory all day.  The HUI closed up 1.77 percent.

After opening about unchanged, the silver equities rallied strongly until shortly before noon EST—and then chopped lower for the remainder of the Wednesday trading session.  Nick Laird's Intraday Silver Sentiment Index closed up 2.24 percent—and well off its high tick.

The CME Daily Delivery Report showed that 58 gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  In gold, there were three different short/issuers but, once again, it was JPMorgan stopping them all for its client account.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest for February fell by 267 contracts leaving 95 left to deliver.  But only 58 are posted for delivery tomorrow, so the balance will be on this CME's Daily Delivery Report this evening, along with the First Day Notice numbers for March.  In silver, the February open interest declined down to 3 contracts—and as you'll note in the previous paragraph, those are already posted for delivery on Friday, so silver is done for month.  Only gold has February contracts left to deliver.

There were no changes in GLD yesterday—and as of 9:24 p.m. EST yesterday evening there were no reported changes in SLV, either.

The good folks over at the shortsqueeze.com Internet site updated the short positions in both GLD and SLV as of the close of trading on February 15—and this is what they had to report.

It was no surprise to see that SLV's short position dropped by a very chunky 34.03 percent—from 20.72 million shares/troy ounces, all the way down to 13.67 million shares/troy ounces.  That would probably be JPMorgan buying all the SLV shares that fell off the table during the current price decline in silver that they engineered—paying down their SLV short position in the process.  On top of that, 5.41 million ounces of silver were deposited in SLV since the February 15 cut-off for this report, so it's a lead-pipe cinch that the short position in SLV is down even more—and probably significantly more.  But we won't know until about March 9 at the earliest.

GLD's short position declined by an even larger percentage, as it was down by 37.05 percent—from 1.49 million troy ounces to 935,000 troy ounces.  This is the lowest number I can remember seeing in a very long time.

These are the most aggressive short coverings I've seen in any one 2-week period—and it's got my “spidey senses” tingling.  But I think I'll take a blue pill and lie down until the feeling goes away.

Switzerland's Zürcher Kantonalbank updated their website with the activities in their gold and silver ETFs as of the close of trading on Friday, February 20—and this is what they had to report.  Both ETFs are continuing their respective declines, as their gold ETF shed another 10,015 troy ounces—and their silver ETF dropped by another 104,196 troy ounces.

There was no sales report from the U.S. Mint yesterday.

There was very decent in/out movement in gold at the COMEX-approved depositories on Tuesday.  80,375.000 troy ounces were reported received, which works out to precisely 2,500 kilobars—and 16,075 troy ounces [500 kilobars] were shipped out.  As you may have noticed recently, the in/out activity in the depositories is indicating that kilobars are a de facto “good delivery” bar for gold now—and will officially become so when gold sports its “new” price at some point in the future.  The link to that activity is here.

In silver, there was 584,789 troy ounces reported received—and 80,744 troy ounces shipped out.  Almost all the activity was at Canada's Scotiabank.  The link to that action is here.

Nick sent around some gold charts vs. some of the world's currencies to show that the precious metal is still a store of value—and here's gold vs. the local currencies in Argentina, the Ukraine—and “Mother Russia”.

I started off with very few stories yesterday, but as the evening progressed, that all changed.  Now I have quite a few, so I'll happily leave the final edit up to you.

I’d be remiss if I didn’t mention my speculation that JPMorgan has amassed upwards of 300 million oz of physical silver over the past four years in the big buyer discussion. JPM is the most powerful and, in many ways, the most sophisticated trader in the world. I would also add most connected and crooked. This bank, in my opinion, controls the silver market. How they accumulated as much silver as I claim they’ve acquired is a testimony to their skill, power and treachery. But not even JPMorgan was able to buy 100 million ounces of physical silver in a short time (aside from the first big price take down in 2011).

If JPM did buy as much physical silver as I allege, that tightens the physical market even further and makes the price impact of the next big buyer that comes along more potent. It also validates the big buyer premise because JPMorgan wouldn’t buy that much silver if it wasn’t looking to score big.  And while it does create the possibility that JPMorgan could then sell the physical silver it acquired to the next big buyer which comes along at discounted prices, in reality that would only occur if JPMorgan sold the silver it accumulated at a loss and, in effect, subsidized the next big buyer’s purchase. That would not be in keeping with JPMorgan’s reason for existence.Silver analyst Ted Butler: 25 February 2015

Except for the early price action in Far East trading on their Wednesday morning, it was very quiet yesterday—and most of the early gains were bled away as trading in London and New York progressed.  Of course yesterday was the day when all the big boys had to be out of the March  COMEX silver contract—and the over-the-top gross volume I spoke of at the top of this column, indicated that this was precisely what they did.  Everybody else has to be out today.

Here are the 6-month charts for all four precious metals updated with yesterday's data.

And as I write this paragraph, the London open is about thirty minutes away.  Once again there were smallish rallies in all four precious metals in morning trading in the Far East on their Thursday.  However, it does appear that these rallies ran into selling in early afternoon trading Hong Kong time for the second day in a row.

Gold's net volume at the moment is barely over 15,000 contracts—and silver's net volume checks in around 2,600 contracts—and most of silver's volume is now in the new front month which is May.  It's very quiet out there.  The dollar index is virtually comatose—and only down about 3 basis points at the moment.

I must admit that I'm not expecting a lot to happen as the March contract goes off the board.  As I said, all the small traders have to be out by the COMEX close at 1:30 p.m. EST this afternoon—and first day notice numbers come out this evening EST.

So where to from here you ask?  Beats me.  I still don't think we've seen the bottom of this engineered price decline, although I reserve the right to be wrong.  I'll have a much better feel for things once I've seen tomorrow's Commitment of Traders Report.  I've been commenting on it off and on all week—and this is what Ted Butler had to say about it to his paying subscribers yesterday.

Finally, there was likely some further improvement in the COT market structure thru Tuesday’s cutoff for the reporting week, in that there was further speculative and technical fund selling and commercial buying on the series of new price lows in gold and silver to be reported in Friday’s release. However, the overall decline in price this week was muted—and COMEX trading volumes were not large, suggesting the reduction in the total commercial net short position was not as large as the two previous reports, at least in gold. One wild card is that there was a significant price decline on high volume on the cutoff day of the previous COT report, raising the possibility that not all of the speculative selling and commercial buying in that report was recorded in a timely manner and may show up this week. That’s a cute way of saying I’m not sure of how much commercial buying occurred this week.

And as I send this out the door to Stowe, Vermont at 4:50 a.m. EST, I note that prices have  continued to chop higher in all four precious metals since I wrote my prior comments about two hours and change ago.  Once again silver is leading the charge but, having said that, they're all doing very well for themselves at the moment.  Net gold volume is around 26,000 contracts, which isn't overly heavy considering the price action—and silver's net volume is only 5,100 contracts.  I find this lack of volume rather surprising—and it appears on the face of it that JPMorgan et al aren't really resisting these rallies too much.  Let's see if that continues. The dollar index still isn't doing much—but is now up 2 whole basis points.

The whole world now seems to know what the bullion banks have been up to in the precious metal markets for the last couple of decades—and even though not a lot appears to be going on out in the open, it's a sure bet that under the surface there's plenty happening—and it can't blow up quick enough to suit me.

Before heading off to bed, I'd like to point out that Casey Research is hosting another FREE on-line video event entitled “Going Vertical: Deep-Value Stocks to Own in a Rising Gold Market“.

Eight investing and junior exploration experts talk about their experiences in previous bear markets—and what you need to do now to prepare your portfolio for maximum gains when the market turns bull. Including one MUST-OWN stock pick from Louis James.

Guests include Pierre Lassonde, co-founder and chairman, Franco-Nevada, Bob Quartermain, president, CEO, and director, Pretium Resources, Doug Casey, Rick Rule, founder and chairman, Sprott Global Resource Investments, Ron Netolitzky, chairman and director, Aben Resources, Frank Holmes, CEO and CIO, U.S. Global Investors—plus Jeff Clark and Louis James.

This FREE VIDEO will air on March 10 at 2:00 p.m. EST.  It will also be available for viewing after the initial stream for those who have schedule conflicts.  You can find out all about it, plus you can sign up as well, by clicking here.

That's it for another day—and based on what's happening at the moment, the rest of the Thursday trading session may prove to be far more exciting than I was expecting.

See you tomorrow.

Ed Steer

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Here are four more Grand Canyon shots from Day 2.  The three predominant tree species as this altitude are the ponderosa pine, the Pinyon pine—and the Utah juniper.  The fantastic trunks of the Utah juniper are on display in photo three—and in photo 4—plus I used their foliage to frame shots of the canyon in the first two photos, plus every other canyon photo I took as well.  Very handy these trees!  Note the two tiny figures in photo #2—almost lost in the grandeur.  Don't forget about the 'click to enlarge' feature.