Fourth withdrawal from SLV in the last six business days
It was another trading day in the Far East where gold got sold down right at the open of their trading day—and after that it didn't do much until minutes after the London open. The rally that began at that point got capped within a few hours—and from that point until noon EDT, the price got sold down to its New York low. The tiny rally attempts after that weren't allowed to get far.
The low and high ticks were recorded by the CME Group as $1,314.50 and $1,326.60 in the August contract.
Gold closed in New York on Tuesday at $1,319.00 spot, up a whole 70 cents from Monday's close. Volume, net of June and July, was not exactly light at 127,000 contracts. It's obvious that it took JPMorgan et al a decent amount of Comex paper to put out the gold rally at the London open yesterday morning.
It was more or less the same chart pattern for silver, however the rally—which broke above the $21 spot level—lasted about an hour longer than the gold rally. But, by day's end in New York, the results were the same.
The low and high tick were reported as $20.81 and $21.17 in the July contract.
Silver finished the Tuesday trading session at $20.925 spot—up 3 cents on the day—and obviously back below the $21 spot price mark. Gross volume was over the moon, but net volume was 33,000 contracts, which was quite heavy—and was probably the result of more Comex paper being thrown at the silver rally at the London open, just like for gold
Both platinum and palladium got sold off a hair in early trading in the Far East on their Tuesday morning, but then rallied a few dollars above unchanged. That state of affairs lasted until the 8:20 a.m. EDT Comex open. They both spiked up—and both got capped in short order. Platinum finished up about a percent—and all palladium's New York gains vanished within minutes, but did finish up seven bucks. Here are the charts.
The dollar index closed late on Monday afternoon at 80.28—and then dipped down to its 80.20 low around 11:20 a.m. in London. The subsequent rally made it as far as 80.42—and then sold down a bit from there. The index closed at 80.32—up 4 basis points on the day. Nothing to see here.
The gold stocks opened in positive territory, but began to head south within fifteen minutes—and they chopped slowly lower for the entire day. The HUI closed on its absolute low tick, down 2.99%.
The silver equities were up a bit over 2 percent within 20 minutes of the open yesterday but, like the gold stocks, it was all down hill from there, as Nick Laird's Intraday Silver Sentiment Index closed down 1.99%.
The CME Daily Delivery Report showed that only 2 gold contracts were posted for delivery within the Comex-approved depositories on Thursday.
There were no reported changes in GLD yesterday, but even I was taken aback when I saw that there had been another withdrawal from SLV. This time it was 1,056,233 troy ounces that were shipped off to parts unknown. Since June 2 there have been 6.8 million ounces of silver withdrawn—with 3.6 million of that being pulled out since Tuesday, June 16. And as I said yesterday—and on Saturday—Ted Butler says that this ETF is owed about 7 million troy ounces.
The good folks over at shortsqueeze.com updated their Internet site with the latest changes in the short positions of both SLV and GLD as of May 15. In SLV, the short position declined by 4.80 percent—from 14.23 million troy ounces/shares, down to 13.55 million troy ounces/shares. Unless the authorized participants add the approximately 7 million ounces owed to this ETF before the end of the month, we'll see a big increase in the short position in SLV as the authorized participants are forced to short the shares in lieu of depositing the physical metal.
Over at GLD, the short position increased by 7.63 percent from the the end of May to the middle of June. The current short position in GLD is now 1.36 million troy ounces, up from 1.26 million troy ounces in the prior report.
There was no sales report from the U.S. Mint.
There was a small amount of gold shipped out of the Comex-approved depositories on Monday, as 4,807 troy ounces came out of Scotiabank. But it was another big day in silver, as 842,145 troy ounces were reported received—and only 1,000 troy ounces were shipped out. The biggest chunk went into the CNT Depository. The link to that activity is here.
I have a very decent number of stories again today—and the final edit is up to you.
If we do witness a sharp growth in the short position of SLV, I’m prepared to take the matter up again with BlackRock (the trust’s sponsor) and their very aggressive lawyers. The bottom line is that the lack of deposits/delay in SLV fully supports the COMEX silver warehouse turnover as an indicator of extreme tightness in physical silver. As much as I study the COTs, as and when a pronounced physical shortage of silver appears, I’m prepared to disregard the COTs as physical will trump paper. Again, both the COMEX warehouse turnover and the deposit story in SLV are specific and unique to silver and not any other commodity, including gold. – Silver analyst Ted Butler: 21 June 2014
It was just another day off the calendar yesterday—and another day where every rally, no matter how small in all four precious metals, got capped. And as I mentioned at the top of this column, it took a decent amount of Comex paper for “da boyz” to put out those gold and silver rallies in London yesterday morning.
Here are the 6-month charts for both silver and gold once again—and not a thing has changed since I posted Monday's charts in yesterday's column, as both are still in overbought territory.
Once again I was bowled over by the fourth withdrawal from SLV in the last six business days. If anyone has any explanation other than “acute physical silver shortage,” I'd love to hear it.
I was not amused by the price action in the precious metals yesterday. I'm always suspicious of future price events in the metals themselves when there is counterintuitive action in the shares. Maybe I'm just imaging things, but this overbought situation has to be resolved, so I doubt that we'll have to wait much longer for some sort of resolution.
As I write this paragraph, the London open is about 20 minutes away. As has been the case recently, all four precious metals got sold down in morning trading in the Far East on their Wednesday. And also like yesterday, all four are rallying into the London open, but all have a ways to go to get back to unchanged from Tuesday's close in New York. Volumes are already pretty heavy in both metals. There is some roll-over action in silver, but even the net volume is pretty chunky for this time of day and, not that it matters, the dollar index is trading ruler flat.
We've got three more trading days in the July silver contract before it goes off the board on Monday. All the big boys have to be out by the end of trading on Thursday, with the balance of the traders on Friday. Monday is First Notice Day, but I would think that the CME Group will have the delivery numbers up on Friday evening EDT.
And as I prepare to send today's column out the door, the London market has been open an hour. The tiny rallies going into London open all got sold down—and all four precious metals are back to more or less where they started at, or before, the London open. Volumes in both gold and silver are higher than I like to see, especially considering the lack of price action. The dollar index is still trading flat from its close in New York yesterday afternoon.
That's all I have for today—and nothing will surprise me from a price perspective when I power up my computer later this morning.
Enjoy your day—and I'll see you here tomorrow.
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