In a way, today’s COT Report is already yesterday’s news
Except for the spike low just after 9:30 a.m. Hong Kong time, the gold price traded mostly in a five dollar price band through all of Far East and London trading on their respective Thursday's. Once the London p.m. gold “fix” was in, the price rallied a bit before getting sold down starting around 2:45 p.m. EDT in electronic trading.
The low and high ticks were reported by the crooks over at the CME Group as $1,183.60 and $1,197.40 in the June contract.
Gold finished the Thursday trading session at $1,193.50 spot, up $6.70 on the day—and would have obviously closed above $1,200 spot if the sellers of last resort hadn't shown up during the electronic trading session in New York. Net volume was 112,000 contract, with 93 percent of that number trading in the current front month.
Here's the 5-minute gold tick chart courtesy of Brad Robertson. The volume really began to pick up about 12:45 p.m. in London, when the rally that was underway at the time got turned over. After that, heavier volume began to appear as the short sellers of last resort were on hand to provide “liquidity/price capping” against the new buying that was coming into the market. You should also note that the price decline that started at 2:45 p.m. EDT was accomplished with very little volume. The vertical gray line is 10:00 p.m. MST/midnight EST, so add two hours—and don't forget the 'click to enlarge' feature.
The silver price followed a similar pattern, but was much more subdued. However, the inflection points all occurred at the same time as gold. Silver's low came at the London p.m. fix—and not in morning trading in Hong Kong, as did gold's low.
The low and high were recorded as $15.705 and $15.92 in the May contract.
Silver finished the Thursday session in New York at $15.85 spot, up 9 whole cents. Gross volume was very high, but once the roll-overs were netted it out, the volume was only 21,000 contracts.
The platinum and palladium prices traded similarly, with platinum closing at $1,134 spot, up 6 bucks on the day—and palladium closed at $753 spot, up 16 dollars on the day, recouping all of Wednesday's loss, plus a few dollars more. Here are the charts.
The dollar index closed late Wednesday afternoon in New York at 98.06—and chopped higher from there, hitting its 98.40 high tick shortly after 8:30 a.m. BST in London. The 97.15 low came at 2:30 p.m. EDT, which was about the time that gold began to get sold off in electronic trading in New York yesterday. It rallied a bit from there—and closed at 97.31—down 75 basis points on the day.
Up until the 10 a.m. EDT London gold fix, there was absolutely no correlation allowed between the dollar index and the precious metal prices. But the moment the dollar index bottomed out at 2:30 p.m. EDT—and then rallied a hair, there was a seller there to make sure that almost half of yesterday's gains in gold vanished before the close.
The gold stocks opened up a bit—and then rallied in a straight line until the not-for-profit seller showed up around 2:45 p.m. in the gold market—and sold the price down going into the close. The equities followed suit, as the HUI finished the Thursday session up 2.42 percent.
The silver equities opened unchanged—and then sold down a bit, but reversed direction around 10:20 a.m. EDT. They then followed an identical trajectory as the gold stocks—selling off at the same time was well, giving up about a percent of their gains in the last hour or so of the trading day. As a result, Nick Laird's Intraday Silver Sentiment Index closed up only 1.60 percent.
The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday. With only three delivery days left in the April contract, I find this lack of activity very strange.
The CME Preliminary Report for the Thursday session showed that gold open interest in April declined by 31 contract—and total o.i. left remaining is 440 contracts. In silver, o.i. fell by 1 contract, leaving 22 left to deliver.
There were no reported changes in GLD yesterday—but there was a big deposit in SLV, as a chunky 1,912,276 troy ounces were deposited by an authorized participant.
Since yesterday was Thursday, Joshua Gibbons, the Guru of the SLV Bar List, updated his website with the current data from the iShares.com Internet site—and this is what he had to report.
“Analysis of the 22 April 2015 bar list, and comparison to the previous week's list: 1,435,000.1 troy ounces were added (all to Brinks London)—and no bars were removed or had serial number changes.“
“The bars added were from: Solar Applied Materials (0.7M oz), Russian State Refineries (0.6M oz), Yunnan Copper (0.1M oz), and 2 others.“
“As of the time that the bar list was produced, it was overallocated 699.3 oz. All daily changes are reflected on the bar list.“
There was no sales report from the U.S. Mint on Thursday.
There was no in/out movement in gold at all at the COMEX-approved depositories on Wednesday—and not a lot of activity in silver, as only 5,772 troy ounces were reported received—and only 53,779 troy ounces were shipped out the door. The link to the silver activity is here.
It was a another monster day over at the COMEX-approved gold kilobar depositories in Hong Kong on Wednesday. Brink's, Inc. reported receiving 10,288 kilobars—and shipped out 8,100 kilobars. One wonders if this level of hyperactivity is a permanent feature of this newly-created depository. Time will tell, I suppose. The link to the above activity in troy ounces is here.
Here are a couple of charts that Nick Laird passed around yesterday evening while I was working away on today's column—and I hope you find them as interesting as I did. They show Switzerland's gold imports and exports for March. Nick says that the export number to China would include Hong Kong's imports as well. There's a story about this further down in the Critical Reads section.
I have a very decent number of stories for you today—and I will ruthlessly edit any further news items that come in over the remainder of Thursday evening.
The big news event, of course, [was Tuesday's] joint filing of civil charges by the CFTC and criminal charges by the Justice Department against a London trader for his participation in the infamous “Flash Crash” in the stock market on May 6, 2010. That was when the Dow Jones Average fell 1,000 points in a very short period of time before recovering almost as sharply. Yesterday’s filing places much of the blame for the crash on this London trader who “spoofed” the market, by entering and immediately canceling large orders on stock index futures contracts whose prime intent was to manipulate prices. (I suppose he’s not the one spoofing prices lower in COMEX gold and silver today, Wednesday, but someone certainly is).
According to Eric Hunsader, from the market data company, Nanex, “I’m dumbfounded that they missed this until now.” After watching the agency’s handling of the increasingly obvious silver manipulation, I’m less surprised and I am left with the feeling that the evidence provided by the unnamed whistleblower must have been overwhelmingly convincing for the CFTC to change its tune so radically.
I am not at all surprised at the article’s negative portrayal of the role of the CME in this matter. The article quotes the London trader, in an e-mail more than four years ago, as having told the exchange who was inquiring into his activities, “to kiss my ass.” I’m sure that wasn’t what took the CME so long to crack down on the trader, since there is no evidence the CME ever cracked down on him. The CME hasn’t cracked down on High Frequency Trading, no matter how egregious it has become for the simple reason it is the greatest beneficiary of the mindless and manipulative trading in the form of exchange fees. The CME is the prime promoter of HFT. That’s the problem with self-regulation when the regulator is a beneficiary of the manipulative trading – it will never be ended by the conflicted regulator.
The irony, of course, with the charges of manipulation in the stock market that occurred five years ago is that the same manipulation is occurring in COMEX silver and gold today [Wednesday – Ed] as I write this. As I’ve written previously, the HFT computer jocks have been careful not to trip off another stock market crash because they know it will not be tolerated. But because both the CFTC and the CME have openly signaled that high speed computer manipulation is OK in COMEX silver and gold, the manipulative practice has actually intensified. Whereas crashing the stock market damages too many investors, the number of investors hurt in the silver manipulation is so small in comparison that the CFTC and the CME look the other way. Th at's the way these regulators swing – they only do what they are forced to do. – Silver analyst Ted Butler: 22 April 2015
I was happy to see that the precious metals rallied yesterday, but as I pointed out earlier, it had nothing whatsoever to do with what was going on in the currency markets, as the dollar index was in the dumpster during the whole time they were trading flat—and the only time that they were allowed to rally meaningfully was once the London p.m. gold fix was in. They even capped those rallies in electronic trading in New York, so they were modest, at least in gold and silver—and that's being kind.
Gold made it to its 50-day moving average, but didn't close above it. Silver hasn't been above its 50-day moving average for over two weeks, so there wasn't much damage done from a Commitment of Traders perspective.
Here are the 6-month charts for all four precious metals as of the close of trading yesterday.
And as I write paragraph, the London open is about fifteen minutes away. Gold sold down a few dollars in Far East trading on their Friday, with the low over there coming at 1 p.m. Hong Kong time—and at the moment it has rallied a buck above unchanged. Silver, platinum and palladium have erased their tiny losses as well during the last hour or so.
Net gold volume is 11,000 contracts, with 99.9 percent of that occurring in the current front month, so it's all of the HFT variety. Net silver volume is around 2,700 contracts, with roll-overs out of the May contract in that metal about 25 percent of the gross volume. The large traders have to be out of the May contract by the close of COMEX trading on Tuesday—and the rest by the COMEX close on Wednesday—and first day notice for delivery in May silver is Thursday. All eyes should be on JPMorgan at that time. Mine certainly will be.
The dollar index rallied to around 97.57 just before lunch in Hong Kong on their Friday morning—and began to slide from there. It then did a 35+ basis point face plant about 2:15 p.m. Hong Kong time, about forty-five minutes before the London open. It's sitting at 97.04 right now, down 27 basis points from Thursday's close in New York, but over 50 points off its Far East high.
Today at 3:30 p.m. EDT we get the latest COT Report from the CFTC's website for positions held at the close of COMEX trading on Tuesday—and as I said yesterday, gold is a tough call. I'd guess that we'll see some deterioration because of the upward penetration of the 50-day moving average during the reporting week, but I wouldn't bet the ranch on that. Silver is much easier, as there will be further improvement in the Commercial net short position in that metal, as prices are down on the week. And as I also said yesterday, it's too bad that Wednesday's price action won't be in it, as we would have substantial improvements in both metals—so in a way, today's COT Report is already yesterday's news. I'll have all the details tomorrow.
And as I hit the 'send' button on today's column at 5:10 a.m. EDT, I see that with the exception of palladium, which is only up two bucks at the moment, the other three precious metals are now down a bit on the day even though the dollar index is 38 basis points lower at the moment—and was down over 50 earlier. Net gold volume is around 19,500 contracts—and silver's net volume is at 3,600 contracts. This is very light volume.
Here's the 1-year dollar index chart—and it's current as of 5:10 a.m. EDT this morning—and it certainly looks toppy to me. But so far, the powers-that-be have not allowed precious metal prices to reflect the decline of the last few weeks—and it remains to be seen how the dollar/gold ratio unfolds if this dollar decline really develops some legs.
As to what may happen during the rest of the Friday session, I haven't a clue—although I'm somewhat apprehensive because of the punk price action on the big drop in the dollar index, the second one in as many days. And as I've pointed out on many occasions, we've still got a ways to go in both metals to the downside before JPMorgan et al can get maximum long and minimum short in all four precious metals, so nothing will surprise me, up or down, when I crawl out of bed later this morning.
Enjoy your weekend, or what's left of it—and I'll see you here tomorrow.
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