JPMorgan et al can keep this up as long as they think they can get more leveraged longs to sell.
As I mentioned in ‘The Wrap’ in yesterday’s column, the gold price didn’t do much of anything in Far East trading on Wednesday…and the London high came very shortly after the 8:00 a.m. GMT open. Then at precisely 9:00 a.m. the selling started, sell stops were tripped, and down went the price.
That decline came to an end at the London a.m. gold fix at 10:30 local time…and from there it didn’t do much until around 8:40 a.m. in New York. Then, in the space of about fifty minutes, another twelve bucks was peeled off the price, with the low of the day [$1,627.00 spot] coming minutes before the open of the equity markets at 9:30 a.m. Eastern.
Gold rallied in fits and starts from there…but the price action really quieted down once the Comex trading session ended at 1:30 p.m. From there it moved a few dollars higher going into the close of electronic trading at 5:15 p.m. in New York.
Gold closed at $1,644.90 spot…down $5.20 on the day. Volume, net of all roll-overs, was in the 148,000 contract range…about 30% higher than Wednesday’s volume.
Silver’s high of the day was in London at the same moment as gold’s…and from there, the selling pressure was relentless all day long, as the high-frequency traders did their thing.
Silver’s low price tick [$31.01 spot] came about twenty minutes before the Comex close at 1:30 p.m. Eastern time…and then silver rallied a bit going into the Comex close, and a little more in the electronic trading session that followed.
Silver’s intraday price move was $1.16…or 3.6%…about the same intraday price move as Tuesday. Silver closed at $31.59 spot…down 58 cents on the day. Net volume was very heavy…around 47,000 contracts.
The dollar index, which had been down all through early Far East trading, caught a bid moments after the London open…and by the London a.m. gold fix was up 45 basis points. From there it traded sideways…with the high tick of the day coming around 9:45 a.m. Eastern.
From there it traded lower until precisely noon in New York…and moved sideways into the close. It was another day where the dollar index closed virtually unchanged.
It was also another day where the gold price and dollar index activity were chained together but, as always, the metal sold off far more than the dollar index decline warranted
The gold stocks gapped down almost three percent at the open and, despite the fact that gold recovered almost all its losses on the day, the shares barely moved off the floor. The HUI closed down 1.96%.
Most of the silver stocks in Nick Laird’s Silver Sentiment Index closed down on the day as well…and that index closed lower by 2.25%.
(Click on image to enlarge)
The CME Daily Delivery Report showed that 87 gold and 1 lonely silver contract were posted for delivery on Monday. The link to this action is here.
The GLD ETF showed that an authorized participant withdrew 242,851 troy ounces of gold…and there were no reported changes in SLV.
There was no sales report from the U.S. Mint.
Over at the Comex-approved depositories on Wednesday, they reported receiving a chunky 1,315,174 troy ounces of silver…and shipped a very small 18,523 ounces out the door. The link to that activity is here.
Here’s a chart about Turkish gold demand that Washington state reader S.A. sent my way yesterday. There’s a must read story about Turkish gold demand further down.
Here’s another chart. This one was sent to me by reader Tim Hart. It shows Mark Hulbert’s data for Gold timing letters…and it’s at the lowest it’s been in the 23 months shown on this chart…down at 5%. And as Tim said…”From a contrarian point of view, this is quite bullish.” Yes, it is.
Reader Scott Pluschau has another blog on silver for us today. It’s headlined “Update on Silver with a follow up from the CFTC“…and the link is here. What Scott found out from the CFTC was the cut-off for the Commitment of Traders Report comes at the close of Comex trading every Tuesday. I thank him for digging up this info…and laying the issue to rest once and for all.
I have the usual number of stories…and the final edit, as always, is in your hands.
It was another day of the same old stuff. Nothing changed in the physical market…and the action was in the Comex futures market, which is all paper. Using high-frequency trading tactics, ‘da boyz’ engineered the price lower…sell stops were hit…and down went the price in all four precious metals.
As I’ve said all week, I have no idea when the bottom will be in. JPMorgan et al can keep this up as long as they think they can get more leveraged longs to sell out as they maneuver the precious metals prices lower. Once they think they’ve covered as many shorts as they can…or gone long themselves…then the bottom will be in.
This is the same pattern that we saw during November and December…and the question I asked then, still applies now. When the bottom is finally in and the subsequent rally begins, who will be go short against the technical fund longs and the small traders that come flooding back into the market? If it’s the usual Commercial traders, then the outcome will be the same as we are experiencing now.
It’s always possible that JPMorgan et al will instigate the next rally on their own…going into the market and purchasing long positions to cover their short positions. They did it in the past…and they may do it again.
The way to tell, is to watch the open interest numbers. If open interest climbs as the prices rise, it’s the same old, same old pattern…as new long positions are met by new Commercial short positions. On the other hand, if prices rise while open interest drops, then that’s ‘da boyz’ are covering short positions by buying a long…and that extinguishes open interest and it will show a decline.
So we just have to wait it out and see what happens. We’ve still got five business days left in March before we hit first notice day for the April delivery month in gold…and as I’ve also mentioned before, we’ll probably have to wait until after that date to see if the selling pressure subsides.
Today we get the long-awaited Commitment of Traders Report. All of last week’s big take-down will be in it and, hopefully, everything that happened going into the close of Comex trading on Tuesday when we had that big HFT event. But, as I’ve also said before, ‘da boyz’ are great at withholding data when it suits them…and this may be one of those times. We’ll see.
Not much happened in Far East trading during their Friday…and volume was pretty light going into the London open. The dollar index headed south just before that time… and, as of 5:13 a.m. Eastern time, is down about 45 basis points from its earlier high. But that has had only a minor positive impact on the prices of both metals. It seems that gold and silver only ‘react’ strongly if the dollar is in rally mode…and it’s my opinion that the Commercial traders use a dollar rally of any size…that they themselves probably instigate…as cover for their engineered sell-offs.
Here’s the 5-day dollar index, to put this morning’s drop into perspective for the week that was.
As of 5:18 a.m. Eastern time, gold is up about eight dollars…and silver is up the magnificent sum of 10 cents. One can only imagine how much they would have fallen if the dollar index had rallied that amount. Volume is up from the London open…but is not quite as high as it was this time on Thursday.
Since today is Friday, I’ll be ready for pretty much any price scenario that shows up on my computer screen when I turn the beast on later this morning.
With the precious metals and their shares still on sale…but for how much longer, nobody knows…there’s still the opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold…and I respectfully suggest that you take a trial subscription to either Casey Research’s International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best (and current) recommendations…as well as the archives. Don’t forget that our 90-day guarantee of satisfaction is in effect for both publications.
I hope you have a great weekend…and I’ll see you here sometime tomorrow.
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