JPMorgan et al are keeping the precious metal prices on a short leash

It was a nothing sort of day in the gold market on Wednesday.  The high, such as it was, came shortly after 2 p.m. in Hong Kong trading—and then it was a long, slow slide during the London and New York trading session.  The gold price dipped under the $1,200 spot mark on a couple of occasions, but managed to close above it, but only by a whisker.

The high and low ticks are barely worth the trouble of looking up.  The CME Group recorded them as $1,208.40 and $1,197.70 in the April contract.

Gold closed yesterday at $1,200.30 spot, down $3.20 from Tuesday's close.  Net volume was pretty quiet at only 98,000 contracts or so.

It was more or less the same price pattern in silver and, like gold, the low tick of the day came at, or just after the London p.m. gold fix.  From there it recovered about twenty cents into the close.

The high and lows were recorded as $16.36 and $16.055 in the May contract.

Silver finished the Wednesday session at $16.215 spot, down a penny on the day.  Net volume was extremely light at only 22,000 contracts.

The platinum chart was a mini version of the silver chart—and that metal closed at $1,180 spot, down 2 bucks from Tuesday's close.

Palladium chopped around in a five dollar price range all day—and also closed down 2 dollars at $824 spot.

The dollar index closed late on Tuesday afternoon at 95.37—and then jumped stair-step fashion up to its 96.03 high, which came a few minutes after the London p.m. gold fix was done for the day.  It held steady for a few hours, before sliding back below the 96.00 mark—and closed at 95.91—which was up 54 basis points from Tuesday.

Considering the fact that the dollar index is on a tear, the precious metal prices are certainly holding up well.  But, as I've pointed out before, what the currencies are doing is of no importance, as prices are set in the COMEX futures market by JPMorgan et al.

The gold stocks traded in positive territory ever-so-briefly in the first few minutes of trading yesterday, but the sell off to gold's low of the day at the fix, took the shares with it—and they chopped sideways from there into the close.  The HUI closed down again, this time by 1.71 percent.

The silver stocks opened unchanged—and headed for the nether reaches of the earth immediately, as silver also got sold down to its low of the day at, or just after, the London p.m. gold fix at 10 a.m. EST.  The shares rallied a hair into the close, but Nick Laird's Intraday Silver Sentiment Index closed down another 2.37 percent, which was out of all proportion to the puny 1 cent decline in the metal itself.  We've seen a lot that sort of price action lately.

The CME Daily Delivery Report showed that zero gold and 33 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.   Mizuho, a Japanese bank, delivered 26 contracts as the largest short/issuer—and it should come as no surprise to anyone that it was JPMorgan in its in-house [proprietary] trading account stopping 22 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Daily Delivery Report for the Wednesday trading session showed that March open interest in gold remained unchanged at 153 contracts, but silver's March o.i. dropped by 139 contracts, of which only 39 were delivery related.  The new balance remaining is 997 contract, minus the 33 contracts posted for delivery on Friday that were mentioned in the previous paragraph.

There were no reported changes in GLD yesterday—and as of 9:32 p.m. EST yesterday evening, there were no reported changes in SLV.

Over at Switzerland's Zürcher Kantonalbank for the week ending February 27, they reported that their gold ETF declined an insignificant 185 troy ounces—and their silver ETF was down 60,990 troy ounces.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 21,000 silver eagles—and that was all.

There was no activity in gold at the COMEX-approved depositories on Tuesday.  But it was another big in/out day in silver, as 592,542 troy ounces were reported received—and 211,816 troy ounces were shipped out.  The silver received was all at Scotia Mocatta, as was a big chunk of the silver shipped out.  The rest came out of the CNT Depository.  The link to that activity is here.

I don't have all that many stories for you today—and I hope there's the odd one in here that you'll find of interest.

But the improvements [in the current COT structure – Ed] does not take us back to the favorable set up at the beginning of the year—and certainly not back to the even more bullish readings in November. Therefore, I still sense the possibility of one more shot to the downside in which whatever technical funds can be persuaded to sell (on lower prices) are persuaded to sell. I hope and believe that is what I have conveyed recently.

What’s bothering me about the set up I imagine in the short term—and that has worked up until now (although I ask you not to rely upon it)—is that there have been a number of occasions in the past few days where I would have imagined the technical funds would have come in as strong sellers (as prices declined) and yet there has been no apparent new tech fund selling. For instance, there was a sharp sell-off in the wee hours the other night in which gold dropped a quick $15 and silver by 40 cents to new lows and there was no follow thru to the downside—and prices quickly snapped back. On Wednesday, prices acted crummy, but again no follow thru to the downside. Or at least no downside follow thru yet.

I’ve tried to narrow the market equation to the downside, should it occur, as being solely dependent upon whether the commercials could lure what may be a limited number of technical fund short positions into the market on lower prices. That opens the possibility that new technical fund short sales may even be more limited than I imagine. And I can’t help but think that even more as the downside breaks occur with no follow thru. Maybe the commercials are just toying with short term price appearances to lower the boom once again, but if there are not significant numbers of short technical fund short contracts to be put on, then there is, effectively, no reason for silver prices to go lower.Silver analyst Ted Butler: 04 March 2015

With such low volume, I'm not prepared to read much into yesterday's price action but, like Ted, I'm amazed that JPMorgan et al haven't  hammered the crap out the precious metals this week.  Of course they tried early Tuesday morning in Far East trading and promptly go their heads handed to them.  Then yesterday when the gold price dipped below the $1,200 spot mark—and silver hit $16 the ounce, I thought the roof would cave in at that point.  But nada!

We get the job numbers tomorrow at 8:30 a.m. EST, so maybe they're waiting until then—or not.

But, on the other hand, I am more than impressed by the price strength in all the precious metals in the face of this ongoing U.S. dollar melt-up.

Here are the 6-month charts for all four precious metals once again.

As I type this paragraph, the London open is under twenty minutes away—and I see that the price pattern in Far East trading on their Thursday is virtually identical to the price pattern there on Tuesday, at least in gold and silver.  Needless to say, this didn't happen under free-market conditions.  Net gold volume is just over 15,500 contracts—and silver's net volume is around 3,200 contracts.  Not much to see here.  The dollar index is currently up 25 basis points.

There's not much going on in the precious metal world this week.  JPMorgan et al are keeping the precious metal prices on a short leash at the moment—and it just remains to be see whether we're going to rally from this point, or get another quick, sharp engineered price decline before that rally.

In the story on palladium in today's column, along with the two stories on platinum during the last week, it was pointed out that both these precious/industrial metals are in a supply deficit again this year.  Of course you'd never know it by looking at the price charts, but it should be no surprise as to why that is the case.  The COMEX paper tail, continues to wag the supply/demand fundamentals dog—and until that changes, nothing changes.

And as I send this off to Stowe, Vermont at 5:05 a.m. EST this morning, I see that all four precious metals are trading slightly below their respective closes in New York on Wednesday afternoon—and that was after all four of them were up decent amounts until 1 p.m. Hong Kong time on their Thursday.  Net gold volume is barely 22,000 contracts—and silver's net volume is 4,200 contracts.  Like it was this time on yesterday morning, there's nothing to see here.  The dollar index is now up 31 basis points.

That's all I have for today—and I'll see you here tomorrow.

Ed Steer

Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization

Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.

Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.”

Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained.

Please visit our website for more information about the project.

One of the 'must see' things when you're in Sedona is the Chapel of the Holy Cross.  To say that its setting is spectacular is somewhat of an understatement.

The first photo is from a distance, so you're able to put the church [center right] in a 'big picture' perspective, as the two following shots are from close in.  Note in the first photo that they even paint the lamp standards/street light poles the same colour as the sandstone.  The church is just off a main road in a rather upscale residential neigbourhood—and I had to stand in some pretty creative spots in order to make sure that it didn't intrude on the photos.  The last picture was taken close to the chapel entrance at the top of the rock it's built on.  I'll have an interior shot in tomorrow's column.  Don't forget to use the 'click to enlarge' feature.  It helps to a certain extent, but it still doesn't do the photos justice.

This next photo is courtesy of chartist extraordinaire, Nick Laird, which he took near his house in Cairns the other day.  “Down Under” they call it a goanna.  But in actual fact, it's a member of the monitor lizard family—and this fellow is a Lace monitor—the second-largest of the monitor species in Australia after the perentie.  Nick said this fellow was approaching 2 meters long—and mentioned that they taste like chicken when prepared properly.