There was huge deterioration in the Commercial net short positions again yesterday.
Gold opened flat when trading began in New York on Wednesday evening. Then starting just before 9 a.m. Hong Kong time, a rally began that grew stronger as the Far East trading session unfolded. It was up a decent amount by the London open—and then went vertical at 8:00 a.m. GMT, but ran into the usual not-for-profit sellers less than fifteen minutes later—and by 9 a.m. in New York, “da boyz” had the price bank under control, as most of the gains vanished.
The low and high tick were reported by the CME Group as $1,193.80 and $1,219.50 in the April contract.
Gold finished the Thursday session in New York at $1,204.10 spot, up only $9.00 on the day. Gross volume was over the moon at 372,000 contracts, but it netted out to only 118,000 contracts, with a decent chunk of the latter amount used up to cap and then kill the big price spike around the London open.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. The New York open on Wednesday evening shows as 16:00 on this chart, which is Denver time, so add two hours for EDT. Don’t forget the ‘click to enlarge‘ feature.
The silver chart was similar in most respects, but came close to being closed back below the $17 spot mark, but a rally in electronic trading on Thursday afternoon EDT prevented that occurrence.
The low and high were reported as $16.91 and $17.405 in the May contract.
Silver finished the Thursday session at $17.10 spot, up 14.5 cents from Wednesday’s close—and one can only fantasize what the closing price would have been if JPMorgan et al hadn’t put in an appearance when they did. Ditto for gold. Net volume was 38,000 contracts—and about a third of that was used to put out the silver fire in early London trading.
Platinum had a similar price path—and also got capped shortly after 8 a.m. in London as well. The secondary rally after that got dealt with at the COMEX open in New York. Platinum as closed at $1,148 spot, up 7 dollars on the day.
Palladium was the same—and it closed at $768 spot, up 5 bucks from Wednesday’s close.
The dollar index closed late on Wednesday afternoon in New York at 96.93—and immediately began to head lower. That slide turned into a rout starting around 2:30 p.m. Hong Kong time, with the final 96.20 low tick coming at the London a.m. gold fix at 9:30 a.m. GMT. From there it rallied strongly to its 97.53 high tick very shortly after the 1:30 p.m. COMEX close in New York. It sold off a bit after that, but finished the Thursday session at 97.42—up 49 basis points.
Here’s the 1-year U.S. Dollar Index chart.
The gold stocks opened higher—and managed to stay above the unchanged mark until 2 p.m. EDT—and then rolled over, hitting their low ticks around 2:50 p.m. From there, they recovered a hair into the close. The HUI finished down 1.79 percent.
The gold price has closed higher for the last three days in a row, the gold stocks have closed lower each of those days. The only up day they had was on Monday.
The silver equities follows a very similar pattern, except they closed even lower than the gold shares, as Nick Laird’s Intraday Silver Sentiment Index closed down 2.61 percent.
The CME Daily Delivery Report showed that 43 gold and 68 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. In gold, the only short/issuer was HSBC USA—and the only long/stopper was Canada’s Scotiabank. In silver, there was one short/issuer—and that was HSBC USA. JPMorgan picked up another 48 of those contracts—27 for its in-house [proprietary] trading account, along with 21 for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest for March fell by 49 contract down to 43 contracts still open. With that amount, March delivery in gold will be done by the close of business on Friday. In silver, March o.i. dropped by 66 contracts—and is now down to 146 contracts still open, minus the 73 contracts posted above.
There was another big withdrawal from GLD yesterday, as an authorized participant removed 191,934 troy ounces. There was also another withdrawal from SLV. This time it was 1,434,783 troy ounces. The amount of gold and silver in GLD and SLV have continued to decline over the last seven days despite the fact that the prices of the underlying metals has been rallying for the past week.
There was a tiny sales report from the U.S. Mint. They sold 1,000 troy ounces of gold eagles—and that was all.
There was very decent gold movement at the regular COMEX-approved depositories on Wednesday—and almost all of it was in in kilobar form, as 97,738 troy ounces were received—and 3,552 troy ounces were reported shipped out. Most of the activity was at Scotiabank’s depositories. The link to that activity is here.
At the Gold Kilo Stocks depositories, there was more action once again at Brink’s, Inc.—as they received 1,906 kilobars—and shipped out 6,686 kilobars. The conversion factor from troy ounces to kilobars is 32.151. The link to that action is here.
Ted and I have been trying to make some sort of sense out of this frantic in/out activity at Brink’s since the depositories were launched ten days ago—and we’re drawing a blank.
And much to my surprise, there was absolutely no in/out movement in silver at the COMEX-approved depositories on Wednesday.
I have fewer stories today, which suits me just fine.
Undoubtedly, there has been deterioration or an increase in the total commercial net short positions in COMEX gold and silver as a result of the sharp increase in price in both markets during the reporting week that ended [on Tuesday at the close of COMEX trading]. It would almost be impossible that the technical funds weren’t buying or that the commercials weren’t selling on the price rise. It’s only a matter of how many contracts were positioned and who among the commercials the sellers were – the big shorts or the raptors. I’m hoping for an increase of no more than 10,000 contracts in silver and no more than 40,000 contracts in gold—and really hoping for no large increase in the big four short position in both COMEX gold and silver. – Silver analyst Ted Butler: 25 March 2015
The rallies and spikes in all four precious metals in the Far East and early London trading session yesterday were met by “all the usual suspects”—and they did what they always do.
Volume was very heavy during this time period—and it almost goes without saying that the Commercial traders, as sellers of last resort, were taking the other side of the trade against all comers in the precious metals, as the technical funds and small traders sold short positions and/or went long. Without doubt there was huge deterioration in the Commercial net short positions again yesterday, but that won’t show up until next Friday’s Commitment of Traders Report.
Here are the 6-month charts for both gold and silver—and as you can see, gold touched its 50-day moving average yesterday, but wasn’t allowed to penetrate it,as JPMorgan et al showed up across the board in all the precious metals at that point.
As I type this paragraph, the London gold market open is about twenty minutes away. Needless to say, the price activity in Far East trading on their Friday was deathly quiet. Gold and silver got sold down a bit in the early going in Hong Kong trading, but have now ‘rallied’ back to unchanged. Platinum and palladium are each down a dollar or so.
Net volume in gold is the lowest I’ve ever seen it for this time of day, or month—around 7,200 contracts. Silver’s net volume is 3,700 contracts. The dollar index has been chopping sideways since its close in New York late on Thursday afternoon—and is currently up 3 basis points.
All is quiet. Almost too quiet.
Today we get the latest COT Report for positions held at the close of COMEX trading on Tuesday afternoon. And as Ted said in his quote further up—“It would almost be impossible that the technical funds weren’t buying or that the commercials weren’t selling on the [5-day price rise during the reporting week]. It’s only a matter of how many contracts were positioned and who among the commercials the sellers were – the big shorts or the raptors.” And that, dear reader, is the long and the short of it. I’m hoping for the best, but expecting the worst.
Unless they’re standing for delivery, today is the last day for the big boys to get out of the April gold contract—and that’s why I’m rather surprised at how quiet the volume is, in that metal at the moment. I expect that to change dramatically once London opens. However, looking at yesterday’s monstrous volume numbers, a pretty decent percentage of these traders appeared to have hit the exits on Thursday.
And as I sent today’s column out the door at 5:20 a.m. EDT, I see that all four precious metal prices are back to just about where they closed on Wednesday. It’s almost like the early morning price action on Thursday never happened. Gold is back below $1,200 the ounce—and silver below $17 spot. Platinum and palladium are actually below their Wednesday closes.
Gross gold volume is sitting at 30,000 contracts, but over half of that is roll-overs out of the April contract, so net volume is extremely light. Based on that, not much should be read into the current price action in this metal. Silver volume is fairly decent at 7,200 contracts.
The dollar index caught a bid shortly after 3 p.m. Hong Kong time—and is currently up 38 basis points.
I’m not sure what to expect during the Friday session in London trading, or what might follow during the COMEX session in New York. But from what I see now, I’m prepared to be underwhelmed.
Enjoy your weekend, or what’s left of it if you live west of the International Date Line—and I’ll see you here tomorrow.
This fellow is a Costa’s hummingbird.
And one of the rarest hummingbirds is the Marvelous Spatuletail, as it’s only found in one small area of Peru—and its home turf is now very protected, as it’s estimated that there are less than 1,000 of these birds left on Planet Earth. There’s a short but excellent video of the male courting display linked here.