Gold is an eyelash away from being in an extreme oversold condition

As you're aware, the gold price didn't do much in Far East and most of the London trading session on their Wednesday—and was actually up a couple of dollars by 9 a.m. in New York.  But then the price got sold down about 11 bucks, with the low of the day coming about 11:15 a.m. EDT.  From there the price recovered a handful of dollars—but didn't do much after the 1:35 p.m. Comex close.

The high and low ticks as recorded by the CME Group were $1,267.30 and $1,255.80 in the June contract.

Gold finished the Wednesday session at $1,258.60 spot, down another $4.70 on the day.  Gross volume, as expected, was over the moon once again at 315,000 contracts, but once the rolls out of the June contract were netted out, total volume crashed all the way down to 22,000 contracts.

Silver did even less from a price point of view than gold did on Wednesday, spending the day in a trading range of less than 20 cents.  However, it should be pointed out that the traders were able to break the price slightly below the $19 mark during the New York trading session

I'm only posting the high and low because of the low price tick.  They were recorded as $19.155 and $18.97 in the July contract.

Silver finished the day at $19.025 spot, down a penny from Tuesday's close.  Volume, net of May and June, was 38,000 contracts, which was very decent—and of that amount, about 1,700 contracts were traded in the September and December delivery months.

Platinum traded quietly right up until shortly before 2 p.m. in Zurich—and then dropped over twelve dollars in seconds, so it was obviously the HFT boyz at work once again.  But by 12:15 p.m. in New York the price had recovered back to almost unchanged.  But that didn't last—and platinum closed down another $12.

Palladium also traded flat up until 10 a.m. in Zurich—and then away it went to the upside, but ran into a seller of last resort as it broke above the $840 mark.  By 10 a.m. in New York it had been sold back to unchanged—and the subsequent rally after that suffered the same fate. Palladium only closed up $4.

The dollar index closed at 80.36 late on Tuesday afternoon in New York—and then traded flat until a rally commenced about 2 p.m. Hong Kong time—an hour before the London open.  That rally ran out of gas at the 80.57 mark around 1 p.m. in New York—and traded flat for the remainder of the day, closing at 80.56—up 20 basis points on the day.

The gold stocks opened down a hair—and headed lower from there.  Their absolute low came around 3:30 p.m. EDT—and a tiny rally into the close cut the HUI's loss to “only” 1.82%.

The silver equities followed a similar path—and Nick Laird's Intraday Silver Sentiment Index closed down another chunky amount—this time by 2.36%.

The CME Daily Delivery Report showed that 5 gold and very surprising 260 silver contracts were posted for delivery on Friday.  Nowhere in yesterday's Preliminary Report from the CME was there any warning sign of this huge transaction, so it was obviously slipped in at the very last moment.

In silver, the only two short/issuers that mattered were Canada's Scotiabank with 149 contracts—and Credit Suisse with 110 contracts.  The surprise long/stopper was Barclays with 211 contracts.  The CME was also involved as a stopper, picking up 49 Comex contracts.  But that had to do with deliveries in the Comex mini-contracts in silver [single 1,000 troy ounce good delivery bars], as they issued 245 bars for delivery in those contracts—and if you do the math; 49 contracts multiplied by 5 bars/contract, equals 245 individual bars—and, voila!—the deliveries on the silver mini-contract are done like dinner.  The link to yesterday's Issuers and Stoppers Report is here.

Unless something else comes out of left field today, the above deliveries should just about do it for May.

And as I said in yesterday's column, the First Day Notice for deliveries into the June contract in gold will be posted on the CME's website late this evening EDT—and I'll have all it for you tomorrow.

The were no reported changes in GLD yesterday—and as of 9:24 p.m. EDT yesterday evening, there were no changes reported in SLV, either.

The staff over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETF holdings as of the close of business on Friday, May 23.  Their gold ETF showed a decline of 31,625 troy ounces—and their silver ETF dropped by 20,866 troy ounces.

The US Mint had another small sales report yesterday.  They sold 2,000 troy ounces of gold eagles—2,500 one-ounce 24K gold buffaloes—and 100,000 silver eagles.

I saw that the Royal Canadian Mint posted its first quarter report for 2014 on their website yesterday.  On pages 5 and 6, they had this to say about bullion sales for the first three months of the year: “Sales of Gold Maple Leaf (GML) coins declined 34.6% to 176 thousand ounces compared to 269 thousand ounces in the same period in 2013. Sales of Silver Maple Leaf (SML) coins increased 24.2% to 8.2 million ounces from 6.6 million ounces in the same period last year. The decline in GML sales reflects the lack of volatility in the gold price during the fourth quarter of 2013 and first quarter of 2014 as well as continuing activity in the gold bullion secondary market. The increase in SML sales reflects continued strong demand in North America, Europe and emerging markets such as Southeast Asia.

Refinery revenues were up slightly in the thirteen weeks to March 29, 2014. Gold rough deposits increased as the Mint competes successfully for a growing market share. This was partially offset by a decline in silver rough deposits due to increased competition in the silver refining sector. Also contributing to this growth was an increase in sales of 1 kg gold bars, which increased 525% to 18,099 bars, which offset a contraction in sales of 100 oz silver bars, which decreased 25% to 12,562 bars.

I can tell you right now, dear reader, that the silver maples leafs are not being bought by John Q. Public in this country, as we've been barely able to give them away so far this year—and the premium over spot [and generic silver rounds] has declined significantly as well which, up to this point, was unheard of.

There wasn't a lot of in/out movement in either gold or silver at the Comex-approved depositories on Tuesday.  In gold, there was 33,607 troy ounces reported received—and nothing shipped out.  Almost all of the deposit was into the vaults over at HSBC USA.  The link to that activity is here.

In silver, nothing was reported received—and only 52,050 troy ounces were shipped out.

I'm delighted to report that I have a lot fewer stories today than I did in the previous two columns—and nobody is happier about this state of affairs than me.

Thrown into the mix—and my key concern—[which] is whether the 8 big shorts (including JPMorgan) will add to their massive concentrated short position to contain the coming silver price rally. I admit to harping on this circumstance for the specific purpose of sounding the alarm now, before any rally commences, to discourage additional short selling by the big 8. That’s because this concentrated short position (317 million oz) is so large currently to rule out any legitimate explanation for its existence. Any additional short selling can only be for the purpose of containing the price. In this case, containing is the same as manipulating.Silver analyst Ted Butler: 28 May 2014

There's not much to add to what I've already said further up about yesterday's price action.  The monstrous volume in gold, as I said, was the final roll-overs by the big traders out of the June contract—and the rest of the traders have to be out by the 1:30 p.m. EDT Comex close this afternoon.

Here are the six-month charts for both gold and silver once again.  As you can see, gold is an eyelash away from being in an extreme oversold condition—and silver is in that condition already, regardless of the RSI trace shows.

And as I type this paragraph, the London open is less than a minute away.  The prices for all four precious metals did nothing through almost all of the Far East trading session, but about 2:20 p.m. Hong Kong time, a seller showed up in all four metals, with most of the damage being done in gold and silver.  Platinum and palladium are hovering around unchanged at the moment, but both had been up a few dollars until that point—and hardly moved when the HFT boyz did their thing in the other two precious metals.

Volumes, which had been microscopic up until then, have really blown out.  Net gold volume is around 21,000 contracts, four times what it was earlier—and silver's volume is up to 8,500 contracts, over three times what it was before the not-for-profit sellers put in an appearance.  Gold is down six bucks at the moment—and at its low tick of $18.83 in the July contract, silver was down about twenty cents from Wednesday's close in New York.  Obviously “da boyz” are fishing for more sell stops as the June contract goes off the board.

And as I prepare to send today's effort out the door at 5:10 a.m. EDT, I note that nothing much has changed in the gold price, but JPMorgan et al have set a new low tick for this move down in the spot silver price.  Platinum and palladium are under a bit of selling pressure as well, but are basically unchanged from the London open two hours ago.  Net gold volume is now in the 30,000 contract range—and silver's volume is only up to 10,000 contracts, so these downward price probes in early London trading aren't happening with much volume associated with them.  This indicates, at least to me, that we're at the bottom, or very close to it—and “da boyz” are back to picking up nickels in front of the proverbial steamroller once again.  The dollar index is down about 10 basis points.

With the last two trading days of May upon us—and based on the price pattern so far on Thursday, I must admit that I haven't the foggiest notion as to what might happen price-wise between now and the Comex close on Friday. Only JPMorgan et al know that for sure—and they're not about to tell anyone.

I hope your day goes well—and I'll see you here tomorrow.



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Here are the last three photos from the trip.  It was a 14-hour driving day.  The first photo is a couple of unit trains sitting on a siding a few miles east of Glasgow, Montana on U.S. Highway 2.  The one closest to the highway—and the one you can see all of in this photo—was two kilometers long, a mile and a quarter.

The second photo was taken just north of the Milk River—and north of what's left of the settlement of Vandalia, about 15 miles northwest of Glasgow.  It was a foggy, rainy day—and the rain turned into snow shortly after.

The last photo was taken north of Havre, Montana—and 15 miles [obviously] from the Port of Wild Horse U.S./Canada border crossing on Montana Secondary Highway 232.  This 69-kilometer highway has no side roads leading anywhere—and redefines the term “middle of nowhere”.