Another day—and more slices

It was a fairly quiet trading day from a price perspective in the Far East on their Friday.  The price developed a negative bias right out of the gate, with the low coming at 1 p.m. in Hong Kong trading.  The tiny rally after that made it back above the Thursday close in New York by a few dollars around 8:30 a.m. in London—and then it was down hill until 12:30 BST.  The price chopped sideways into the London p.m. “fix”—and once that was out of the way, the HFT boyz spun their algorithms.  The absolute low tick came minutes before 1 p.m. EDT—and the gold price crawled higher from there into the 5:15 p.m. close of electronic trading.

The high and low ticks were recorded by the CME Group as $1,195.40 and $1,174.10 in the June contract.

Gold finished the Friday session at $1,180.40 spot, down $13.10 from Thursday’s close.  Net volume was very decent at 143,000 contracts.

Here’s the 5-minute tick gold chart courtesy of Brad Robertson.  As you can see, the only volume that mattered occurred during the COMEX trading session in New York, with the biggest volume coming between 8 a.m. and 9 a.m. Mountain Standard Time on this chart.  That was when JPMorgan et al appeared once the p.m. gold fix was in.  The dark gray vertical line is midnight in New York/noon in Hong Kong.  Add two hours for EDT—and don’t forget the ‘click to enlarge‘ feature.  The chart is worth a quick look.

Silver followed the same price path as gold, but the low tick in that metal came shortly after the London p.m. gold fix—and then it rallied a decent amount off its low by 11 a.m. EDT.  After the it didn’t do much, although it popped a few pennies at the close.

The high and low ticks in silver were recorded as $15.885 and $15.55 in the May contract.

Silver closed yesterday in New York at $15.755 spot, down only 9.5 cents—and well off its low.  Gross volume was just under 99,000 contracts, but when everything was netted out, the volume fell down to only 26,000 contracts.

It was more or less the same chart pattern for platinum, except the sell-off at the gold fix wasn’t anywhere near as severe—and the low tick came minutes before the COMEX close.  It recovered five dollars or so off its low by the close.  Platinum finished the day at $1,123 spot, down 11 dollars from Thursday’s close.

Palladium followed a different path—and both its attempted rallies, particularly the one that began at the COMEX open, got dealt with in the same old way.  Palladium finished the Friday session at $768 spot, down a buck.

The dollar index closed late on Thursday afternoon in New York at 97.31—and made it to its 97.57 high tick shortly before noon in Hong Kong.  It fell down to 96.80 by 8:20 a.m. in London—and manged to struggle back to the 97.30 mark by noon BST, but headed lower once the London p.m. gold fix was in at 10 a.m. EDT—and after 11 a.m. the index chopped sideways for the remainder of the New York trading session.  The dollar index closed at 96.90—down 41 basis points from Thursday’s close.

And as you should carefully note once again, what happened in the precious metal market from a price perspective had diddly to do with what was going on in the currencies yesterday.

The gold stocks flirted with positive territory at the open, but rolled over pretty quick once the gold price began to turn lower—and the low came at  gold’s low tick minutes after the London fix was in.  They recovered a bit from there, but that didn’t last—and the gold stocks closed just off their lows, as the HUI finished down 1.64 percent.

The silver equities followed an identical path to their golden brethren, except Nick Laird’s Intraday Silver Sentiment Index closed down 2.12 percent.

Nick informed me that the HUI was down 1.65 percent on the week—and the Intraday Silver Sentiment index closed lower by 3.77 percent.

The CME Daily Delivery Report showed that 25 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.   HSBC USA was the short/issuer on 24 contracts—and Scotiabank stopped 12 of them—and JPMorgan stopped 13 contracts, all for its in-house [proprietary] trading account. The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest remaining in April rose by one contract to 441 contracts—and silver’s remaining April o.i. was unchanged at 22 contracts.  Twenty-five of those gold contracts are being delivered on Tuesday as per the previous paragraph, so that means that the rest [along with the 22 silver contracts] should be posted for delivery on Wednesday—and that will be in Monday’s Preliminary Report.  It’s going right down to the wire again this month.

There were no reported changes in GLD yesterday—and as of 7:57 p.m. EDT yesterday evening, there were no reported changes in SLV, either.  When I checked back at 2:25 a.m. this morning, I noted that, much to my surprise, an authorized participant had added another 956,120 troy ounces.  Based on the price activity over the last couple of weeks, the 7.4 million troy ounces added over that time period were done to cover an existing short position in SLV.

While on the subject of the short position in SLV and GLD, the good folks over at update their website with the short position in both these ETFs as of the close of trading on April 15.

The short position in SLV declined from 19.55 million shares/troy ounces, down to 18.53 million shares/troy ounces—5.23 percent.  I was expecting/hoping for more, but the numbers are what they are.  The short position in GLD rose 5.16 percent, from 1.46 million troy ounces, up to 1.53 million troy ounces.

The 4.3 million ounces of silver added to SLV since the 15th won’t show up until their next report, which will be on May 8 or 11.

There was a sales report from the U.S. Mint yesterday.  They sold 243,000 silver eagles—and that was all.

Month-to-date the mint has sold 17,000 troy ounces of gold eagles—8,000 one-ounce 24K gold buffaloes—and 2,173,500 silver eagles.  Based on these sales, the silver/gold ratio for the month works out to 87 to 1.

And I’m still waiting for the 2014 annual report from the Royal Canadian Mint—and I’m wondering what the hold-up might be.  Hopefully it won’t be too much longer.

There was no gold reported received at the COMEX-approved depositories on Thursday, but a chunky 160,384 troy ounces were withdrawn.  And except for two kilobars, all of it came out of Scotiabank’s vault.  The link to that action is here.

There was no in/out activity in silver at all.

It was another huge day over at the COMEX-approved gold kilobar depositories in Hong Kong.  Brink’s, Inc. reported receiving 5,802 kilobars—and shipped out a whopping 11,190 of them.  These are big, big movements, dear reader!  The link to this activity in troy ounces is here.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday was pretty much as I was expecting/hoping for in gold, but silver was a monstrous surprise.

In silver, the Commercial net short position declined by a stunning 10,029 contracts, which was more than double what I was expecting/hoping for.  The new Commercial net short position is now down to 169,000 million troy ounces—a 50 million ounce improvement in one week.

The Big 4 short holders covered around 2,300 short contracts.  The ‘5 through 8’ big short holders actually added about 2,000 contracts to their short position during the reporting week—and Ted’s raptors, the small Commercial traders other than the Big 8, added about 9,800 contracts to their long positions.  Ted estimates JPMorgan’s short-side corner in the COMEX futures market in silver is now down to around 15,000 contracts.  Not to be forgotten in all of this is the short position in silver held by Canada’s Scotiabank.  I would estimate their short-side corner in the COMEX silver market to be something north of 20,000 contracts.

Under the hood in the Disaggregated COT Report in silver, the improvement in the Managed Money category was even bigger, as they sold 2,871 long contracts and added 8,925 short contracts, which is a swing of 11,796 contracts in just one reporting week!  That has to be one of the biggest 1-week changes on record.

And all of the above occurred on a price decline of about 50 cents!  That was the shocker for me.  There was absolutely nothing in silver’s 6-month chart that indicated this level of change in the internal structure of the COT Report in silver—and I’ll have more on this later.

In gold, the Commercial net short position increased by a smallish 1,413 contracts, or 141,300 troy ounces, which was more or less right in line with what I was expecting to see.  The Commercial net short position now sits at 15.43 million troy ounces.

The Big 4 covered 3,000 short contracts, the ‘5 through 8’ traders added about 1,900 contracts to their short position—and the small Commercial traders sold 2,500 long contracts.

Under the hood in the Disaggregated COT Report, there was little net change by the technical funds in the Managed Money category, as they sold 2,180 long contracts, but also reduced their short position by 2,256 contracts—so it was within 76 contracts of being a wash.  Nothing to see here.

Of course, since the Tuesday cut-off there has been further improvement in the Commercial net short positions in both gold and silver—but particularly in gold, now that the 50-day moving average was pierced to the down-side on Wednesday.  Ted figures that even with the improvements we’ve seen over the last three trading days, we’re still around 30,000 contracts off our lows from about five weeks ago.  And just eyeballing the 6-month gold chart, a price move of $30 to $35 lower from Friday’s low tick should just about do it.

Ted figures we’re at the lows in silver already.

Here’s Nick’s “Days of World Production to Cover COMEX Short Positions” chart showing the short positions of the Big 4 and Big 8 traders, which are the current short positions held by these traders that I just discussed in the previous paragraphs.   The chart hasn’t changed much in the 15 years that I’ve been following it, as the four precious metals are still pinned to the far-right hand side of this graph.

Here’s another chart courtesy of Nick Laird.  This one shows the gold withdrawals from the Shanghai gold exchange as of Friday, April 17—and during that week there was 49.954 tonnes withdrawn.  Here’s Nick’s most excellent chart.

I must admit that I’ve got a fair number of stories today, including a decent number that I’ve been saving for the weekend, so I hope you have enough time to read the ones that interest you.

I also detect the continued presence of a single big buyer in Silver Eagles from the U.S. Mint due to the large but erratic pace of reported sales. Whereas the Mint has been reporting regular but very low sales of Gold Eagles relative to sales of Silver Eagles, in addition days can go by with no sales of Silver Eagles, but with reported sales of Gold Eagles. Particularly against a backdrop of weak retail sales, the spurts in reported sales of Silver Eagles is notable. As I’ve remarked previously, it’s as if the big buyer is waiting for the Mint to build up a few days of production before placing a big buy order, rather than buy what’s produced on a daily basis.

Also notable is that when one adjusts for the premium the Mint applies to Silver Eagles, more money is being spent on Silver Eagles than is being spent on Gold Eagles. Except for 2014, this had never occurred in the 29 year history of the Mint’s bullion coin program. Considering the low to almost non-existent collective investor sentiment towards silver, it is almost shocking that the Mint is selling more Silver Eagles relative to Gold Eagles than ever before, including 2014.Silver analyst Ted Butler: 22 April 2015

Today’s pop ‘blast from the past’ is the greatest hit of the Canadian-American hard rock band Steppenwolf.  The piece hit the airwaves in 1968—and needs no introduction at all.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve posted before, but I never tire of—and I hope you’re of the same mind.  It’s Max Bruch’s Kol Nidrei Op.47.  This recording has been on youtube for a while, because it’s in two parts, when it will easily fit in one video now.

But, having said that, the quality of the audio recording is luscious—and certainly the best one available on the Internet. I listened to the Maisky recording—and thought it too fast and I certainly didn’t like his interpretation.  However, here is cello soloist Teodora Miteva, with the Vienna Philharmonic Women´s Orchestra at the St. Thekla Church in Vienna. Conducted by Izabella Shareyko.  This is as good a performance of this classical work as you’ll hear anywhere by any soloist or orchestra.  It is divine—and that’s probably the reason that it’s had 464,000 hits, which is over the moon for any classical work. Enjoy—and the link to Part 1 is here—and the link to Part 2 is in the right sidebar.

Another day—and more slices.

As I’ve commented on before, the latest being in yesterday’s column—and which Brien Lundin mentioned in the Critical Reads above—the downside price action in the precious metals in the face of a declining dollar index didn’t happen without some help from JPMorgan et al.

Here are the 6-month charts for all four precious metals as of the close of trading yesterday.

Of course options and futures expiry for the May contract is early next week—and I’m sure that the HFT boyz were gunning for the stops held by the brain-dead technical funds in the Managed Money category—and it worked like a charm, as it always does.  It was just more proof positive the price of the precious metals is being set by two different sets of speculators—JPMorgan et al in the Commercial category—and the brain dead technical funds in the Managed Money category.

Nowhere to be found in this price-setting mechanism are the producers or the consumers—and if they are there, they represent a very tiny fraction of the current open interest in any of the precious metals, so supply/demand fundamentals are totally overridden by the powers-that-be.  The producers and consumers would show up in the Commercial category, but they were hijacked by the bullion banks years ago for price management purposes—and JPMorgan et al have been there ever since.

Ted says that silver is already back to where it was from a COT perspective five weeks ago—and any price declines since then—and we’ve had two in the last three days—will just be icing on the cake.

As Ted also mentioned on the phone yesterday—and I spoke of it in my COT comments further up, even with improvements in the Commercial net short position in gold since the Tuesday cut-off, he feels that there still could be 30,000 contracts worth of long liquidation left in gold in the Managed Money category.

But will “da boyz” press their advantage at this point?  If they do, they’ll certainly use the opportunity to not only reduce their short positions in gold, but also continue to beat the living snot out of the silver price.  As Ted has been saying for decades now, silver is the critical metal—and JPMorgan won’t hesitate to use gold as a hammer to beat it lower if they can.

That’s probably the number one reason that Jamie Dimon has been so publicly bemoaning the takeover of Bear back in 2008.  He got stuck with their outrageous short position in silver that he just can’t get out of—and that’s why he’s loaded to the gunwales in physical silver bullion.

The precious metal picture is crystal clear—except for those whose jobs depend on them not seeing it—that Jim Rickards was right in saying that these guys should be embarrassed by how obvious their price management scheme has now become.

I await the Sunday evening open in New York with great interest.

Before heading off to bed, I’d like to remind you again that Casey Research‘s own Louis James has been watching a company that he is convinced will be the world’s next high-grade gold producer.

It’s an extremely well-funded operation working a high-grade gold deposit 8x richer than the average mine—and that’s scheduled to throw the switch on a brand-new mine and start producing gold for the very first time.

Up to this point, the market is largely ignoring it, so shares of this company are currently trading well below book.  This is your chance to invest in an advanced-stage producer at a dramatic discount… just before its true value is realized. But you must act before April 30.

That’s First Notice Day for delivery into the May silver contract.

If you want to find out more, you can do so by clicking here.

I’m done for the day—and the week.

See you on Tuesday.

Ed Steer