The lows we saw in all the precious metals just after the Comex close looked like a final capitulation to me…not only in price, but in volume
Gold hit its low price tick of the day [about $1,525 spot] shortly after the London open yesterday morning…and by 9:40 a.m. in New York, the gold price was up about fifteen bucks off that low…and then spiked over fifteen bucks going into the London p.m. gold fix. That was the New York high at $1,553.50 spot.
From there, it got sold off to its New York low [$1,530.10 spot] about twenty minutes after the close of Comex trading. The gold price then rallied about eight dollars going into the close of electronic trading at 5:15 p.m. Eastern time.
Gold closed down four bucks on the day at $1,540.30 spot…but would have obviously closed substantially higher if it had been left to its own devices once the London p.m. gold fix was in…which it wasn’t. Net volume was an absolutely astounding 200,000 contracts.
Silver was also under selling pressure in the Far East and London yesterday…and also set a new low shortly after the London open as well. From there it followed almost an identical price path to gold.
The New York high [$28.10 spot] came about 10:30 a.m. Eastern…but once that high was in, the engineered sell-off continued anew…and by the time the carnage was over about six or seven minutes after the close of Comex trading, silver had hit its low of the day…and printed another low for this move down…$26.68 spot.
The recovery off the bottom was instantaneous…and only a few minutes later, silver was back over the $27.00 mark…and closed the trading day at $27.27…down another 45 cents on the day…but 59 cents off its low price tick. Net volume was a stunning 55,000 contracts.
From its New York high to its New York low, the silver price was savaged for $1.42…a hair over 5 percent. If you think that this sort of price activity was the free market in action, then you obviously only need to follow the daily precious metals advice that you will find at this link here.
The dollar index peaked around 81.58 just moments after the London open…and then declined a bit before spending the rest of Wednesday trading within 15 basis points of 81.35. The index finished up about 20 basis points on the day.
Not surprisingly, the gold stocks opened in the plus column…and then peaked at the 10:30 a.m. Eastern time, which was the high tick in the gold price. From there the gold stocks pretty much followed the metal’s price…with the low coming shortly before 2:00 p.m…which was the low price tick for gold in New York. Even though gold finished down four bucks…the HUI finished in the black, but only by 0.20%.
There were some green arrows in the silver stocks yesterday…but with silver down as much as it was during the New York session, most of the silver equities were brutalized once again…and Nick Laird’s Silver Sentiment Index closed down 0.68%.
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It was a nothing day for deliveries…and the CME’s Daily Delivery Report showed that only 3 silver contracts were posted for delivery tomorrow.
The GLD ETF showed a tiny withdrawal of 16,253 troy ounces, which was probably a fee payment of some kind…and there were no reported changes in SLV.
Over at Switzerland’s Zürcher Kantonalbank, both their gold and silver ETFs showed minor withdrawals of metal as of the close of trading on Tuesday. Their gold ETF showed a decline of 80,814 troy ounces…and their silver ETF declined 44,368 troy ounces.
The U.S. Mint had another sales report. They sold 1,500 ounces of gold eagles…4,000 one-ounce 24K gold buffaloes…and 275,000 silver eagles. This brings the mint’s month-to-date sales up to 36,000 ounces of gold eagles…5,500 one-ounce 24K gold buffaloes…and 1,410,000 silver eagles.
There wasn’t a lot of activity over at the Comex-approved depositories on Tuesday. They reported receiving 300,253 ounces of silver…and shipped a smallish 13,894 ounce of the stuff out the door. The link to that action is here.
Silver analyst Ted Butler was at the top of his game with his mid-week market commentary…headlined “In Search of the Bottom“…to paying subscribers yesterday. Here are three free paragraphs…and the first three from his report…
“I can’t call it unique, nor can I claim to be unfamiliar with the present circumstance of silver and gold price weakness. I didn’t predict it, but that doesn’t mean I can’t see what caused it. The fact that the situation is so familiar makes it depressing in many ways; yet understanding what will occur at some point is encouraging. Of course, I’m speaking of the bottom in the price of silver and gold that is being established.”
“I believe that the most plausible and verifiable explanation is usually the correct explanation. Since the top of silver prices on Feb 28 at $37, the $10 price decline (so far) has allowed the commercials on the COMEX to buy back and reduce their total net short position by 30,000 contracts (150 million ounces), as speculators sold that same net amount. The biggest commercial silver short, JPMorgan, bought back almost half that amount. In gold, the commercials bought back 100,000 net contracts (10 million oz) on the $150 price decline from the top on Feb 28.”
“Not only are these figures verified by CFTC COT data, the amounts of metal represented in the COMEX maneuvering since Feb 28 dwarf any other verifiable gold and silver ownership changes throughout the world. In fact, the world’s holdings in gold and silver ETFs (the largest privately held stores of metal) have been quite stable over the past six months or more. Therefore, the most obvious and plausible and verifiable explanation for the price decline has to be COMEX maneuvering. The next obvious question is who was doing the maneuvering; the commercials or the speculators? Since it is unthinkable that independent speculators would collude for the purpose of losing money, it is clear that the commercials were doing the maneuvering. This is old stuff, of course, but I repeat it because it is important to understand how any market works.”
Here’s a nifty chart of all the big New York money center banks. It shows the decline in their respective share prices since the end of March. The ‘click to enlarge’ feature will be useful here. I thank Washington state reader S.A. for sending it along.
Here are two more charts from Washington state reader S.A. They put the current engineered price declines in both gold and silver in some sort of long-term perspective.
Australian reader Wesley Legrand sent me this 3-year chart of the HUI…along with the following comment…”Incredible HUI Chart: You’d think that gold is under $1,000!”
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Reader Scott Pluschau has posted a blog over at his Internet site that’s headlined “Target 2 reached in silver [Copper target reached]“…and you can read all about it here.
I have the usual number of stories today…and a lot of them are well worth reading.
The glory of great men should always be measured by the means they have used to acquire it. – François de la Rochefoucauld
Well, the lows we saw in all the precious metals just after the Comex close looked like a final capitulation to me…not only in price, but in volume as well. I suspect that the sharp decline in the silver price about 1:35 p.m. in New York yesterday was a short position being place, as it had all the characteristics of it. If that’s the case, then that position was under water within minutes.
If we did see the lows yesterday, it’s just a matter of ‘where to from here…and how fast’. As Ted Butler pointed out on the phone yesterday…all these new shorts that have been placed during this engineered price decline are going to want to cover at some point. The ‘raptors’ will be the ones selling to them, but the question remains “at what price will they do it?” Will they let them off the hook easily by selling to them at a low price…or will they stick it to them and force them to bid the price up a whole bunch before they starting selling their longs? An even bigger question is whether JPMorgan will show up as a seller of last resort again. If they don’t, then look out above!
That is all that matters in the ‘where to from here…and how fast’ equation. So we wait.
I’d give another day’s pay to know what the Commitment of Traders would have looked like if it had been compiled at the close of electronic trading yesterday. I’d bet that it would be another one for the records books considering the fact that we hit new lows for this move down after the cut-off for Friday’s COT report at 1:30 p.m. on Tuesday afternoon.
Of course the Relative Strength Indicators for both gold and silver hit new record lows at the close of trading yesterday. Here are the 3-year gold and silver charts. Unless ‘da boyz’ have something even more horrific planned to the downside that we know nothing about…and can’t see coming…these oversold points should also be record lows for years to come.
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I had a couple of readers point out that JPMorgan et al may have painted a ‘triple bottom’ [accidental or otherwise] in both gold and silver over the last year and a bit…as it’s certainly visible on both the above charts. We’ll see if that make a difference, but it will take many months or even years before we know if that’s true…depending on ‘how high…and how fast’ that prices move from here.
Both gold and silver worked their way higher in price during most of the Far East trading day on their Thursday…but at 3:00 p.m. Hong Kong time, right on the button, a not-for-profit seller showed up…and both metals have been trading sideways ever since. As of 4:25 a.m. Eastern time, volume is very high in both metals…but nowhere near what they were this time yesterday morning when the new low price tick was set just after the London open. The dollar index is moving sideways…and is basically unchanged from Wednesday’s close. And as I hit the ‘send’ button at 5:19 a.m. Eastern time, gold is up about eight dollars…and silver is up 20 cents.
I’m done for the day. Let’s hope ‘day boyz’ are done as well.
I hope you have a good Thursday…and I’ll see you here tomorrow.
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