What will JPMorgan et al do on the subsequent rally?
The gold price didn't do much in Far East trading on their Tuesday, but a tiny new low was set around 1:30 p.m. Hong Kong time. From there, gold rallied back above the $1,200 price mark. Then around 11:15 p.m. the price began to decline. Ted said that it was JPMorgan et al “spoofing” prices lower. And once Monday's closing price was taken out at 8:45 a.m. in Comex trading, the technical funds went short some more—as JPMorgan et al took the long side of those trades—and the price plunged over twelve bucks in a few seconds.
The tiny rally that followed exploded in a flurry of what was probably a combination of short covering by technical funds—and long buying by JPMorgan et al at 9:50 a.m. EST. That rally ran out of gas/got capped at the London p.m. gold fix, which came minutes after 10 a.m. EST.—about 15 minutes after the rally began.
From gold's high of the day, the price slowly declined until it stuck its nose back below the $1,200 spot price market shortly before 3 p.m. in New York. At that point a buyer showed up—and gold closed above the $1,200 spot.
The low and high ticks were recorded by the CME as $1,181.40 and $1,214.00 in the February contract.
Gold closed on New Year's Eve in New York at $1,205.50 spot, which was up $8.80 from Monday's close. Volume was an impressive 127,000 contracts.
And as incredible as the price gyrations were in gold, it was off the charts in silver, as JPMorgan et al pulled out all the stops. However, the price pattern was virtually identical, so I shan't waste any time talking about it.
The intraday price move was well over a dollar—and the CME recorded the low and high as $18.72 and $19.825 in the March contract.
Silver never got a sniff of the $20 spot price mark, closing the Tuesday session at $19.445 spot, which was down 12 cents from Monday. Net volume was an astounding 46,000 contracts.
It was more or less the same routine in both platinum and palladium, but both reported a decent gain on the day—finishing up a percent or so. Here are the charts.
The dollar closed on Monday afternoon in New York barely above the 80 mark at 80.01. From there it rallied it tiny fits and starts, finishing the Tuesday session at 80.205 which was up 20 basis points from its prior close.
The gold stocks opened in the red, but rallied strongly almost immediately, even before 9:50 a.m. EST gold price melt-up going into the London p.m. gold fix. From that point, the stocks gave up a bit of their gains before trading sideways for most of the day, but rallied into the close, finishing almost on their highs of the day. The HUI closed up 2.42%.
The chart pattern in the silver equities was virtually the same as the HUI, except the silver stocks closed on their absolute high ticks of the day. Nick Laird's Intraday Silver Sentiment Index closed up 2.47%.
The CME's Daily Delivery Report showed that 1 gold and 72 silver contracts were posted for delivery on Friday within the Comex-approved depositories. JPMorgan out of its in-house [proprietary] trading account delivered 58 contracts—and ABN Amro came up with 10 contracts. The only long/stopper of note was Canada's Bank of Nova Scotia with 70 contracts. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in either GLD or SLV yesterday—and no sales report from the U.S. Mint, either.
Monday was a very busy day over at the Comex-approved depositories—especially in silver.
In gold, these depositories reported receiving 63,996 troy ounces of the stuff—and all of it went into the HSBC USA depository. The link to that activity is here.
But the fork lifts were real busy moving silver around, as 1,810,657 troy ounces were reported received—and 1,216,360 troy ounces were shipped out the door. Of the amount received, a third of it disappeared into JPMorgan's vault—and all of the silver JPM received came out of Scotia Mocatta's vault. The link to that action is here—and it's worth a quick peek.
I have a decent number of stories today—and I hope you have the opportunity to read the ones that interest you.
Yes, it is possible, given how close we are to the lows of the year that more salami slicing to the downside, designed to generate more technical fund short selling, could be seen. But it is just as possible that the salami slicing is over with. More than possible is that JPMorgan will look, at some point, to feather their own nest with an explosion in gold and silver prices, given how they are currently positioned. That’s what smart crooks do. – Silver analyst Ted Butler: 28 December 2013
Well, it doesn't get much more blatant than that. I couldn't make up a price scenario like yesterday no matter how hard I tried. If JPMorgan et al were fishing for a bottom, I'd say they found one, as I doubt very much that prices could get much lower than this—or stay there for long if they did. You saw that happen yesterday—and you also saw how quickly it reversed itself.
As Ted Butler says, in order for JPMorgan et al to go longer or cover more short positions, they have to find either a technical fund or small trader to either puke up a long or go short, so they [JPMorgan et al] can gobble up either the long contract puked up, or buy the long side of the short trade. These two types of traders are the only “food supply” for JPM et al—and why they continually attempt to engineer lower prices. Once “da boyz” can no longer entice these traders to go short anymore, or puke up more longs, the bottom is in. And if I had to bet a sum of money, I'd guess we saw it yesterday.
But the question at all market bottoms is always the same—what will JPMorgan et al do on the subsequent rally? They, as always, are 100% in the driver's seat—and what they do, or what they're instructed to do, is all that matters. If you've been reading this column for any length of time, it's a situation that we've been in many times in the past—and Ted Butler and I always pose the same questions. Will this time be different, or will it be the same old, same old?
Since this is the final column for 2013—my thanks go out to all the kind readers that have contributed so much to this missive over the last 12 months. As I say every year at this time, this column is just as much yours as it is mine, as it would be considerably diminished without their contributions.
Some you only know by their initials—as they wish where they live and who they are to remain anonymous—and I respect that. But I would be remiss if I didn't shout out a few names here: Phil Barlett, West Virginia reader Elliot Simon, South African reader B.V., Manitoba reader Ulrike Marx, Washington state reader S.A. and, as always, Roy Stephens is at the top of the heap. Of course other readers have contributed news items, chart and graphs, photos and cartoons from time to time all year long—and as I said, this column would be diminished without them. Chief amongst those contributors would be Nick Laird over at sharelynx.com, as his charts are an integral part of my blog—along with other newsletter writers on the Internet as well.
Last, but certainly not least, my thanks go out to my daily Internet buddy at Casey Research. Every day [except Saturdays and holidays] CR's own Juli Placek crawls out of a nice warm bed somewhere in the vicinity of Stowe, Vermont at 5:10 a.m. EST—and takes my scribblings and posts them on their website before 6:30 a.m. EST—and then dispatches it to the in-boxes of the 40,000+ world-wide readers that peruse this rant [in whole, or in part] every day. All of this is done long before the vast majority of North Americans has even had to reach for their respective alarm clocks. I can't begin to remember the number of times she has been there for me—or for us—and she has my eternal gratitude.
Happy New Year to you and yours in 2014, dear reader—and I'll see you right here on Friday.
Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations.
An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information, [email protected]