The slices off the salami to the downside are getting thinner with each passing day.
The gold price traded around the $1,380 spot price mark through all of Far East and most of the London session on Friday. But minutes after the equity markets opened in New York, the gold price got sold down twenty bucks in short order…and the subsequent rally didn’t get far. Once the Comex closed, the gold price got sold down to its low of the day in thin access market trading.
The low price tick came at precisely 4:00 p.m. EDT in New York…and Kitco recorded that as $1,354.60 spot. After that, it recovered a few dollars doing into the close of electronic trading.
Gold closed at $1,360.20 spot…down $25.70 on the day. Net volume was very high…around 193,000 contracts.
The silver price was more ‘volatile’ on Friday. It topped out around the $22.80 mark around 10:00 a.m. in Tokyo…and was as low as $22.40 shortly after the Comex opened in New York. The subsequent rally ran into selling just after 9:30 a.m. EDT…just like gold.
From there, the silver price got sold down until the close of London trading, which was 11:00 a.m. in New York…and the anemic rally that followed ended just after 1:00 p.m. Then, like gold, silver got sold down in the thinly-traded electronic market…and the low price tick came at, or very close to 4:00 p.m. EDT in New York. That was pretty much it for the day.
Silver’s low tick was recorded as $22.09 spot.
Silver closed the Friday trading session at $22.26 spot…down 43 cents from Thursday’s close. Gross volume was around the 46,000 contract mark.
The dollar index closed in New York at 83.745 late Thursday afternoon…and then traded in a tight range just under the 84.00 mark right up until 8:00 a.m. EDT. Then away it went to the upside…and almost all the gains were in by 9:20 a.m…ten minutes before the equity markets opened in New York. The high tick was 84.31…and it sold off just a hair going into the close, finishing the Friday session at 84.21…up 47 basis points on the day.
Gold and silver didn’t even begin to seriously sell off until about fifteen minutes after the big dollar index rally was done, so to pin yesterday’s precious metal price action on the currencies is laughable.
Once again the gold stocks gapped down at the open…and the followed the gold price lower, with the absolute low of the day coming at the 4:00 p.m. EDT close of the equity markets in New York…and also at the precise low of gold for the day. The HUI got clocked again…down 4.09%.
Surprisingly enough, the silver miners that make up Nick Laird’s Intraday Silver Sentiment Index weren’t hit quite as hard…but that’s little consolation to long-suffering stockholders…as they finished down ‘only’ 3.30%.
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Here’s the long-term Silver Sentiment Index that shows just how badly the silver stocks have been slaughtered since December of 2012.
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One of the other reasons that the sell-offs in the metal are hitting the shares so hard, is that mutual funds are feeling the effects of massive redemptions…and they have to sell whether they want to or not. The markets are very illiquid…and this just makes matters worse.
But the one big question you should be asking yourself is this…”Who is buying all these shares that the precious metals investors are selling in such a panic?” Think about it. Somebody is…and whoever they are [and I have my suspicions] they have infinitely deep pockets…and are the very definition of “strong hands”.
The CME’s Daily Delivery Report showed that zero silver and 157 silver contracts were posted for delivery on Tuesday within the Comex-approved depositories. The big short/issuers were ABN Amro and Jefferies…with 120 and 29 contracts respectively. The two largest long/stoppers were, once again, the ringleaders in the silver price management scheme…Canada’s Bank of Nova Scotia with 113 contracts, and JPMorgan Chase with 30 contracts. The link to yesterday’s Issuers and Stoppers Report is here.
GLD had another withdrawal by an authorized participant yesterday. This time 96,987 troy ounces were removed for parts unknown. SLV had a big withdrawal as well, as 2,220,839 troy ounces were taken out.
The U.S. Mint reported selling another 3,000 ounces of gold eagles yesterday…and that was it. Month-to-date the mint has reported selling 45,000 ounces of gold eagles…9,000 one-ounce 24K gold buffaloes…and 1,733,500 silver eagles. Based on these figures, the silver/gold sales ratio is just over 31 to 1. Without question that ratio would be much higher if the mint was able to produce all the silver eagles that were required…and as the mint has already stated publicly, it could produce more if it had the necessary blanks.
Over at the Comex-approved depositories on Thursday, they reported receiving only one good delivery bar of silver, weighing in a 1,019.900 troy ounces…but they shipped 856,973 troy ounces of the stuff out the door. The link to that activity is here.
In gold on Thursday, these same depositories reported receiving 65,425 troy ounces of the stuff…and shipped 64,659 ounce of same out the door. All the activity was at Scotia Mocatta…and the link to that is here.
The Commitment of Traders Report, for positions held at the 1:30 p.m. EDT close of Comex trading on Tuesday, was pretty much as I had hoped/expected…as there were small improvements in the Commercial net short positions in both gold and silver.
In silver, the Commercial net short position declined by 6.2 million ounces…and currently sits at 66.1 million ounces. Not a record low, but within hailing distance, that’s for sure…and I’ll have more to say about this in ‘The Wrap’.
Ted Butler said that JPMorgan’s short position didn’t change much from the previous reporting week…and is still around the 18,000 contract mark, or 90 million ounces…which represents 136% of the Commercial net short position. That’s outrageous!!! If their short position vanished overnight, the remaining Commercial traders would be net long the Comex silver market…just like the traders in the other two COT categories…and we’d have a 3-digit silver price in a heartbeat.
The total open interest in silver is reported as 144,666 contracts…but if you dip in the Disaggregated COT Report, you find that of that amount…36,620 of these contracts are market-neutral spread trades. So the true open interest in silver is only 108,046 contracts…and once you remove them from the equation, the concentrated short positions of the major players really stand out.
In silver, the Big 4 traders are short 34.1 percent of the entire Comex futures market, once you subtract out all the b.s. market-neutral spread trades. In troy ounces, that 34.1 percent represents 184.4 million ounces…two and a half times the entire Commercial net short position!
And, according to the monthly Bank Participation Report in silver, only three big bullion banks actually matter, so in fact, it’s the Big 3…not the Big 4. They are JPMorgan Chase, Canada’s Bank of Nova Scotia…and HSBC USA. The short position of the 4th largest bank is immaterial.
The ‘5 through 8’ largest traders are short an additional 10.6 percent of the Comex silver market…but at well under 3% each, they just don’t matter in the grand scheme of things.
But, in total, the Big 8 traders are short 45% of the entire Comex silver market…and that’s a minimum number. You can’t make this stuff up.
In gold, the Commercial net short position declined by 357,300 troy ounces during the reporting week…and now sits at 8.41 million ounces.
There are spread trades in gold as well…and the ones that are visible in the Disaggregated COT Report total 75,170 contracts. The total open interest shows as 443,806 contracts…and subtracting out these market-neutral spread trades leaves a true open interest of 368,636 contracts.
In actual fact, dear reader, there are more spread trades than are being shown in this report, but if they showed all spread trades, then the true concentrations of all the market participants would become instantly apparent…and that’s precisely why the report doesn’t show them all. That’s why I say that the true concentrations are actually higher, but it’s impossible to know by how much.
Anyway, the Big 4 are short 8.30 million ounces of gold…virtually 100% of the Commercial net short position of 8.41 million ounces. On a ‘net’ basis, they are short 22.5 percent of the entire Comex gold market. The ‘5 through 8’ traders are short 4.39 million ounces of gold…and that represents an additional 11.9 percentage points of the Comex gold market.
So, the Big 8 are short 151% of the Commercial net short position in gold…and short 34.4% of the entire Comex futures market in gold.
But to show you how much more concentrated the short position is in silver vs. gold…the Big 4 are short 257% of the Commercial net short position in silver. In gold, the Big 4 are short 98.7% of the Commercial net short position. Both figures are outrageous and obscene…and the CME Group does nothing, the CFTC does nothing…and the precious metals mining companies do nothing. As I said a few paragraphs ago…you couldn’t make this stuff up.
Here’s Nick Laird’s most excellent “Days of World Production to Cover Short Positions” chart. Except for the willfully blind, it tells you all you need to know at a glance.
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I haven’t spoken about how business has been at the bullion store recently, so I shall make amends now. There’s no question that business has slowed down quite a bit now that we’re four weeks past the big engineered price decline. Deliveries of bullion are still an issue, but somewhat better than they were ten days ago. However, because of the long-term ‘special relationship’ that the story owner has had with his bullion supplier, this ‘better’ delivery situation many not be applicable across the board for all bullion stores.
The wholesaler’s premiums have come down a bit, but are still quite elevated compared to what they were before April 16th when all hell broke loose…and we’re nowhere near being back to what I would consider ‘normal’. We aren’t able to offer the same discount on future orders that we used to be able to…but I suspect that the situation will slowly revert back to ‘normal’ over time.
The other things that aren’t ‘normal’ anymore is the level of business activity…and the internal structure of it. I would estimate the silver sales are permanently higher by 25 to 50% on a daily basis, than the baseline amount that our store did prior to April 15th. And if that isn’t impressive enough, I’d estimate gold sales are up between 300 and 500% now that things are ‘back to normal’. This new level of activity is going to take some getting used to…and it will be interesting to see how the mints cope with this new demand structure as time marches on.
Of course these demand figures, whether local, national…or international, are price sensitive…and bear watching closely. But many customers are mentioning the fact that they are grateful that the precious metals are “on sale”…and as long as they are, demand is certain to remain strong.
And your “cute quota” for the day…
I have a lot of stories today…but since it’s the weekend, I hope you can find the time to spend on the ones that interest you the most.
The cat is still stuck up the tree and we don’t know how to get it down. Keynes would suggest building a bigger ladder. Hayek would wait for the cat to jump down of its own accord. The European approach involves chopping the tree down. – Economist George Akerlof at an IMF conference on rethinking macroeconomics
Today’s pop ‘blast from the past’ takes me back to my hippy days of the mid-1960s in Toronto. This is the first time I’ve heard this song in about forty-five years…and if you’re of that age, you should know it right away. The link to the youtube.com video is here.
Richard Addinsell’s Warsaw Concerto was written for the 1941 film Dangerous Moonlight, and continues to be a popular concert and recording piece. The film-makers wanted something in the style of Sergei Rachmaninoff, but were unable to persuade Rachmaninoff himself to write a piece. Roy Douglas orchestrated the concerto. It has been recorded over one hundred times and has sold in excess of three million copies.
As was common with film music until the 1950s, many of Addinsell’s scores were destroyed by the studios as it was assumed there would be no further interest in them. However, recordings of his film music have been issued since his death, reconstructed by musicologist and composer Philip Lane from the soundtracks of the films themselves which, knowing orchestral music as well as I do, I find amazing!
I posted this classical piece several years back, but thought I’d post it again. Here’s Philip Fowke doing the honours. The video quality could be better, but the musicianship and interpretation is hard to beat. The link to the youtube.com video is here.
So…are we done yet?
As bad as the last few days have been, JPMorgan et al haven’t succeeded in taking out the Far East lows set on the morning of April 16th in Hong Kong. They came within pennies in silver…but missed gold’s old low by thirty-five bucks.
Unless they can find more longs prepared to sell, or tech funds prepared to go short this far below the major moving averages, ‘da boyz’ can’t get the prices any lower than this. As Ted Butler said on the phone yesterday, the slices off the salami to the downside are getting thinner with each passing day. There are limits to how low they can get prices…and we may have reached them at 4:00 p.m. EDT yesterday in New York.
And even if they do succeed early next week, the reward for their efforts will be pretty meager. We’ll just have to wait and see what developments await us next week.
The three days of price declines that we’ve experienced since the Tuesday cut-off for yesterday’s Commitment of Trader Report, has probably set new lows in a lot of categories…and if prices remain subdued for Monday and Tuesday, the Commitment of Traders Report this coming Friday should be something to see as well…provided all the data is reported in a timely manner.
A quick glance at any gold or silver chart reveals what may be the classic double bottom formation from a market technician’s point of view. But it wasn’t formed by free-market forces. It was courtesy of JPMorgan et al…as they can, and do, print any chart pattern they please. I would think we’ll find out pretty quick if what they’re telegraphing to the market is the real deal or not, as their reaction to the next rally will tell us all we need to know.
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I received an e-mail from reader Stephen Sadd yesterday…and these were his thoughts on the precious metal mining industry…”Why are there no voices coming from the mining sector on the gold and silver take-down? I find it highly remarkable there has been no strong cries of wrong doing from this entity. Are they just going to sit back like a bunch of zombies while their very own industry gets crushed, not to mention their shareholders. Just disgusting!”
I have other far less charitable words than this that I shall not utter here…but it’s sufficient to say that they don’t give a damn about you, the shareholder…and as a group they have already circled the wagons against their real owners…us. How did it come to this?
On that happy note, I’m done for the day…and the week.
See you on Tuesday.