Nothing would surprise me, particularly to the upside

Gold began to rally the moment that trading began in New York at 6:00 p.m. on Sunday evening, but wasn't allowed to get far—and by 10 a.m. Hong Kong time on their Monday morning, the gold price was back to unchanged.  It's low tick, such as it was, came shortly before 9 a.m. in London—and from there the price chopped quietly higher in light trading, with some activity also occurring after the 1:30 p.m. EDT COMEX close.

The low and high ticks were recorded by the CME Group as $1,178.60 and $1,191.00 in the April contract.

Gold finished the Monday session in New York at $1,189.30 spot, up $6.90 on the day.  Gross volume was a bit over 200,000 contracts, but it netted out to a reasonably light 106,000 contracts, as the roll-overs out of the April contract intensify.

The price pattern in silver was very similar—and it appeared that a not-for-profit seller showed up on a couple of occasions during the Monday session to put the brakes on the price when it was about to get to frisky to the upside, especially in the thinly-traded electronic session after the COMEX close.

The low for silver came the same time as the low in gold—and the high and low ticks were reported as $16.61 and $17.09 in the May contract.

Silver closed in New York yesterday at $16.975 spot, up two bits from Friday.  Not surprisingly, the net volume was a lot heavier at 40,000 contracts as the technical funds in the Managed Money category are now covering their short positions in earnest—and possibly going long as well.

The platinum chart looked suspiciously similar to the gold chart—and that white metals closed at $1,145 spot, up 11 bucks from Friday.

The palladium price didn't do a whole heck of a lot, but rallied a bit starting at 1 p.m. Zurich time, which was 8:00 a.m. in New York.  That budding rally got cut off at the knees twenty minutes later when the COMEX opened—and by 1 p.m. was down ten bucks off its high tick, but rallied into the close, finishing the day down only a dollar at $774 spot.

The dollar index closed late on Friday afternoon in New York at 97.92—and chopped a bit higher to its 98.20 high tick which came shortly after London opened—and it was pretty much all down hill from there, as the index finished the Monday session at 96.95—and down 97 basis points on the day.

One would have thought, we some justification in a free market, that precious metal prices would have responded more favourably to such a huge down-move in the dollar index.  But these aren't free markets we're dealing with—as they are set by JPMorgan et al in the COMEX futures market.

And here's the 6-month US Dollar Index chart so you can put yesterday's action in some sort of perspective once again.

The gold stocks gapped up a bit at the open—and then chopped very quietly higher, finishing the day up 2.04 percent.

The silver equities opened unchanged, but blasted higher, only to get sold down until around 11:15 a.m. in New York.  After that they rallied slowly but steadily, finishing just off their highs when that not-for-profit seller showed up in the metal itself just before the close.  Nick Laird's Intraday Silver Sentiment closed up 2.41 percent.

Considering the price action in the metal itself, I'm somewhat disappointed in the share price action of the companies that dig the stuff out of the ground.

The CME Daily Delivery Report showed that zero gold and 106 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  Once again it was Jefferies as the only short/issuer—and JPMorgan stopped 63 contracts in its in-house [proprietary] trading account once again.  UBS was a distant second with 19 contracts stopped.  The link to yesterday's Issuers and Stoppers Report is here.

I'm amazed, that with only a week left in the March delivery month, that only 1 gold contract has been posted for delivery so far—and there's still a huge number of silver contracts [relatively speaking] still open in March left to deliver.  As I said last week, one wonder what the short/issuers have to gain by holding out until the very last minute.

The CME Preliminary Report for the Monday trading session showed that March open interest in gold remained unchanged at 108 contracts.  But in silver, March open interest actually increased by 63 contracts—and that's over an above the 39 contracts that were subtracted because of today's scheduled delivery that was posted in Friday's report.  That's over a 100 contract difference in total—500,000 ounces.  There are now 604 silver contracts remaining in March.

There were no reported changes in GLD yesterday—and as of 6:35 p.m. EDT yesterday evening, there were no reported changes in SLV, either.  But when I checked back at 3:55 a.m. EDT this morning, I noted that an authorized participant withdrew 1,434,861 troy ounces.  This is the second withdrawal in as many days.  Silver should be pouring into this ETF, not out—so it's a good bet that JPMorgan is shorting SLV shares in lieu of depositing real metal once again.

There was a sales report from the U.S. Mint yesterday.  They sold 534,000 silver eagles—and that was it.  Once again these sales weren't because John Q. Public is buying them, as retail bullion sales are tepid all across North America—and that's a generous description of the current situation.

There was no activity in gold over at the COMEX-approved depositories on Friday—kilobar stocks, or otherwise.  But it was another busy day in silver, as 537,978 troy ounces were reported received—and 601,237 troy ounces were shipped out.  The lion's share of the receipts was at Scotiabank's vault—and all of the silver shipped out came out of HSBC USA.  The link to that action is here.

Here's an interesting chart that Nick Laird sent my way yesterday evening—and the title pretty much says it all.  Over 90 percent of U.S. treasuries in foreign hands are held by only twenty-five countries, but over 50 percent are held by just four countries.  Note that China's holdings haven't changed much since mid 2010—and have been declining at a snail's pace for the last couple of years.  The 'click to enlarge' feature is useful here.

For a Tuesday column, I don't have all that many stories for you today—but that may change as the evening and morning progress.

What’s most remarkable about the price action over the past two days in silver is that the speed and force of the two and a half day rally does not appear to be in keeping with the four previous anemic $3 silver rallies dating back to the beginning of last year. Plus, as I mentioned earlier, silver has acted funny over the past six or seven weeks in that it was not as relatively weak compared to gold on the downside as it had been in the past.

I know I warn against relying on price action in a manipulated market, but there’s something different this time – silver wasn’t as weak as it usually has been and is out of the gate quicker and stronger than it has been recently as well. To that I would add the masterful work of art, worthy of Picasso himself that the commercials rigged in getting the technical funds as short as they were in the current COT, to say nothing of JPMorgan’s accumulation of a massive amount of physical silver.

I suppose it’s possible for the commercials to slam on the price brakes at any time, but usually there is a cycle and season to price capping that evolves over time periods longer than a few days or weeks. And in order to lure the technical funds back onto the short side the commercials would have to rig a sudden and violent drop in the price of silver below recent lows and even if the commercials did rig such a price drop (this is still a manipulated market after all), it probably wouldn’t lure near enough technical funds back to the short side as existed as of Tuesday. The technical funds are much more comfortable in building big short positions on salami slicing-like price declines, rather than on big chunks to the downside—and for a variety of reasons, including expecting it for many years, I’m inclined to view this budding rally in silver as the big one.Silver analyst Ted Butler: 21 March 2015

I was happy to see both gold and silver post decent gains on Monday, but I'm careful not to read too much into this at the moment, as this is roll-over week out of the April gold contract—and all the large traders have to be out by the close of COMEX trading on Friday, with the balance out by the end of trading on Monday.  There is still a lot of open interest yet to go before first notice day on Tuesday.

Gold's net volume continues to be reasonably light—and that's because the 50-day moving average hasn't been penetrated to the upside yet.  However, gold closed above it's 20-day moving average on Monday—and that fact is certainly reflected in the volume numbers in today's Preliminary Report from the CME Group early this morning.

In silver, volume was much heavier again yesterday as the technical funds in the Managed Money category continue to cover their short positions on one hand—and go long with the other.

Here are the 6-month charts for all four precious metals once again—and once again I've included the 6-month charts for the U.S. dollar index.

As I type this paragraph, the gold market open in London is about fifteen minutes away.  After getting sold down a few dollars to its Far East low at noon Hong Kong time, gold is almost back to unchanged.  The price pattern is the same for silver and platinum as well.  Palladium hit its low at noon in Hong Kong as well—and the price has flatlined since.

Gold volume is very light, with more than a third of it being roll-overs out of the April contract, which is an unusual amount for this time of day.  Silver's net volume is 3,700 contracts, with virtually of it in the current front month, which is May.  All in all, there's nothing going on.

The dollar index rallied a decent amount in Far East trading on their Tuesday morning, but rolled over at noon Hong Kong time—and is only up 11 basis points at the moment.

Today, at the close of COMEX trading, is the cut-off for this week's Commitment of Traders Report.  I'm not expecting big price activity for the remainder of the Tuesday session, but with circumstances on Planet Earth the way they are at the moment, nothing would surprise me, particularly to the upside.

And as I hit the send button on today's column at 5:30 a.m. EDT, I see that the smallish rallies in all four precious metals haven't gone too far now that the market has been open in London for a few hours, but the trading day is still young.

Gross volume in gold is just over 44,000 contracts, but almost half of that is roll-overs out of April and into the new front month, which is June.  Silver's net volume is barely over 6,000 contracts, with virtually all of that in May.  The dollar index is continuing to chop lower—and is down 20 basis points at the moment.

As I said earlier, I have no idea what the rest of Tuesday's trading action will bring, but with the dollar index trending lower, it's reasonable to assume that the precious metals should continue to trend higher.  But how fast and how high will be up to JPMorgan et al—and I'll be more than interested in what the charts show when I power up my computer later this morning.

I'm off to bed—and I'll see you here tomorrow.

Ed Steer

First Majestic is a mining company focused on silver production in México and is aggressively pursuing the development of its existing mineral property assets. The Company presently owns and operates five producing silver mines; the La Parrilla Silver Mine, the San Martin Silver Mine, the La Encantada Silver Mine, the La Guitarra Silver Mine, and the Del Toro Silver Mine. Production from these five mines is anticipated to be between 11.8 to 13.2 million ounces of pure silver or 15.3 to 17.1 million ounces of silver equivalents in 2015.

Here's a photo of the International Space Station as it passed across the sun during the solar eclipse in Europe last week.  You can read all about it at the spaceweather.com Internet site linked here.  I'd sure like to know what frame rate this guy's camera was shooting at to get as many images of the ISS that he did.