Another day—and more slices off the precious metal salamis

The gold price didn't do much, or wasn't allowed to do much—take your pick—in morning trading in the Far East on Monday.  The low tick over there came at 1 p.m. Hong Kong time.  From that point it rallied to its high tick at the 8:00 a.m. BST London open—and JPMorgan et al were waiting.  The low tick came about fifteen minutes before the London close.  The rally off the low got reversed at exactly 1:00 p.m. EDT and, starting shortly after the 1:30 p.m. COMEX close, the gold price rallied quietly into the 5:15 p.m. close of electronic trading.

The high and lows were recorded by the CME Group as $1,209.00 and $1,190.80 in the June contract.

Gold finished the Monday session in New York at $1,195.80 spot, down $7.50 from Friday's close—and safely back below the $1,200 spot price.  Net volume was pretty decent at 129,000 contracts.

Here's the 5-minute gold price/volume chart courtesy of Brad Robertson.  Midnight EDT Sunday night is the second vertical gray line.  It didn't require a lot of volume at the spike high at the London open to reverse the rally, as volume was very light to start with—01:00 Denver time on this chart.  Most of the volume came between 11 a.m. BST—and noon EDT, which is 05:00 to 10:00 a.m. MDT on this chart.  Add two hours for EDT—and the 'click to enlarge' works wonders here.

The silver price chart is similar, but it's interesting to see how the price got taken lower in stair-step fashion until the 10:45 a.m. EDT low tick.  Then, like gold, the silver price recovered a few pennies after the COMEX close.

The high and lows were reported as $16.34 and $15.82 in the May contract.

Silver closed yesterday at $15.94 spot, down 28.5 cents from Friday's close.  Net volume was pretty chunky at 37,500 contracts.

The price charts for platinum and palladium looked similar, except their respective lows came just before the equity markets opened in New York yesterday morning.  Platinum was closed at $1,146 spot, down 24 bucks.  Palladium finished the Monday session at $771 spot, down 11 dollars—and well off its low tick.  Here are the charts.

The dollar index closed late on Friday afternoon in New York at 97.45.  It gapped down a bit at the open, but then chopped more or less sideways until about 2:40 p.m. Hong Kong time.  From there it rallied up to its 98.07 high which came minutes before the 8:20 a.m. EDT COMEX open.  It dropped down to 97.71 by 11:15 a.m.—and then rallied a bit into the close.  The index finished the Monday session at 97.90—and up 45 basis points from Friday's close.

The gold stocks opened down—and hit their lows about 9:45 a.m. EDT.  They chopped higher—and back into positive territory—shortly before noon, before falling back into negative territory once again.  But starting shortly after 2 p.m. a rally ensued that took gold back to its high of the day—and that's pretty much where it closed.  The HUI finished the Monday session up 0.43 percent, which was quite remarkable considering how badly the gold price got smacked.

The silver equities followed a somewhat similar pattern—and they, too, actually closed in the green—as Nick Laird's Intraday Silver Sentiment Index closed up 0.33 percent.

The performance of the precious metal shares, especially the silver equities, is rather amazing considering how badly they got smoked last week on loses of 4 cents on two consecutive trading days in a row.

The CME Daily Delivery Report showed that 659 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  Once again the big short/issuer was JPMorgan out of its client account—and the two largest long/stoppers were Canada's Scotiabank with 329 contracts—and JPMorgan with 319 contracts for its in-house [proprietary] trading account once again.

This is the third time that JPMorgan has screwed over it clients in the April delivery month in gold—and I sometimes wonder who these “clients” might be.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that April open interest in gold fell by 640 contracts—and those were the ones posted on Friday for delivery today.  April o.i. in gold is now down to 1,186 contracts, minus the 659 that got posted for delivery tomorrow.

For the second day in a row, the April o.i. in silver remained unchanged at 172 contracts.

There were no reported changes in GLD yesterday—and as of 6:48 p.m. EDT yesterday evening, there were no reported changed in SLV either.  But when I checked the Internet site at 2:11 a.m. EDT this morning, I saw that an authorized participant added 1,434,312 troy ounces.  Based on the current price action, I would guess that deposit was used to cover an existing short position.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 500 troy ounces of gold eagles—and 500 one-ounce 24K gold buffaloes.

The only activity in gold at the COMEX-approved depositories on Friday was the two kilobars withdrawn from the Mafra, Tordella & Brookes, Inc. depository.

In silver, there was 57,991 troy ounces reported received—and 366,995 troy ounces shipped out.  For a change, none of the activity involved JPMorgan.  After all the heavy activity of the last two weeks in silver, they must still be charging up the batteries on their fork lifts.  The link to that activity is here.

Over at the COMEX-approved depositories in Hong Kong on Friday, it was a much busier day.  At the Brink's, Inc. depository they reported receiving 10,830 kilobars, which is a lot—and shipped out 1,668 kilobars.  The link to the activity in troy ounces is here.

Since yesterday was the 20th of the month—and it fell on a weekday—The Central Bank of the Russian Federation updated their website with their March data.  It showed that they added 1 million troy ounces of gold to their reserves in the past month—and Nick's most excellent charts is posted below.

Here's a chart that was embedded in a Bloomberg story way back on March 31.  I didn't think the story was worth posting, but the chart is worth saving—as it shows the best performing asset classes in the first quarter of 2015.  I thank reader William Gebhardt for sending it along.

I have a decent number of stories for you today—and I hope that number doesn't expand by much as the evening progresses.

Two weeks ago, the turnover or physical movement of metal brought into and taken out from the COMEX-approved silver warehouses was at a nadir and appeared to be cooling off. I openly questioned (myself) whether the four-year-old, frantic, unprecedented and unique-to-silver-among-all-commodities-physical-conveyance was approaching an end—and what that end would portend for price. I’ve been forced to put such thoughts on hold as a result of what transpired over the past two weeks, as the combined two week movement of metal was the largest two week turnover in memory, fully double the torrid 5 million oz average weekly movement of 2014.

This past week, more than 8.5 million oz of silver were physically moved either into or out from the six COMEX warehouses. Total COMEX silver inventories rose a relatively slight 0.8 million oz to 175.9 million oz for the week. Over the past two weeks, close to 20 million oz of actual metal was either moved into or taken out from the COMEX warehouses, while total inventories declined by mere 0.6 million oz. While this underscores the consistent observation of mine over the past year and longer that the frantic turnover in COMEX inventories were highly unusual in two regards – the outsized movement itself—and the fact that total inventories hardly changed at all – there is a more specific explanation for the past two weeks. Yep, JPMorgan again.

Basically, JPMorgan accounted for all the COMEX silver movement this week as well as much of what moved during the prior week. This week, 4.7 million oz were moved into the COMEX silver warehouse of JPMorgan and because that metal mostly came from other COMEX silver warehouses, total movement is fully explained by the growth in JPM holdings. Last week 3.4 million oz came into the JPM warehouse, so the two week increase of 8.1 million oz is directly connected to the 7.5 million oz that JPMorgan took in delivery for the March futures contract. (Please remember there is a 6% – under or over – weight tolerance for delivered COMEX silver contracts). – Silver analyst Ted Butler: 18 April 2015

Another day—and more slices off the precious metal salamis.

It was also another day where Russia, China and India showed the world that between the three of them, they're pretty much gobbling up all the newly mined gold on Planet Earth every year.

Yet still gold prices aren't allowed to go anywhere.  That applies to platinum and palladium, both of which are in structural supply/demand deficits as well.

Then there's silver.  With about 350 million troy ounces now in the hands of JPMorgan—and at the same time this company, along with Canada's Scotiabank, are short roughly 200 million troy ounces of silver in the COMEX futures market between them—and you have to ask yourself when and how this will all end.

I would guess the JPMorgan has enough silver in good delivery form to cover their entire short position if required to do so; but that comfort level [or their 'Get Out of Jail Free Card'] certainly doesn't extend to Scotiabank—unless they've managed to hide their silver stash out of sight in SLV.

Here are the 6-month charts for all four precious metals, plus copper and WTIC, as of the close of trading yesterday.

I was somewhat surprised to see the precious metal equities finish in the green yesterday—and wonder who the deep-pocket buyers were that were scooping up everything that John Q. Public was selling in the face of Monday's engineered price declines in both gold and silver.

And as I write this paragraph, the London open is about fifteen minutes away.  The gold price isn't doing much, but is down a buck and change from Monday's close.  Silver is unchanged—and platinum and palladium are up a dollar or two. 

Gold volume is just under 11,500 contracts, with virtually all the volume in the current front month.  Silver's net volume is just shy of 2,600 contracts—and about of a third of the total volume is roll-overs out of the May contract.

The dollar index didn't do a lot until shortly after 1 p.m. Hong Kong time—and since then it's up 26 basis points.

Yesterday's salami slices were pretty decent—and just eye-balling the above charts, “da boyz” still have work to do if they want to get back to the wildly bullish levels that the Commitment of Traders data showed a month ago.  I'd guess $50 in gold—and 50 cents in silver—and that's from their respective low ticks yesterday, not their closing prices.

But can they, or will they?  We got part of the answer yesterday—and it remains to be seen if there's more to come.  It wouldn't take much effort on behalf of JPMorgan et al, along with their HFT buddies, to do what's necessary.

I mentioned all this in Saturday's missive, but with another day of data in the history books, I'm just revisiting it briefly.

I would guess that all this price/volume will be in this Friday's COT Report, as there's no real reason why it shouldn't—and hopefully the same can be said for the price/volume today—as Tuesday at the close of the COMEX trading session, is the cut-off for Friday's report.

And as I fire today's column out the door at 5:15 a.m. EDT, I see that the gold price is flat—and silver is actually up a nickel. Platinum and palladium are up a bit more as well.  Gold volume is now up to 18,500 contracts—and silver's net volume is now at 4,800 contracts.

All in all there's not much happening from a price perspective—and the fact that the dollar index is now up 38 basis points—and was even even higher than that shortly before 5 a.m. EDT, I'm somewhat surprised to see the precious metals performing as well as they are.

But with all the problems in the world these days, I guess it really shouldn't come as much of a surprise that the precious metals are catching a bid despite what's going on with the dollar index.

It beats the heck out of me as to how the rest of the Tuesday session will turn out—and nothing will surprise me when I check the charts later this morning.

I'm off to bed—see you here tomorrow.

Ed Steer

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