To say that I was disappointed in it would be the understatement of the year

With the Globex/Comex closed for the Good Friday holiday, all four Kitco precious metal charts all looked like this.

The equity markets were closed as well, so there's no HUI or Intraday Silver Sentiment Index—and no delivery report from the CME, nothing from GLD or SLV, the U.S. Mint, or the Comex-approved depositories.

The only thing that was open for business was the U.S. Dollar Index.  It closed late on Thursday afternoon in New York at 97.53—and didn't do much until about an hour before the job numbers came out at 8:30 a.m. EDT yesterday morning.  At that point, it dropped around 30 basis points to around 97.21, before regaining a decent chunk of those loses.  Then the job numbers came out—and by the time “gentle hands” showed up 30 minutes later at 9:00 a.m., the Index was down to 96.394—which was a loss of 114 basis points from Thursday's close.

From that low, the index “rallied” until it reached the 96.80 level at precisely 1 p.m. EDT—and from there it traded more or less sideways into the close, finishing the Friday session at 96.766—which was down 73 basis points on the day.

The Commitment of Traders Report for positions held at the close of trading on Tuesday did not make for happy reading.  It was a disaster from one end to the other in both gold and silver.

I was right to be the proverbial “doubting Thomas.”

What it indicated was that all the price/volume activity from the prior reporting week was not reported in a timely manner—and last Friday's COT report was not even close to being accurate.

The price action during the current reporting week suggested improvements in the Commercial net short positions in both gold and silver—and I mentioned that in yesterday's column.

But the report was not even close to what the price action indicated—and yesterday's report may not have had any of the current reporting week's data in it at all.  That's speculation on my part, but it's certainly what the numbers indicate.

In silver, the Commercial net short position blew out by an additional (and astounding) 10,619 contracts, the biggest one-week change in history if my memory is close to being correct.  That's 53.1 million troy ounces in just one week.  The Commercial net short position is now back up to 249.3 million troy ounces.

Ted Butler said that the Big 4 Commercial shorts (read JPMorgan) increased their short position by 3,300 contracts, the “5 through 8” traders actually covered 600 short contracts—and the small Commercial traders, Ted's raptors, sold 7,900 contracts of their long position.  Ted says that JPMorgan's short-side corner in the Comex silver market has increased to around 18,000 contracts, or 90 million troy ounces.  He'll get a more accurate indication of JPM's short-side corner when the new Bank Participation Report comes out next Friday.

In the last two COT reporting weeks combined, last Friday's and yesterday's, the Commercial net short position in silver increased by an absolutely gargantuan 19,651 contracts, or 98.3 million troy ounces—all on the back of a silver price rally of about $1.75.

JPMorgan et al. totally crushed this budding silver rally—and it's obvious that this massive increase in their short positions was entirely for price-capping purposes.  No other explanation is plausible.

Under the hood in the Disaggregated COT Report, the brain-dead technical funds in the Managed Money category covered 6,962 short positions in silver—and added 4,855 contracts to their long position, a total swing of 11,817 contracts—as they sold shorts and bought longs as silver's 50-day moving average was broken to the upside.

It's the same story in gold, as the surprise good news from the previous Friday's COT Report was buried under an avalanche of mostly bad news.

The Commercial net short position increased by a very chunky 28,190 contracts, or 2.82 million troy ounces.  (Don't forget there was an “improvement” of 3,565 contracts, or 356,500 troy ounces reported in the previous Friday's COT Report.  The current report negates all that, plus more.) The Commercial net short position in gold now stands at 8.11 million troy ounces.

The Big 4 traders actually covered about 2,900 contracts of their short position, while the “5 through 8” big short holders increased their short position by around 7,400 contracts.  The small Commercial traders sold 23,700 long contracts.

Under the hood in the Disaggregated COT Report, the technical funds in the Managed Money category were, of course, the Pavlovian patsies on the other side of this trade, as they covered 19,597 of their short contracts and went long 5,024 contracts on top of that.

This current rally in gold, if you wish to dignify it with that name, only lasted for $50 to the upside—at least for the moment.

The gold COT Report wasn't anywhere near as bad as the silver COT Report, but both were bad enough in their own right—and there's no way to sugarcoat this.  The report was butt-ass ugly, particularly in silver.

Yes, there's still fuel in the tanks of the Managed Money traders to take silver and gold prices higher from here, but it's equally as obvious from yesterday's and the previous COT Report, that “da boyz” are going to show up as the not-for-profit sellers of last resort the moment the attempts are made.

After these last two COT Reports, my bulls hit meter will be on its high gain setting when next Friday's COT Report puts in an appearance.  I don't think that the data we saw in this week's report—and last week's COT Report—are wrong; it's just that the timing of the reported data is now highly suspect.  And as I said earlier, it appears that all of price/volume data from the current reporting week just past—March 25-31 inclusive—was not in this report, or certainly not all of it.

As you can imagine, Ted and I had a rather intense discussion about all this on the phone yesterday, but because I was visiting the outlaws, I didn't have the time to spend bisecting and dissecting the report the way I would have liked.  And because of that, I'll be more than interested in what he has to say about it to his paying subscribers in his weekly review this afternoon.

Here's the “Days of World Production to Cover Comex Short Positions” from the March 17 cutoff two weeks ago when we were at the lows. The Big 8 trader were short about 56 days of world gold production and 138 days of world silver production.

Here's the current “Days of World Production to Cover Comex Short Positions” chart from the cutoff on Tuesday, March 31—and the short position of the Big 8 in gold has only increased by two days to 58 days—and as I said earlier, the gold numbers weren't that bad, but the days-to-cover in silver for the Big 8 has now blown out from 138 to 156 days.

If you're looking for a reason why the precious metal prices are where they are, this is the only chart you need concern yourself with—along with the companion Bank Participation Report that will be out this time next week.

It was very much business as usual in the Far East on Friday—and the Shanghai Gold Exchange reported their weekly withdrawals as of March 27.  This time they reported 45.719 tonnes—and here's Nick Laird's most excellent chart.

For the month of March, the SGE withdrew 195.165 tonnes—and for the first quarter it was 606.951 metric tonnes.  Of course that doesn't include the last two trading days of this past week, but the above numbers are close enough for government work.

I've cut the number of stories down to the bare minimum, as I must admit that I'm really not in the mood to write today's column.

In market developments since last Saturday's review, standouts include further withdrawals of metal from the big silver ETF, SLV, and final sales of Silver Eagles from the U.S. Mint for March.  Close to two million additional ounces of silver were withdrawn from the Trust on Tuesday on top of the 3.5 million oz withdrawn last week. To be clear, when I speak of the turnover or movement of metal in the Comex-approved silver warehouses, I am speaking of the physical movement of metal either coming into or leaving those warehouses. That’s not necessarily the case with SLV deposits or withdrawals; it may represent actual physical movement, although it doesn’t have to be actual movement of metal.

When metal is withdrawn from the SLV (or GLD), the only certain known effect is a corresponding reduction in the proportionate number of shares outstanding, no more, no less. When metal is deposited into the trust, shares outstanding grow proportionately. There’s no way of determining whether the metal withdrawn or deposited actually moves out or into the warehouses where the metal is stored—or if the metal stayed where it was after the withdrawal, or was moved. Likewise, there’s little easy way to know if metal deposited was brought in for that purpose or was previously already in position at the relevant custodian warehouse when a deposit is made. There can be movement involved in a metal ETF deposit or withdrawal, but that is not mandatory.Silver analyst Ted Butler: 01 April 2015

A friend of mine, John Di Tomasso, passed around an audio clip by Dire Straits last night.  I've posted it in this space before, but it's been quite a number of years—and it's certainly worth a revisit.  It's a classic for sure—and Mark Knopfler does the honours.  The link is here.

Today's classical “blast from the past” is by J.S. Bach.  It's his Concerto for Oboe and Violin in C minor, BWV 1060.  I've posted this within the last six months—and I make no apologies for posting it again so soon.  I heard this on the drive to work last week—and I couldn't get it out of my head.  Now you're stuck with it.  This version was recorded in Vilnius, Lithuania back in December 2010.  The orchestra is perfect—and the soloists are as good as they get—and the quality of the recording is first rate.  It doesn't get any better than this—and the link is here.

Well, there's nothing to talk about except the latest COT Report—and to say that I was disappointed in it would be the understatement of the year.

I see nothing in this report, or the previous one, that indicates that JPM et al. are about to release their iron grip on the precious metals in general, or silver in particular.

But—and it's a pretty big but—not to be forgotten in all of this is the unrelenting and apparently insatiable demand for physical silver by JPMorgan—and now, by the look of it, gold as well in the April delivery month.

Ted and I are both still in semi-shock about the 1,500 Comex silver contracts that JPMorgan stood for delivery on in its in-house [proprietary] trading account during the March delivery month.  They even stopped contracts from their own clients that had to deliver as short/issuers.   And pile on top of that their huge position in SLV shares, plus the metal they've taken delivery of out of that ETF in order to prevent them from exceeding the 5% reporting limit to the SEC.

And they're certainly buying every U.S. silver eagle that the U.S. Mint can produce—and that John Q. Public isn't buying.  That goes for silver maple leafs as well—and I'm still waiting for the Royal Canadian Mint's fourth-quarter and total 2014 sales numbers to see if that is, in fact, the case.  I'll be surprised if it isn't.

I can't imagine that they're buying all this silver just to double their money.  I'm expecting that they're looking to make a really big score.  There's no other reason I can think of, but as far as timing is concerned, I haven't a clue.

As I and others have said over the years, on a gold price reset, the new gold price will be well beyond the reach of all but the richest people—and silver will become the new gold.  That's the kind of score that JPMorgan may be anticipating.  But that's all speculation on my part.

With the lousy job numbers, coupled with the face plant in the U.S. dollar index yesterday, one would think that gold will do well at the 6:00 p.m. EDT open in New York on Sunday evening—but it would be presumptuous to assume that—with “da boyz” ready to pounce if need be—and they probably will.

So we wait some more.

See you on Tuesday.

Ed Steer


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This rabbit sat still long enough for me to take quite a few photos, but I only kept these two.  The sun had come out for a bit, so I didn't need the flash—and he was a bit far away for that anyway.  It's in the process of losing its white winter coat—and it looks like a cross between a domestic rabbit and a jack rabbit.

The first photo is straight out of the camera—and not cropped at all.  It's presented here just the way it looked in the viewfinder. The second photo is a head and shoulders shot—and I did crop this one, but not by much.

Here's a photo that Nick Laird sent our way last night—and it's much more interesting than the bunny pictures above.  This Cassowary appeared in his friend Jack's backyard up in Innisfail, North Queensland late Friday morning local time.  Jack breeds Australian insects for export—and you can find out all you need to know by clicking here.