As the saying goes…he who has the gold, makes the rules.
After doing nothing for the first couple of hours in Far East trading on their Friday, the high-frequency traders spun all the precious metal prices lower starting around 8:30 a.m. Hong Kong time. Gold's subsequent rally lasted until 2:00 p.m. in Hong Kong…and from there drifted down to its low of the day…$1,186.40 spot…which came at the 3:00 p.m. BST London p.m. gold fix, which was 10:00 a.m. EDT in New York.
From there, the gold price blasted higher, adding $35 to its price in about thirty minutes. After that, the gold price continued to move quietly higher closing on its high of the day…and that's an event that has only occurred two or three times in the last couple of years.
The gold price closed at $1,235.30 spot…up $34.50 on the day. Gross volume was a remarkable 335,000 contracts.
Silver's price pattern was similar…but different in some respects.
The sell-off occurred at 8:30 a.m. Hong Kong time, just like the other three precious metals…but in silver's case, the subsequent rally got capped at 11:00 a.m. Hong Kong time. Silver's low [$18.47 spot] came long before the London p.m. gold fix…but the big run-up in price after the fix, like gold, ended at 10:30 a.m. EDT. After that, silver rallied quietly into the close…with the high tick [$19.80 spot] coming around 5:00 p.m. in electronic trading.
According to Kitco, silver closed at $19.66 spot on Friday…up $1.15 from Thursday's close. Net volume was an eye-watering 74,000 contracts.
After their little engineered price declines in early Hong Kong trading on their Friday morning, both platinum and palladium rallied as well, but did not follow the gold or silver price patterns at all. Here are their respective charts…
For the day, gold was up 2.87%…silver was up 6.21%…platinum was up 1.90%…and palladium closed up 2.33%.
The dollar index closed at 82.95 late Thursday afternoon in New York…and once Friday morning Far East trading began, it chopped sideways just below the 83.00 mark until rolling over to its low of the day…82.77…just before 9:00 a.m. in New York. The rally that began at that point ended at 11:00 a.m. EDT right on the button. That was the index high of 83.32…and from there it drifted lower into the close, finishing the Friday session at 83.18…up 23 basis points on the day.
You should carefully note that gold and silver's big 30-minute rallies that began at the 10:00 a.m. EDT London gold fix, occurred right in the middle of the big dollar index rally.
The gold stocks opened in slightly negative territory, but only spent a couple of minutes there before blasting higher along with the post-London p.m. gold fix rally. And, like gold, the gold shares continued to climb at a much slower rate after the meat of the gold rally was in at 10:30 a.m. EDT. The HUI finished up 7.83%.
The silver stocks went ballistic…and there were only a small handful that weren't up double digits…and some of them were up big double digit amounts. Of course, since we're starting off at such a low base, we've still got weeks of double digits gains to go before we get remotely close to being back to the old highs. Nick Laird's Intraday Silver Sentiment Index closed up a chunky 7.86%.
(Click on image to enlarge)
Here's the long-term Silver 7 chart to show you how we've been doing lately…and it also puts yesterday's silver stock gains in some sort of perspective.
The CME's Daily Delivery Report for 'Day 2' of the July delivery month in silver showed that one gold and 500 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. In silver, the three largest short/issuers were Jefferies, Deutsche Bank and Merrill…with 229, 172 and 66 contracts respectively. Not surprisingly, JPMorgan Chase was the biggest long/stopper with 410 contracts in its proprietary trading account…and 41 in its client account. Yesterday's Issuers and Stoppers Report is linked here.
And…much to my surprise…there were no reported changes in either GLD or SLV again yesterday…and I'm sure Ted Butler will have something to say about that in his commentary later today.
The U.S. Mint had a sales report to end the month. They sold another 10,000 ounces of gold eagles…and 4,500 one-ounce 24K gold buffaloes…and zero silver eagles, which I found rather surprising. For the month of June, the mint sold 57,000 troy ounces of gold eagles…17,000 one-ounce 24K gold buffaloes…and 3,275,000 silver eagles. Based on these figures, the silver/gold sales ratio is a bit over 44 to 1.
Over at the Comex-approved depositories on Thursday, they reported receiving 301,005 troy ounces of silver…and shipped 251,797 troy ounces of the stuff out the door. The link to that activity is here.
In gold, these same depositories reported receiving only one kilobar [32.15 troy ounces]…and that was at Brink's, Inc. However, they reported shipping out 57,830 troy ounces. The link to that action is here.
It was stupid busy at the bullion store again yesterday. Everybody who had been procrastinating all week, showed up yesterday. I was a tired puppy by the time I crawled into my car to drive home.
The Commitment of Traders Report showed declines in the Commercial net short positions in both gold and silver. But, considering the pounding that the price of each metal took during the reporting week, the improvements weren't as great as might be expected.
Ted Butler and I are of the opinion that the law of diminishing returns that we have both spoken of previously, is now setting in…as it's taking more and more effort to produce declining results, as there are limits to how many long holders that are prepared to sell…and how many short positions the technical funds can be tricked into buying.
In silver, the Commercial net short position declined by another 9.3 million ounces…and is now down to an unbelievably low 20.5 million ounces. Reader E.W.F. put yesterday's report in some sort of historical perspective with these comments…”In silver, the Commercial net short position hasn't been this low since February 2, 1993…more than twenty years ago! The silver raptors hold the largest net long position in the history of the data…and the non-commercial net long position hasn't been this low since April 15, 2003…more than ten years ago.”
In gold, the Commercial net short position declined by 890,700 troy ounces…and is now down to 3.52 million ounces. This is what reader E.W.F. had to say about the gold numbers…”In gold, the Commercial net short position hasn't been this low since August 27, 2002. The gold raptors hold the largest net long position since February 20, 2001.”
As the Commercial traders decrease their short positions, or add to long positions, it's the technical funds in the Non-Commercial category that are going short against them. In silver, these same traders added 15.3 million ounces to their collective short positions…and in gold the Non-Commercial/technical fund types went short a further 954,000 ounces.
It's a good bet that up until 8:30 a.m. in Far East trading on their Friday, there were more records set in the COT Report since the Tuesday Comex close cut-off…but that was partially masked by the rally that occurred once the London p.m. gold fix was in.
But regardless of that, the COT Report yesterday was one for the ages…and unless JPMorgan et al have another surprise up their collective sleeves next week, we probably saw the bottom on Friday. Of course I said that seven days ago in this space as well…so you can take that last comment for what it's worth.
I have a lot of stories for you today…and I hope you can find the time over the weekend to read the ones that interest you.
We wanted a president who listens to all Americans. Now we have one. – Jay Leno talking about NSA surveillance
Today's pop 'blast from the past' hit the charts in 1963…and is courtesy of a one-hit wonder group called The Murmaids. I'd forgotten all about it until I came across it on youtube.com when I was looking for something else. If you remember this one, you're at least as old as I am. So turn up your speakers…and then click here.
Today's classical 'blast from the past' dates from 1878. It's Johannes Brahms' Violin Concerto in D major, Op. 77. In my opinion, it’s tied with Beethoven's violin concerto as the best violin concerto ever written.
The work was premiered in Leipzig on January 1, 1879 by Joseph Joachim, who insisted on opening the concert with the Beethoven Violin Concerto, written in the same key, and closing with the Brahms. Joachim's decision could be understandable, though Brahms complained that “it was a lot of D major—and not much else on the program.” Joachim was not presenting two established works, but one established one and a new, difficult one by a composer who had a reputation for being difficult himself. The two works also share some striking similarities. For instance, Brahms has the violin enter with the timpani after the orchestral introduction: this is a clear homage to Beethoven, whose violin concerto also makes unusual use of the timpani. Brahms himself conducted the premiere.
Here is the wonderfully gifted Dutch violinist Janine Jansen doing the honours with the Deutsche Kammerphilharmonie Bremen. Paavo Järvi conducts. The recording, both video and audio, are as good as they get…as is the orchestra. This is a desert island recording for sure. The work is in four parts…one, two, three and four.
Well, here we are sitting on the launch pad with the Commitment of Traders Report showing the lowest Commercial net short position in gold and silver for a generation. We did not arrive here by accident…and whatever happens going forward will be talked about as a seminal moment for generations to come as well.
I cannot believe that the world's financial and banking elite have gone to all this trouble…and made themselves as conspicuous as they have…without a major financial and monetary event planned as a follow-up.
It's only the timing…and the event that triggers it…that remains unknown. When that point arrives…and I doubt very much that it will happen by accident…all that JPMorgan et al have to do is absolutely nothing. As Ted Butler pointed out, it would be a perfect time for all the major long holders to take a vacation for a couple of weeks and let the markets clear.
But one thing is now a certainty…and that is that JPMorgan et al are now in complete control of the precious metal markets on the long side…at least in gold…and how high we go, and how fast we get there, is entirely up to them. And as the saying goes…he who has the gold, makes the rules.
As I and others have already stated, this event appears to be imminent.
So, we wait.
Before heading off to bed, here's Nick Laird's weekly “Total PMs Pool” chart updated with this week's data. The total ounces haven't changed a lot…except for gold…and all that gold that did depart the world's repositories and ETFs now resides in the strongest of hands.
(Click on image to enlarge)
That's it for the day…and the week…and what a week it was. I await the Sunday night open in New York with more than the usual amount of interest.
See you on Tuesday.
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