When will JPMorgan et al allow the precious metals to rally…and how far will they be allowed to run?

Gold trading in both price and volume was virtually dead yesterday.  The high, such as it was, came shortly after the London open…and the low, such as it was, came at 2:00 p.m. in electronic trading in New York.  All in all, there was about a twelve dollar price spread between the Wednesday high and low price ticks.

Gold closed at $1,606.70 spot…down $6.10 on the day.  Once roll-over were subtracted out of the gross volume, net volume was only around 88,000…which falls into the 'fumes and vapours' category.  Nothing to see here.

It was pretty much the same story in silver…and any differences were minor.  Silver's one attempt to break through the $29 spot price mark occurred just before, or at, the London silver fix.  From that high, the price dipped about twenty cents by 11:00 a.m. in New York before trading more or less sideways in the 5:15 p.m. electronic close.

Silver closed the Wednesday trading session at $28.82 spot…down 9 cents from Tuesday.  Gross volume was only 28,500 contracts.  Nothing to see here, either.

As for platinum and palladium yesterday, both gained back almost every dollar they 'lost' on Tuesday.  Beats me what's going on there.

The dollar index opened in the Far East at 83.04…and more or less traded sideways until 10:00 a.m. in London.  It was all downhill until shortly after the London p.m. gold fix…and the low price print at that point was 82.58.  From there the dollar rallied into the New York close…and finished the day at 82.87…down 17 basis points on the day.

Once again there was no correlation between the dollar index move and the goings-on in the precious metal markets.

The gold stocks opened in slightly negative territory and chopped around either side of unchanged in a very tight range all day.  The HUI finished the trading day just about where it started…down a tiny 0.10%.

The silver stocks finished mixed as well, but most of the ones that make up Nick Laird's Silver Sentiment Index didn't do particularly well…and it closed down 0.73%.

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The CME Daily Delivery Report was a yawner, as only 2 gold and 14 silver contracts were posted for delivery on Friday.

There were no reported changes in either GLD or SLV yesterday…and the U.S. Mint had nothing to say for itself, either.

Over at the Comex-approved depositories on Tuesday, they reported receiving 300,318 troy ounces of silver and shipped 881,541 troy ounces of the stuff out the door.  The link to that activity is here.

Since yesterday was the 20th of the month…and it fell on a week day…The Central Bank of the Russian Federation updated its Internet site with February's data.  That data showed that they purchased another 200,000 ounces of gold for their official reserves…and here is Nick Laird's most excellent chart showing the change. Officially reported Russian gold reserves are now 31.4 million troy ounces.

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Well, the Cyprus issue hasn't gone away…and if the situation wasn't so serious, one could almost relegate it to farce…as you just couldn't make this scenario up if you tried.  I think the situation was pretty much summed up in these three paragraphs below from a piece out of The Guardian on Tuesday evening GMT…

“There are really only two plausible scenarios: somebody – be it Europe or the IMF – gives Cyprus more money, in which case there is a chance that the crisis can be contained. Or Germany and the other hard-line eurozone countries can insist that the deal is non-negotiable. In which case, the banks in Cyprus will go bust, risking widespread turmoil.”

“Given the precarious eurozone economy and the enfeebled state of European banks, cutting Cyprus a better deal looks like the safer option. The package could be restructured so that only deposits in excess of €100,000 (£85,000) are taxed, the preferred option of Christine Lagarde at the IMF. Sparing those with savings of less than €100,000 from any pain would require the bigger depositors to pay a 15.5% tax to find the €5.8bn demanded of Cyprus. Alternatively, Europe could easily find the extra €5.8bn itself.”

“The problem is that both options will cause political problems. Putin will bridle at suggestions that Russian citizens – who make up a large proportion of the €100,000 depositors – should be singled out. And Merkel could expect an almighty domestic backlash if she backtracked from the tough stance she adopted at the weekend.”

“But the alternative is to let the banks in Cyprus go bust as soon as they are reopened after the extended bank holiday and hope that it really is a “special case”. That looks like an awfully big gamble.”

Yes, it's a monstrous gamble, dear reader…so place your bets.

I have slightly fewer stories for your reading 'pleasure' today…and I hope you can find the time to spend on the ones that most interest you.

That it is JPMorgan as the likely concentrated short candidate in all four [precious metals] is deeply troubling. Why is any U.S. bank so heavily involved on the short side of any metals market, to say nothing of why is our most systemically important bank probably the one big precious metals short? It’s hard not to reach the conclusion that JPMorgan has been anointed by some entity within the U.S. Government to tamp down any price rally in any precious metal market. This also explains why the CFTC has stood by in allowing the silver manipulation to spread to other markets, violating its most important mission of preventing manipulation. Instead, it appears the CFTC is sanctioning an ever-expanding price manipulation scheme. As such, they appear as crooked as JPMorgan.Silver analyst Ted Butler…20 March 2013

So…here we sit…waiting for the next shoe to drop.  How bad will the Cyprus resolution be when it's finally decided upon?  When will JPMorgan et al allow the precious metals to rally…and how far will they be allowed to run?  Questions with no answers…and as I said in yesterday's column…the situation remains “fluid”.

Tomorrow we get the all-important Commitment of Traders Report for positions held at the close of trading on Tuesday.  There may be a slight improvement in silver's Commercial net short position, as “da boyz” have been keeping silver under the $29 mark for about the last month.  Gold has rallied a bit over it's 20-day moving average, so I'd guess that JPMorgan et al were gong short, or selling long positions into this rally in order to cap it…especially on Sunday night on the Cyprus news.  That situation may also apply to silver, but it's not as visible on the chart.

Here are the 6-month charts for both metals, so you can see where the current situation stands as of the close of trading yesterday.

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Don't ever forget that these charts are courtesy of a paint job by JPMorgan et al…as there's nothing free-market about them.

Like Wednesday, Far East and early London trading were quiet in both price and volume…and the dollar index is flat…but jumped back above the 83.00 mark shortly after 9:00 a.m. GMT.  The calm before the storm perhaps?  Beats me…but we are certainly 'locked and loaded' for a big move to the upside from a Commitment of Traders standpoint…and it all depends on what JPMorgan is allowed to do.

See you here tomorrow.

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