It’s my opinion that “da boyz” are heading for the exits…and this is their swan song.
As I mentioned in my closing comments in yesterday's column, the high-frequency traders showed up around 9:00 a.m. Hong Kong time on their Wednesday morning…and dropped the price a bit over ten bucks in short order. From there, the gold price more or less traded flat until the London open.
The smallish rally in London lasted until shortly after the p.m. gold fix, before the high-frequency traders showed up once again. By 1:15 p.m. Eastern time…fifteen minutes before the Comex close…they had engineered enough tech fund selling to drop the gold price to its low tick of the day, which Kitco recorded at $1,549.10 spot.
The subsequent rally died around 4:00 p.m. in electronic trading…and the price traded flat into the close.
Gold finished the Wednesday session at $1,557.90 spot…down another $18.30 from Tuesday. Net volume was immense…around 222,000 contracts.
It was slightly different in silver, as the price quietly began to slide almost right from the Far East open, with an interim low coming moments before the London open. After that, the chart looked almost identical to the gold chart…with the absolute low tick in silver [$26.64 spot] coming at 1:10 p.m…five minutes before gold hit its low.
Silver closed at $26.98 spot…down 28 cents from Tuesday's close. Net volume was pretty heavy…around 52,500 contracts, give or take.
For whatever reason, the lows on Wednesday in both gold and silver came at precisely the same moments as they did on Tuesday, which is not possible in a free market. These phenomena are even more obvious on the New York Spot [Bid] charts for both metals.
Up until about lunchtime in New York yesterday, neither platinum nor palladium were doing much price wise…and both were down a few dollar and that was about it. Then a not-for-profit seller/high-frequency trader showed up and hauled them down by brute force. The charts tell all.
When all was said and done on Wednesday, gold closed down 1.16%…silver was down 1.03%…and platinum and palladium were down 2.42% and 1.83% respectively.
The dollar index opened at 82.88 in Far East trading yesterday…and it's high tick of the day [83.06] came a exactly 1:30 p.m. Hong Kong time. From there it chopped lower, with its nadir [82.65] coming shortly after 10:00 a.m. Eastern time…corresponding almost exactly with the London p.m. gold fix. From there it rallied a handful of basis points into the close, finishing the Wednesday trading session at 82.75…down 13 basis points from where it started the day.
With the gold price trading back at virtually unchanged by the time the equity markets opened in New York, the gold stocks tried hard to rally. But once it became apparent the rally had ended, the stocks continued to sell off. The low came around 2:15 p.m…and the HUI closed just off its low, turning in another horrific performance…down 4.57%.
The HUI is down 10 percent in just three trading days. I would guess that the mutual funds were getting hit hard with redemptions…and they were being forced to unload shares into an already illiquid market. One has to wonder who the buyers were.
Once again the silver shares got crushed…and Nick Laird's Intraday Silver Sentiment Index closed down another chunky amount. This time it was 4.44%.
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The CME's Daily Delivery Report showed that 1,455 gold and 11 silver contracts were posted for delivery within the Comex-approved depositories on Friday. Deutsche Bank…and JPMorgan Chase out of its client account…were the two big short/issuers yesterday with 992 and 460 contracts respectively. The three largest long/stoppers were HSBC USA with 745 contracts…Barclays with 474…and Canada's Bank of Nova Scotia with 210 contracts. In short, it was “all the usual suspects”…five of the 'Big 8' all in one report. The link to yesterday's Issuers and Stoppers Report is here.
There was another reported decline in GLD yesterday, as an authorized participant withdrew 87,064 troy ounces. SLV showed a withdrawal of 826,225 troy ounces, which wasn't reported on their website until about midnight last night Eastern time. I didn't discover this fact until long after I'd filed my column this a.m…and because of that, I had to change the paragraph below.
In the last seven or eight business days, silver has been smacked for about three bucks…and during that period, SLV has only declined by 300,000 ounces or so. I'd love to be a fly on the wall over there just to get a quick peek at what is going on internally in that ETF. I'm sure that what I'd see would be amazing…as what is happening there is as far from normal as you can possibly get.
There was another sales report from the U.S. Mint yesterday. They sold 8,500 ounces of gold eagles…and 1,500 one-ounce 24K gold buffaloes.
Over at the Comex-approved depositories on Tuesday, the didn't receive any silver at all…but they did ship 238,735 troy ounces of the stuff out the door. The link to that activity is here.
Here's a chart of JPMorgan Chase's Comex silver inventories. They started at zero in late April 2011…less than a week before the drive-by shooting in silver on May 1st…and look where they were as of April 1st this year. You have to wonder who the real owners of all this silver might be. Is it the company itself…or its clients?
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And here's a chart of total Comex silver stocks going back a bit over ten years. A goodly portion of the rise in warehouse stocks since late April of 2011…more than 50 percent, actually…can be attributed to the silver pouring into the newly established JPMorgan depository that opened up at that time.
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Here are a couple more photos that readers were kind enough to share with us…
I have the usual number of stories for a week day…and I hope you have enough time to read the ones that interest you the most.
If you need a “yardstick” of present Gold “prices” as they appear on the markets for paper claims to Gold, consider this. In January 1980, Gold reached a “price” of $US 850. Today, Gold is “priced” at less than twice that level at $US 1595. Yet over the intervening thirty-three and a bit years, the debt of the US Treasury has risen by a factor of more than 17. That huge increase in money creation is faithfully reflected on the markets for paper assets. The Dow, for example reflects it almost exactly. The paper Gold price does not even approach it.
Nor do we know if the Gold “price” ever will approach an accurate reflection of the degree of monetary debauchery which has gone on since 1980. But we do know that it is impossible to inflate Gold into oblivion. Gold is financial insurance and with each passing day, the need for that insurance becomes more acute. – Bill Buckler…Gold This Week…30 March 2013
It was another blood bath yesterday…a belated “Happy Easter” from “da boyz”. Are we done yet? Again the answer is…I don't know. But as Ted Butler said on the phone yesterday, this is a clean-out of historic proportions. Friday's Commitment of Traders Report will tell us a lot…and it's most unfortunate that yesterday's price/volume numbers won't be in it.
Here's a paragraph that I 'borrowed' from silver analyst Ted Butler's mid-week commentary yesterday…
“If there is a unique aspect to the current takedown, it is the emergence of new technical fund short selling, not only in gold and silver, but in COMEX copper as well. I don’t know why the technical funds (in the managed money category of the disaggregated COT report) have chosen this time to establish record gross short positions in these markets, but that is secondary to the fact that they hold such positions in COMEX silver and copper…and after this week’s COT, may hold new record gross short positions in all three markets. Remember, the scam is that the commercials aren’t selling; they are duping the technical funds into selling…and selling short.”
I took a quick peek at the preliminary open interest numbers from yesterday, which were posted on the CME's website in the wee hours of this morning…and it's impossible to read anything into them. I doubt very much whether the final numbers that are posted later this morning will tell us much, either.
Further up in this column I was talking about the dichotomy that existed between the inventory levels of GLD and SLV since the beginning of the year. I asked Nick if he had any relevant charts…and these are the two he provided…both of which are self-explanatory. The differences in inventory levels of these two ETFs is beyond amazing, considering the severity of the engineered price decline in both metals over the last many month. It's for that reason that I would love to be a fly on the wall over at SLV HQ…as whatever is going on under the hood is something that I think would amaze us all if we knew.
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I sure hope that the precious metal miners will finally wake up and do something, instead of watching their/our companies get ground into the dirt by JPMorgan et al. However, I'm not holding my breath. And we certainly won't get any help from either the World Gold Council or The Silver Institute, as you have to be thoroughly corrupted by the dark side of The Force before you ever get nominated to chair those organizations. That includes their current executives…and all prior executives. You couldn't make this stuff up.
In Far East trading on their Thursday, I note that the high-frequency traders showed up once again in these thinly-traded markets…and took all four precious metals to new lows for this move down. Although they all recovered somewhat, the procedure was repeated shortly after London began to trade. Once again both gold and silver were taken to new lows for this move down. And as I hit the 'send' button at 5:20 a.m. Eastern time, gold is down about ten bucks…and silver is down less than a dime. Volumes are already over the moon…with gold volume north of 62,000 contracts…and silver's net volume above 10,000 contracts. Shortly after 12:00 o'clock noon in Hong Kong, the dollar index took off…and is currently up 56 basis points…but that currency move is nowhere to be seen in the precious metals, as they are dancing to a tune played by JPMorgan et al.
What lies ahead for the rest of the Thursday trading day is unknown…but Ted's comments about the Comex paper clean out being of “historic” proportions are worth keeping in mind when New York opens for business at 8:20 a.m. Eastern Daylight Time, as the pain may not be over yet.
However, I can't shake the feeling that we're heading for some sort of dénouement in the precious metal markets in the very near future, as it's my opinion that “da boyz” are heading for the exits…and this is their swan song. We'll find out soon enough if that's the case or not.
See you on Friday…or on Saturday if you live just west of the International Date Line.
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