If the position limits do get through unscathed, will they actually be enforced?
It was an active day in early morning trading in London on Wednesday, even if there wasn't a lot of volume associated with it. The two price spikes, one at 8:30 a.m. GMT and the other at 10 a.m. GMT, are the two most noticeable features on the Kitco chart below. After those two rallies were capped, the gold price chopped sideways in a very tight five dollar range for the remainder of the Wednesday trading session.
The CME reported the December low and high ticks at $1,308.90 and $1,322.00. The scale of the chart makes the price moves look more impressive than they actually were.
Gold close in New York yesterday afternoon at $1,317.60 spot, up $5.70 from Tuesday. Volume, net of roll-overs, was 78,000 contracts, which was the same as the volume on Tuesday, very light.
Of course the price “action” in silver really looks impressive on the chart below, and it should be obvious to all except the willfully blind that the silver price would have closed materially higher if a seller of last resort hadn't shown up at 9 and 11 a.m. GMT in London trading yesterday morning. But by the time they were through, the silver price was safely back below the $22 spot price mark once again.
According to the CME, silver's low and high for December were $21.62 and $22.075.
Silver finished the Wednesday trading session at $21.805 spot, up 9.5 cents from Tuesday. It could just have easily closed up nine and half bucks if it hadn't been for the obvious presence of not-for-profit sellers.
Platinum and palladium had decent up days, as platinum finished up a percent, and palladium was up 2%. Here are the charts.
The dollar index closed late Tuesday afternoon in New York at 80.68, and when it opened in Far East trading on their Wednesday morning, it traded sideways until 10 a.m. Hong Kong time. By half past lunchtime over there, the index had fallen down to 80.50. The smallish counter-rally didn't get far, and the index continued to chop lower from there. The low tick [80.395] came shortly after 10 a.m. in New York, and from that point the index crawled higher into the close. The dollar index ended the Wednesday session at 80.50, which was down 18 basis points on the day.
The stocks gapped up about a percent and a half at the open, and then traded sideways into the close. The HUI finished up 1.33%.
It was pretty much the same story in silver, as Nick Laird's Intraday Silver Sentiment Index closed up 1.18%.
The CME's Daily Delivery Report on Wednesday, like every other report so far in the November delivery month, has been a yawner. It showed that zero gold and 12 silver contracts were posted for delivery within the Comex-approved depositories on Friday. The link to that activity is here.
There were no reported changes in GLD, and as of 8:59 p.m. EST, there were no reported changes in SLV, either.
The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs as of the end of trading last Friday, November 1. There were declines in both ETFs during the reporting week. Their gold ETF shed 69,792 troy ounces, and their SLV declined by 180,269 troy ounces.
The U.S. Mint had no sales report yesterday.
For a change there was some activity in gold over at the Comex-approved depositories on Tuesday. They reported receiving 96 ounces of the stuff, and shipped 17,891 troy ounces out the door. The link to that activity is here.
But it was another off-the-charts day for silver in these same depositories on Tuesday, as 618,553 troy ounces were reported received, and a very chunky 1,001,095 troy ounces were shipped out the door. Virtually all of the activity was at Scotia Mocatta or Brink's, Inc. The link to that action is here.
The last of the government shut-down delayed Commitment of Traders Report [for positions held at the close of trading on Tuesday, October 29] was issued at 3:30 p.m. EST yesterday and, as expected, it showed an increase in the Commercial net short positions in both silver and gold.
In silver, the Commercial net short position increased by 1,251 contracts, which translates into 6.26 million ounces. Ted Butler said that almost all of the increase was caused by the small Commercial traders other than the 'Big 8' selling long positions. JPMorgan bought a few hundred long contracts, so Ted figures their short position is something less than 18,000 contracts; maybe 17,500. The Commercial net short position in silver now stands at 130.7 million ounce, so JPM is short about 87.5 million ounces of that amount.
The Commercial short position in gold blew out by a surprisingly large 24,639 contracts, or 2.46 million ounces, as the technical funds/managed money went long and/or covered short positions. Of course the Commercial traders did the opposite. Ted said that most of the changes occurred amongst the Commercial traders themselves, and that JPMorgan's long-side corner barely changed at all during that reporting week. The Commercial net short position in gold up until the October 29 cut-off now sits at 10.68 million ounces.
Tomorrow we get the COT Report for position held at the close of trading on Tuesday, November 5, and it should show a big improvement in the Commercial net short positions in both metals, as the numbers associated with the engineered price declines that began last Wednesday after the FOMC meeting will be all present and accounted for at that time.
I have about twenty stories for you today, and I hope you have time to read the ones that interest you.
The approved position limit proposal has an exemption for bona fide hedging positions. Speculative position limits are designed to limit speculators, not legitimate hedgers who have always been able to exceed position limits if they can demonstrate they are hedging not speculating. So JPMorgan (or any large trader) can get an exemption if legitimately hedging.
But how the heck can JPM claim to be legitimately hedging silver and adding to short positions with the price at or below the cost of production for so many miners? The bank can’t do that legitimately, in my opinion, but I’m not the one JPMorgan is going to be appealing to; it will be the CFTC who will decide. Even more fanciful would be the claim by JPMorgan that it is hedging with its long market corner in Comex gold, since a year ago it held a short market corner in Comex gold of about the same level. It’s going to take some powerful ‘splaining to justify a hedge exemption in gold. – Silver analyst Ted Butler: 06 November 2013
Despite the bit of excitement in early Wednesday trading in London, it was another slow day from a volume perspective, as it has been all week. Nothing is happening in the precious metal markets at the moment, but put more correctly, nothing is being allowed to happen.
London has been open about 10 minutes as I write this paragraph, and volumes are microscopic in both gold and silver; a hair over 3,000 contracts in silver, and 12,500 contracts net of roll-overs in gold. Prices are doing nothing, and the dollar index is chopping sideways.
I note that Coeur d'Alene [CDE] lost $69 million in the first nine months of this year. Their top management is more than aware of the JPMorgan price management scheme in the precious metals, but won't do a thing about it, either to save their company or benefit their shareholders. It's a scenario that you couldn't dream up if you tried.
This apathy is rampant throughout the entire precious metal mining industry. They richly deserve their fate, but dragging their shareholders [the real owners of these companies] into the dirt with them isn't part of management's fiduciary responsibilities, but they seem to have come to the conclusion that it is.
I have no idea what JPMorgan have in store for us in the days and weeks ahead. All we can do is take this one day at at a time and see what develops. I'm encouraged by these new position limits that the CFTC has passed, but it remains to be see if, a] it gets past the objections of some of the U.S. banks involved in this price management scheme, and b] if the position limits do get through unscathed, will they actually be enforced? That's a reasonable question to ask, because the current position limits that the CFTC has in place in the gold and silver futures market have never been enforced, either.
And as I hit the send button on today's efforts at 5:10 a.m. EST, I note that both gold and silver prices still aren't doing much, and volumes remain very light. The dollar index isn't doing anything, either.
Before heading off to bed, I'd like to point out that Casey Research will be closing membership for new subscribers to its Casey Energy Report on a temporary basis starting at 11:59 a.m. EDT today. It will be closed until after the “Next Bakken” drill results are reported to current subscribers, and the stock price stabilizes. After that 11:59 a.m. time, you will be directed to the Casey Energy Report product page, which will have a wait list activated. Membership has its privileges, and if you've been sitting on the fence on this, and want to get involved before the “lock down” takes effect this morning, then you can find out all you need to know about getting in under the wire by clicking here. [As always, Casey Research's risk-free 3-month trial with money-back guarantee applies.]
See you on Friday, or Saturday if you live west of the International Date Line.
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