One should never short a quiet market
It was a nothing day again on Wednesday—and the tiny rally that began in gold shortly before the Comex open, got squashed at precisely 8:30 a.m. in New York—and by around 11 a.m. the price was back below unchanged. Nothing happened after that, as gold traded sideways for the remainder of the day.
With gold trading in less than a ten dollar price range, the low and high ticks aren't worth looking up once again.
The gold price finished the day at $1,243.60 spot, down $1.30 from Tuesday's close. Volume, net of June and July, was very tiny—around 79,000 contracts.
It was ultra-quiet in silver trading as well—and the 8:15 to 8:30 a.m. EDT rally in that metal met the same fate as the tiny rally in gold—and once the high was in, the price did very little after that.
Silver traded within a 20 cent price range yesterday—and closed at $18.795 spot, down 1 whole penny from Tuesday's close. Net volume was 20,000 contracts.
Platinum traded flat until shortly after 1 p.m. Hong Kong time—and from that point got sold down to its low of the day just before 1 p.m. in Zurich. The subsequent rally ended at 2 p.m. in electronic trading in New York—and it traded flat from there, closing up 8 bucks.
It was much the same chart pattern in palladium, except it closed down a dollar.
The dollar index opened flat—and traded flat before a 20 basis point down/up move that began at the London open—and ended 10 hours later shortly after 1 p.m. in New York. After that, the index didn't do much—and closed at 80.66, which was up 4 basis points from Tuesday's close.
The gold stocks chopped around aimlessly within a two point range of unchanged on Wednesday—and the HUI closed down a tiny 0.15%.
Exactly the same can be said about the silver equities, as Nick Laird's Intraday Silver Sentiment Index finished the basically unchanged, down a tiny 0.01%.
The CME Daily Delivery Report was a quiet affair yesterday, as only 35 gold and 1 silver contract were posted for delivery within the Comex-approved depositories on Friday. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in GLD yesterday—and as of 9:57 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
There was a tiny sales report from the U.S. Mint. They sold 50,000 silver eagles—and that was it.
After two days of running down the batteries on their forklifts, there wasn't much in/out activity in either gold or silver on Tuesday over at the Comex-approved depositories. There were no changes at all in gold—and in silver, nothing was reported received—and 97,156 troy ounces were shipped out.
Here's a chart that Nick Laird passed around yesterday evening. It shows the total derivatives position in both gold and the white metals versus their entire derivatives position. It sure doesn't take much money to control precious metal prices—or the price of anything else they decide is worth their effort.
I have a lot of stories for you again today—and some of them are definitely worth your time, but the final edit is always up to you.
In a nutshell, the 150 million oz (30,000 contracts) of newly created open contracts between the technical funds and the raptors is what caused silver prices to fall $3 since the end of February. As much as I pinpoint JPMorgan as being the prime silver manipulator, since the bank’s net short position in COMEX silver has hardly changed over this time, I can’t accuse JPM as being the active catalyst in the recent silver price drop. However, I will be very quick to accuse the bank, along with the 7 other large COMEX silver shorts, should that short position increase on any silver rally.
It is rare when it is so clear that two specific trader categories accounted for, effectively, all the net positioning in any one market like exists in COMEX silver over the past three months; but the data are undeniable. What is also undeniable is that the technical funds’ new short selling of 150 million oz is what caused the price to drop $3; as there is no other plausible explanation. The only question is what motivated the technical funds to sell such a quantity of silver futures contracts? The answer is also clear – progressively lower prices. – Silver analyst Ted Butler: 04 May 2014
Except for the tiny spikes in both gold and silver at, or just before the New York open yesterday, there's nothing to report regarding yesterday's price action, as volume was anemic. I've already said what I wanted to say at the top of this column.
Here are the 6-month charts for both gold and silver once again, so you can put yesterday's price action in some perspective against the overall.
Going into the London open this morning, gold and silver volumes were as low as I can ever remember seeing—even lower than yesterday. Gold volume was around 11,000 contracts—and silver's volume was 2,900 contracts. It is deathly quiet out there—and there isn't a high-frequency trader in sight. The gold price is about unchanged, but the other three precious metals are all down from their respective closes in New York yesterday afternoon—and what passes as the world's reserve currency at the moment, is down a handful of basis points.
A long time ago I read somewhere on the Internet that one should never short a quiet market—and I consider that to be excellent advice when it comes to the precious metals at the moment.
But Ted did mention in his mid-week commentary to his paying subscribers yesterday that “My only concern in gold is that if the technical fund short position in gold [is] to mimic the record increase witnessed in silver, then there may be more technical fund selling to go in gold.“
That may be true, dear reader, but I bought some silver yesterday anyway, as we're close enough to a bottom in this metal to suit me.
Tomorrow we the jobs numbers, along with a shiny new Commitment of Traders Report—and embedded in [and extracted from] that report is the June Bank Participation information, so I'll have lots to talk about in my Saturday missive.
And as I send this off into cyberspace at 5:10 a.m. EDT, I note that all four precious metals are now down on that day, with silver under the most selling pressure. Volumes have picked up substantially in gold, but is still very much on the lighter side—and silver's volume is very quiet, so whatever price action is occurring, its happening on very little volume. The dollar index is down ten basis points.
I have no idea what will happen with prices today. I would suspect that there will be some activity around the release of the job numbers at 8:30 a.m. EDT on Friday, but that event is still 24 hours away.
I'm off to bed—and I'll see you here tomorrow.
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The first photo is of a magpie on the wing that I took a couple of weeks ago. It's almost a surreal picture, because it's being lit by the sun from above and behind at the same time. No Photoshop here, as it's straight out of the camera, although I did bump up the saturation a hair.