I still get the impression that there are forces beneath the surface that spell big changes ahead.

The gold price traded in a tight range throughout the Friday trading session everywhere on Planet Earth.  It appeared that every time gold tried to break above the $1,740 spot price mark, it got sold off…with the sell off at that London p.m. fix being the most obvious.

The high tick of the day at the afternoon gold fix was $1,740.50 spot.  From there, gold got sold off…and closed for a small loss…down $1.10 on the day at $1,738.80 spot.  Net volume wasn’t overly heavy at 117,000 contracts.

Silver traded sideways up until 10:00 a.m. in London…and then got sold down to its low of the day [around 32.05 spot] shortly after 1:00 p.m. GMT…about fifteen minutes before the Comex open.

The subsequent rally got hit hard the moment that the London p.m. gold fix was in at 3:00 p.m. GMT…10:00 a.m. in New York…and then traded sideways into the 5:15 p.m. Eastern time electronic close.  The high tick at the fix was $32.89 spot.

Silver finished the Friday session at $32.63 spot…up 32 cents on the day.  Net volume was pretty decent at 37,500 contracts…as I’m sure that JPMorgan et al were going short against all comers in that 2-hour early morning rally in New York, because it didn’t look like a short-covering rally to me.

The dollar index opened at 80.81…and then traded lower…with the low tick [about 80.63] coming around 1:30 p.m. Hong Kong time.  From there it rallied until precisely 8:00 a.m. in New York, before trading mostly sideways for the remainder of the day.  The index closed just above the 81.00 mark at 81.05…up 24 basis points on the day.

The dollar index and the gold price were in sync right up until 8:00 a.m. in New York…and then broke down entirely.

Despite the fact that gold’s high tick came at 10:00 a.m. Eastern time, there was absolutely no sign of it in the share price action…as they were under selling pressure right from the 9:30 a.m. open of the equity markets in New York.  The HUI finished virtually on its low of the day…down 1.60%.

Even though the silver price closed well into positive territory again, it didn’t help the shares too much…and Nick Laird’s Silver Sentiment Index closed down 1.09%.

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The CME’s Daily Delivery Report showed that 4 gold and 8 silver contracts were posted for delivery on Tuesday.

Over at GLD, an authorized participant withdrew 29,068 troy ounces of gold.  But SLV went in the other direction.  For the second day in a row, an authorized participant added a big chunk of silver.  This time it was 1,452,249 troy ounces.  On Wednesday it was 1,549,091 troy ounces of silver that was added, so a hair over 3 million ounces was added in those two day alone…and since last Friday [Nov. 2]…SLV has taken in almost 4.3 million ounces in total.  I’m sure Ted Butler will have something to say about this in his weekend commentary to his paying subscribers later today.

Well, the good folks over at shortsqueeze.com finally updated their website with the latest short positions for SLV and GLD…but it was in the wee hours of this morning that it finally happened.  The short position in SLV declined by 9.24 percent…from 14,621,500 shares/ounces, down to 13,270,700 shares/ounces held short.  That’s still a lot of silver that’s owed to SLV…but don’t forget that 4.3 million ounces have been deposited in SLV since the beginning of the month, so this new short position number is probably wildly out of date by now.

The GLD ETF went in the other direction, as the short position increased by 10.22 percent…from 16.99 million shares, to 18.73 million shares…or 1.87 million ounces in total.  That’s 58.16 tonnes of gold that should be on deposit at GLD, but isn’t.

It was another big sales day at the U.S. Mint.  They reported selling 6,000 ounces of gold eagles…2,000 one-ounce 24K gold buffaloes…and 350,000 silver eagles.  Month-to-date the mint has sold 37,500 ounces of gold eagles…5,000 one-ounce 24K gold buffaloes…and 1,548,000 silver eagles.  Based on these sales, the silver/gold sales ratio is a bit over 36 to 1.  And as I keep saying…I do hope you’re getting your share, dear reader.

The Comex-approved depositories showed that 935,196 troy ounces of silver were received by them on Thursday…and 554,126 troy ounces were shipped the door on the same day.  Of the amount received, JPMorgan Chase took in 785,407 troy ounces, bringing their depository total up to 25,030,654 troy ounces.  The link to that activity is here.

Well, the Commitment of Traders Report showed improvements in the Commercial net short positions in both gold and silver…but certainly not as much as Ted Butler and I were expecting.

In silver, the Commercial net short position declined by 4,054 contracts, or about 20.3 million ounces.  The Commercial net short position in silver is now down to 248.4 million ounces.

The ‘Big 4’ traders are short 240.3 million ounces…virtually the entire amount of the Commercial net short position of 248.4 million ounces….and are also short a hair north of 45% of the entire Comex futures market in silver on a net basis.  The positions of the other 37 Commercial traders [the raptors] on the short side of the Comex silver market, are immaterial.

Ted figures that JPMorgan Chase is still short a bit over 155 million ounces of silver on it’s own…and didn’t improve their position much during the reporting week, despite the big sell off on Friday, November 2nd.  Ted said that the raptors…some of the other 37 small traders [other than the ‘Big 4’] in the Commercial category…bought between 3,000-3,500 long contracts on that sell off.

In gold, the Commercial net short position improved by 15,022 contracts, or 1.50 million ounces.  The Commercial net short position is now down to 20.77 million ounces of gold.

The ‘Big 4’ short holders are short 13.10 million ounces of gold…and 31.9% of the Comex futures market in gold on a net basis.  The ‘5 through 8’ traders are short an additional 5.41 million ounces of gold.  So the ‘Big 8’ are short 18.51 million ounces of gold, or 45.0% of the entire Comex futures market in gold on a net basis…the same as silver.  The short positions of the other 39 other traders in the Commercial short category are immaterial.

As you can see, the tail is wagging the dog in both silver and gold.

Here are the ‘Big 4’ and ‘Big 8’ short positions show in “Days of World Production to Cover Short Positions“…Nick Laird’s most excellent graph that lays bare the price management scheme in all four precious metals for the world to see.  The silver short position is particularly egregious…as it always has been.

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The Bank Participation Report for November also showed improvements in the short positions of both the U.S. and non-U.S. banks from the prior month.

In silver, 4 U.S. banks are net short 35,252 Comex silver contracts.  Ted figures that JPMorgan holds a bit over 31,000 contracts of that amount all by itself…and I’m guessing that virtually all of the rest are unequally divided up between HSBC USA, Citigroup…and one other U.S. bank…in that order.

The 15 non-U.S. banks are net short 14,286 Comex silver contracts…and I’d bet that between 70 and 80 percent of that amount is held by Scotia Mocatta…with the balance split up between the other 14 non-U.S. bank…whose individual positions would be immaterial.

From the October report to the November report in silver, the 4 U.S. banks reduced their net short positions by only 2,532 Comex contracts.  The 15 non-U.S. banks reduced their collective net short positions by 2,826 Comex contracts.

In gold, 5 U.S. banks are net short 98,101 Comex gold contracts, or 9.81 million ounces…a decline from 10.62 million ounces held short in October.

The 21 non-U.S. banks are net short 59,436 Comex gold contracts, or 5.94 million ounces…a decline from  7.86 million ounces held short in October.

As I mentioned in the Commitment of Traders report [from which the data for November’s Bank Participation Report is extracted]…the big 4 in silver…and big 8 in gold…are short 45% of each of their respective markets on a net basis.

On a gross basis [before all market-neutral spread trades are subtracted] the Bank Participation Report shows that…15 banks are short 23.6% of the entire Comex palladium market…17 banks are net short 35.7% of the Comex platinum market…19 banks are net short 39.5% of the Comex silver market…and 24 banks are net short 38.4% of the entire Comex gold market.

Once the spread trades from each market are subtracted from the total open interest…then the short positions, on a percentage basis, shoot sky high…another 5.5 percentage points in silver…and 6.6 percentage points in gold.  I’m sure platinum and palladium would be similar.

This is precisely what Nick Laird’s graph above shows in all four precious metals…except its shown in days of world production to cover those short positions…but the ratios remain the same no matter in what unit of measure the graph is computed.

I thank reader ‘David in California’ for providing this Reuters chart that requires no further explanation on my part.

(Click on image to enlarge)

This next chart is courtesy of reader Anthony D. Cattani…and it doesn’t require any further embellishment from me, either.

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Since this is my Saturday column, here are all the stories that were still sitting in my in-box up until midnight last night.  I hope you can find the time to read the ones that interest you.

Liberals seem to assume that if you don’t believe in their particular political solutions, then you don’t really care about the people that they claim to want to help. – Thomas Sowell

I have a couple of musical selections for you today…one a pop classic from the early 1970s…and the other one was a ‘classic’ from Billboard’s Top 10 in 1834.

The tune from 1972 that was a big hit…and the only hit for British singer Daniel Boone…a.k.a. Peter Charles Green…and I remember playing it on radio station CHAR when I was in Alert, North West Territories.  If you can remember the words, feel free to sing along, because I’m sure you’ll remember the tune…and the link is here.

Niccolò Paganini (1782–1840) encouraged Hector Berlioz (1803–1869) to write Harold en Italie. The two first met after a concert of Berlioz’s works conducted by Narcisse Girard on 22 December 1833, three years after the premiere of Berlioz’s Symphonie fantastique. Paganini had acquired a superb viola, a Stradivarius — “But I have no suitable music. Would you like to write a solo for viola? You are the only one I can trust for this task.”

Berlioz began “by writing a solo for viola, but one which involved the orchestra in such a way as not to reduce the effectiveness of the orchestral contribution.” When Paganini saw the sketch of the allegro movement, with all the rests in the viola part, he told Berlioz it would not do, and that he expected to be playing continuously. They then parted, with Paganini disappointed.

Harold in Italy was premiered on 23 November 1834 with the Orchestre de la Société des Concerts du Conservatoire, Chrétien Urhan playing the viola part, Narcisse Girard conducting.

Paganini did not hear the work he had commissioned until 16 December 1838; then he was so overwhelmed by it that, following the performance, he dragged Berlioz onto the stage and there knelt and kissed his hand before a wildly cheering audience and applauding musicians. A few days later he sent Berlioz a letter of congratulations, enclosing a bank draft for 20,000 francs.

The viola is a strange instrument…and some string players, notably violinists, look on it with thinly disguised contempt.  One first violinist with the Edmonton Symphony Orchestra told me the most famous of viola jokes…and it goes something like this… Q: What’s the difference between a viola and an onion? A: Nobody cries when you chop up a viola… wink

But, having said that, this 4-moment symphony is a jewel…and it took me many listenings before I began to appreciate the work for what it is…and it would be certainly included in any ‘desert island’ collection I was putting together.

This video recording is from 1976…and features the Orchestre National de France.  Donald McInnes is the soloist…and Leonard Bernstein conducts.  It’s posted over at the youtube.com Internet site…and the link is here.

I wouldn’t read too much into yesterday’s price action, although it was obvious that JPMorgan Chase et al were standing by at the London p.m. gold fix to make sure that none of the four precious metals got out of hand to the upside once the ‘fix’ was in.

Although I’m happy that we’re enjoying a bit of a rally since the big smack-down on November 2nd…I’m still not prepared to break out the party favours just yet.  The Commercial net short positions in both silver and gold in the Commitment of Traders Report, although better, are nowhere near a wildly bullish buy point…so I’m still on the look out for “in your ear”.

But, having said all that, I still get the impression that there are forces beneath the surface that spell big changes ahead.  It’s just the timeline that I’m not certain about.  One thing that I would be happy to bet some money on is that by May 1, 2013 the price of both silver and gold will be substantially higher than they are at the moment…as JPMorgan Chase et al can’t keep this up forever.  How fast we get there and how high we go, will very much depend on whether the bullion banks are still in control of the price as these expected rallies get underway.

Will they be short covering rallies…or will the powers-that-be just stand aside for a little while and let the prices rise in sort a controlled retreat fashion…which is the process they’ve been using since 1999.  I don’t know the answer to that…and only time will tell.

But I’m still ‘all in’.

See you on Tuesday.

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