Published on January 29 2013

Jeff Thomas: The Disappearing Gold

This price management situation will come to a head…and it’s the dénouement that I await with great interest.

Monday was another day of “slicing the salami” to the downside…as Ted Butler so often says when JPMorgan et al are in the process of one of their countless engineered price declines.

The gold price traded flat until mid-afternoon in the Hong Kong trading day…and then headed lower going into the London open shortly after that.  The London low came minutes after 11:00 a.m. GMT…and the absolute low [$1,651.00 spot] came at 8:45 a.m. in New York.

There was a slight spike to the upside once the London p.m. gold fix was in…but by lunchtime in New York, the price got sold off about five bucks from that high tick…and from there gold traded sideways into the 5:15 p.m. close of electronic trading.

All in all, it was a nothing sort of day…as gold traded within a ten dollar price range…but most importantly, set a new low for this move down.

Gold closed at $1,654.50 spot…down $4.80 on the day.  Gross volume was monstrous…a bit over 293,000 contracts…but with the February roll-overs netted out, the volume shrank to a very tiny 72,000 contracts.

Of course it’s always silver that “da boyz” are after…and yesterday was no exception.  Like gold, silver traded sideways up until around 3:00 p.m. in Hong Kong before getting sold down to its low of the day shortly after 11:00 a.m. local time in London.

The subsequent rally got smacked at the 8:20 a.m. Comex open as it broke through $31 to the upside.  From that point it traded around that price until shortly before lunch in New York…and then got taken down to its New York low towards the end of their lunch hour.  The tiny rally after that got snuffed out as the silver price once again approached the $31 spot mark.

The low in London was in the $30.70 spot range…and the New York low printed $30.66 spot…at least according to Kitco…but it sure didn’t look like it got that low to me.

Silver closed at $30.84 spot…down 34 cents from Friday.  Volume was decent…around 39,000 contracts.

[Here’s the New York Silver Spot [Bid] price so you can see the New York action in more detail.  Silver’s N.Y. low of $30.66 spot must have been very brief, as there’s nothing to indicate that it got anywhere near that price on this chart.

The dollar index opened at 79.74 in New York on Sunday evening…and by 8:30 a.m. in New York the following morning, it had reached its ‘high’ of 79.91…and then fell back to unchanged half an hour later.  From there it just chopped around in a tiny range, closing at 79.77…basically unchanged from Friday’s close.

In case you hadn’t noticed…the dollar index has done precisely nothing of consequence during this engineered price decline in both gold and silver that began last Wednesday at the Comex open.  This has all been a paper affair in the Comex futures market as per usual.  Nothing has changed in the real world.  Here’s the 5-day dollar chart that includes all four days of that event.

The gold stocks broke into positive territory almost the moment that trading began in New York yesterday.  But it’s obvious from the trading pattern during the first hour that there was a seller of some consequence lurking about, as every time the shares attempted to rally, there was someone in there to sell them off.

But it could have been a mutual fund or hedge fund unloading a position just as easily as it could have been a not-for-profit seller.

Whatever it was, these shenanigans ended shortly before 11:30 a.m. in New York…and from there the stocks traded basically flat for the rest of the day.  The HUI closed down another 0.90 percent.

Of course the silver stocks got hit hard once again…but there were a couple of green arrows amongst the silver stocks that I track on a daily basis.  Nick Laird’s Intraday Silver Sentiment Index closed down 1.67%.

(Click on image to enlarge)

With the January delivery month winding down, the CME Daily Delivery Report showed that only 89 gold contracts were posted for delivery on Wednesday from within the Comex-approved depositories…and I’d be prepared to bet that we’ve see the end of the deliveries for this month.  Here’s the link to the activity…and with the exception of 1 contract issued by JPMorgan…the ‘Big 3’ gold shorts were nowhere to be found.

By the way, the ‘Big 3’ gold shorts are also the ‘Big 3’ silver shorts as well…JPMorgan Chase, Bank of Nova Scotia…and HSBC USA.

First Day Notice for delivery into the February gold contract will be posted on the CME’s website late on Thursday evening Eastern time…and I’ll have that data for you in Friday’s column.

Over at GLD yesterday, there was another withdrawal…the 13th in January so far.  This time it was 58,086 troy ounces.  SLV reported a withdrawal of 822,067 troy ounces of silver.

The new report short positions for both SLV and GLD were posted on Friday by the good folks over at…and I forgot all about them in my Saturday column, so here they are now.  As I mentioned last week, the big 18.3 million ounce deposit into SLV came on the January 16th…the day after the cut-off for this report…so we still don’t know whether that deposit was made to cover that short position…or for a new large buyer that has now entered the fray.  This is Ted Butler’s theory on what’s going on in SLV at the moment…if it’s not short covering…and he talks about it at great length in his Saturday commentary to his paying subscribers.

But, having said all that, it was no accident that this big deposit was made on the date specified, precisely so that it wouldn’t show up in the short interest data last Friday.  Now we have to wait until about February 10th to find out.  As JPMorgan et al do with the Tuesday cut-off for the weekly COT report, they are obviously now doing with SLV.  But whatever they’re up to, it will remain hidden until about that date.

Anyway, the short interest in SLV increased 4.99% for the first half of January…and in GLD the short interest jumped a whopping 24.58% over the same period.  As a percentage of shares issued, the percentage of each ETF that has no physical metal backing it is as follows…in GLD it’s 5.05%…and in SLV it’s 5.32%.

Despite the fact that the U.S. Mint was going to start shipping silver eagles again this week, it obviously didn’t sell/ship any yesterday…as there was no sales report from them.

Over at the Comex-approved depositories on Friday, they reported receiving 928,840 troy ounces of silver…and shipped 41,411 troy ounces out the door.  Almost all of the silver disappeared into HSBC USA’s vaults.  The link to that activity is here.

Here’s a chart that Washington state reader S.A. sent me on Saturday that I just know he stole from a Zero Hedge story…and it’s self-explanatory.

(Click on image to enlarge)

Here’s another chart…this one courtesy of Paul Laviers.  He ‘borrowed’ it from John Williams over at the Internet site and, it requires no further comment from me, either.

Being a Tuesday, I have a lot of stories…and I’ll leave the final edit up to you.

As the Founding Fathers knew well, a government that does not trust its honest, law-abiding, taxpaying citizens with the means of self-defense is not itself worthy of trust. Laws disarming honest citizens proclaim that the government is the master, not the servant, of the people. — Jeff Snyder

With options and futures expiry in gold for the February delivery month upon us, it should have come as no surprise that JPMorgan et al would take down the price so that all those contracts would finish out of the money and expire worthless.  They’re quite good at that…and I’ve seen this sort of price action countless times over the last thirteen years or so.

Couple that with the FOMC meeting going on today and tomorrow…and also throw into the mix the job numbers coming out at 8:30 a.m. Eastern time on Friday…and the rest of the week from a price point of view, is really up for grabs.  I know for sure what precious metal prices should be doing…but will JPMorgan Chase et al allow it?

After another day of “slicing the salami”…the silver and gold charts look like this.

(Click on image to enlarge)

(Click on image to enlarge)

And even though we’re below the 200-day moving average in gold…and kissing the 200-day moving average in silver, neither metal is close to being in oversold territory.  I get tired of saying it…but can we go lower in price from here?  Sure…but will we?

The other thing I get tired of mentioning…and I’m sure you get tired of hearing…is that how high and fast the next price rally goes, depends 100 percent on whether or not the bullion banks go short against the new technical fund longs that come back into the market once the price has broken above key moving averages.  If they do, it will be the same price pattern we’ve been looking at for the last twenty-five years or so.

But if they don’t, then you won’t have to ask whether this is the big move or not, because as Ted Butler has pointed out to me many times over the years…it will be self-evident.  Sooner rather than later, this price management situation will come to a head…and it’s the dénouement that I await with great interest.  Of course there’s always the possibility that one should be careful what one wishes for.  The reason I say that is because when the big day comes, I can pretty much guarantee that there will be other things going on in the world that will be far less pleasant.

In Far East trading on their Tuesday, all four precious metals rallied a bit…but at, or soon after the London open, the selling pressure began anew.  Gold volume is monstrous, but once you subtract the roll-overs and spread trades, the net volume is virtually nothing.  I believe that today is the last day for the big traders to roll out of the February contract…and that fact is more than obvious in the volume figures as of 5:13 a.m. Eastern time.  Silver volume is pretty decent as well.  The dollar index is doing nothing…just like it has been doing for the last week.

Before signing off for today, I’d like to remind you of the expressions “buy the dips”…or “buy when blood is running in the streets.”  Well, what you have before you is right out of the Investment 101 textbook…and I’ll leave it at that.

As many at Casey Research [and elsewhere] have been pointing out, the precious metal stocks have never been this cheap versus the price of gold itself.  So I’d like to remind you one more time that there’s still an opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold…and I respectfully suggest that you take out a trial subscription to either Casey Research‘s International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations…as well as the archives. Don’t forget that our 90-day guarantee of satisfaction is in effect for both publications.

That’s more than enough for one day…and I’ll see here tomorrow.

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