Are we done the downside…and who will be the short

first_imgAre we done the downside…and who will be the short sellers on the next rally? The gold price did precisely nothing during Far East trading on their Friday…and through the first hour of trading in London.  But at 9:00 a.m. GMT, gold got hit for a bit over fifteen bucks in just under and hour.  That was it’s low price tick of the day.  It recovered a bit going into the 8:20 a.m. Comex open…and then began to rally sharply from there. Of course that wasn’t allowed to stand…and fifteen minutes after it began, a not-for-profit seller put an end to it…and by around 11:40 a.m. Eastern time, the gold price was back where it started at the beginning of the trading day in New York.  From there it chopped very slowly higher for the remainder of the day. Gold closed at $1,576.80 spot…down ‘only’ $2.70 on the day.  Gross volume was way up there once again at 214,000 contracts.  Gold volume all week was very high…averaging 215,000 contracts a day, so Friday’s volume was actually a hair below ‘average’. The dollar index opened at 81.95 on Friday morning in the Far East…and drifted a bit lower from there…hitting its nadir [81.79] at 8:30 a.m. in London trading.  From there it rallied to its high of the day…82.47…sometime between 10 and 11 a.m. in New York…and then slid a bit into the close, finishing the day at 82.27…up 33 basis points from Thursday. Once again, trying to make the dollar index price action fit the precious metal price action on a daily basis would be, for the most part, an exercise in futility…as it has been for most of the last three weeks.  Yes, the dollar index is up about 300 basis points in the last month, but its price action was only a fig leaf behind which JPMorgan et al did the dirty…as the correlation between them and gold and silver, has been iffy at best on a daily basis. The gold stocks started in positive territory, but once the gold price began to sell off, the stocks followed quickly…and hit their lows at gold’s low…around 11:40 a.m. Eastern time.  After that, they didn’t do much…and the HUI finished down another 0.70%. (Click on image to enlarge) Here are three cute photos sent by various readers over the last few weeks or so…and I try to insert a few when I have the space…or the time, which I do in my Saturday column. Sponsor Advertisement (Click on image to enlarge) Here’s the longer term Silver Sentiment Index…and it gives you the big picture view. It was a very similar story in silver, at least up until 9:00 a.m. in London.  Then, like gold, JPMorgan et al began the engineered price decline in silver as well.  The silver price hit an interim low just before 10:00 a.m. GMT…and then hit its real low of the day, which appeared to come at, or right after the London p.m. silver fix. Once that low tick [a bit below the $27.90 spot mark] was painted, the silver price blasted off to the upside…and went parabolic at the Comex open in New York.  Then, once again like gold, a non-profit-maximizing seller made an appearance about fifteen minutes after Comex trading began…and for the rest of the day, the silver price pattern was identical to the gold price pattern. Silver closed at $28.58 spot…up 7 cents on the day.  Net volume was very heavy…around 59,000 contracts. The list of stocks I watch over at the Toronto Globe and Mail was not available for viewing yesterday, as they were having some ‘technical issues’ on their website.  But Nick Laird’s Intraday Silver Sentiment Index closed down another 1.32% despite the fact that silver managed to close in positive territory.center_img With some ruthless editing, I’ve cut the number of stories down to what I feel is a manageable amount. The beauty of the second amendment is that it will not be needed until they try to take it away. – Author unknown Today’s pop classic needs no introduction…and neither does the group that sings it.  They are as American as apple pie…and this is one of their biggest hits.  You’ll know it instantly.  The link is here. Today’s classical ‘blast from the past’ is the overture to Mozart’s opera “The Magic Flute” K620.  This recording is from 2006 with the Weiner Philharmoniker.  Riccardo Muti conducts…and the link is here. Yesterday we saw a new low price tick in silver, but not a new low for gold.  I was surprised after the aggressive sell-off in early London trading, that there was no follow-through to the downside in either metal in New York.  Quite the contrary, there were rallies in both starting in London, well before the Comex open…and whether it was short covering is up for debate, as the preliminary open interest numbers for Friday seem to indicate otherwise.  But, as I mentioned in the COT discussion further up, we may or may not find out in next Friday’s COT report…depending on this coming Monday and Tuesday’s price action. Here are the 3-year charts for both gold and silver… (Click on image to enlarge) The CME’s Daily Delivery Report for ‘Day 3’ of the March delivery month showed that 13 gold and 298 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. The two big short/issuers in silver were Canada’s Bank of Nova Scotia…and ABN Amro, with 136 and 123 contracts respectively.  The biggest long/stopper was JPMorgan Chase with 197 contracts…followed by Jefferies and Credit Suisse, with 57 and 39 contracts respectively.  Yesterday’s Issuers and Stoppers Report is worth a quick look…and the link is here. It was the same old, same old in GLD and SLV yesterday.  GLD declined by 19,354 troy ounces…and SLV added another 386,668 troy ounces. While on the subject of SLV….Joshua Gibbons, the “Guru of the SLV Bar List” updated his website with the internal goings-on in SLV for the week that was.  The activity is posted on his website…and the link to that is here. The U.S. Mint had a tiny sales report for the first day of March, as they sold 4,000 ounces of gold eagles…and that was all. Over at the Comex-approved depositories on Thursday, they reported receiving 600,129 troy ounces of silver…and shipped a tiny 5,022 ounces of the stuff out the door.  The link to that activity is here. The Commitment of Traders Report, as of the close of Comex trading on Tuesday, was a bit of surprise in some ways.  There was short covering going on by the commercials in both gold and silver, but it also appeared that Ted Butler’s raptors…the smaller traders outside of the Big 8…sold long positions and took some profits on that big price spike that occurred in both metals on Tuesday. In silver, the Commercial net short position declined by a very healthy 35.4 million ounces…and the net short position is now down to 154.4 million ounces. The Big 4 are short 227.1 million ounces of silver…and the ‘5 through 8’ largest traders are short an additional 52.4 million ounces.  Because we were so busy at the store yesterday, I had no chance to talk to Ted Butler, so I don’t know how much JPMorgan’s short position improved by, but I’m sure it was by a decent amount. As far as concentration goes, once all the market-neutral spread traders are subtracted, the real open interest in silver falls from 145,625 contracts all the way down to 101,155 contracts…about a third.  Based on these net open interest numbers, the Big 4 are short 44.9% of the entire futures market in silver…and the ‘5 through 8’ traders add another 10.4 percentage points…so the Big 8 in total are short 55.3% of the silver market. In gold, the Commercial net short position actually increased by 554,000 ounces…and now sits at 13.76 million ounces.  Most of this increase can be accounted for by the fact that the raptors sold a big whack of long positions for a profit on Tuesday’s rally and, mechanically, this has the effect of increasing the Commercial net short position. The Big 4 in gold are short 8.89 million ounces of gold…and the ‘5 through 8’ traders are short an additional 5.34 million ounces.  In total, the Big 8 are short 14.23 million ounces of gold. Once the market-neutral spread trades are subtracted from the total open interest, the Big 4 are short 24.6% of the entire Comex futures market in gold…and the ‘5 through 8’ traders add another 14.8 percent points to that total.  The Big 8 are short 39.4% of the Comex futures market in gold. Without a doubt there has been considerable improvement in all these numbers since the Tuesday cut-off, as he price has declined every day since, but depending on what kind of price action we see on Monday and Tuesday of next week, they may or may not show up in next Friday’s COT Report.  That’s why I was really unhappy to see that big price spike this past Tuesday, as it threw this week’s COT numbers totally out of whack.  Without that one day of data, yesterday’s COT report would have been much more bullish in both metals.  You can’t always get what you want. Here’s Nick Laird’s most excellent “Days to Cover Short Positions” chart that includes the data from yesterday’s COT Report. (Click on image to enlarge) I guess we shouldn’t be too surprised that JPMorgan et al went after silver so aggressively, as that metal really is their problem child, especially for Morgan.  As I’ve mentioned before, it’s still my opinion that JPM, the Bank of Nova Scotia…and HSBC USA are the three big material silver shorts.  It’s my opinion that between them they are short about 40% of the entire Comex silver market…with JPMorgan holding the largest portion by far. And it’s also my opinion that precious metal prices won’t be going materially higher from here unless these three entities either stand aside, cover…or declare force majeure. Unfortunately, the answers to the two $64,000 questions still remain…are we done the downside…and who will be the short sellers on the next rally?  The answer to these questions will determine where we go from here price wise…and how fast we get there.  Nothing else matters. I’m done for the day…and the week. See you on Tuesday. (Click on image to enlarge) (Click on image to enlarge) And here’s the chart from the week before, so you can compare the changes in all four precious metals from one week to the next…and some of them are pretty big. Aben Resources (TSX.V: ABN) is a Canadian gold and silver exploration company with a focus on developing properties in the Yukon and Northwest Territories. The Company owns a 100% interest in the 18,314 acre Justin Gold Project located in SE Yukon. A 2,020 metre diamond drill program was carried out in 2011 to test never before drilled zones. Aben made a significant new greenfields gold discovery when it intercepted 60m of 1.19 g/t Au in hole JN11009 at the POW Zone. Additionally, a new high grade silver-copper zone was discovered at the Kangas Zone with hole JN11003 returning 1.07m of 7320 g/t Ag (234 oz/ton) and 3.52% Cu. Aben carried out an aggressive exploration and drill program in 2012 to follow up on the initial discoveries. The first drill hole in 2012, JN12011, returned 46.4m of 1.49 g/t Au and extended the gold mineralization at the discovery zone 85 metres laterally. The Company has four other prospective Yukon and NWT projects in its portfolio along with a seasoned management and geological team. Aben’s chairman, Ron Netolitzky, is credited with exploration success on numerous properties including three Western Canadian gold and silver projects which became producing mines. Please visit our website to learn more about the company and request information.last_img