The Precious Metal Price Rallies Get Hammered at the COMEX Open

24 February 2017 — Friday


The gold price drifted lower by a few dollars until shortly after 2:30 p.m. China Standard Time on their Thursday afternoon.  Then it began to inch quietly higher from there up until at, or just after, the noon silver fix in London.  Then away it went to the upside, only to run into ‘da boyz’ at the COMEX open.  It chopped quietly higher from there, but with obvious headwinds — and the high tick of the day came a minute or so after the 1:30 p.m. EST COMEX close.  It crawled lower from there into the 5:00 p.m. close.

The low and high tick were reported as $1,236.40 and $1,252.20 in the April contract.

Gold finished the Thursday session at $1,249.30 spot, up $12.10 from Wednesday’s close.  Net volume was over the moon at 230,000 contracts.

And here’s the 5-minute gold tick chart from Brad Robertson.  Volume really became noticeable shortly after 5:00 a.m. Denver time, which was noon in London — and the silver fix — and it soared at the COMEX open when the short buyers and long sellers of last resort appeared.   Volume didn’t drop off to anything resembling background levels until very late in the thinly-traded after-hours session.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must.

It was a very similar trading pattern in silver, as it blasted through $18 spot like a hot knife through soft butter — and got brutally capped about fifteen minutes after the COMEX open.  An attempt was made to sell it back down to that price mark shortly after the London p.m. gold fix, but rallied strongly once it touched it.  Silver’s rally attempt after that ran into more ‘resistance’ — and it was finally turned lower around 2:45 p.m.  It traded sideways into the close from there.

The low and high tick in this precious metal was reported by the CME Group as $17.925 and $18.21 in the March contract.

Silver was closed in New York on Thursday at $18.145 spot, up only 16.5 cents on the day.  Net volume was 38,500 contracts.  That would be a ‘normal’ volume day, but for it to occur during a big roll-over period, it’s a lot.  And, not surprisingly, roll-over/switch volume out of March was monstrous — and will be again today.

And here’s the 5-minute silver chart courtesy of Brad again.  There was the odd bit of volume in late Far East and early London trading but, like gold, the real volume began to kick in shortly after the noon London silver fix, which is 05:30 a.m. MST on the chart below.  Volume really wasn’t back to fumes and vapours until after the 2:45 p.m. EST price spike, which is 12:45 p.m. Denver time.

Like for the 5-minute tick chart for gold, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must as well.

And just for information purposes, here’s the New York Spot Silver [Bid] chart so you can see the price action a bit more clearly during the COMEX trading session — and it’s the price shenanigans around the 1:30 p.m. EST COMEX close are what I wanted you to see.

It was the same for platinum as it was for gold and silver — and once the noon silver fix was in, the price exploded.  And also like silver and gold, got capped shortly after the COMEX open.  The powers-that-be drove it back to the $1,005 spot mark around 11:30 a.m. EST, which was thirty minutes after the Zurich close.  It rallied a couple of dollars from there until COMEX trading ended — and the price traded flat for the rest of the Thursday session.  Platinum finished the day at $1,008 spot, up 6 dollars from Thursday’s close.  But, like silver and gold, one can only fantasize on what the free-market closing price would have been if JP Morgan et al hadn’t stepped in as short buyers and long sellers of last resort.

After doing little of anything from a price perspective during Far East trading, some kind soul spiked palladium about 7 bucks lower going into the Zurich open.  It was back to unchanged by 1 p.m. in Zurich/noon in London — and was forced to follow an almost identical path as the other three precious metals from there.  The major differences were the fact that palladium was capped and turned lower shortly after 9 a.m. in New York — and was driven down into the London p.m. gold fix.  The subsequent rally attempt got squashed — and it chopped mostly sideways for the rest of the day after that.  Palladium was closed on Thursday at $770 spot, up only 2 dollars from Wednesday.

The dollar index closed very late on Wednesday afternoon in New York at 101.33 — and once trading commenced a few minutes later at 6:00 p.m. EST on Wednesday evening, chopped sideways 10 basis point either side of unchanged until shortly after 11 a.m. GMT in London.  Then down it went.  The 100.87 low tick was set a minute or so before London closed…11:00 a.m. EST…and then chopped higher until shortly after the COMEX close.  It headed lower from there until 4 p.m. — and then traded sideways for the rest of the day.  The dollar index finished the Thursday session at 100.98 — and down 35 basis points.

And here’s the 6-month U.S. dollar index chart for your entertainment.

The gold shares rallied about two and a half percent in the first five minutes of trading in New York yesterday morning — and that was their high ticks of the day.  By shortly before 11 a.m. EST, half those gains were gone — and the stocks chopped mostly sideways until shortly after 3 p.m.  Then almost all of Thursday’s gains vanished by the close, as the HUI finished the day up only 0.28 percent.

It was the same price pattern for the silver equities — and they were back to a hair above unchanged by 11 a.m. in New York — and actually closed down on the day during the last twenty minutes of trading!  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 0.25 percent.  Click to enlarge if necessary.

As I said in yesterday’s column — and I’ll be even more emphatic about it today — and that’s that the precious metal share price action has been terrible all week.  And why that extended into Thursday is beyond me.  I do not like what it may portend.

The CME Daily Delivery Report showed that 638 gold and 16 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  In gold, the largest short/issuer by far was JP Morgan with 580 contracts out of its client account — and Scotiabank was a distant second with 56 contracts out of its in-house [proprietary] trading account, as it doesn’t have customer account.  The only three long/stoppers were HSBC USA, JP Morgan and International F.C. Stone…with 361, 259 and 18 contracts out of their respective in-house [proprietary] trading accounts.  And that’s the first time I remember ever seeing F.C. Stone take or make delivery for its own account.  In silver, the two short/issuers were Morgan Stanley and ADM, with 13 and 3 contracts out of their respective client accounts — and the two long/stoppers were JP Morgan and Scotiabank…the former with 12 contracts for it client account — and the latter with 4 contracts for its own account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in February declined by 28 contracts, leaving 702 still open, minus the 638 contracts mentioned above.  Wednesday’s Daily Delivery Report showed that only 5 gold contracts were actually posted for delivery today, so that means that 28-5=23 contract holders exited the February delivery month.  Silver o.i. in February fell by 54 contracts, leaving 67 still around, minus the 16 contracts mentioned in the previous paragraph.  Wednesday’s Daily Delivery Report showed that 120 silver contracts were actually posted for delivery today, so that means that another 120-54=66 silver contracts were actually added to the February delivery month.  That’s rather remarkable since there are only two potential delivery days left in the month — and those are Monday and Tuesday.  I wonder what that’s all about — and I’ll be watching with great interest to see who the short/issuers and long/stoppers are on that amount.

March open interest in silver fell by 11,255 contracts, leaving 34,106 still open, which is a lot for this late in the month.  But with all the large traders having to exit their March futures contracts by the close of COMEX trading today…unless they’re standing for delivery, of course…I expect this number to plunge big time when I report this data in Saturday’s missive.

Once again, there were no reported changes in either GLD or SLV.

There was no sales report from the U.S. Mint, either.

I checked the Royal Canadian Mint website just now…7:14 p.m. EST yesterday evening…and it still reads the same thing as it has since mid-December — “Royal Canadian Mint’s Third Quarter Financial Report for Fiscal 2016 is expected to be released by February 23, 2017.”  In mid-December the mint said that Q3 results would be posted by December 23.  I wonder what their excuse is this time?  I’ll e-mail them today and see if I get an answer.  I’ll not be holding my breath awaiting a reply.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  They reported receiving 32,150.000 troy ounces/1,000 kilobars [U.K./U.S. kilobar weight] — and all of that went into Canada’s Scotiabank.  There were 257.200 troy ounces/8 kilobars [U.K./U.S. kilobar weight] shipped out of Manfra, Tordella & Brookes, Inc.  The link to this activity is here.

It was reasonably quiet in silver.  There was 599,368 troy ounces received — and except for one good delivery bar that went into Delaware, the rest…one container full…ended up at Brink’s, Inc.  There was 20,389 troy ounces shipped out of HSBC USA — and the link to all this activity is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, they reported receiving 1,217 of them — and shipped out 710.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Here are three charts that Nick passed around at 10 p.m. EST last night.  They show Switzerland’s gold imports and exports for January.  In his covering e-mail, Nick said the following…”Switzerland imported 197.4 tonnes — and exported 120.5 tonnes in January.

The first chart is updated with January’s import/export data — and goes back two years.  Click to enlarge.

These last two charts show imports and exports for January divided up by country.  Click to enlarge.

It was a fairly slow news day yesterday — and with all the ‘fake news’ plus what I call pseudo-stories out there, it’s sometimes hard to know if you’re getting the real deal with a lot of what passes through my in-box every day.


Steven Mnuchin Speaks to CNBC, Fails to Give Trump Tax Plan Details: Key Highlights

Following his first interview since being confirmed yesterday with the WSJ, U.S. Treasury Secretary Steven Mnuchin spoke to CNBC‘s Becky Quick and repeated some of the key points he made yesterday, among which his hope to get tax reform done by the August Congress recess, however he again confirmed that there are too many moving pieces at this point saying it is “too early to give details” of the Trump tax plan.

He also reiterated that “we’re primarily focused on a middle-income tax cut and simplification for business“.

As a reminder, on February 9th stocks surged after President Trump promised a “phenomenal” tax plan to be unveiled in “two or three weeks.” It appears that this will not happen, and instead in his State of the Union address, where the market expects more clarity on Trump’s economic policies to be unveiled, Trump will be forced to speak in broad generalities as he juggles not only passage of his tax plan in Congress, but also the process of “repeal and replace” (and rename and repair) of Obamacare which similarly has gotten bogged down in negotiations in Congress. Overnight we laid out an extensive primer of how Trump’s tax policies will likely be impacted by the stalled negotiations over Obamacare.

As a reminder, yesterday in his WSJ interview, Mnuchin said the administration was working with House and Senate Republicans to smooth over differences among them on tax policy, with the aim of passing major legislation before Congress leaves for its August recess. He added, “that’s an ambitious timeline. It could slip to later in the year.” He also said the administration is “looking seriously” at the House plan that includes border adjustment and was well aware of concerns raised by specific industries. The Treasury Department had its own concerns, he added, “about what the impact may be on the dollar” from a border-adjusted tax.

On another hot button topic, despite Trump previous vows to name China a currency manipulator, Mnuchin said “we’re not making any judgments” at this time.

It was said that this interview on CNBC very early yesterday morning is what may have sparked the rally in the precious metals.  I don’t know if that’s true or not, I’m just reporting on what I heard.  This Zero Hedge news story was posted on their website at 7:24 a.m. EST on Thursday morning — and another link to it is here.

Marc “Dr. Doom” Faber talks stocks, commodities, bonds and gold

This CNBC video clip from Thursday was picked up by the Internet site yesterday — and the comments from Marc start at the 1:58 minute mark.  The interview runs for just under 8 minutes.  I thank Roy Stephens for sending it our way.

U.S. Treasury eyeing issuance of 100-year government debt

Steven Mnuchin, U.S. Treasury secretary, said today that his staff have begun to look into issuing U.S. government debt with maturities of as long as 50 or 100 years.

Mr. Mnuchin said he was not making any “formal announcement” on whether the Treasury would issue longer-dated bonds but he had “already begun to talk to staff” about it. This builds on earlier comments made before he took office that he was open to the idea.

The move would mark a historic shift in policy for the world’s largest and most actively traded government bond market, which has avoided issuing debt of longer than 30 years even as other countries such as Belgium, Austria, and Mexico have sold longer bonds.

The above three paragraphs are all that are posted in the clear from this story in the Financial Times of London yesterday.  The rest of it is hidden behind their subscription wall.  I found this on the Internet site last night EST.  The link to the FT website is here.

Trump suggests he wants a weak dollar to help U.S. exporters

President Donald Trump signaled Thursday that he wants to keep the U.S. dollar’s value lower to aid American companies selling products abroad.

In a candid exchange with Doug Oberhelman, Caterpillar’s chairman and former CEO, Trump said that when the dollar rises “and we let other people manipulate their currencies, that’s the one thing that stops you.”

We have to let other countries give you a level playing field,” Trump told Oberhelman at a meeting of manufacturing executives at the White House.

Past presidents have often refrained from talking about the strength or weakness of the dollar. Treasury secretaries would address the currency’s value, but would generally tout dollar strength as a sign of faith in the American economy, even at times when it posed a challenge to multinational companies.

A stronger dollar can drag on non-U.S. revenue for multinational companies like Caterpillar. The company cited a strengthening dollar last month when it cut its sales outlook for the year.

This story, complete with a 4:39 minute video clip, was posted on the CNBC website around 2 p.m. EST on Thursday — and I found this news item embedded in a GATA dispatch last night.  Another link to it is here.

Project Veritas Releases Massive Trove of Damaging Audio Recordings From CNN

Project Veritas, a controversial investigative journalism initiative that made waves multiple times during the election season, has released 119 hours of secretly recorded raw audio from a source within the Atlanta CNN headquarters.

Richard Griffiths, who is now CNN’s Vice President and Senior Editorial Director, was also caught in the audio recordings explaining that the role of journalists is to “aid the afflicted and afflict the comfortable,” instead of just accurately reporting the news.

Tell a story. Tell what’s going on. There’s a secondary corollary to that, right? Aid the afflicted and afflict the comfortable. To a degree, right? Is that not part of the traditional role of a journalist? It’s actually one of the things I can be most proud of as a journalist. You know we try to show the ugly side of humanity so we can do something about it. It’s hard, very hard.

In another exchange, Arthur Brice, an executive editor at the network, is heard discussing misrepresenting poll data.

This very interesting story appeared on the Internet site at 6:21 p.m. Moscow time on their Thursday evening, which was 10:21 a.m. in Washington — EDT plus 8 hours.  I thank Roy Stephens for this — and another link to it is here.  The Zero Hedge spin on this is headlined “O’Keefe Drops “Bombshell” Undercover Footage From Within CNN” — and that comes to us courtesy of Brad Robertson.

Dramatic Drone Footage Shows Extent of San Jose Flooding

While the series of major storms hitting California have begun to subside, residents of San Jose are being warned to keep away from affected homes until water levels decrease to a safe level. Flash floods along the west coast of the U.S. have seen thousands of people forced to leave their homes and a state of emergency declared by California governor Jerry Brown. The majority of mandatory evacuation orders have now been downgraded for areas including Sutter County around the Oroville Dam Spillway, which sparked panic one week ago when it threatened to collapse during the floods.

However, San Jose, the 10th largest city in the U.S., remains one of the most substantial urban regions affected, with 14,000 resident evacuated and more than 36,000 homes estimated to be hit by floodwater, reports the San Francisco Gate.

To get a sense of the water damage, the following drone footage shows the extent of the flooding in San Jose.

City Mayor Sam Liccardo has admitted failures in the official response to the storm crisis. “If the first time that a resident is aware that they need to get out of a home is when they see a firefighter in a boat, then clearly something went wrong,” Mayor Sam Liccardo said, report KQED News. “We are assessing what it is that led to that failure.

The reason for the city’s dire predicament is that over the last two weeks, heavy rains pushed water levels at Santa Clara County’s largest reservoir into the danger zone. That happened over the weekend, sending massive amounts of water into the Coyote Creek, which runs through the heart of San Jose. By Tuesday, the creek was overflowing at numerous locations, inundating neighborhoods, flooding hundreds of homes and forcing the frantic evacuations of more than 14,000 residents, who remained out of their homes Wednesday, the LA Times reported.

This Zero Hedge article, complete with an embedded 58 second video clip courtesy of CNN, showed up on their Internet site at 7:09 p.m. EST yesterday evening — and another link to it is here.

Student Loans: A Multi-Generational Curse — Dennis Miller

For many, student loan debt is a giant step backward. Is it possible to get a good college education without a multi-decade debt burden? Yes, but it requires some hard work and discipline.

It seems like yesterday when I held my newborn grandson Jacob. Today he is taller than I am, graduating from high school heading off to college. The extraordinary cost of college education is looming, with his sister following close behind. There is money saved, including some of his own, but not nearly enough.

I cringed when student loans were mentioned. Student loans are a curse that keeps on haunting and should be avoided. Jacob can learn from his cousins before him. His older cousin married right before graduation. Their combined student loan debt would buy a nice home. Paying off their loans may take decades.

They were good students, received scholarships, grants, parents and grandparents chipped in; yet that was not enough to cover the cost of their diploma. They’re now in their 30’s and, like most of their peers, they both work, pay rent, pay down debt, have two small children and hope to save enough for a down payment on a home – “someday”.

This interesting commentary by Dennis put in an appearance on his Internet site yesterday — and another link to it is here.

Global (economic) warming — Alasdair Macleod

Few, if any macroeconomic commentators, seem to be aware of how the global economy is performing. Their selective reliance on duff and out-of-date statistics forces them to anticipate what lies ahead by looking backwards. This approach to economic forecasting and planning gives as little hint of what lies ahead as it does for driving along a winding country road, and has only encouraged closer scrutiny of the past. Ignorance itself is increasingly ignored as the causative factor behind the manifest failure of modern macroeconomics.

Even perfect knowledge of the past and present is no substitute for understanding that it is unpredictable change, the dominant characteristic of progress and regress, that makes the past barely relevant. The modern reliance on statistics, most of which are produced by government agencies with vested interests, is nonsensical. Instead of understanding this, we rely on the opinions of the great and the supposedly expert. Nearly every pundit’s introduction nowadays starts with a list of his or her academic achievements, as if they mattered. Indeed, to be believed in macroeconomics requires PhDs, professorships and the all the rest, as cover for the lack of a true understanding of economics.

That the cream of the economics profession is clueless was admitted this week by a rate-setting member of the Bank of England’s Monetary Policy Committee, in evidence before the Treasury Select Committee of the UK’s Parliament. The BoE’s forecasters have not only got the performance of the economy over Brexit horribly wrong, but it is now admitted that “…there are large forecast errors, and we are probably not going to forecast the next financial crisis, nor are we going to forecast the next financial recession.”

Opinion, which is what these macroeconomists possess, is inappropriate for economics, being built on the quick-sands of Keynesian wishful-thinking, as opposed to the firm ground of sound reasoning. The combined intellects of all the panjandrums in all the central banks, in all the top universities, and in all the smart investment banks have consistently failed to foresee any financial crisis. And they now underestimate the degree to which the global economy today has progressed, aided by human nature and buoyed up on a sea of financial credit. They also underestimate the consequences of today’s events for price inflation, which is approaching a confluence of events on the demand side, against a backdrop of a marginally unresponsive physical supply. When the purchasing-power of fiat currencies declines, measured initially in rising commodity prices, the purchasing power of sound money, which is gold, rises, undermining confidence in fiat money even further. That is the background, in place for a year now, to a rapidly approaching train-wreck. Only a handful of prescient analysts, those who understand the considerable risks posed by unsound money, are gradually becoming aware of the consequences for prices measured in fiat currencies.

This longish essay by Alasdair was posted on the Internet site yesterday — and it’s definitely worth reading, particularly when his comments turn to the subject of gold.  I thank Peter Holland for finding it for us — and another link to it is here.

Max Keiser and Stacy Herbert — Episode 1036

In this episode of the Keiser Report, Max and Stacy discuss the “bad news” and “grave concerns” in the eurozone that are leading to big gold buying.  Starting around the 8:20 minute mark, the discussion turns to Greenspan, the euro…and gold.

The first part of this episode runs for 12 minutes — and is certainly worth your time.  It was posted on the website at 8:31 a.m. Moscow time on their Thursday morning, which was late Wednesday night in Washington.  Another link to it is here — and it’s the third contribution of the day from Roy Stephens.

While Europe burns, Brussels scribbles

Europe may be in a bit of an existential funk these days with Brexit and an E.U.-hostile new president in the White House, but the talk of the town in Brussels is a “White Paper” being prepared, out of view, for the E.U.’s 60th anniversary celebrations in Rome.

European Commission President Jean-Claude Juncker and his cabinet chief Martin Selmayr are busy laying down options on how the bloc should evolve over the next 10 years. Hordes of officials, all the way up to other commissioners, are desperate for a sneak peak to see if they got a line in and for any insight as to what solutions it might propose.

Such is the intrigue that Italy’s La Repubblica reported Juncker was ready to resign over resistance from national capitals to the paper. The newspaper even named his successor (Commission Vice President Jyrki Katainen).

I won’t resign,” Juncker said when POLITICO ran into him Tuesday evening.

He told commissioners he will shepherd the White Paper throughout the year, plans to come back to it during his annual “State of the Union” speech in September and see it over the finishing line in December at another E.U. summit, according to participants in the weekly College of Commissioners meeting Wednesday.

I posted a story about this in my Thursday column, but the folks over at the Internet site have decided to wade into this issue — and their efforts are certainly worth reading.  It’s the fourth and final offering of the day from Roy Stephens — and another link to it is here.

London Metal Exchange cuts deal with banks to propel gold futures

The London Metal Exchange has reached a 50:50 revenue-sharing deal with a company founded by a group of banks to promote trade in its new gold futures contracts, sources said, aiming to overcome market scepticism surrounding their launch in June.

Usually, exchanges merely consult potential users about their needs when planning new financial and commodity contracts. But in this case the LME has opted for a radical departure from normal practice as it tries to grab a piece of London’s $5 trillion-a-year gold market.

Sources close to the matter told Reuters that the five banks and a proprietary trader that are shareholders in the new company have undertaken to bring guaranteed minimum levels of trade in the gold futures.

Should they meet these levels, the project partners will receive a half share of the revenue under an incentive scheme designed to ensure the contracts have turnover, viability, and credibility from the outset.

We’re all committed to market-making and will at least bring our own trading book,” said a source at one of the banks involved in the project. “It’ll come with some built-in volume.

It’s obvious from this preemptive action, that they could see that their new exchange would have been stillborn.  So, in order to prevent that embarrassment, they had to offer a hefty financial incentive for the bullion banks to use it.  Fifty percent of the profits sound like an embarrassingly large amount — and smacks of desperation.  This Reuters story, filed from London, appeared on their website at 2:05 a.m. EST on Thursday morning, which was 7:05 a.m. GMT over in “merrie olde England” — EST plus 5 hours — and I found it in a GATA dispatch.  Another link to it is here.

Einhorn Shorts Sovereigns, Affirms Gold on Trump Uncertainty

Hedge fund manager David Einhorn is betting on declines in government debt and a rebound in gold to guard against the risk of inflation under President Donald Trump.

We made several changes to the macro portfolio in response to the election,” Einhorn said Thursday in a conference call discussing results for Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where he is chairman. “It was various long positions in sovereign fixed income that we eliminated. We added some additional shorts in sovereign fixed income, and we added to our long equity exposure.” He didn’t specify which nations’ debt he was betting against.

Einhorn is seeking to extend a rally in the investment portfolio of Greenlight Re, which said late Wednesday that it posted back-to-back quarterly profit for the first time since 2013. The portfolio was helped in the last three months of 2016 by bets on General Motors Co. and Japanese bank Resona Holdings Inc., while gold was a weak spot.

Still, “our long-term outlook remains bullish,” for the metal, Einhorn said. “The new administration comes with a high degree of uncertainty, and its policy initiatives appear to be focused on stimulating growth and, with it, inflation.

This Bloomberg story put in an appearance on their Internet site at 7:40 a.m. Denver time on Thursday morning — and was subsequently updated at 2:08 p.m. MST.  I found it on the Sharps Pixley website very late last night — and another link to it is here.


The title of Most Promising British Underwater Photographer 2017 went to Nicholai Georgiou for his image “Orca Pod” taken in the depths of winter in northern Norway. “The days are short and the water is barely above freezing, but with orca around, the cold is quickly forgotten. The light was beautiful as the sun skimmed the horizon, but the water was dark and foreboding. Then this orca swam by, nice and close. It was a moment, which will be hard to top.”  Click to enlarge.


“Our era is dominated by heads of privately owned central banks and their ever-devaluing fiat currencies. Their fiat currencies money system has made them fabulously rich…the accomplice governments big and powerful…and populaces less free and more poor.  It is not that a gold standard has been tried and found wanting; but that it is not wanted and no longer tried.  Regardless of its superiority, a gold standard is inferior to gold coins and silver coins as money. The exclusive use of such coins is mandated by article 1, sections 8 and 10, of the U.S. Constitution. That mandate precludes all alternatives, including a gold standard.” — James Robert Rodgers, February 23, 2017

Whether it was what Mnuchin said on CNBC yesterday, or some other reason, the fact remains that precious metal prices would have been repriced to the moon and the stars in a short covering rally for the ages on Thursday if ‘da boyz’ hadn’t stepped in as short buyers and long sellers of last resort at, or shortly after, the COMEX open in New York.

But they weren’t able to get silver back below $18 the ounce, which is a price level that JP Morgan et al have been defending for about a week now.  Whether that, or its 200-day moving average, which now stands at $17.97 in the March contract, is of importance…remains to be seen.

Here are the 6-month charts for all four precious metals, plus copper…which took a bit of a beating yesterday.  The click to enlarge feature helps a bit it with the first four charts.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price traded pretty flat in Far East trading until shortly before 2 p.m. CST on their Friday afternoon.  It began to rally a bit at that point — and is currently up $3.70 an ounce.  It was the same price pattern for silver, except after its small rally that began at the same as gold’s, it has been forced to chop sideways since — and is up 5 cents the ounce at the moment.  Platinum traded flat until around 10 a.m. China Standard Time — and been crawling higher since — and is up 4 dollars currently.  All of palladium’s gains came in morning trading in the Far East — and it has been chopping sideways since 11 a.m. CST — and it’s up 4 bucks as well as the Zurich open approaches.

Net HFT gold volume is currently sitting around 35,000 contracts — and that number in silver is only 2,200 contracts, with most of the gross volume being roll-overs and switches out of March — and that’s very heavy at the moment.

The dollar index rallied a few basis points back above the 101.00 mark in the early going in Far East trading, but began to head lower starting around 10:30 a.m. in Shanghai.  It’s back below the 101.00 mark at 100.91 — and down 7 basis points from its close on Thursday in New York.

How high silver will go from here will certainly depend on how aggressively the Managed Money traders go long and cover shorts, now that the price is above its 200-day moving average by a good bit.  They were certainly around yesterday, but they were met with ‘all guns blazing’ by the powers-that-be.  All we can do is wait and see how this unfolds.

Today, at 3:30 p.m. EST, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  It certainly appears from the 6-month gold and silver charts posted above, that there will be increases in the commercial net short positions in both these precious metals, but by how much remains to be seen.

In his mid-week commentary on Wednesday, silver analyst Ted Butler had this to say about it…”Best as I can tell, based upon price action and changes in total open interest, there is likely to be an increase in managed money buying and commercial selling in both gold and silver. Since silver’s market structure is already clearly in the bearish category, this week’s report should not be comforting. Gold, on the other hand, couldn’t possibly have moved away from its very bullish market structure, regardless of any increase this reporting week.

And I would certainly suspect even more deterioration after yesterday’s price activity.

Ted went on to say in his closing remarks that…”[T]he unusual dichotomy between the very bearish market structure in silver and very bullish structure in gold, continues. There are any number of possible outcomes and resolutions to this historic dichotomy, but I am reminded that overall price levels in silver are historically low by any reasonable measures — and that still persuades me to maintain positions (albeit with a good measure of trepidation). Certainly, no one can rule out the commercial crooks on the COMEX succeeding in rigging the price of silver lower yet again amid a managed money flush out. I still have some small hope that this move could still turn into the big one, but neither do I want to delude anyone (myself included) that it hasn’t unfolded as I would have imagined to this point (due to the strong increase in commercial short selling by the largest COMEX shorts).

That spells it out exactly.

And as I post today’s column on the website at 4:02 a.m. EST, I see that the gold price continues to inch higher now that London has been open for about an hour — and it’s up $4.40 an ounce.  Silver continues to creep higher as well — and is up 9 cents.  Platinum is up 6 bucks — and palladium is now up 7.

Net HFT gold volume is around 41,500 contracts, so this rally, tiny though it may be, is certainly not going unopposed.  Net HFT silver volume is a few contracts above 2,500…which is up only 300 contracts from an hour ago.  The remaining 8,500 contracts of volume is of the roll-over/switch variety out of March — and as I said in the first part of today’s missive, we’ll see March open interest crater when Friday’s Preliminary Report is posted on the CME’s website around 10 p.m. this evening EST.

The dollar index is off its current low by a bit — and back to down 9 basis points, which is where it was sitting an hour ago.

Today is Friday — and the last day for the large traders to exit their March silver contracts, unless they’re standing for delivery.  If yesterday’s price action is any indication, it could be a bit of a wild one.

That’s all I have for today.  Enjoy your weekend, or what’s left of it if you live west of the International Date Line — and I’ll see you here tomorrow.


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