Another Monster Volume Day in Gold & Silver

04 June 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price rallied a few dollars until around 11 a.m. China Standard Time on their Monday morning once trading began at 6:00 p.m. EDT on Sunday evening in New York.  From that juncture it really didn’t do much until the London open — and the it began to head quietly and unevenly higher until around 3:10 p.m. EDT in after-hours trading in New York — and it was sold a bit lower going into the 5:00 p.m. close from there.  I guess ‘da boyz’ didn’t want it close more than twenty bucks higher yesterday.

The low and highs were recorded by the CME Group as $1,310.90 and $1,333.00 in the August contract.

Gold finished the Monday session at $1,324.80 spot, up $19.90 on the day.  Net volume was ginormous once again at 352,000 contracts — and roll-over/switch volume was 13,000 contracts. It’s obvious that this current rally is not going unopposed.

Silver was up 8 cents or so by 9:40 a.m. CST on their Monday morning — and then didn’t do much until around 1:30 p.m. CST.  It was sold back to unchanged by the London open, but then also began to head quietly and unevenly higher until, like gold, it ran into ‘something’ around 3:15 p.m. EDT in New York in the thinly-traded after-hours market.  It was sold a bit lower into the close from there.

The low and high ticks in this precious metal were reported as $14.565 and $14.825 in the July contract.

Silver was closed at $14.765 spot, up 20.5 cents from Friday.  Net volume was eye-watering, at a bit under 99,500 contracts — and there was a bit over 14,000 contracts worth of roll-over/switch volume out of July and into future months. I’m sure not happy about this, as we’re still well below silver’s 200-day moving average.

After trading flat for the first two hours once it commenced at 6:00 p.m. EDT in New York on Sunday evening, platinum began to head rather sharply higher starting around 8 a.m. in Shanghai on their Monday morning.  It appeared to get capped and then turned lower around 10 a.m. CST — and its low of the day, like in silver, came at the Zurich open.  It crept unevenly higher from there until the afternoon gold fix in London — and then away it went to the upside.  The price was capped at the $822 spot mark a few minutes before the 1:30 p.m. EDT COMEX close, which it bounced off multiple times before trading ended at 5:00 p.m. EDT in New York.  Platinum was closed at $820 spot, up 29 bucks on the day.

The palladium price rally followed the platinum price rally like a shadow in morning trading in the Far East, including the price capping and sell-off at 10 a.m. in Shanghai on their Monday morning. It was up 22 bucks or so at that point.  It was sold quietly lower until minutes before 11 a.m. in Zurich — and then crept a few dollars higher until the bids were pulled at the 9:30 a.m. EDT open of the equity markets in New York.  It was down about 30 bucks in no time flat, before gaining a bunch of that back — and then crawled unevenly sideways-to-higher until the market closed at 5:00 p.m. EDT.  Palladium finished the day, down 2 bucks from Friday at $1,309 spot.

The dollar index closed very late on Friday afternoon at 97.75 — and for whatever reason the data feeds for the charts didn’t begin until 10 p.m. EDT in New York on Sunday evening.  And when trading did commence, the index opened down 11 basis points.  Its Far East low, such as it was, came around 11:15 CST on their Monday morning — and from there it crept higher and back into positive territory by a bit, by fifteen minutes before the London open.  Then right at the 8:00 a.m. BST London open, it began to head lower at an ever-accelerating rate.  It got saved at the 97.11 mark by the usual ‘gentle hands’ around 3:12 p.m. EDT, which was the exact time that that gold, silver and platinum price hit their respective highs of the day.  It crept a bit higher for the next hour before trading sideways until trading ended at 5:30 p.m. in New York.  The dollar index finished the day at 97.14…down 61 basis points from its close on Friday.

If a case could be made for the U.S. dollar index affecting precious metal prices, it would certainly be yesterday’s price action.  But it was just paper trading in the GLOBEX/COMEX future market that made it all happen.

Here’s the DXY chart courtesy of BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.06…and the close on the DXY chart above, was 8 basis points on Monday.  The dollar index closed below its 50-day moving average yesterday, if that means anything these days, as those ‘gentle hands’ are always lurking about.  Click to enlarge as well.

The gold shares gapped up two percent at the open — and then crept quietly and steadily higher until trading ended at 4:00 p.m. EDT in New York on Monday afternoon.  For all intents and purposes, the HUI closed on its high of the day…up 5.08 percent.

The silver equities were up 3 percent by 10 a.m. in New York yesterday morning — and then crept quietly and unevenly higher until around 3:15 p.m. EDT.  They didn’t do much after that — and even got sold down a bit in the last minute of trading, as the day traders took some profits.  Nonetheless, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 4.72 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Monday’s doji.  Click to enlarge.

The CME Daily Delivery Report for Day 3 of June deliveries in gold, showed that 358 gold, plus 1 silver contract was posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, of the four short/issuers in total, the only one that mattered was Scotia Capital, with 350 contracts out of its in-house/proprietary trading account…it doesn’t have a client account.  There were eight long/stoppers in total — and the biggest by far was HSBC USA with 217 contracts for its own account.  In second and third place were JPMorgan and International F.C. Stone, picking up 61 and 40 contracts for their respective client accounts.

In silver, JPMorgan issued and stopped the lone contract — and both contracts involved its client account.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session [which was posted on their website about three hours later than normal] showed that gold open interest in June fell by 251 contracts, leaving 1,762 still open, minus the 358 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 32 gold contracts were actually posted for delivery today, so that means that 251-32=219 gold contracts vanished from the June delivery month.  Silver o.i. in June fell by 45 contracts, leaving just 5 left, minus the 1 contract mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 45 silver contracts were actually posted for delivery today…so the change in open interest and the deliveries match.


There was big deposit into GLD yesterday, as an authorized participant added 528,501 troy ounces…16.4 metric tonnes.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, May 31 — and this is what they had to report.  They added 3,638 troy ounces of gold, but their silver ETF shed 28,132 troy ounces.

There was a sales report from the U.S. Mint to start out June.  They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 223,500 silver eagles.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday was 1,000 troy ounces that was shipped out of Delaware — and I won’t bother linking this.

It was certainly busier in silver, as 600,393 troy ounces was received…one truckload…and that was dropped off at HSBC USA.  There was 1,493,186 troy ounces shipped out.  Of that amount, one big truck load…624,809 troy ounces…left the vault over at CNT — and the other truckload…600,473 troy ounces…departed Canada’s Scotiabank.  The remaining 267,903 troy ounces was shipped out of Brink’s, Inc.  The link to all this activity is here.

Not to be outdone, it was a pretty heavy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They reported receiving 4,000 of them — and shipped out 4,718.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around on the weekend.  They show U.S. Mint sales for gold and silver bullion coins, updated with May’s dataIt should be noted that the gold sales are the sum of the sales of gold eagles and gold buffaloes — and the silver sales include silver eagles, plus the sales of those 5-ounce ‘America the Beautiful’ rounds.  Click to enlarge for both.

I have an average number of stories for you today.


CRITICAL READS

Fed’s Bullard Says Rate Cut May Be Needed “Soon

The Federal Reserve may need to cut interest rates soon to prop up inflation and counter downside economic risks from an escalating trade war, St. Louis Fed President James Bullard said.

A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown,” Bullard said Monday in remarks prepared for a talk in Chicago. “The direct effects of trade restrictions on the U.S. economy are relatively small, but the effects through global financial markets may be larger.”

Bullard’s comments mark the first time a Fed official has publicly suggested the need for a rate cut since the central bank put rates on hold in January when it pledged to be “patient” as it weighed headwinds from slower global growth and the fallout from the trade war.

While President Donald Trump has called for a one-percentage point cut, and investors deepened bets on policy easing after he threatened Mexico last week with tariffs, other Fed officials have stressed that their approach to policy is still appropriate. That was the message earlier on Monday from San Francisco Fed chief Mary Daly in Singapore, though Fed Vice Chair Richard Clarida opened the door to a cut in remarks Thursday that stressed policy makers were watching risks to the outlook.

One of the most dovish members of the Fed, Bullard is a voter this year on the rate-setting Federal Open Market Committee, which meets next June 18-19 in Washington.

Minneapolis Fed President Neel Kashkari, who along with Bullard has most vocally opposed higher rates in recent years, said Friday during a Bloomberg TV interview that he was “not quite there yet” on the need for easing. Bullard said recently that a rate cut was premature.

This Bloomberg article was posted on their website at 10:25 a.m. PDT [Pacific Daylight Time] on Monday morning — and it was updated about three hours later.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.


The Most Important Ratio in All of Investing — Bill Bonner

The formula – fed-managed trade, high tariffs, a socialized economy, price fixing, crony coddling, and money printing – has been a big success, at least with politicians.

Every sh*thole country in the world has tried it, at one time or another. Zimbabwe, Venezuela, Argentina, Brazil… Peru had 7,000% inflation in 1990. Argentina currently has about 56% inflation – even with a reasonably sensible government.

Venezuelan inflation is running so hot, the statisticians can’t keep up with it; one estimate is 3 million percent.

Everything in the natural world is cyclical. Our eagerness to forget the lessons of the past (and present!) ebbs and flows like everything else. And no matter how many times you run the experiment, there are always people who want to run it again.

This very worthwhile commentary from Bill, filed from Dublin, appeared on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is here.


The Peasants’ Revolt — Jeff Thomas

In 2016, James Delingpole commented that toffs hate Brexit because it’s the Peasants’ Revolt.

For non-British readers, the word “toff” is a shortened form of “toffee-nosed,” a slang term for the rich or upper class. But more important is the reference to the Peasant Revolt of 1381, which is little-known on the western side of the Atlantic.

In fourteenth century England, the cost of ongoing warfare placed politicians in a situation in which they either had to concede the war, cut their own emoluments, or increase taxation significantly. As politicians always do, they chose the latter.

Revenue from the resultant poll tax proved to be less than anticipated, as large numbers of people found ways to evade the tax. The tax commissioners were then given wide latitude in the methods they chose to facilitate collection.

This very interesting commentary from Jeff showed up on the internationalman.com Internet site on Monday morning EDT — and another link to it is here.


Russia Confirmed It Removed “Most of Their People” From Venezuela

President Trump confirmed in a Monday afternoon tweet that Russia communicated to the U.S. that it has removed “most of their people” from Venezuela, in reference to military personnel previously servicing contracts with Maduro’s armed forces.

Trump’s tweet followed a Sunday WSJ report detailing that Russian state defense contractor Rostec is quickly pulling out of the Latin American country over concerns the debt-strapped socialist ally won’t be able to pay its bills now or in the future.

The president issued the statement while on a state visit to London in what could signal a broader Russian exit of defense support to the Maduro government.

The Wall Street Journal notes that it’s a huge blow to Maduro – and though it appears primarily motivated by lack of confidence in Caracas’ ability to pay the bills – this could mark the writing on the wall in terms of the future powerful backing of Maduro’s biggest international supporter. It further comes as the U.S. has vowed to keep up the pressure and after the Kremlin condemned what it called ongoing “U.S.-backed coup attempts“.

This article was posted on the Zero Hedge Internet site at 7:30 p.m. on Monday evening EDT — and another link to it is here.


Multi Billion U.K. Hedge Fund Blocks Redemptions

In a moment of financial serendipity, earlier today we tweeted that as a result of the sudden collapse in the market’s most crowded positions (which as we noted over the weekend, now face the biggest risk of a wipe out), “hedge fund redemption requests re-emerge.”

It turns out we were very much spot on, because just a few hours later, the Financial Times reported that Neil Woodford, the U.K.’s equivalent of David Tepper, has blocked redemptions from his £3.7bn equity income fund after serial underperformance led to an investor exodus, “inflicting a serious blow to the reputation of the UK’s highest-profile fund manager.”

The freeze on redemptions, exactly five years after Woodford opened his eponymous fund management group, underlines his increasingly precarious position. It follows a steady stream of investor outflows, which have occurred each month for two years, with the fund shrinking by two-thirds to £3.7bn since a peak of £10.2bn in May 2017.

The severity of this latest hit to the hedge fund industry can not be underscored enough. The FT quoted a veteran fund manager who has known Woodford for more than 20 years, who said that “this is one of the bigger events for the U.K. asset management industry of the last decade. A bonfire of reputation and a terrible moment for investor confidence.”

I suspect that this hedge fund is but the thin edge of the wedge, dear reader. This Zero Hedge news story put in an appearance on their website at 5:37 p.m. on Monday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


German SPD leader quits in blow to Merkel’s coalition

Andrea Nahles said on Sunday she would resign as the leader of Germany’s Social Democrats (SPD), raising new doubts about the durability of Chancellor Angela Merkel’s ruling coalition with the struggling centre-left party.

Merkel’s Christian Democrats and the SPD both took a hit in last week’s European elections as voters turned away from mainstream political parties, eroding support for a ruling coalition that already came close to falling apart last year.

Nahles, whose SPD is a junior coalition partner in Merkel’s ruling alliance, said she would resign as party leader on Monday and step down as head of the SPD’s parliamentary group on Tuesday.

The discussions within the parliamentary faction and feedback from within the party have shown me that I no longer have the necessary support to carry out my duties,” Nahles said in a statement released by the SPD.

The 48-year-old said she hoped her resignation “would open the possibility that the succession can take place in an orderly manner“.

The “grand coalition“, nicknamed GroKo in Germany, is due to rule until 2021 but Nahles’ resignation could trigger the SPD’s early exit, forcing Merkel to call snap elections, to lead a minority government, or to seek an alliance with the Greens and liberal Free Democrats.

This news item put in an appearance on the france24.com Internet site at 3:53 p.m. CEST on their Sunday afternoon — and I thank Roy Stephens for bringing it to our attention.  Another link to it is here.


Switzerland: The World’s Lowest Interest Rate Could Be Going Even Lower

Investor expectations are building that the Swiss National Bank will take its key interest rate even further below zero as it faces a renewed franc appreciation.

Amid escalating trade tensions and market jitters, the Swiss currency has gained about 2% against the euro in the past month. Futures for March 2020 are now putting an almost 50% probability of a 25 basis-point-cut in the SNB’s deposit rate. It’s currently at minus 0.75%, the lowest among the world’s major nations.

The franc’s gain buttresses the case of SNB President Thomas Jordan and fellow officials, who declined to move off their ultra-low rates last year even as the currency weakened and the economy expanded at a strong pace. They stressed markets were still fragile, and Jordan has repeatedly said the current policy remains necessary. He’s also said that rates can go lower still if needed.

The franc is moving along with other haven assets, which have rallied amid a decline in stocks on concern about the outlook for global growth. The German 10-year bond yield fell to a record low on Monday.

This Bloomberg  story was posted on their Internet site at 4:24 a.m. PDT on Monday morning — and it’s the second contribution of the day from Patrik Ekdahl.  Another link to it is here.


Americans are war-weary, while Iran was never a threat to us” – Virginia State senator to RT

U.S. citizens are weary of endless wars, Virginia State Senator Richard Black believes. He warned President Donald Trump against dragging the country into another one with Iran, and blamed John Bolton for being the top warmonger.

As tensions between Tehran and Washington continue to soar, Senator Black has addressed the U.S. president in a letter, warning against going into an all-out war with Iran. He squarely put the blame for the ongoing standoff on National Security Advisor John Bolton, and urged Trump to prevent the official from “usurping” his own role.

John Bolton has usurped [Trump’s] authority as Commander-in-Chief [CINC]. He countermanded your order for an immediate withdrawal from Syria, and now he has alarmed our allies by agitating for war against Iran. It was reported that you hope to avoid war with Iran. But the CINC does not ‘hope’. He commands. He does not delegate war-making to his staff,” Black wrote.

The U.S. citizenry is weary of the decades of endless wars, and starting another one – while others are still going on and on – is definitely a bad idea, Black believes.

I think the American people are very war-weary, and I don’t think it will bode well for the republicans if we end up in a shooting war with Iran.”

We’re in the 18th year of the war in Afghanistan. We have dropped over a quarter million of bombs on Iraq, a country that never attacked us, that never was a threat to us, that never took any negative action,” Black told RT, adding that Bolton “was one of the individuals involved in concocting the false narrative that got us into Iraq.”

The idea that Iran is somehow “terrorism sponsor No. 1,” actively peddled by the U.S. media and officials alike, is completely untrue, Black said. At the same time, there is plenty of evidence about Saudi Arabia to give it such a ‘title’, the senator said in his letter, accusing Riyadh of instigating the U.S. to attack Iran “on their behalf.

This very worthwhile story showed up on the rt.com Internet site at 7:19 p.m. Moscow time on their Monday evening, which was 11:19 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for bringing it to our attention — and another link to it is here.


Domino #2: Chinese Bank With $105 BN in Assets on Verge of Collapse

While the western world (and much of the eastern) has been preoccupied with predicting the consequences of Trump’s accelerating global trade/tech war, Beijing has had its hands full with avoiding a bank run in the aftermath of Baoshang Bank’s failure, scrambling to inject massive amounts of liquidity last week in the form of a 250 billion yuan net open market operation to thaw the interbank market which was on the verge of freezing, and sent overnight funding rates spiking and bond yields and NCD rates higher.

Unfortunately for the PBOC, Beijing is now racing against time to prevent a widespread panic after it opened the Pandora’s box when it seized Baoshang Bank two weeks ago, the first official bank failure in a odd replay of what happened with Bear Stearns back in 2008, when JPMorgan was gifted the historic bank for pennies on the dollar.

And with domino #1 down, the question turns to who is next, and will they be China’s Lehman.

This was the question we asked last Thursday, when we published a list of regional banks that have delayed publishing 2018 reports, the biggest red flag suggesting an upcoming bank solvency “event.”

One day later we may have gotten our answer, when the Bank of Jinzhou,  a city commercial bank in Liaoning Province, the second name in the list above, and with some $105 billion in assets, notably bigger than Baoshang, announced that its auditors Ernst & Young Hua Ming LLP and Ernst & Young had resigned, not long after the bank announced it would delay the publication of its annual reports.

For those confused, the delay of an annual report and the resignation of an auditor, means a bank failure is not only virtually certain, but practically imminent.

This worthwhile news item is datelined 4:03 a.m. on Monday morning, but I saw the article on the Zero Hedge website about six hours before that.  Another link to it is here.


Does China have enough U.S. dollars to survive the trade war?

[This is the first article in a three-part series looking at China’s U.S. dollar shortage risks amid the trade war with the United States as it plans to reform and internationalise its economy.]

The Chinese government is officially sitting on the world’s largest stockpile of foreign exchange reserves, but it has been scrambling recently to block back-channels for capital outflows as trade tensions with the United States increase.

Beijing’s increasing scrutiny of the usage of the U.S. dollar by Chinese companies and individuals, in the absence of any immediate signs of a financial crisis, along with accelerating efforts to lure in foreign capital, have raised suspicions among analysts that the world’s second-largest economy is worried about the risk of running short of the U.S. dollar.

On the surface, China should be the last country in the world to worry about a shortage – about two-thirds of its US$3.1 trillion worth of foreign exchange reserves, the world’s largest, are believed to be held in U.S. dollar-denominated assets.

China’s U.S. dollar interest rate for one-year deposits implied by the yuan exchange rate has risen to around 3.4 per cent from 2.4 per cent last August, according to Thomson Reuters data.

But the huge foreign reserves and a relatively stable currency do no reflect the true stresses underlying the economy, analysts said, because the concerns are that those reserves may not be enough to provide the safety buffer needed to pay for China’s imports and pay off its debt in adverse circumstances if the yuan faced a devaluation or a sharp drop in value.

Analysts, though, doubt that China would be subject to an imminent balance of payment crisis similar to the one that Argentina experienced last year. The Latin American country was hit by a currency crisis and stagflation because of structural deficiencies that constrained real demand and prevented the economy from growing sustainably.

This interesting article showed up on the South China Morning Post last Thursday — and I found it embedded in a GATA dispatch on Monday morning.  Another link to it is here.


Gold jumps to over 3-month peak as trade fears spur safe-haven buying

Gold climbed more than 1.5% on Monday to its highest level in more than three months on concerns that U.S.-Chinese trade tensions and Washington’s threat of tariffs on Mexico would hurt the global economy.

U.S. gold futures settled up 1.28% at $1,327.90 an ounce.

There are concerns still surrounding the trade wars, whether it be surrounding the tariffs with Mexico or the tariffs with China. There is a ‘flight to safety’ buying going into metals,” said Bob Haberkorn, senior market strategist at RJO Futures.

Relations between the United States and China got another jolt when the two nations clashed again at the Shangri-La Dialogue in Singapore on Sunday.

It remains to be seen if this is what the story states, or whether this is the usual dos à dos/do-si-do between the Managed Money and commercial traders.  Friday’s COT and Bank Participation Reports will tell us more.  This gold-related news item put in an appearance on the cnbc.com Internet site on Sunday night EDT — and I found it on the Sharps Pixley website.  Nice photo, though.  Another link to it is here.


Unique, massive emerald crystal discovered in Russian Urals

An emerald weighing some 1.6 kg, the largest to be found in nearly 30 years, has been unearthed at Europe’s largest emerald-beryllium ore field, located in Russia. The huge gemstone may be valued at up to US$500,000.

The rare crystal, which boasts both a unique form and size, was mined at a depth of 260-meters, Russia’s state hi-tech corporation Rostec, which owns the facility at Malyshevsky, announced in a press release about the discovery. Last year a smaller 1.5 kg stone was found at the same mine, while the largest emerald weighting more than two kg was mined back in 1990.

The gem even bypassed the technological process and came “almost in its original form,” with smooth straight edges. “This indicates a significant rarity and uniqueness of the emerald,” the chief of the facility, Evgeny Vasilevsky, explained.

There’s not much to this tiny rt.com story that was posted on their Internet site very early on Sunday morning Moscow time, but the photos sure are neat.  Larry Galearis, who has considerable knowledge in the mineral field had this to say about it…”The size is impressive, but the form – hexagonal – is the usual form. There does not appear to be a lot of gem quality beryl here as the multiple fractures render this more specimen grade.  The colour is not top end either…..The value quoted is therefore also questionable.”  Reader George Whyte was the first person through the door with this story — and another link to it is here.


The PHOTOS and the FUNNIES

Continuing on through Spences Bridge — and south on the Trans-Canada Highway, we turned into the community of Lytton on our way to Lillooet, only to be stopped by this unit grain train on the CPR tracks headed back to the prairies, empty from unloading in the port of Vancouver.  We were there for a bit, as it was at least a mile and change long, so I didn’t pass on the photo op.  The second shot is from a vantage point in Lytton, where we could look out over the confluence of the Thompson River, as it flows into the Fraser River.  Note the difference in water clarity.  And also note the Fraser Valley in the background.  That’s where we were headed.  The third shot was taken in that valley, looking back towards Lytton from whence we had just come.  The dead ‘tree’ in the shot is a deceased specimen of the big sagebrush — and this specimen would be a 100+ years old.  Click to enlarge for all.


The WRAP

It remains to be see if there’s any truth to the fact that gold and silver’s rallies to this point are dollar related, or other fears that are making the rounds on the Internet.

But the only thing that you can take to the bank is that because gold’s 50-day moving average has now been taken out with authority over the last two trading days, is that the Managed Money traders are selling previously placed short contracts…for big loses — and putting on new long contracts that they will sell for big loses later.  And considering the volume over  the last two trading days, the commercial traders are the willing and able counterparties — and are doing so with abandon.

But it should be pointed out that despite the gains of the last several trading sessions, the silver price is not yet within spitting distance of its 200-day moving average, let alone its 50-day moving average.  But the enormous volumes in that precious metal certainly suggests that the largest of the Managed Money traders may be covering some of their excessive short positions.

Ted won’t have an idea of whether JPMorgan was involved in the commercial category in either precious metal until he sees Friday’s COT Report.

In the other Big 4 commodities, I note that platinum, despite its big rally yesterday, is still well below any moving average that matters.  But I also suspect Managed Money short covering in that precious metal as well.  Copper hit a new intraday low for this move down, but closed higher than Friday’s close…a ‘key reversal’ for those technical analysis types.  WTIC was closed at a new low for this move down.  And it should also be pointed out that gold’s RSI trace on the 6-month chart below is about to break into overbought territory.  We’ll find out quick enough, I suppose, just how long this overbought situation lasts…or is allowed to last.

Here are the 6-months charts for the Big 6 commodities — and the above changes should be noted.  Click to enlarge.

And as I type this paragraph, the London open is a minute or so away — and I see that the gold was trading very unevenly sideways in the Far East on their Tuesday — and is currently up $1.30 the ounce. Ditto for silver — and it’s back at unchanged.. The same can be said of platinum — and it’s back at unchanged as well. Palladium’s price path started off the same as the other three precious metals in morning trading in the Far East, but price pressure showed up around noon China Standard Time — and it’s down 10 bucks as Zurich opens.

Net HFT gold volume is just under 53,000 contracts already — and there’s only 955 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is pretty healthy att 13,600 contracts — and there’s 1,135 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened up 7 basis points once trading began at 7:45 p.m. EDT in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. It has been heading quietly lower since, with its current 97.08 spike low tick coming at the 2:15 p.m. CST afternoon gold fix in Shanghai. It’s down 5 basis points as of 7:45 a.m. in London/8:45 a.m. in Zurich.


Today, at the close of COMEX trading, is the cut-off for this week’s Commitment of Traders Report and companion Bank Participation Report.  With the latter, we’ll find out what the world’s banks have been up to over the last month — and they’re usually up to quite a bit.

I will probably have something to say about what will be in Friday’s COT Report in tomorrow’s column, but from what I’ve seen so far, we’ll certainly be seeing an increase in the short positions of the commercial traders — and the Bank Participation Report will tell Ted how much it was.


And as I post today’s column on the website at 4:02 a.m. EDT, I note that the gold price has been creeping quietly higher during the first hour of London trading — and is up $3.00 the ounce. Silver continues to struggle — and is still at unchanged. Platinum is now up 2 bucks — and palladium is only down 3.

Gross gold volume is getting up there…something over 72,000 contracts — and minus roll-over/switch volume, net HFT gold volume is 68,000 contracts. Net HFT silver volume is now up to a hair over 17,000 contracts — and there’s 1,275 contracts worth of roll-over/switch volume out of July and into future months in this precious metal.

The dollar index’s current low came at 8:10 a.m. BST in London. It has bounced off that by a bit — and is down 7 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That’s all I have for you today, which is more than enough — and I’ll see you here tomorrow.

Ed