http://www.tfmetalsreport.com/blog/4542/saturday-gold-and-silver
Saturday Gold and Silver
It looks more and more like the next two weeks or so are going to be significant.
So, where do we start on this fine Saturday? How about with something from Friday? I posted these two charts into the comments section of yesterday's post. They show a classic short/theft tactic. Someone, either an HFT or a Cartel monkey, pulled the trigger on a sell order in silver at the very thin trading hour of 4:00 a.m., New York time. Since silver was sitting right on top of the previous week's lows, the effect was predictable. A host of sell-stops were "harvested" as price quickly fell about 50¢. Note then that price quickly recovered as liquidity returned with the opening of the Comex session.
Why did I start there today, you ask?
- Because now $28.40 is a very important level to watch early next week in silver, and,
- It is becoming increasingly likely that the same trick is going to get played out on a much larger scale in both gold and silver before a final bottom is put in and price permanently reverses.
Let's next visit our three friends...Crude, DrC and Sylvia. Do they have any clues for us? Why, yes, they do as a matter of fact. All three have come down dramatically and all three give the appearance of having a bit further to go. And if "commodities in general" show additional weakness over the next 7-10 days, you can probably imagine that selling pressure compounding our problems in gold and silver.
So let's start with silver. Running the stops yesterday has fortunately provided us with a very clear level to watch at $28.40. If silver slips below there again early next week, it would be a near certainty that we are going to take at least one trip down below $28. There has consistently been a lot of support there so taking it much lower is going to be a task for The Bad Guys.
That said, I'm beginning to sense that the ultimate goal of this entire event is to harvest the stops below $26. IF this happens...and currently I'd put the odds at about 25%...a quick drop to $25ish would be your final bottom. Price would quickly recover back above $26 and this deliberate beatdown would be over. How can I say that? More on that in a few minutes. First, two more charts:
And gold could very easily suffer the same fate. If The Cartel can engender enough additional spec selling, a veritable cornucopia of sell stops lay waiting for them sub-1530. And you can just imagine the reaction in the media: "GOLD IN BEAR MARKET!!" will be screamed as loudly as possible in the hopes of inspiring even more selling. Like silver, I only give this about 1 chance in 4 of happening but we must be on the lookout and prepare mentally. IF this occurs, you must be strong and BUY, not sell. The spike low will be The Bottom.
Now lets get back to why I am so confident that the selling has already been stretched to unsustainable levels and why, IF a spike low occurs, the metals would quickly recover. It's all in the CoT.
Yes I know that Santa claimed this week that the CoT is fudged and unreliable and yes I know that Santa has forgotten more about the metals markets that I know.....but....Unlce Ted believes in this stuff and so do I. Here's what Ted said in his mid-week newsletter:
"One of the reasons I think the data in the COT are accurate is that every contract has a long and short side. Therefore, to lie in the large trader reporting system that underlies the compilation of the COT, would require two lies; one by the big commercial lying and another by the counterparty holding the opposite side of the contract. I can see JPMorgan wanting to lie on its COMEX holdings, but I can’t see why a counterparty tech fund or speculator would assist in that lie. Please remember that lying on a large trader report is illegal and will be prosecuted by the CFTC (one of the few things they do well)."
With this in mind, here's a c&p of my CoT comments from yesterday:
For the Wed-Tue reporting week, gold was up $10 but total OI fell by 13,432. Silver fell by 17¢ and OI fell by 9,728.The only interesting thing in the gold CoT was the divergence between LargeSpecs and SmallSpecs. The LargeSpecs went net long 13,000 contracts while the small specs went net short 7,400. This, my friends, is called leading the HFTs by their collective noses. On the bounce, the LargeSpecs covered shorts and went long to the tune of 13,000 contracts. Once fleeced, the "market" rolled back over and now all of those new longs (at 1600+) are under water.
Once again, the real interesting stuff is in silver. Both the Large and Small specs were adding to their shorts. The Large Specs sold a net 4,700 contracts and the Smalls sold a net 2,300. The commercials also sold 1,700 longs, dropping their gross long position back to a still-whopping 52,509. All of this selling allowed the naked short Cartel members to cover a massive 8,769 shorts or about 9% of their total gross short position! Now at 83,395, The Silver Cartel has been able to trim their short position by over 15,500 contracts, from 98,979 just two weeks ago. That's a drop of 16% in two weeks while price fell $2 from $31 to $29. I'm sure that's just good timing and good fortune...at least that's what Cueball and Thunderlips think.On the bright side...- The total "commercial" long position in silver is actually up over the past two weeks while JPM et al have been covering. On 2/12/13, the gross comm long position was 52,182. As stated above, as of 2/26, it was still 52,509.
- The Large Specs are racing to get short. On 2/5/13, the Large Specs were only short a record low 6,588 contracts. Three short weeks later, they're short a total 16,016, an increase of 143%!
- The Large Specs are also feverishly dumping longs. Three weeks ago they were gross long 42,449. As f last Tuesday, that position had been whittled down to 37,753. That's a drop of 11%.
- And the Large Spec net long ratio, which just 3 weeks ago was totally out of whack at 6.44:1, has fallen all the way back to 2.38:1. Remember, as a general rule, anything under 3 is somewhat bullish and anything over 4 is somewhat bearish. Anything under 2:1 is extremely bullish. For examples, see here:http://www.tfmetalsreport.com/blog/4492/strange-days-indeed
- Also, all that Cartel short covering has further dropped the Cartel net short ratio. Last week it was 1.70:1 and this week it is 1.59:1. Again, historically, anything approaching 3:1 is very bad. Anything near 1.5:1 is very good.
I don't know if I can pound the table much harder. Could price be forced even lower, taking out $28 and heading toward $26? Yes, of course it can. But, if it does, the silver market will reach and surpass the exact same extremes that indicated bottoms in October of 2011, December of 2011 and August of 2012.
Again, please go back and looks at the "Strange Days Indeed" post from three weeks ago. (http://www.tfmetalsreport.com/blog/4492/strange-days-indeed) The data is compelling and telling. Both metals, when measured by The Cartel net short ratio, have reached very bullish levels and stop-running spike lows would make them more extremely bullish than any other time that I can recall. Simply put, with CoT history as a guide, there is NO WAY that gold is going to $1200 and silver to $18 or even $22. Not from this CoT structure!
Moving on...Speaking of the CoT, one of your fellow Turdites has constructed a site to help everyone read and interpret the data. It can be found here: http://goldsilvercot.com/charts/cot/index.php
As you know, Santa's company TRX is an advertiser on this site. Someday soon, the miners will turn and I have great faith in Santa and his company for the long term. Last week, they held their annual shareholder meeting and the entire thing was recorded and posted. Here's a link. I think you'll enjoy watching it: http://standrewsclubav.ca/webcast/client_tanzanian/20130228/
And you've probably noticed that we've had to add a captcha to the registration and login process here. Sorry but it was necessary. If you've never run a site before, you simply wouldn't believe the amount and intensity of the spamming effort out there. They really slow site performance so it is hoped that the captcha will help us all in enjoying and learning from the site.
OK, that's it for now. Enjoy your weekend but please be aware of continued volatility next week and do not allow yourself to get all freaked out by the temporary price action. Keep your wits about you and remember the fundamentals. Stay strong and keep the faith. Continue to prepare accordingly.
TF
p.s. Adding these ZH links which were posted Saturday afternoon. Don't want you to miss this: http://www.zerohedge.com/news/2013-03-02/hedging-funds-and-physical-vs-paper-gold. AND YOU MUST READ THIS: http://www.zerohedge.com/news/2013-03-02/why-jpmorgans-gold-vault-largest-world-located-next-new-york-fed
and while we're wondering at the New York Fed and JP Morgan's revolving door ( by way of the oh so convenient underground connecting tunnel ) , let's take a look at the Bank of England's gold - or lack thereof .....
A detailed look at Bank of England gold
2013-MAR-03
The London Bullion Market is the global trading centre for physical gold, and the Bank of England holds gold on behalf of other central banks. There are a number of historical reasons the Bank has this privileged role, but the most important are that the Bank is trusted, and it oversees the largest bullion market by far. Therefore a significant portion of the world’s monetary gold should be stored at the Bank of England.
This does not appear to be the case. First, we must try to get an idea of how much unidentified central bank, or monetary gold, is in London at the Bank of England.
Table 1 shows the derived figures for February 2006 and 2012 (The Bank’s accounting year-end).
Subtracting the known or reasonably estimable quantities listed in the table leaves 2,220 tonnes unidentified in 2006, which rose to 4,691 in 2012. To see how these figures stack up in a global context, we need to compose a second table (Table 2).
China, Russia and the middle-Asian states are taken out on the basis that their gold reserves are mostly from local mine production, and for political reasons they can be deemed unlikely to hold gold in London. The United States is assumed to hold all its gold on its own territory.
Immediately we can see a disparity, with unidentified central bank holdings in Table 2 declining by 464 tonnes, whereas the Bank of England reports an increase of 2,471 tonnes in custody. The explanation – taking the World Gold Council/IMF figures at face value – is that either central banks have been shipping their gold to London, or much more likely, the increase is not monetary gold at all. If the latter is correct, and given that the unidentified gold figures in Table 2 declined over the period, the maximum figure for monetary gold has to be within the 2,220 tonnes recorded in 2006.
This 2006 figure includes an undeclared quantity of gold held on behalf of bullion banks, but comparing the LBMA’s clearing statistics at the two dates suggests little overall variation in LBMA stocks. Logically the balance must be non-monetary gold held on behalf of governments and sovereign wealth funds, on the basis that no one else would be eligible for a bullion account with the Bank. Given the political instability in the Middle East and elsewhere over the last decade, it is very likely that this is the origin of the ownership of much of this custodial bullion. And if that is the case, we can assume that these holdings began to accumulate in the Bank’s custody before 2006.
This being the case, a significant portion of the 2006 figure of 2,220 tonnes must also be non-monetary gold. Therefore, on the basis of reasonable supposition it appears that the total amount of monetary gold at the Bank of England, including that of Germany, Austria and Mexico and the UK’s own stock, cannot be more than 3,320 tonnes, perhaps significantly less. The belief that the world’s central banks store a significant amount of their gold in London is therefore incorrect.
This raises two interesting questions: where is it all, and does it actually exist?
and......
http://www.zerohedge.com/news/2013-03-02/why-jpmorgans-gold-vault-largest-world-located-next-new-york-fed
( Where is Simon Gruber when you need him - with the connecting tunnel , his scheme would truly be golden ! )
Why Is JPMorgan's Gold Vault, The Largest In The World, Located Next To The New York Fed?
- Commodity Futures Trading Commission
- Federal Reserve
- FOIA
- Freedom of Information Act
- Italy
- JPMorgan Chase
- New York City
- New York Fed
- NYMEX
- Precious Metals
- Sovereigns
- World Trade
When two weeks ago we exposed theheretofore secret location of JPM's London gold vault (located under the firm's massive L-shaped office complex at 60 Victoria Embankment) we thought: what about New York? After all, while London is the legacy financial capital of the "old world", it is New York that the biggest private wealthof the past century is concentrated, and it is also New York where the bulk of the hard assets backing the public money of the world's sovereigns are located, some 80 feet below ground level in the fifth sub-basement of the New York Fed, resting on the bedrock of Manhattan.
That the topic of the gold "held'' by the New York Fed - historically considered the gold vault with the largest concentration of gold bars in the world - has become rather sensitive, in the aftermath of the Bundesbank's request to repatriate it (surely, but very, very slowly), is an understatement. Yet in the aftermath of some of the revelations presented here, we believe quite a few other countries will follow in Germany's footsteps for one very simple reason: suddenly the question of whether their gold is located at 33 Liberty, or just adjacent to it, in what we have learned is the de facto largest gold vault in the world, located across the street 90 feet below 1 Chase Manhattan Plaza, doesn't appear to have a clear answer.
But first, some background.
The location of New York's commercial vaults, like those of London, are closely guarded. While there is occasional anecdotal speculation of where one may find any given vault, a definitive answer is rarely if ever in the public domain. Luckily, the past few years, which saw a surge in the price of gold and silver, have provided a variety of useful clues, as one after another bank applied to have its legacy precious metal vault certified for commercial use with the CFTC.
For those who aren't easily discouraged, buried deep in the bowels of the CFTC's website, is a veritable goldmine of data, in the form of supplemental applications from assorted CME members, who one after another, and very quietly, had the CME provide supplements to the CFTC vouching for their approval as "licensed depositories and weighmasters for gold, silver, platinum and palladium."
For those curious (and that should be all who are interested by the precious metals space) what constitutes an approvable vault, we present the fully filed supplement application by Brinks (recently best known for having two of its armored cars captured in a Google Streetview snapshot just outside the JPM office at 60 Victoria Embankment) filed with the CFTC:
The application submitted by Brink's, Inc. and Brink's Global Services USA, Inc. for licensing its facility at 580 5th Ave., New York, NY for storage of the respective NYMEX and COMEX Gold, Silver, Platinum, and Palladium contracts meets the requirements of the Exchanges.BACKGROUND INFORMATIONBrink's Global Services USA, Inc. is a wholly owned subsidiary of Brink's Inc. The Brink's Company, which owns Brink's Inc., was founded as Brink's City Express in Chicago in 1859, and has been in operation for 150 years. Currently, it is based in Richmond, Virginia. Starting as an armored transportation service, it evolved to expand its operations to include precious metals storage in the late 1990s. Brink's has been operating Licensed Depositories approved to store precious metals against the Exchanges' Futures Contracts for 10 years. Brink's international network operates about 875 facilities and services customers in over 50 countries. It is estimated that it employs approximately 59,400 employees.NAME AND ADDRESS OF APPLICANTOffice LocationBrink's Inc. and Brink's Global Services USA, Inc. Suit400
580 Fifth Avenue
New York, NY 10036Vault LocationBrink's Inc.
580 Fifth Avenue
New York, NY 10036LEASE/VAULT CLASSIFICATION/INSPECTIONExchange staff inspected the facility at 580 5th Ave., New York, NY on Thursday, June 17, 2010, which is owned by Forty Seventh Fifth Company, LLC. Brink's Inc. is the Tenant in the signed copy of the Lease Agreement, entered into on November 9, 1992, that was provided to the Exchange. There are 5,000 square feet of space available, enclosed by four steel reinforced cinder block walls with a concrete ceiling and concrete floor on top of bedrock. The interior of the facility is divided into several work areas, including a 752 square foot, modular vault capable of housing one million ounces of gold, platinum, and palladium, and an additional two million ounces of silver. The no floor vault solution is surface mounted to the existing basement slab which is described as bedrock. The walls and ceiling-grid carry a U.L. Class-3 designation which is torch and tool resistant. The vault is equipped with one U.L. listed Class-3 oversized vault door offering a clear opening of 52"wide x 78" high. Custom Vault Corporation has certified that the existing vault system at 580 5th Ave., New York, NY meets all current U.L. listings as a Class-3 five-sided structure. It has also certified that all modular components (the modular vault panel components were manufactured by International Vault, Inc.) of the system have passed testing in accordance with the U.L. "Burglary Resistant Vault Doors" and "Modular Panels" standards.Cameras, motion detectors, and entry way alarms are installed throughout the interior and exterior access points. The activity is monitored 24 hours per day, 7 days per week. Access from exterior points to interior spaces is limited by the use of biometric proximity readers that record all activity. A majority of employees assigned to the area are licensed to carry Brink's issued firearms. The Depository employs Metler Toledo SG32001DR high precision self calibrating balances. The scales weigh to a tolerance of 1/1000th of a troy ounce, and meet all of the Exchange's requirementsThus we know where at least one of the world's largest precious metals depositories is located: deep underground the Diamond Tower located in the heart of Manhattan's jewelry district.Another such supplement was filed by the Bank of Nova Scotia's Scotia Mocatta. What many may not know is that it was Scotia Mocatta's vault that was destroyed in the events of September 11, as SM's vault was located deep beneath 4 WTC. From the application:The Bank of Nova Scotia’s Scotia Mocatta Depositary (SMD) is an Exchange-licensed depository for Gold, Silver, Platinum and Palladium. SMD has submitted applications, requesting that a new facility,located at International Airport Center, 230-59 International Airport Center Boulevard, Building C, Suite 120, Jamaica, New York, be approved for the storage of gold and silver deliverable against the COMEX Gold and Silver Futures Contracts, and for the storage of platinum and palladium against the NYMEX Platinum and Palladium futures contracts.History: The Bank of Nova Scotia, doing business as SMD, is an Exchange Licensed Depository for the storage of gold, silver, platinum, and palladium, and its current facility is located in Manhattan at 26 Broadway. SMD was previously known as Iron Mountain Depository (IMD), its name was changed when it was acquired by the Bank of Nova Scotia in 1997. The IMD/SMD facility has been a COMEX licensed delivery point since 1975. SMD has planned to develop a new facility since the terrorist attacks upon the World Trade Center, which destroyed SMD’s facility at 4 WTC. SM subsequently returned to its existing and former facility as an intermediate measure while the new facility was designed and built.In evaluating this application, SMD’s performance in the wake of the terrorist attacks on the World Trade Center must be noted. SMD’s Licensed Depository was located in a sub-basement of the WTC at the time of the attacks. When the material in this facility was trapped within the debris, SMD acted swiftly, offering to purchase any and all of the warranted material that was buried at the request of any holder of warrants to this material. Scotia further prepared to make replacement material stored in Canada available to offset any potential supply shortage that the destruction of its WTC facility might have caused.So Scotia Mocatta's place for a new vault is deep in Queens under what is described as a "two-story elevatored building located in a four building industrial park, Located within close proximity to JFK International Airport."Just in case the gold has to take off rather quickly we assume.And since both of these applications also contained an official list of licensed "depositories and weighmasters" we finally can compile a full, official list of where the largest commercial gold vaults in New York are located:
We now know that in addition to Brink's vault lying on the bedrock at 580 Fifth, the following gold vaults are located as follows:HSBC Bank USA1 West 39th St.
SC 2 Level
New York, NY
Manfra, Tordella, & Brookes90 Broad St.
Sub-Basement
New York, NYScotia Mocafta Depository, a Division of the Bank of Novia Scotia230-59 Int'l Airport Center Blvd. 3002
Building C, Ste. 120
Jamaica, NYYet one name is missing. The same name which as we reported back in October 2010, reopened its undisclosed New York gold vault after it had been "mothballed in the 1990s."The name of course is JPMorgan.Curiously (or perhaps not at all), when the CME on behalf of JPM submitted the certification filing alongside the comparable such supplements as filed by Brinks above, it requested a FOIA (Freedom of Information Act) confidential treatment. As a reminder, to be eligible for FOIA exemption status the protected information must be of vital importance to the nation's safety. This is precisely what JPM thought the details surrounding its New York vault are. To wit:
Pursuant to Sections 8 and 8(a) of the Commodity Exchange Act ("CEA"), as amended, and Commission Regulation 145.9(d), NYMEX and COMEX request confidential treatment of Appendix A, Appendix B, and this letter on the grounds that disclosure of Appendix A and/or Appendix B would reveal confidential commercial information of the submitters (NYMEX and COMEX) and of other persons. Pursuant to Commission Regulation 145.9(d)(5), NYMEX and COMEX request that confidential treatment be maintained for Appendix A and Appendix B until further notice from the Exchanges. We also request that the Commission notify the undersigned immediately after receiving any FOIA request for said Appendix A, Appendix B or any other court order, subpoena or summons for same. Finally, we request that we be notified in the event the Commission intends to disclose such Appendix A and/or Appendix B to Congress or to any other governmental agency or unit pursuant to Section 8 of the CEA. NYMEX and COMEX do not waive their notification rights under Section 8(f) of the CEA with respect to any subpoena or summons for such Appendix A or Appendix B.
Please contact the undersigned at (212) 299-2207 should you have any questions concerning this letter.Sincerely, /s/ Felix Khalatnikov
Yet oddly enough, the FOIA request letter itself, while also being filed with a request for Confidential Treatment, never got it. As a result it was posted at this address. Ooops.
But a far bigger oops, is that on the first page of said declassified confidential FOIA app, in black ink, we get the missing piece:
In addition, the Exchanges are providing the Commission with the application summary of requirements for the JP Morgan Chase Bank N.A. facility located at 1 Chase Manhattan Plaza, New York, NY.
And so, despite the extended attempts at secrecy, we finally hit the proverbial goldmine vault.
So what do we know about 1 Chase Manhattan Plaza. Well, aside from the fact that the 60-story structure, built in the 1950s, was the headquarters of the once-legendary Chase Manhattan corporation, and which when it was built was the world's sixth tallest building, not much.
So we set off to learn more.
To learn more, we first went to the motherlode: the Landmarks Preservation Commission, whose report on 1 CMPdescribes everyone one wants to know about this building and then much more, such as that:
One Chase Manhattan Plaza combines three main components: a 60-story tower, a 2½ acre plaza, and a 6-story base, of which 5 floors are beneath grade.
So the old Chase HQ, once the stomping grounds of one David Rockefeller, and soon to be the other half of JPMorgan Chase, has 5 sub-basements, just like the NY Fed...
Reading on:
Excavations, said to be the largest in New York City history, reached a depth of 90 feet
Or, about the same depth as the bottom-most sub-basement under the NY Fed...
But then we hit the jackpot:
Originally constructed with white marble terrazzo paving and enclosed by a solid parapet of white marble travertine that was personally selected by Bunshaft in Tivoli, Italy, the L-shaped plaza levels the sloping site and conceals six floors of operations that would have been difficult to fit into a single floor of the tower, including an auditorium seating 800 [and]the world’s largest bank vault.
And there you have it: the JPM vault, recommissioned to become a commercial vault, just happens to also be the "world's largest bank vault."
Digging some more into the curious nature of this biggest bank vault in the world, we learn the following, courtesy of a freely available book written by one of the architects:
On the lowest level was the vault, which rested directly on the rock - the "largest bank vault in the world, longer than a football field." It was anchored to the bedrock with steel rods. This was to prevent the watertight, concrete structure from floating to the surface like a huge bubble in the event that an atomic bomb falling in the bay would blow away the building and flood the area.
In other words, the world's biggest bank vault, that belonging to the private Chase Manhattan empire, and then, to JPMorgan, was so safe, the creators even had a plan of action should it sustain a near-direct hit from a nuclear bomb, and suffer epic flooding (such as that from Hurricane Sandy).
It is no surprise, then, that the street entrance to this world's biggest vault located under 1 Chase Manhattan Plaza makes the entrance to any medieval impregnable fortress seem like child's play in comparison. Courtesy of Google StreetView:
Yet it is not what is on this side of the street, which just happens to be known as Liberty Street, that is what is the most interesting part of this whole story. It is what is on the other:
Or, shown another way...
That's right, ladies and gentlemen, as a result of our cursory examination, we have learned that the world's largest private, and commercial, gold vault, that belonging once upon a time to Chase Manhattan, and now to JPMorgan Chase, is located, right across the street, and at the same level underground, resting just on top of the Manhattan bedrock, as the vault belonging to the New York Federal Reserve, which according to folklore is the official location of the biggest collection of sovereign, public gold in the world.
At this point we would hate to be self-referential, and point out what one of ourown commentators noted on the topic of the Fed's vault a year ago, namely that:
Chase Plaza (now the Property of JPM) is linked to the facility via tunnel... I have seen it. The elevators on the Chase side are incredible. They could lift a tank.
... but we won't, and instead we will let readers make up their own mind why the the thousands of tons of sovereign gold in the possession of the New York Fed, have to be literally inches across, if not directly connected, to the largest private gold vault in the world.
We think readers can do a good enough job on their own.
http://www.caseyresearch.com/gsd/edition/john-hathaway-the-investment-case-for-gold...part-2/
¤ YESTERDAY IN GOLD & SILVER
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'.
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 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 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'sIssuers 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 hisabout.ag/SLV/ 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 ishere.
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.
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.
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selected news and views.......
Michigan Naming Fiscal Manager to Help Detroit
Over the fierce protests of this city’s elected leaders, the State of Michigan plans to send an emergency manager to repair the deeply troubled finances of Detroit, one of the largest cities ever to reach such a dire point or to face such a level of oversight.
“There is probably no city that is more financially challenged in the entire United States,” Gov. Rick Snyder said on Friday as he explained why he had deemed Detroit’s woes too fundamental, too lasting and too large to be solved by the city itself.
Mr. Snyder’s call for an emergency manager, who would wield sweeping powers to reshape the city, underscored a long, troubling arc for Detroit. Once the cradle of the American auto industry and the nation’s fourth most populous city, it is now less than half the size it was decades ago and has a public sector plagued by more than $14 billion in long-term liabilities and annual worries of cash shortfalls.
This article appeared in The New York Times yesterday...and it's courtesy of Roy Stephens.
Britain Heads for New Recession
The risk that Britain is entering its third recession in four years grew on Friday with figures showing that manufacturing shrank unexpectedly last month and mortgage approvals for home buyers dropped in January.
Gross domestic product fell at the end of last year, bringing Britain within sight of another recession and the latest data suggested the central bank may need to do yet more to revive the economy.
The pound sank to its lowest level against the dollar in more than 2-1/2 years, while prices of British government bonds - which the Bank of England could resume buying - rose after the releases.
The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) fell to 47.9 from a downwardly revised 50.5 in January, confounding forecasts for a rise to 51.0. It was the first reading below the 50 line that separates growth from contraction since November.
This Reuters piece found a home on The New York Times website yesterday...and it's certainly worth skimming if you have the time. My thanks to Phil Barlett for sharing it with us.
Eurozone unemployment touches fresh high
Unemployment in the eurozone rose to a record 11.9pc in January from 11.8pc in December, with nearly 19m people out of work.The Eurostat data agency said
In the 27-member EU, the unemployment rate edged up to 10.8pc from 10.7pc in December, with 26.2m jobless.
Eurostat said that compared with December, some 201,000 joined the jobless queues in the eurozone in January and 222,000 in the EU.
The highest jobless rates were in bailed-out Greece, at 27pc - although this figure is for November - and in struggling Spain, on 26.2pc.
This story, along with an excellent chart, appeared on the telegraph.co.ukInternet site late yesterday morning GMT...and I thank Manitoba reader Ulrike Marx for sending it along.
God’s Racket: Why It’s High Time to Shut Down the Vatican Bank
It’s a place where angels fear to tread; where criminals, frauds and mysterious corpses turn up as regularly as rats in the metro. The Institute for Works of Religion, commonly known as the Vatican bank, was set up in 1942 by Pope Pius XII to manage the vast Vatican finances. Often referred to as the world’s most secret bank, the operation is run by a CEO and overseen by five cardinals who report directly to the Pope.
The bank’s official role is to safeguard and administer property intended for works of religion or charity. The actual activities of the bank are somewhat different. They include money laundering for narcotics traffickers, bribery, skimming charitable funds to enrich priests, and tax evasion for wealthy Italians.
The scandals associated with the Vatican bank, particularly over the last four decades, are so sordid and improbable as to strain the creativity of a supermarket tabloid. The Church’s past offenses of selling indulgences and charging fees for sacraments have been updated for the world of modern finance, complete with shell companies, speculation and secret transfers. Last year, Italian journalist Gianluigi Nuzzi published a book delving into the intrigue and corruption swirling in a bank that has been answerable to no one. It was an eye-opener.
I've posted several articles about the Vatican bank over the years...and each one gets more incredible...and sordid. Even JPMorgan Chase has stopped dealing with it, that's how bad it is. This story, which was posted on the alternet.orgInternet site on Monday, is your first must read of the day...and is another story from Roy Stephens that I've been saving for my Saturday column.
American Gold Eagle Bullion Coins Continue Winning Streak
Although sales of the United States Mint's American Gold and Silver Eagle bullion coins showed declines from the seasonal spikes seen in January, monthly sales levels were significantly higher compared to the year ago period.
For the month of February 2013, American Gold Eagle bullion sales reached 80,500 ounces, across the four different sizes available. While this was down from the prior month when 150,000 ounces were sold, the amount is nearly quadruple the sales of 21,000 ounces recorded in February 2012. This also marks the fifth consecutive month that Gold Eagle bullion sales have exceeded the level of the year ago period.
This short piece was posted on the coinupdate.com Internet site yesterday...and it's very much worth your time...and I thank Elliot Simon for sharing it with us. As I keep saying, I hope you are getting your share at these give-away prices.
Greek Central Bank Says Gold Reserves Worth 4.7 Billion Euros
Greece had gold reserves worth €4.74 billion ($6.2 billion) at the end of 2012, the country’s central bank said in a letter to a lawmaker about the fate of the country’s gold during the Nazi occupation.
The reserves at December 31st totaled 3.76 million ounces of gold, according to the letter forwarded to parliament by the Athens-based Finance Ministry and obtained by Bloomberg News. Half is held at the central bank in Greece while the remainder is held at the Federal Reserve Bank of New York, the Bank of England and in Switzerland, according to the document.
The information came in response to a query submitted by a lawmaker of the far-right Golden Dawn party after reports in the Greek press that gold moved in 1941 ended up in England and was never returned.
Well, if it really does exist, then they shouldn't mind posting the bar list on their website. This very short Bloomberg story was filed from Athens yesterday...and it's courtesy of Ulrike Marx.
John Hathaway: The Investment Case for Gold...Part 2
"What is reflected in the dollar price of gold, despite the meandering rationalizations of conventional wisdom, is the ongoing and potential future loss of utility in the dollar as the cornerstone of global credit. In our view, the next stage of the bull market in gold will be marked by a widely shared awareness of the lost purchasing power of paper money. Such an outcome is, after all, the design of Fed policy which has set upon a course that could prove extremely difficult to alter. When the fog clears and, as we expect, the dollar’s loss of value becomes broadly palpable, we look for the gold price to advance to new all- time highs against all paper currencies."
Of course there's not a word in here about the monstrous and grotesque short positions in all four precious metals held by JPMorgan et al. Like Frank Holmes, John Hathaway can't and won't go anywhere near the price management scheme in the precious metals...even though they both know full well what's going on. Both are just too much part of "The Establishment" to stand up and point out that the Emperor has not clothes, at least not in public. But, having said that, they're both good guys. John's commentary was posted on the tocqueville.com Internet site on Thursday.
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¤ THE WRAP
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)
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.
Hi Fredw, Nice of the Fed to share their vault :) Kev
ReplyDeleteyeah , back and forth ........nice handy tunnel for the boys to deploy !
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