JPMorgan Buys Back More of Its Silver and Gold Short Positions
As I mentioned in my closing comments in this column yesterday, it would be interesting to see if the 50-day moving average in gold… and the 200-day moving average in silver got taken out to the downside on Tuesday. Well, they broke through both, but it was only by an eyelash [and a few seconds] in each metal.
From these New York lows, which occurred minutes before 8:30 a.m. Eastern, both metals blasted higher… with the rallies in both ending precisely two hours later… minutes before 10:30 a.m. Eastern time.
Yesterday's highs and lows in both metals were as follows: Gold – $1,236.70 spot/$1,209.30 spot. Silver – $18.51 spot/$17.74 spot.
Here's yesterday's gold chart…
…and yesterday's silver chart.
The bullion banks were active in both platinum and palladium as well, as their charts look pretty similar.
What you see in the two charts above was collusion by the bullion banks to rig the prices down to the pertinent moving averages in both metal…starting at the Far East open on Tuesday morning…and ending with the spike down at 8:30 a.m. in New York. That's what I was referring to in the closing comments of yesterday's column as well. The price spike was most likely JPMorgan covering short positions in all these metals. Platinum and palladium, too.
When I spoke to Ted Butler [butlerresearch.com] yesterday he pointed out something that I had missed in all the excitement. In commentary to his subscribers yesterday, Ted put it this way… "What was special about silver was that it first plunged below the last remaining big moving average, the 200 day, before reversing dramatically higher to trade above all the moving averages. I’m not a technical trader, but the specific term for this abrupt move from below all the moving averages to above is, I believe, a “golden cross.” I’m not sure of the significance of this price reversal, but to my knowledge I don’t think it has occurred in silver in such a short time frame, namely, within a couple of hours."
The world's reserve currency conveniently fell about 60 basis points from 8:15 a.m. until 10:30 a.m. Eastern time… which covered the entire dramatic price rise in both gold and silver. Coincidence, you ask? Not bloody likely.
The precious metal stocks did pretty well for themselves… with the top in both coming shortly after gold and silver hit their highs. But, since both metals flat-lined from 10:30 a.m. onwards, the action in the general equity markets picked away at the HUI until it finally succumbed to a 0.97% loss on the day.
Tuesday's CME Delivery Report showed that 109 gold contracts were posted for delivery on Thursday. It was all JPMorgan and HSBC. Here's the link.
The GLD ETF showed a small withdrawal yesterday… 48,876 ounces. And, surprise surprise… the SLV ETF reported actually receiving some silver. This is the first time since July 13th that any silver has gone into SLV. This time it was 783,009 ounces. There was no sales report from the U.S. Mint yesterday.
Over at the Zürcher Kantonalbank in Switzerland last week, their gold ETF was only up a tiny 362 ounces… but their silver ETF jumped an impressive 1,653,609 troy ounces! Since the beginning of August, the ZKB silver ETF has risen by 3.2 million ounces. That begs the question as to where they're getting the silver from… and who's buying it? I thank Carl Loeb and Nick Laird for those numbers.
There wasn't a lot of activity over at the Comex-approved depositories on Monday. A net 93,097 ounces of silver was taken into their inventories. The link to that 'action' is here.
The news is so bad… and there's just so much of it, that it's hard to know where to begin.
I'll start with the real estate market. The huge drop in July's sales of existing homes in the U.S. was a stunner. I've said countless times in this column that you should call me in 2013 and we can talk about a bottom in the U.S. housing market at that time. Well, dear reader, I wasn't kidding… and I'm now considering the possibility that I might have to push that date out even further. Here's a marketwatch.com story about it that was sent to me by reader Scott Pluschau. The headline reads "Existing Home Sales Plunge 27.2%"… and the link is here.
The second story from Scott is a Bloomberg piece headlined "California Defers $2.9 Billion for Schools, Counties". California will delay paying $2.9 billion of subsidies to schools and counties in September, a month earlier than projected, to save cash amid an impasse that has left the state without a budget for 54 days. The link to the story is here.
Here's something that reader 'David in California' sent me from thechicagobusiness.com website. The headline is an eye-opener. It reads "Illinois Teachers' Retirement System selling off $3B to cover benefits". The system is the fifth Illinois statewide defined benefit plan to sell off investments this fiscal year to pay benefits. This is real scary stuff, dear reader… and if you're planning on retiring anytime soon…this article should be on the top of your must readlist. The link is here.
Reader Roy Stephens sent along this Ambrose Evans-Pritchard offering that was posted over at The Telegraph in London last night. The global bond markets and the twin havens of the yen and Swiss franc have been flashing warning signs for weeks, tracking leading indicators as they topple like dominoes. They always sniff trouble first. The headline reads "Hard-nosed Fed sends global markets reeling". This is your first must read piece of the day… and the link is here.
Today's first gold-related story is a GATA release from yesterday evening. Chris Powell's headline to it reads "Fed 'probably' manipulates gold, seeks to 'destroy' it, Ron Paul tells Kitco News". The headline to the Kitco interview itself reads "Ron Paul Calls for Audit of U.S. Gold Reserves". Chris Powell's preamble, along with the interview, are both very much worth your time… and the link is here.
The next gold-related GATA release is a story out of Tuesday's edition of The Wall Street Journal. Powell's headline to this reads "Wall Street Journal gives gold only resentful acknowledgement as safe haven". The headline in the paper reads "As Dollar Slides, Safe-Haven Options Shrink". Normally this story is subscriber protected… but is printed in the clear in this GATA release. It's not overly long… and if you have the time, it's worth it. The link is here.
Eric King of King World News provides today's finally item of interest. He did a timely interview about gold and silver with Ben Davies, CEO of Hinde Capital in London. They discussed what Davies called the "fascinating" action in silver yesterday… and his expectation of price explosions this fall in both gold and silver, China's increasing leadership in the gold market, and the likelihood of currency devaluations, among other things. The interview is a must listen… and the link is here.
He that lives upon hope will die fasting. – Benjamin Franklin
Well, Tuesday was certainly an exciting day in the gold and silver markets. Normally, not much happens in Far East and early London trading… but the action yesterday in those markets was a dead giveaway that something was going to happen in New York trading… and it certainly did. The bullion banks might as well have taken out a full page ad in The Wall Street Journal… and marched a brass band past the CFTC… as they were that obvious.
Gold volume yesterday was monstrous… pretty close to 140,000 contracts net of all roll-overs and spreads… and there weren't many of them. In silver it was the same… with net volume north of 50,000 contracts. It will be interesting to see how much information can be gleaned from the changes in open interest numbers when they're posted later this morning.
And even more important than that… will any of this data be in Friday's Commitment of Traders report? I mentioned yesterday that if we have a big day on Tuesday, the bullion banks conveniently have reporting problems… and even though Tuesday's action is supposed to be reported in this Friday's COT report, the numbers may not show up until the following Friday's report… which is September 3rd. Knowing these bastards the way I do… I'd bet a fair chunk of money that they'll bury Tuesday's volume and open interest numbers until next Friday.
Trading action in the Far East and the early going in London this Wednesday morning was a yawner by comparison to Tuesday… but all that changed shortly before 10:00 a.m. London time, as both metals spiked up a bit. As I write this, Hong Kong is still open for another hour… and the London a.m. gold fix at the Hong Kong close [10:30 a.m. in London… 5:30 a.m. Eastern time] could be a little more exiting than usual, as well.
Here's silver's chart from yesterday… with the "Golden Cross" that Ted Butler spoke of… standing out like a sore thumb. The only question to be asked here is whether the tech funds will come pouring in… or does JPMorgan have something else in mind? It's entirely possible that we might see that $5 or $10 rise in silver price that Ted spoke of in one of his interviews a few weeks back. We'll see.
Note how gold's 50-day moving average was just touched on this graph. This sort of activity [along with silver's above] did not happen by accident. It was totally premeditated. Based on that, one wonders what other premeditated moves are in store for us in the days and weeks ahead?
Things are not looking great out there, dear reader. We are very close to a complete collapse of just about everything. As I've mentioned many times in my closing commentaries over the years… there are only three ways out of this: 1] a complete deflationary collapse; 2] a hyperinflationary depression; 3] a re-pricing of the world's gold reserves to allow the world's central banks to bring the asset side of their respective balance sheets back into line with their liabilities. Whatever happens, we're well down the road to one of these outcomes right now.
With that flurry in London just a while ago… it could turn into another exciting trading day in New York. I'm still "all in"… and happy that I am.
I hope your Wednesday goes well… and I'll see you on Thursday.