THE WRAP / ED STEER´S GOLD AND SILVER DAILY

The Wrap

March 12, 2015


As has been the case for eight days running, silver (and gold) has hit successive new price lows on the COMEX through today. I know some things for sure – how and why this is happening, even though I can’t know what everyone (including me) wants to know, namely, where’s the exact bottom?

That will only be known after the bottom has passed. So let’s stick to what is known – the how and why of the decline.

This price decline is a 100% pure COMEX production, as is nearly always the case. It is not the result of any developments in the physical world of silver, such as investors selling physical silver on balance. It is not the result of any sudden increase in silver (or gold) mine production or falloff in physical industrial demand.

Technical funds and other price momentum speculators are selling into the lower prices that the commercials know how to create.

The commercials rig ever lower prices for the purpose of buying whatever contracts the technical speculators can be induced into selling. The game has become so obvious and repetitive and proven by the CFTC’s own data, that the only wonder is how everyone can’t see it after it’s explained to them.

What is also known is that there is a limit to technical fund selling.

There may be no limit, in theory or practice, as to how many contracts the commercials can buy or sell, but there is a very finite limit for the technical funds. Quite simply, if the equation was reversed and it was the commercials who were limited in any way and the speculators could buy or sell in unlimited quantities, the COMEX silver manipulation would not have lasted even a year, to say nothing of not enduring for 30 years.


JPMorgan demonstrated on several occasions over the past seven years that it was allowed to hold over 40,000 net contracts of COMEX silver short, the equivalent of 200 million ounces. Never would an individual technical fund or other speculator be allowed to hold 40,000 contracts of COMEX silver. I’m not telling you anything you don’t know about the COMEX paper game being rigged and how the key to ending the manipulation now rests in the physical silver market, but even the current price take-down will soon be exhausted in strictly paper terms.
Silver analyst Ted Butler
11 March 2015

I'd like to think, based on the share price action in both silver and gold, that we saw the lows in the precious metals for this move down during the COMEX trading session yesterday.  But as Ted Butler pointed out in the quote above, we won't know for sure until it's plainly visible in the rear-view mirror.

Here are the 6-month charts for all four precious metals---and it's obvious that we are at, or very close to, the lows from last November, which are pretty much bottom-of-the-barrel numbers.

We're oversold in three of the four precious metals---and because palladium has been trading to its own drummer for many months now, I don't think that the current RSI-neutral position means much in the grand scheme of things, as it's a very tiny market.

As I type this paragraph, the London open is thirty minutes away. 

 

All four precious metals hit their lows of the Far East trading session at 10 a.m. Hong Kong time on their Thursday morning---and shortly before 2 p.m. they all popped to the upside in unison. 

 

This had nothing to do with supply and demand---and everything to do with trading in the futures market.  At the moment, they're all up decent amounts---and only time will tell if they're allowed to keep those gains.  Not surprisingly, net gold volume is already pretty chunky at 29,000 contracts---and silver's net volume is 6,100 contracts.  It's obvious that these rallies, such as they are, aren't going unopposed by JPMorgan et al.

The dollar index, which peaked out at 100.60 at noon Hong Kong time on their Thursday, is now down 38 basis points as of this writing.

I was happy to see the new low prices that were set yesterday---and the corresponding rise in their associated equities.  As I said further up in today's missive---"I would guess that we saw some serious bottom fishing, or the insiders were buying like crazy because they knew that the low was in yesterday.  We'll see."

The only unfortunate thing is that because yesterday's price action occurred after the cut-off for tomorrow's Commitment of Traders Report, we'll probably never know what the true bottom was in terms of long and short contracts held by the Big 8 traders---and their technical fund prey in the Managed Money category.

And as I send this off to Stowe, Vermont at 5:20 a.m. EDT, I note that the prices of all four precious metals got stepped on shortly after 7:00 a.m. GMT in London.  They're all still up on the day, at least for the moment, but the gains have certainly been pared back.  Net gold volume is now 39,000 contracts---and silver's net volume is around 7,700 contracts.  As I said before, these rallies are not going unopposed---and the volume and price action certainly bears that out.

It appears that the dollar index ran into "gentle hands" at the 99.00 mark at 8:00 a.m. GMT right on the dot, which was the London open, but the precious metals got capped about an hour before that.   Right now the index is down 36 basis points.

That's more than enough for another day---and I'll be more than interested in what the price charts show when I roll out of bed later this morning.