• Gold: 1,475.71 0.76
  • Silver: 16.89 0.03
  • Euro: 1.108 0.000
  • USDX: 97.578 -0.024
  • Oil: 58.3 -0.07

COT Report For Silver is Off-the-Charts Wildly Bullish in the Extreme

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July 1, 2015 - 11:49am

27 June 2015 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

The gold price crept higher in early Far East trading on their Friday morning—and that lasted until shortly after 8 a.m. Hong Kong time. It didn’t do much until the spike down at the London open—and the subsequent rally got its wings clipped once the London a.m. gold fix was done for the day. The absolute low tick of the day came shortly before the equity markets opened in New York. They crawled higher from there until 12:50 p.m. EDT—and then traded flat into the 5:15 p.m. close of electronic trading.

Despite the appearance of a lot of price activity yesterday, it’s only because of the ‘y’ axis scale on the chart. Gold traded in less than a ten dollar range all day on Friday, so the highs and lows aren’t worth mentioning here. But, having said that, ‘da boyz’ did set a slight new low for this current move down.

Gold finished the Friday session in New York at $1,174.20 spot, up $1.30 from Thursday’s close. Net volume was nothing special at 101,000

contracts.270615gold

The silver price traded in a similar fashion to gold in the Far East yesterday, but the quiet was shattered starting shortly before the London open, when JPMorgan et al, along with their HFT buddies and their algorithms, hit silver for 25 cents in less than fifteen minutes. The price recovered fully within thirty minutes, but it should be obvious to all but the willfully blind, that there was absolute nothing free-market about that price action. After that, the silver price followed the gold price around like a shadow.

The high and lows ticks are definitely worth looking up here—and the CME Group recorded them as $15.865 and $15.45 in the July contract.

Silver closed yesterday at $15.745 spot, down 9 cents from Thursday’s close. Gross volume was over the moon at 106,671 contracts, but it all netted out to only 6,800 contracts, as everything else was roll-overs or switches.

260615Kitco Silver -- 0510 EDT

Platinum and palladium were mini versions of the gold price chart. Platinum finished the Friday session at $1,080 spot, down 3 dollars from Thursday’s close. Palladium was similar—and it should be noted that ‘da boyz’ set a new intraday low price for this move down once again, but the metal itself closed up a buck at $677 spot. Here are the charts.

270615platinum

270615palladium

The dollar index closed late on Thursday afternoon in New York at 95.21. It rallied a hair in early Far East trading, before rolling over and hitting its 95.09 low around 9:30 BST in London. It chopped higher from there in rather erratic fashion, with the 95.63 high tick coming just before 11 a.m. EDT. It hung in there until 12:30 a.m. before beginning to slide. The index closed at 95.40—up 19 basis points on the day.

270615intraday

Here’s the 1-year ‘bigger picture’ view of the world’s reserve currency.

270615 1-year USD

The gold stocks opened down a bit, but rallied into the London p.m. gold fix, with their respective highs coming shortly after 10 a.m. EDT. From there they sank back to unchanged—and chopped around that mark for the remainder of the Friday trading session. The HUI closed down another 0.22 percent.

270615HUI

The silver equities barely got a sniff of positive territory—and kept on sinking as the day went along—as Nick Laird’s Intraday Silver Sentiment Index closed down 1.81 percent.

270615Silver 7

For the week, the HUI closed down 1.13 percent—and the SSI closed down 3.85 percent.

The CME Daily Delivery Report showed that 39 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. The short/issuers in gold were HSBC USA and Canada’s Scotiabank with 27 and 12 contracts respectively. The only long/stopper was JPMorgan with all 39 for its client account. The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that open interest in gold for June dropped by 183 contracts, leaving 40 still open—and 39 of those are up for delivery on Tuesday. In silver, June o.i. dropped by 21 contracts leaving 2 still open—and those 2 contracts are posted for delivery on Tuesday as well. The June delivery month in both precious metals is pretty much done.

For a change, there was a withdrawal from GLD, as an authorized participant withdrew 57,522 troy ounces yesterday. I would guess that this withdrawal was of the ‘plain vanilla’ variety. But the big surprise was in SLV, as an authorized participant withdrew a shocking 4,776,460 troy ounces—and although the silver price action has been bad, it certainly hasn’t been bad enough to warrant a withdrawal of this size. If I had to bet ten dollars, I would guess—based on what else has been happening in silver so far this month—that someone handed over 4,776,460 SLV shares and said “Give me the silver.

There was a sales report from the U.S. Mint yesterday. They didn’t sell any gold, but they did sell another 410,000 silver eagles.

Month-to-day the mint has sold 61,500 troy ounces of gold eagles—16,000 one-ounce 24K gold buffaloes—and 3,690,000 silver eagles. Based on these sales numbers, the silver/gold ratio works out to just under 48 to 1.

Mint sales for the month-to-date are miles ahead of May sales. For the entire month of May, the mint sold 21,500 troy ounces of gold eagles—9,500 one-ounce 24K gold buffaloes—and only 2,023,500 silver eagles.

Silver prices were much higher in May that they have been in June—and although I can’t read Ted Butler’s mind from here in Edmonton, I’d guess that it may have been another case where JPMorgan knew they were going to kill the price of silver—and backed off buying silver eagles until they’d hammered the price down once again. They did that last year over a several month time period—and Ted wrote about it extensively at the time.

There was some gold activity worthy of the name over at the COMEX-approved depositories on Thursday. Although nothing was reported received, there was 38,147 troy ounces shipped out. And with the exception of 5 kilobars, every troy ounces came out of Canada’s Scotiabank. The link to that activity is here.

There was far more activity in silver, as 1,175,199 troy ounces were reported received, but only 20,778 troy ounces were shipped out. There was a truckload apiece into HSBC USA and the CNT Depository. The link to that action is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 1,489 kilobars—and shipped out 3,134 kilobars. All the activity was at Brink’s, Inc.—and the link to it is here.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday contained some surprises. The situation in silver is now off-the-charts wildly bullish, but it wasn’t quite as good in gold—which I’ll get to as soon as I talk about silver.

Because of the monstrous size of the short position held by the Managed Money traders, there are at least two, if not more of these traders, firmly but temporarily embedded in the ‘Big 4′ and ‘5 through 8′ short-holder category in silver. Because the Managed Money traders added 8,525 short contracts during the reporting week, this blew out the short position of the Big 4 traders by about 7,500 contracts, which obviously didn’t happen, as they would have been covering shorts or going long on the opposite side of the Managed Money trade. The ‘5 through 8′ traders covered 1,200 short contracts, but who knows what really went on under the surface that has been masked by these Managed Money Traders who have temporarily invaded their turf—and shoved a bunch of them into the raptor category—the Commercial traders other than the ‘Big 8′. They went long 6,300 contracts during the reporting week. So it’s a real dog’s breakfast.

To give you and idea how preposterous it was in silver, the headline number showed that the Commercial net short position increased by 622 contracts, or 3.1 million troy ounces, during the reporting week—and Ted pegs JPMorgan’s short position in this metal anywhere between zero and something under 10,000 contracts. How’s that for a range? That’s what the contamination of the ‘Big 8′ traders by the Managed Money traders has done. It’s all out of whack.

BUT—and it’s very big but. The number that is the most important is the big increase in the short position of the Managed Money traders—8,525 contracts—and the commensurate decrease in the short positions, or increase in long positions of the traders in the Commercial category who took the opposite side of these Managed Money short positions. It’s just more of Ted Butler’s rocket fuel when the next rally starts and the moving averages get broken to the upside. And not only that, there has been further improvement in silver since the cut-off.

Also not to be forgotten are the unblinking non-technical funds on the long side in the Managed Money category in silver, as during the reporting week they added another 615 long contracts to their over-the-moon long positions that now totals 46,135 COMEX contracts. As I said last week—“Who are these guys?”—and even more important, who is paying for the margin calls on all these long positions that are now so deep underwater that you’d need scuba gear to find them? If forced to put a name on these guys it would be the Exchange Stabilization Fund and/or the BIS, as they have infinitely deep pockets.

It was much more of a traditional report in gold, but there the Commercial net short position blew out by a whopping 24,251 COMEX contracts, which is 2.43 million troy ounces. The Commercial net short position is now up to 10.09 million troy ounces.

The Big 4 traders added 13,300 short contracts—and the ‘5 through 8′ added another 500 or so. Making up the difference was the raptor category, the Commercial traders other than the Big 8, as they sold 10,500 longs. When you add up all three numbers in this paragraph, you come up with the 24,251 contract increase in the Commercial net short position mentioned in the previous paragraph.

On the other side of this trade the Managed Money traders were M.I.A. as they decreased their short position by only 4,602 contracts—and only added 316 longs, for a total of 4,918 contracts.

I know that Ted will have much more to say about yesterday’s COT Report in his commentary later today—and I’ll steal what I can for my Tuesday column, because he discusses another category of traders in the Disaggregated Report called the ‘Other Reportables’ who put in an appearance for the first time in a long time—and I don’t know a thing about them, so I’ll happily leave it up to him, as he’s Planet Earth’s #1 authority on the COT Report.

Here’s Nick Laird’s “Days of World Production to Cover Short Positions” chart for all the physical commodities that are traded on the COMEX. You’ll note how the silver chart has blown out of all proportion the last few weeks—and that’s because of the two or three Managed Money traders whose short positions are now so large, that they intrude noticeably into the ‘Big 4′ and ‘5 through 8′ category. Don’t forget that they are only temporary visitors—and during the next rally, they will all vanish from this category in an instant, as they rush to cover as critical moving averages are broken to the upside.

270615Days to Cover

In the chart above, the ‘Big 8′ traders are short 190 days of world silver production—the Big 4 are short 122 days.

Before heading into the stories, Nick was kind enough to send out the chart showing the withdrawals from the Shanghai Gold Exchange for the reporting week ending on Friday, June 19—and it shows that the withdrawal for that week was pretty chunky at 54.195 tonnes.

270615SGE

And here’s another chart that Nick Laird sent around in the wee hours of this morning. It showed that another 10.3 tonnes of U.S. Federal Reserve earmarked gold held in foreign and international accounts got shipped out the door in May.

270615US Earmarked

I don’t have a huge number of stories for you today—but I’ve got quite a few I’ve been saving for today’s column, so there’s quite a range of subject material. And there’s little in the way of precious metal stories once again.


CRITICAL READS

Consumer Confidence Surges to January Cycle Highs (Near 11 Year Highs)

UMich consumer sentiment spiked from 90.7 to 96.1 (well above the 94.6 preliminary print) just shy of 2015 highs (which are also the highest since 2004).

The spike is driven by a surge in “Current Conditions” as hope for the future rose only modestly as inflation expectations dropped. However, notably fewer people see now as a good time to buy a house.

We assume UMich survey respondents are “invested” in stocks since higher gas prices and lower affordability in housing seemed to weigh Gallup’s economic confidence down to its lowest since 2014.

This brief 2-chart news item appeared on the Zero Hedge website at 10:09 a.m. EDT on Friday morning.


What Electricity Consumption Tells Us About the State of the U.S. Economy – an Update

As we pointed out last year, this is not exactly a picture of economic dynamism. Since then electricity consumption across the US has pretty much remained in the doldrums:

  • The red line shows the weekly historical peak, reached all the way back in the summer of 2006. Notice how far we have been from it in recent years, despite all the GDP and population growth that has occurred since then.
  • The black line, which is the smoothed consumption data over time (the longer-term trend if you prefer), has recently turned negative.


It is curious to note that financial commentators regularly gauge China’s economic performance by looking at its electricity consumption, but this is not done for the U.S. Perhaps there is something there that does not fit with the prevailing narrative. Sure, China remains a manufacturing economy while the US is largely a services economy; but as far as we know restaurants, insurance companies, hospitals and IT service providers still use electricity.

In fact, growth in data has been so significant – requiring ever more power-hungry data centers – that IT now consumes some 10% of world electricity production. All the iPhones, clouds, tablets, chats, likes and whatever else have materially increased our demand for electricity, both on the front- and the back-end. So it is surprising that electricity consumption statistics haven’t been a bit perkier in the US, given all the IT development there.

This very interesting, but slightly longish article was posted on the Zero Hedge website at 3:15 Friday afternoon EDT—and if you just want the ‘executive summary‘, which is definitely worth reading, just look at the first two charts and then read everything in between them.


Leaking Las Vegas: Lake Mead at Record Lows, “We Have to Change”

This is it, warns one water advocate, “it really does (make critical) the fact that we have to start changing.” Lake Mead water levels have sunk to their lowest levels on record (below the levels when the dam was built) at 1075 feet.

This is a major problem, as USA Today reports, since Las Vegas water authority’s current “straws” glean water from 1,050 feet and 1,000 feet – leaving the first straw just 25 feet away from pulling in air.

With the drought only set to get worse as the summer begins, the water wars are just beginning as Lower-basin states are still taking more than the river system can sustain.

This Zero Hedge spin on a USA Today article showed up on their Internet site at 3:50 p.m. EDT yesterday afternoon—and is certainly worth reading if you have the interest.


The Truth About Gurus — David Galland

Many years ago, back in the day when it was really something, I ran the New Orleans Investment Conference. It was the oldest and, back then, the largest and most prestigious event of its kind.

In its heyday, the conference drew crowds of more than 5,000 self-directed investors to the Rivergate Convention Center.

Of course, nothing attracts a crowd of self-directed investors faster than the presence of Gurus.

I don’t mean matted-hair, sheet-wearing Indian fellows lounging in remote caves, waiting for the arrival of supplicants willing to exchange rice and trinkets for muttered wisdoms.

Rather, I refer to a person able to write and speak with great authority on matters related to money and investments. You know you’re in the presence of a Guru when—upon being exposed to their gilded words—you find yourself swept away in a passionate acceptance of whatever thesis they are putting forth and then act upon your passions by placing large sums into the recommended investment.

David is one of the best writers on the Internet—and his intimate knowledge on this subject comes from vast personal experience. This commentary from him was posted on the senderoblog.com Internet site on June 8—and it’s definitely worth reading.


The Grecian Kabuki Theatre: 7 Stories

1. Why It Won’t Be a Default If Greece Misses IMF Payment Next Week: Bloomberg 2. Greece No Closer to a Deal as Debt Deadline Nears: New York Times 3. The View from Athens: Greece Peers Fearfully Over the Brink: Spiegel Online 4. Juncker: euro faces ‘crucial’ talks on Saturday: E.U. Observer 5. Greece says creditors’ demands ‘absurd’: E.U. Observer 6. Greek PM Alexis Tsipras calls referendum on bailout terms: The Guardian

One story is courtesy of West Virginia reader Elliot Simon—and the rest are courtesy of Roy Stephens.


The Ukraine Imbroglio: John Batchelor Interviews Stephen F. Cohen

Again Batchelor and Cohen condense geopolitical events in what should now be seen as the Russian/Washington Crisis to a basic question for us all. That question is: do the war parties, now successful over the moderates in NATO and Washington, have the goal of a military confrontation with Russia (and by extension, China)? If the answer is yes, it is supported by Ashton Carter, the new Secretary of Defence of the United States in his most recent actions to place brigade level troop numbers with supporting armour and artillery units in the Baltic States of Poland, Latvia, Estonia for the very first time right along the borders with Russia. Cohen describes this action “as reckless!” These are classic war preparations. And Carter’s decisions have come from a huge propaganda campaign from these small countries with the theme that a Russian invasion is imminent. Putin must react to this in turn.

Again Cohen laments the lack of any Washington dissent about these actions. Surely the West can see if Russia is building up its forces in the Baltic region and yet they let this extreme provocation go on completely based on lies. Apparently for the local elites this is the goal of a long time wish list for these countries to have NATO bases on their territories.

Greece and Gazprom pipelines, are also discussed as manoeuvrings by Putin to end the European sanctions, and eliminate Ukraine from pipeline routes. Meanwhile the latter country is looking more and more unstable both economically and politically. Poroshenko, the Ukrainian President, is now being threatened by the ultra right extremists to pursue the war or be removed by force. Cohen is beginning to speculate that the Ukrainian gambit is a failure, and so there may be a shift of focus for a military effort in the Baltic Countries. He considers Kiev’s military efforts as doomed to failure, and another civil war, this time in the Western Kiev portion of that country may be brewing. In the meantime a new offensive against the East may be commencing, and Cohen speculates that it may increase the size of the rebel held territory considerably this time.

This weekly audio broadcast occurred on Tuesday—and runs for just under 40 minutes. It was posted on the johnbatchelorshow.com Internet site—and it’s certainly worth your time if you’re a serious student of the New Great Game. I thank Larry Galearis for sending it along.


Despite NATO propaganda, Russia not planning to invade Baltic States

The latest U.S. narrative on Russia is straight from the plot of a Hollywood fantasy: U.S. superheroes versus a Russian villain. Sadly for the Baltic States, they are being used by Uncle Sam as bait.

Here’s a starter for ten question: Russia’s reunification with Crimea last year was prompted by which of the following…
a.) a very particular set of historical circumstances, allied to the will of the overwhelming majority of the local population.
b.) Vladimir Putin’s desire to launch a blitzkrieg military campaign, complete with goose-stepping Russian soldiers marching across Europe?

If you are not a raving-mad neocon or someone who has difficulties with reality, the correct answer is a. Crimea was Russian territory for centuries and had been transferred to Ukraine as part of an administrative re-alignment at a time when both states were part of the Soviet Union. The peninsula is as Russian as Cornwall is British, or Texas is American. Furthermore, not even the most myopic anti-Russia activist questions the fact that most Crimean residents wished to join the Russian Federation.

This op-edge piece was posted on the Russia Today website at 3:15 p.m. Moscow time on their Thursday afternoon, which was 8:15 a.m. EDT in Washington. It certainly falls into the must read category, especially for any serious student of the New Great Game. I thank Roy Stephens for sharing it with us.


Here’s the Difference Between Russian and Western Civilizations (Starikov)

Leading Russian public intellectual and politician Nikolai Starikov recently spoke about the fundamental differences between Russian and Anglo Saxon cultures.

According to Starikov, the two civilizations have ‘mental codes’ that govern each one’s collective behavior. Whereas Russians have traditionally been more inclined to view other people as equals, Anglo Saxons have always been more inclined to look upon others as inferiors. This poisonous mindset manifests itself in all kinds of evil, ranging from discrimination and demonization of others, to war, and even to campaigns of genocide.

If Russia is indeed more inclined to foster cooperation, partnership, and conflict resolution among peoples and nations, the West is more inclined to foster conflict, stir up strife, reap divisions, and instigate wars amongst various peoples to spread chaos and destruction. These are national proclivities – fundamental mindsets – which when adequately contemplated, go a long way in explaining the current conflict between the two sides throughout the world today.

This 7:47 minute video clip, with English subtitles, put in an appearance on the russia-insider.com Internet site around 6 p.m. Moscow time yesterday evening—and it’s worth your while if you have the time and/or the interest. I thank Roy Stephens for bringing it to our attention.


 

The Tsar’s Photographer and His Amazing Contribution to the Preservation of Russian History

Sergei Prokudin-Gorsky was a Russian chemist and photographer famous for his pioneering work in color photography in the early twentieth century.

In 1905 Gorsky set himself to the task of photographically documenting the Russian Empire with the primary aim of educating Russian schoolchildren on the diverse history and culture of the realm. After his famous color photograph of renowned author Leo Tolstoy in 1908, Gorsky received an invitation to present his work to Tsar Nicholas II and his family. So impressed was the Tsar that he commissioned Gorsky’s plan and provided him with funding and a specially-outfitted dark room rail car for his work.

From 1909 to 1915 Gorsky tirelessly traversed the Russian empire capturing thousands of shots of virtually every walk of Russian life. In commemoration of the 100th anniversary of the completion of his historic mission, we are publishing 100 of his best shots, giving a vivid glimpse into Tsarist Russia on the eve of the Communist Revolution.

This absolute amazing photo essay showed up on the russia-insider.com Internet site last Friday. Roy Stephens sent it to me on Sunday—and for obvious reasons had to wait for Saturday’s column. I’ve looked at them all—and what an education/history lesson that was. Needless to say, it’s worth your while.


Chinese Stock Plunge Leaves State Media Speechless

Rising up from the center of Beijing, not far from the Temple of Heaven, is the loudest voice in the wild east of the Chinese stock market.

It’s neither a bank nor a brokerage — it’s the headquarters of Xinhua News Agency, long considered the “throat and tongue” of the Chinese government.

With the heady exuberance over Chinese stocks starting to fade, sowing fears of worse to come, investors are scouring state media for clues to the Communist Party’s thinking.

Only months ago, encouraging words from Xinhua sent stocks soaring. Now, with markets sinking, that official line has gone quiet, leaving many wondering how — or whether — Beijing might respond.

This very worthwhile Bloomberg story appeared on their website at 8:06 p.m. MDT on Thursday evening—and then updated at 1:11 a.m. Denver time on Friday morning. I thank Elliot Simon for sending it—and it’s worth reading.


To Soften Image, Brazilian Police Ride In Atop Horned Beasts

Legends flourish about how the first Asian water buffaloes made it to this colossal island in the Amazon River Delta.

One tale holds that they originally came from the steamy rice fields of French Indochina, but washed up here after the wreck of a ship bound for French Guiana. Another yarn contends that inmates escaping from a penal colony in French Guiana used the adroitly swimming buffaloes to help guide their makeshift barges all the way to freedom in Marajó’s mangroves.

However they arrived, the invasive species multiplied on Marajó, and now numbers about 450,000 on an island the size of Switzerland. So much of daily life here revolves around the water buffaloes that islanders haul garbage with them, race them during festivals and regularly savor fillets of buffalo steak smothered in cheese made from, yes, buffalo milk.

“The importance of the buffalo in Marajó got us thinking,” said Maj. Francisco Nóbrega, 41, an official with the 8th Battalion of the military police of Pará, the vast state in Brazil’s Amazon that encompasses Marajó. “Why not patrol on buffalo as well?”

This interesting article was posted on The New York Times website last Saturday—and I thank Roy Stephens for sending it along last Sunday.


Latest Swiss gold export data confirms China/Hong Kong breakdown– Lawrence Williams

Switzerland is the largest conduit for global gold exports with a number of refineries specialising in importing good delivery gold bars and other gold items, remelting and re-refining them and shipping them out again in the sizes more acceptable for the wholesale trade in gold bullion in the principal markets around the world. Last year, for example, Switzerland imported 1,755 tonnes of gold and re-refined this and re-exported 1,753 tonnes. The 10 countries listed below accounted for 90% of the Swiss gold exports.

From the above figures it is clear that China (if one takes the Hong Kong and Mainland China figures together) was the largest importer of gold from Switzerland last year accounting for around 34%, closely followed by India at 27%. Interestingly the figures also show that of the gold exports to Hong Kong and China, only 63% went directly to the former and 37% directly to the Chinese mainland, which goes a long way to proving our frequently expressed point that Hong Kong gold imports can no longer be seen as a proxy for the Chinese total figure – a factor which is frequently ignored by much of the mainstream media.

This interesting commentary by Lawrie was posted on the mineweb.com Internet site at 10:50 a.m. London time yesterday morning, which was 5:50 a.m. EDT. It’s worth reading.


Why SGE Withdrawals Equal Chinese Gold Demand And Why Not (The Argument List)

Since my first post on SGE Withdrawals Equal Chinese Wholesale Gold Demand Western consultancy firms have kept repeating my analysis is false, in response I’ve continued to clarify the metrics used in the China Gold Association (CGA) Gold Yearbooks. Not to get confused in this debate, this blog will keep track of all arguments ever presented and new ones that surface. This is the list so far in chronological order:

  1. industrial demand
  2. stock movement change
  3. round tripping
  4. leasing
  5. official purchases
  6. recycled gold
  7. export

This longish commentary by Koos Jansen put in an appearance on the Singapore-based website bullionstar.com on Thursday.


The PHOTOS and the FUNNIES

270615Dog and Chick270615Kitten and Guinea Pig270615Blame

270615Medic

270615Leftovers


THE WRAP

This week’s move lower was almost assuredly caused by new short selling by the technical funds in the managed money category of the COT report. Regardless of what the new report indicates, it has been massive and continuous short selling by managed money traders over the past month that has brought the price of silver, gold, platinum, palladium and copper lower. In fact, all four precious metals are at or near record large managed money short positions and copper isn’t off by much. It’s not a coincidence that there has been pronounced price weakness in these commodities; the record managed money short positions are the cause of the price weakness. What’s good about that?

What’s good is that the technical fund traders in the managed money category are the weakest short sellers of all because they can’t possibly deliver actual metal to close out their short positions and, therefore, must buy back at some point. Besides, history shows these traders always cover in unison as soon as the moving averages are penetrated to the upside and simply mathematics dictate the moving averages must be penetrated at some point. This guarantees (there are not many guarantees in life) that all these metals will rally in price when the managed money shorts buy back their short positions.

I can’t guarantee you how much of a price rally will result and fully admit recent rallies have been disappointing; but that’s due to the aggressive selling by the commercials when the managed money shorts have bought back recently. The technical funds in the managed money category always buy back with maximum aggression, that’s part of their DNA – what determines the extent of the price rally is the commensurate aggressiveness of the commercial selling.Silver analyst Ted Butler: 24 June 2015


Today’s pop ‘blast from the past’ comes from the year 1979. Here’s Mikey Thomas and Grace Slick doing the honours along with their band Jefferson Starship. I consider this one of the best rock tunes of that era. I’ve posted this at least once before, but never often to suit me. The link is here.

Today’s classical ‘blast from the past’ was composed by Frédéric Chopin in 1830 when he was only 20 years young. It’s his Piano Concerto No. 1 in E minor Op. 11. I personally prefer his No. 2—but doesn’t take a thing away from his No. 1. Here is the Israel Philharmonic Orchestra under the baton of Zubin Mehta. Russian pianist Evgeny Kissin is the soloist de jour. This is a wonderful recording—and the link is here.


Yesterday’s pre-London open shenanigans in the silver market yesterday morning should leave no doubt in anyone’s mind that the enfant terrible for JPMorgan et al is silver. This totally blatant and in-your-face engineered price decline shows that they don’t give a flying &$#% what anyone sees or thinks, as they make what I consider their final desperate attempt to shake loose the last of the short contracts from the Managed Money tree.

As I mentioned in my discussion of the Commitment of Traders Report further up, they certainly were wildly successful in that during the reporting week, as per Ted Butler’s quote above—and have had even more success since. How much is not known—and the cut-off for next Friday’s COT Report is still two trading days away.

Here are the 6-month charts for all four precious metals, plus copper, once again—and the new low for gold, silver and palladium should be noted.

270615 6-month gold

270615 6-month silver270615 6-month platinum270615 6-month palladium270615 6-month copper

With each passing day I’m getting more convinced than ever that something is afoot—and the silver receipts at the COMEX-approved depositories on Thursday, along with the big silver withdrawal from SLV yesterday, continues to add to that “another brick in the wall” conviction. Ted and I are both in the same camp on this.

Exactly how events will unfold over the next few days, or perhaps weeks, is not known—and there’s a chance that the situation with Greece may be part of it. But on the other hand, it could be some other black swan or 9/11 redux event.

But whatever it is, any ‘price reset’ in the precious metals will be blamed on that—and we’re as ‘locked and loaded’ to the upside as we’re ever likely to get.

Psychologically, I already have my fingers in my ears—and I’ll be watching upcoming events nervously.

Of course we want higher precious metal prices, but it may turn out to be the classic case of “be careful what you wish for.” But then again, I may be guilty of looking for black bears in dark rooms that aren’t there, as I’m wont to do at times. I sure hope so.

So we wait.

See you on Tuesday.

Ed

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