Today in Gold and Silver
New York (Apr 4) With the Globex/Comex closed for the Good Friday holiday, all 24-hour gold price charts were flat-lined.
The equity markets were closed as well, so there's no HUI or Intraday Silver Sentiment Index---and no delivery report from the CME, nothing from GLD or SLV, the U.S. Mint, or the Comex-approved depositories.
The only thing that was open for business was the U.S. Dollar Index. It closed late on Thursday afternoon in New York at 97.53---and didn't do much until about an hour before the job numbers came out at 8:30 a.m. EDT yesterday morning. At that point, it dropped around 30 basis points to around 97.21, before regaining a decent chunk of those loses. Then the job numbers came out---and by the time "gentle hands" showed up 30 minutes later at 9:00 a.m., the Index was down to 96.394---which was a loss of 114 basis points from Thursday's close.
From that low, the index "rallied" until it reached the 96.80 level at precisely 1 p.m. EDT---and from there it traded more or less sideways into the close, finishing the Friday session at 96.766---which was down 73 basis points on the day.
The Commitment of Traders Report for positions held at the close of trading on Tuesday did not make for happy reading. It was a disaster from one end to the other in both gold and silver.
I was right to be the proverbial "doubting Thomas."
What it indicated was that all the price/volume activity from the prior reporting week was not reported in a timely manner---and last Friday's COT report was not even close to being accurate.
The price action during the current reporting week suggested improvements in the Commercial net short positions in both gold and silver---and I mentioned that in yesterday's column.
But the report was not even close to what the price action indicated---and yesterday's report may not have had any of the current reporting week's data in it at all. That's speculation on my part, but it's certainly what the numbers indicate.
In silver, the Commercial net short position blew out by an additional (and astounding) 10,619 contracts, the biggest one-week change in history if my memory is close to being correct. That's 53.1 million troy ounces in just one week. The Commercial net short position is now back up to 249.3 million troy ounces.
Ted Butler said that the Big 4 Commercial shorts (read JPMorgan) increased their short position by 3,300 contracts, the "5 through 8" traders actually covered 600 short contracts---and the small Commercial traders, Ted's raptors, sold 7,900 contracts of their long position. Ted says that JPMorgan's short-side corner in the Comex silver market has increased to around 18,000 contracts, or 90 million troy ounces. He'll get a more accurate indication of JPM's short-side corner when the new Bank Participation Report comes out next Friday.
In the last two COT reporting weeks combined, last Friday's and yesterday's, the Commercial net short position in silver increased by an absolutely gargantuan 19,651 contracts, or 98.3 million troy ounces---all on the back of a silver price rally of about $1.75.
JPMorgan et al. totally crushed this budding silver rally---and it's obvious that this massive increase in their short positions was entirely for price-capping purposes. No other explanation is plausible.
Under the hood in the Disaggregated COT Report, the brain-dead technical funds in the Managed Money category covered 6,962 short positions in silver---and added 4,855 contracts to their long position, a total swing of 11,817 contracts---as they sold shorts and bought longs as silver's 50-day moving average was broken to the upside.
It's the same story in gold, as the surprise good news from the previous Friday's COT Report was buried under an avalanche of mostly bad news.
The Commercial net short position increased by a very chunky 28,190 contracts, or 2.82 million troy ounces. (Don't forget there was an "improvement" of 3,565 contracts, or 356,500 troy ounces reported in the previous Friday's COT Report. The current report negates all that, plus more.) The Commercial net short position in gold now stands at 8.11 million troy ounces.
The Big 4 traders actually covered about 2,900 contracts of their short position, while the "5 through 8" big short holders increased their short position by around 7,400 contracts. The small Commercial traders sold 23,700 long contracts.
Under the hood in the Disaggregated COT Report, the technical funds in the Managed Money category were, of course, the Pavlovian patsies on the other side of this trade, as they covered 19,597 of their short contracts and went long 5,024 contracts on top of that.
This current rally in gold, if you wish to dignify it with that name, only lasted for $50 to the upside---at least for the moment.
The gold COT Report wasn't anywhere near as bad as the silver COT Report, but both were bad enough in their own right---and there's no way to sugarcoat this. The report was butt-ass ugly, particularly in silver.
Yes, there's still fuel in the tanks of the Managed Money traders to take silver and gold prices higher from here, but it's equally as obvious from yesterday's and the previous COT Report, that "da boyz" are going to show up as the not-for-profit sellers of last resort the moment the attempts are made.
After these last two COT Reports, my bulls hit meter will be on its high gain setting when next Friday's COT Report puts in an appearance. I don't think that the data we saw in this week's report---and last week's COT Report---are wrong; it's just that the timing of the reported data is now highly suspect. And as I said earlier, it appears that all of price/volume data from the current reporting week just past---March 25-31 inclusive---was not in this report, or certainly not all of it.
As you can imagine, Ted and I had a rather intense discussion about all this on the phone yesterday, but because I was visiting the outlaws, I didn't have the time to spend bisecting and dissecting the report the way I would have liked. And because of that, I'll be more than interested in what he has to say about it to his paying subscribers in his weekly review this afternoon.