Macleod’s Market Report: COMEX Silver Open Interest Close to All-Time Highs!

silver pricesIn western capital markets there is a widely-held view that a deteriorating economic outlook will provoke a run from commodities into cash, so those who regard gold as only a commodity are bearish but have almost certainly already sold. The four billion Asians who own most of the world’s gold take a different view, having learned through experience that their currencies collapse instead.
This sums up the opposing forces behind the gold price.  In futures markets the bets are in favour of shorting, while the Asians continue to buy physical. And this is why yet again, the London gold forward rate (GOFO) went sharply into backwardation last Friday when futures markets forced prices lower.
Prices for gold and silver sold off last week, with gold falling from a high of $1331 to a low of $1286 on Tuesday, and silver went as low as $19.22 at one point.
Silver’s open interest on Comex has been building and is now close to all-time highs at over 164,000 contracts. When the tide turns, silver should be the star performer.


From Alasdair Macleod, Gold Money:

It wasn’t meant to be like this: six years of global money-printing should have guaranteed economic recovery. Until very recently, there was hope that finally the medicine was having some effect; but in the last few weeks investors have become noticeably more cautious. Is it Ukraine, or is it the slow-down in China?

Whatever the story the truth is revealed in the chart of recent US bond prices shown below.

The Long Bond yield is leading the way downwards, having broken below the 3.5% level, and the 10-year bond seems set to follow its lead. Eurozone bond yields have also collapsed signalling either outright deflation or possibly, given its proximity to Ukraine, a flight from bank deposits.

This week the Ukrainian situation escalated with Russia’s Crimean strategy emerging in other eastern cities. Peace talks in Geneva today are not expected to improve things. Meanwhile Washington seems set to escalate financial tensions with Russia, potentially blacklisting businesses and even banks, as well as individual oligarchs. The financial consequences of any such action are bound to concern markets and could become destabilising, risking global economic prospects particularly with a Chinese slowdown.

Opinion is divided over the effects on the gold price. In western capital markets there is a widely-held view that a deteriorating economic outlook will provoke a run from commodities into cash, so those who regard gold as only a commodity are bearish but have almost certainly already sold. The four billion Asians who own most of the world’s gold take a different view having learned through experience that their currencies collapse instead.

This sums up the opposing forces behind the gold price. In futures markets the bets are in favour of shorting, while the Asians continue to buy physical. And this is why yet again, the London gold forward rate (GOFO) went sharply into backwardation last Friday when futures markets forced prices lower. It is even more negative this morning, signalling market strains are still increasing.

Prices for gold and silver sold off this week, with gold falling from a high of $1331 to a low of $1286 on Tuesday, and silver went as low as $19.22 at one point. The chart below shows how prices for gold and silver have progressed since the beginning of the year, and it can be seen that silver has been the outright loser.

However, as discussed last week, silver’s open interest on Comex has been building and is now close to all-time highs at over 164,000 contracts. When the tide turns, silver should be the star performer.

 

Next week

There is little doubt that the Ukrainian situation will dominate next week’s news. If it escalates, which seems likely, bullion may emerge as a safe-haven play.

Easter Monday is a holiday in many countries.

Monday.

US: Leading Indicator.

Tuesday.

Japan: Leading Indicator.
Eurozone: Flash Consumer Sentiment.
US: Existing Home Sales

Wednesday.

Eurozone: Flash PMI.
UK: BoE MPC minutes released, Public Borrowing.
US: Flash Manufacturing PMI, New Home Sales.

Thursday.

UK: CBI Distributive Trades Survey.
US: Durable Goods Orders, Initial Claims.
Japan: CPI.

Friday.

Japan: All Industry Activity Index.
UK: BBA Mortgage Approvals, Retail Sales.


Comments

  1. So again slow and steady move to 1350/21 and then drop under 1300/20 in a 15 mins?

  2. All a scam from the paper market I will day it again when a whale buys up all the sliver in the comex and demands physical silver the price will skyrocket.  

  3. i dont think ppl are that stupid to keep “gold” in paper, atleast since 2008…so i guess all we are waiting for is a new trigger. But what could it be? Even if near war situation because of Ukraine didnot made PM prices jump atleast to 1450+(Risk adjustment) so i have no ideas what should happen to awake this market…

    • No, most of all gold traded is in paper form (futures, options, swaps, leases, ETF’s, etc…). Almost never settled in physical terms. It’s more like musical chairs, shell game, or a ponzi, whatever term you prefer.
       
      And therein lies the rub…

    • I dont think so some one is trading in paper forms right now except maybe fed and jpm…how you can play on deadly manipulated market ? I dont think people that dumb, and didnot learned from the past

    • Not sure what your point is Ukta. There is plenty of evidence to back up my claims on a heavily manipulated and short paper market. The market makers who are heavily suppressing the price (Fed, UST, JPM, GS, Scotia Mocatta, etc…) make boatloads of money on all those market activities listed above. It is a Bankster Paradise these days as nobody is overseeing and regulating their highly unethical, and most likely criminal and illegal insider trading that goes on all day, everyday of the year.

    • @Ukta
       
      Pal, you better study how the market works. Whever you are right now, your within walking distance of a broker who will sell you any number of paper Silver contracts.  Leveraged to the eyeballs. And yes people are that dumb. Never underestimate how fucking dumb people are.

    • @Bay of Pigs
       
      Indeed it is, Bay.  I agree with you on this but continue to wonder why people take the other side of these trades.  Surely, they KNOW that the market is being manipulated.  The dumping of thousands of contracts in a few seconds during the most thinly traded part of the day can have one and only one purpose and that is to depress the price.  This is not what anyone who wanted to max their gains would do.  They would phase it in gradually during the most heavily traded part of the day so as to not spook the market and drop the price.
       
      Then, of course, we have the naked shorts… those who short silver but NEVER borrow a single ounce to back their plays.  If you or I want to short a stock, we HAVE to fully cover that short position via borrowing shares from someone who has them or from a brokerage that holds them.  We aren’t allowed to be “naked” in the market, just as we cannot sell the same item to MANY buyers and pocket LARGE profits from it.  The banksters call that “rehypothecation”… the selling of an item’s ownership while retaining the item itself in their vaults.  This IS a license to steal and if you or I do it, we quickly will find ourselves in court and then in prison for fraud.  But banksters do it all the time and not a damned thing happens to them because of it… ever!  GRRR!!
       
       

    • @Bay Of Pigs – I recently read the book ‘Gold Wars’ and the shell game you described is pretty much what is explained in great detail in that book. The bullion banks and the central banks with the blessing of the Fed and IMF are simply swapping ledger entries with each other in a concerted effort to suppress the price of gold. They use many methods to create an artificial supply including borrowing money from Fed at near zero percent rates and using that money to short gold on the Comex. In the absence of real oversight and regulation this will not end. It is going to take a real supply crisis to get the price of gold and silver moving higher again. 
       
      What I don’t understand is why the futures players think they can compete in the most rigged game in the casino. The cheaters show their hand over and over again and yet these clowns keep taking the bait. Go figure. 

  4. Seems at least someone read my post regarding the “boyz” not having to cover until they are good and ready and this high of OI is begging for a waterfall!
    Too many weak hands piling into the market right at OPEX, which is 4/24…so be careful the next day or two and there are still over 50,000 open for May that will need to roll or close by  then…
    http://www.cmegroup.com/trading/metals/precious/silver_quotes_volume_voi.html?venue=F&foi=O

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