Ed Steer: Short Sellers Run Rampant In The Precious Metal Stocks

The only thing positive about all the short selling is that it will be rocket fuel added to the next big rally, which shouldn’t be that far off. Here’s why…

by Ed Steer of Ed Steer’s Gold & Silver Digest

Short Sellers Run Rampant In The Precious Metals Stocks

The gold price didn’t do much of anything in Far East trading on their Friday — and the low tick of the day, such as it was, came minutes after the London open. It chopped quietly and unevenly higher from there, with every tiny rally attempt turned back before it could get too far. The high tick, such as it was, came at noon in New York — and it edged unevenly lower into the 5:00 p.m. EDT close.

Once again, the low and high price ticks aren’t worth looking up.

Gold was closed at $1,285.80 spot, up $2.40 on the day. Net volume was nothing special at 206,000 contracts — and there was a tiny bit under 36,000 contracts worth of roll-over/switch volume on top of that.

The silver price rose and fell a nickel or so in morning trading in the Far East on their Friday — and then didn’t do much of anything until after the noon silver fix was put to bed in London. It began to head lower from there — and there was a rather vicious down/up price spike at the 8:20 a.m. EDT COMEX open, with the subsequent rally being capped minutes before 9 a.m. It was sold lower going into the afternoon gold fix in London — and then crawled very quietly and unevenly higher until COMEX trading ended at 1:00 p.m. EDT. Most of that tiny gain disappeared by the time trading ended at 5:00 p.m. in New York.

The price shenanigans at the COMEX open, only occurred in the spot month — and the low and high ticks aren’t worth looking up in this precious metal, either.

Silver was closed at $14.735 spot, up 1.5 cents from Thursday. Net volume was very quiet at around 41,400 contracts — and there was just under 4,600 contracts worth of roll-over/switch volume on top of that.

Platinum rallied a bunch in morning trading in the Far East, before running into ‘something’ — and from about 10:35 a.m. China Standard Time onwards, it chopped very unevenly sideways until shortly before 10:30 a.m. in New York. It rallied a bunch more from there — and that rally appeared to get capped a few minutes after 12 o’clock noon EDT — and it crawled sideways into the close from there. Platinum finished the day at $863 spot, up 16 bucks from Thursday’s close.

Palladium began to head higher starting at 8:00 a.m. CST on their Friday morning — and that rally appeared to get stopped in its tracks the moment it broke back above the $1,300 spot mark just after 9 a.m. CST. The price didn’t do much of anything after that, but was sold a bit lower starting shortly after 1 p.m. in Zurich. The low of the Friday session was set about fifteen minutes after the COMEX open in New York — and it headed sharply higher from there until fifteen minutes before the Zurich close. From that juncture it crept unevenly sideways until trading ended at 5:00 p.m. EDT in New York. Platinum finished the Friday session at $1,333 spot, up 52 dollars on the day and, like platinum, would have closed considerably higher, if allowed, which it obviously wasn’t.

The dollar index closed very late on Thursday afternoon in New York at 97.32 — and then chopped quietly but nervously sideways until some economic news or other appeared at 8:30 a.m. in New York. The 97.13 low tick was set around 10:35 a.m. EDT — and it edged higher until around 3:15 p.m. — and didn’t do a whole lot after that. The dollar index finished the day at 97.32…unchanged from Thursday’s close.

Once again the action in the currencies had zero to do with what was happening in the precious metals.

Here’s the intraday DXY chart, courtesy of the folks at ino.com. The ‘click to enlarge’ feature does not help with this chart.

And here’s the 5-year U.S. dollar index chart from the stockcharts.com Internet site — and the delta between its close…97.12…and the close on the ino.com chart above, was 20 basis points on Friday.

The gold shares continue to get pounded into the dirt. Although they opened unchanged once again, they were soon headed lower — and after chopping sideways from about 10:30 a.m. EDT onward, they were sold down to their respective low ticks starting around 3:10 p.m. in New York trading. The HUI closed down 1.95 percent.

And as bad as the price action was in the gold stocks, it was even worse in the silver equities. The trading pattern was the same as the gold shares, but Nick Laird’s Intraday Silver Sentiment/Silver 7 Index got clocked by 3.95 percent.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Friday’s doji — and as you can see, the silver equities are now back below their lows of November 2018. I didn’t think that was possible.

Here are the usual charts from Nick that show what’s been happening for the week, month-to-date — and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York – along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and except for gold, the other three precious metals are in the red, but only by the tiniest of amounts. But its the equities, particular the silver ones, that got hammered hardest.

The month to date chart still shows gold to be the only precious metal in positive territory, but only by the tiniest amount. Yes, the other three precious metals are down as well, but not by amounts that I consider material. But the performance of their related equities is brutal.

The year-to-date chart — and gold is still hanging in their with a slight gain and, of course, both platinum and palladium are still up on the year, despite the ongoing attempt by ‘da boyz’ to drive them lower. And what can I say about their associated equities that I haven’t already said.

As I said in commentary earlier this week, the price declines we’re witnessing in the precious metal shares has been out of all proportion to the declines in the underlying precious metals — and it has been particularly egregious since the beginning of May. I don’t know if this is redemptions from precious metal mutual funds or hedge funds or not. But checking over at the shortsqueeze.com Internet site just now, I noticed that the short positions in both First Majestic Silver and Pan American Silver shares have certainly risen by notable amounts during the two weeks ending on April 30, the last report available. So I would suspect that aggressive and on-going short selling is the main culprit here. The only positive thing about this is that during the next major rally, they will be rocket fuel added to the next big rally in silver — and with the COT set-up back in what I’m sure Ted would call “wildly bullish” territory, it shouldn’t be that far off…so keep the faith!


The CME Daily Delivery Report showed that 2 gold and 19 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the lone short/issuer was Advantage — and the lone long/stopper was JPMorgan. All transactions involved their respective client accounts.

In silver, the two short/issuers were ABN Amro and Advantage, with 15 and 4 contracts out of their respective client accounts. As usual, JPMorgan stopped the most…11 in total…8 for clients and 3 for its own account. In second and third places were Advantage with 5 contracts for its client account — and Standard Charter with 2 contracts for its own account.

So far this month, there have been 189 gold contracts issued/reissued and stopped — and that number in silver is 3,360 contracts.

Of that silver volume, JPMorgan has issued 2,552 contracts from its client account — and stopped 2,790 contracts for its client account. It hasn’t done a thing for its own in-house/proprietary trading account so far in May.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in May fell by 9 contracts, leaving 119 still around, minus the 2 contracts mentioned a couple of paragraphs ago. Thursday’s Daily Delivery Report showed that 11 gold contracts were actually posted for delivery on Monday, so that means that 11-9=2 more gold contracts were added to the May delivery month. Silver o.i. in May declined by 5 contracts, leaving 323 still open, minus the 19 contracts contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 13 silver contracts were actually posted for delivery on Monday, so that means that 13-5=8 more silver contracts were added to May.


There was a very chunky withdrawal from GLD on Friday, as an authorized participant took out 215,662 troy ounces…almost 7 tonnes. There were no reported changes in SLV.

Since April 1…when this latest series of engineered price declines began in gold and silver…there has been 1,690,673 troy ounces of gold removed from GLD. In that same time period, there has been 7.28 million troy ounces of silver added to SLV. Doesn’t anyone find that rather peculiar…or is it just me?

The U.S. Mint had a tiny sales report on Friday. They sold 500 troy ounces of gold eagles — and 92,000 silver eagles.

Month-to-date the mint has sold 500 troy ounces of gold eagles — and 160,000 silver eagles. There is no retail demand.

The Royal Canadian Mint in Ottawa finally got around to publishing their 2018 Annual Report on their website yesterday. As usual, they’re getting more secretive every year about what they’re up to — and this report is further proof of that, as they say absolutely nothing of value. Only the charts hint at the precipitous decline in the sales of mint bullion products since JPMorgan disappeared as a buyer of silver and gold maple leafs around September of 2016. Here’s a snip from Page 23 of their 2018 Annual Report.

For the second day in a row, there was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.

It was a pretty busy day in silver, as 1,089,730 troy ounces were received — and 933,345 troy ounces were shipped out. In the ‘in’ category, there was one truckload…599,240 troy ounces…dropped off at CNT — and the remaining 490,490 troy ounces found a home over at Canada’s Scotiabank. In the ‘out’ category, there were withdrawals from HSBC USA, Brink’s, Inc. — and CNT. Those amounts totalled…329,124 troy ounces, 96,475 troy ounces — and 91,494 troy ounces respectively. But the big news was in the paper category, as 3,032,376 troy ounces was transferred from the Registered category — and back into Eligible. There was 2,037,484 troy ounces transferred at CNT…826,517 troy ounces at Brink’s, Inc. — and 100,021 troy ounces at HSBC USA. I didn’t talk to Ted about this, but I’m sure he would suspect that this is silver that JPMorgan has taken delivery of in May, either for itself or clients, that it has no room for in its own vault, so it’s keeping it right where it currently sits. They only did the paper transfer because Ted says that it’s cheaper to store in the Eligible category, than it is in Registered. Without doubt, he’ll have something to say about this in his weekly review later today. The link to all this action is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday. They received 1,180 kilobars — and shipped out only 30 of them. Except for the 180 kilobars dropped off at Loomis International, the rest of the in/out activity was at Brink’s, Inc. The link to that, in troy ounces, is here.

 

The Frome Hoard is a hoard of 52,503 Roman coins found in April 2010 by metal detectorist Dave Crisp near Frome in Somerset, England. The coins were contained in a ceramic pot 45 cm (18 in) in diameter, and date from A.D. 253 to 305. Most of the coins are made from debased silver or bronze. The hoard is one of the largest ever found in Britain, and is also important as it contains the largest group ever found of coins issued during the reign of Carausius, who ruled Britain independently from 286 to 293 and was the first Roman Emperor to strike coins in Britain.

The hoard was discovered on 11 April 2010 while Crisp was metal detecting in a field near Frome where he had previously found late Roman silver coins. The late Roman coins, eventually totalling 62, were probably the remnants of a scattered hoard, 111 of which had been found on the same farm