The Gold and Silver Wrap
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By I understand some wanting to make excuses for JPMorgan’s undeniably large market shares in gold and silver. There is an instructive message here as well – since JPM’s market corners can’t be denied, all that’s left is trying to explain it away any way possible. The excuses confirm that the market shares held by JPM exist and need explaining. Oh, and one last flimsy excuse is needed to explain, if these outsized market corners are so normal, why is there only one bank atop the gold and silver market heap? If this market making is such a legitimate business – why aren’t other banks offering competition? I have a better question – why is JPMorgan so entrenched in gold and silver trading, when they are withdrawing from every other commodities business? (I say because they can’t exit quietly as they are the market). – Silver analyst Ted Butler: 12 February 2014
Today's pop/folk "blast from the past" was sent to me by reader David Mancini last Saturday—and I thought it worth sharing. This singer/songwriter is a living legend in Canada—and neither he, nor the tune, needs any introduction whatsoever. The performance datesfrom 1974—40 years ago this year—and the link is here.
Today's classical "blast from the past" is a short work—and the only well-known composition of Italian composer and cellist Luigi Boccherini. You'll know it instantly—and the link to the youtube.com video is here.
It was encouraging to see such positive precious metal price action on a Friday—and I certainly hope that this is a harbinger of things to come. It certainly should be, as all the precious metals are many orders of magnitude lower in price than they would be if their respective prices weren't being managed in the Comex futures market by JPMorgan et al.
I really stood up and took notice of the actions of JPMorgan in the latest COT Report that came out yesterday. As I mentioned further up, it showed that, for the second week in a row, they had decreased their short-side corner in the Comex silver market—and increased their long-side corner in the gold market. I was impressed that it happened in the prior week's COT Report, but when it happened twice in row in the current price environment, I must admit that I'm really paying attention now.
As I said recently in this space, for many years both Ted Butler and myself had mused about the possibility that JPMorgan may step in front of the raptors as they sold their long positions in silver to the short-covering technical funds as silver prices rallied, but the last two weeks COT Report shows that this actually happened. I'm now looking at the precious metal rallies of the last three days since the cut-off in a whole new light. I'm wondering if JPMorgan was pulling the same trick during those three days as well—especially with Friday's huge volume. It would be easy to hide that sort of activity behind the skirts of a price move like we had in silver yesterday. Of course we'll have to wait until next Friday's COT Report to see if this was, in fact, the case.
As you can see from the 6-month charts in both gold and silver posted below, we are now in overbought territory in both metals—and it wouldn't surprise me in the slightest if "da boyz" engineered a price decline at some point in time in the near future. On top of the short positions in silver that JPMorgan has managed to cover during the last week, not to mention the ever-increasing long-side corner in gold, it would be the perfect opportunity to cover even more short positions during such an event. When it might occur is unknown, but it's a certainty that it will. You can bet on it.
Once that "correction" is behind us—and JPMorgan is fully out of their Comex short position in silver—it could get interesting to the upside. We'll find out pretty quick I would think.
I was also amazed by the withdrawals from both GLD and SLV yesterday. It's entirely possible that the silver may have been needed elsewhere, but that certainly doesn't explain the withdrawal in gold. And after Friday's big day in all four precious metals, it's a safe bet that just about every precious metal ETF on Planet Earth is now owed a very decent amount of metal. One has to wonder where it will all come from, especially silver.
Here's Nick Laird's Total PMs Pool chart updated as of the end of this week. Both lines are heading in the right direction, but both have a long way to go to get back to where they once were. But get there, they will.
As I head off to bed, I can't help but marvel at the events of the last two weeks. I can't say for sure when the price management scheme in the precious metals will come to an end, but based on the evidence I'm looking at right now, it's days are definitely numbered.
I look forward to next week's price action with more than the usual amount of interest, starting with the New York open on Sunday night EST.
By the way, with what appears to be the start of a major up-trend in the precious metals, it might be worth your while to jump back in, or increase your exposure to the precious metals once again, as the HUI is already up over 22% year-to-date. Your best bets for that are Casey Research's monthly BIG GOLD newsletter—and Casey Research's flagship publication—Casey International Speculator. If you go for Casey International Speculator, it includes a subscription to BIG GOLD at no extra charge. It costs nothing to check them out—and Casey Research's 90-day money back guarantee applies to both.
See you on Tuesday.
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