Yesterday in gold and silver

Up until 9:00 a.m. Eastern, volume had been pretty quiet but after that time, volume was very high.

Silver reached its Far East high on Monday shortly after 1:30 p.m. Hong Kong time which, from the chart below, is 12:30 a.m. Eastern.

From that point, the silver price decline began and it was down about 40 cents from its Friday close by 9:00 a.m. in New York.

Then, along with gold, the silver price launched to the heavens only to be crushed by the same not-for-profit seller and by the time that seller disappeared, silver was down about 85 cents from Friday’s close and down an eye-watering $1.38 from its New York high price, which had occurred less than an hour prior to that.

Silver then came roaring back and came close to its previous high of the day, before selling off a hair into the close of electronic trading at 5:15 p.m. Eastern. Volume was monstrous.

The dollar gapped up a hair at the Far East open and then climbed steadily right up until the magic moment at 9:00 a.m. Eastern. Then, as gold blasted off in a northerly direction the dollar headed south with a vengeance. But there was obviously someone waiting in the wings to catch a falling knife and I would bet serious coin that the same people who beat the snot out of gold and silver, were there to put a bid under the dollar as well and by 11:00 a.m. Eastern the dollar had gained 65 basis points from trough to peak.

But once the dollar buyer disappeared, the dollar sold off quietly into the close of New York trading.

Well, dear reader, is it just me, or is the market management thingy getting more blatant with each passing day?

The gold shares, along with the rest of the equity markets, were under pressure right from the opening bell and the New York low for the gold price is easy to spot on the HUI chart below. Even though both gold and silver went on to close at new highs for the third day in a row, the gold stocks did not join in the party again and the silver shares had another poor day as well.

I spoke with John Embry of Sprott Asset Management yesterday and he wasn’t a happy camper watching the non-confirmation of the shares over the last three trading days. He once again stated the opinion that the share prices of both gold and silver were being manipulated.

I also got an e-mail on this issue from reader Bill Gebhardt on Saturday, because I was complaining in my Saturday column about how poorly the stocks were performing on Thursday and Friday and this is what he had to say “Yesterday [Friday] was settlement day for stock options. It was probably in someone’s best interest that the April options in gold and silver stocks expire at a lower price. Otherwise some party would have lost big time.”

Also on the subject of the lousy share price action, was this worthwhile piece that was sent to me by reader ‘David in California’. It’s by Dan Norcini and is posted over at his website. The headline reads “Hedge Fund Ratio Spread Trades Continue to Distort the Value of the Mining Shares“. This article, along with the excellent graphs, is a must read and the link is here.

So, there you have it. Three different opinions on why the share price action is not confirming the price of the underlying metal and I believe that there’s some merit in all of them. By the way, James Turk has more to say about this in a King World News blog futher down, so don’t miss that.

Well, the CME Daily Delivery Report on Monday showed that another big chunk of the April gold contract [334 contracts in total] were posted for delivery tomorrow. Merrill, JPMorgan and Prudential were the big issuers and JPMorgan and the Bank of Nova Scotia were the big stoppers.

JPMorgan issued 128 contracts in its client account and stopped 218 contracts in its proprietary [in house] account. Once again it can be seen that JPMorgan is taking the opposite side of the trade to its clients. If this isn’t conflict of interest, or insider trading, I don’t know what is. The action is well worth a quick glance…and the link is here.

There were only 6 silver contracts posted for delivery on Wednesday.

Neither GLD or SLV had any changes to report yesterday.

The U.S. Mint had some sales to report on Monday. The sold 9,500 ounces of gold eagles 2,500 one-ounce 24K gold buffaloes along with 658,500 silver eagles. Month-to-date the mint has sold 58,500 ounces of gold eagles 12,500 one-ounce 24K gold buffaloes and 2,079,500 silver eagles.

The Comex-approved depositories showed that 403,727 ounces of silver were received on Friday and 234,626 ounces were shipped out, for a net increase of 169,101 troy ounces. The link to that action is here.

My bullion dealer had another big day on Monday and had buyers standing at the door the moment he showed up for work. The Royal Canadian Mint has now extended delivery times on new orders of silver maple leafs to eight weeks so it’s obvious that investment demand is still off the charts.

Here’s a paragraph I stole from silver analyst Ted Butler’s Weekly Review which he sent out to his subscribers on Saturday afternoon “Against the backdrop of a surging silver price, the calls for a sharp sell-off continue unabated. As I previously reported, almost all those calling for a sharp correction seem to share a commonality, namely, a disbelief in the silver manipulation. I think this is a crucial observation. Let me stipulate first that there can be a correction in the price of silver regardless of whether it has been manipulated or not. But nothing can be more important to the future direction of silver prices than in understanding whether this market has been manipulated. To those who don’t believe silver has been manipulated in price, it’s hard to see how the price won’t collapse. Those who believe that silver has been manipulated [like me] know that the price will explode when the manipulation is terminated. That’s a clear line of demarcation.”