Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
All was quiet in the gold market on Friday until the jobs numbers came out at 8:30 a.m. Eastern time yesterday…then gold got hit for over twenty bucks.
Gold’s low price of the day came at the London p.m. gold fix minutes before 10:00 a.m. in New York…and that was the dollar’s exact low tick as well. Coincidence? Not likely.
The gold price recovered from that point, but still closed the day down $2.90 from Thursday.
Silver’s fate was a carbon copy of gold’s…but it managed to close sixteen cents higher than Thursday.
It’s been a long while since the bullion banks reacted to the jobs report like this. In ‘olden days’ it would normally take days or weeks for the price to recover from these sorts of shenanigans…but this time it took less than a day…as the buyers showed up as soon as the selling stopped.
The jobs report set off a half-hearted rally in the dollar that came to an end at the London p.m. gold fix. From there, the dollar fell out of bed pretty quickly…and closed virtually on its low of the day.
The gold price was in the red all day long on Friday, but the stocks spent part of the day in positive territory before getting sold off with the rest of the equities going into the New York close. But, all in all, I was more than happy with the way that the gold shares performed yesterday. The silver shares turned in a mixed performance. Here’s the HUI for the week that was.
Here’s Nick Laird’s “Silver Sentiment Index” for the week that was…and it’s awfully close to breaking out to new highs.
The CME Daily Delivery Report showed that a very small 19 gold, along with 11 silver contracts, were posted for delivery on Tuesday. Nothing to see here, folks.
Neither GLD nor SLV had a report yesterday.
For the first day of the new month, the U.S Mint reported selling 19,000 ounces of gold eagles…along with a smallish 50,000 silver eagles. The final totals for March were as follows: gold eagles…73,500 ounces, one-ounce 24-K gold buffaloes 38,000…and 2,767,000 silver eagles.
The Comex-approved depositories weren’t very busy on Thursday. They reported receiving 2,973 ounces of silver…and shipped 118,745 ounces out the door. Nothing to see here, either.
The Commitment of Traders report for silver was absolutely flat…as the Commercials only increased their net short position by 113 contracts…which is barely a rounding error.
In gold, things were a bit different…and even Ted Butler was somewhat surprised by what the report had to show…as the Commercial short position increased a chunky 15,970 contracts. To make matters more interesting, the ‘4 or less’ bullion banks actually covered around 7,000 short positions, as it was the ‘5 through 8’ bullion banks…plus the ‘raptors’…that went short.
Ted says that the ‘4 or less’ bullion banks now hold their lowest short position in gold in almost two years. Right now they are ‘only’ short 15.55 million ounces…about 20% of 2011 world gold production! The lion’s share of that is held by JPMorgan.
Overall, Ted says that the COT is basically neutral for both gold and silver.
Here’s Ted Butler’s “Days to Cover Short Positions” graph…updated with yesterday’s COT data. As always, I thank Nick Laird over at sharelynx.com for providing it.
Gold volume on Friday was a bit over 155,000 contracts net of all roll-overs…and the preliminary open interest number, considering the price action, was a pretty chunky 5,764 contracts. Both Ted and I were expecting to see a decline after a big drop in price that size…but maybe that fact was covered by a new spread trade being put on…and we won’t know that for sure until Monday’s final number is posted…or next Friday’s COT report.
Gold’s final open interest number dropped to 5,014 contracts…and although that’s down by half from the preliminary number, it’s still pretty big considering Thursday’s price action.
Silver’s open interest on Friday was a bit over 65,000 contracts net…and the preliminary open interest number was up an eye-watering 4,413 contracts, which did not warm the cockles of my heart. Like gold, that’s a very large increase for the trading action we saw yesterday.
Silver’s final open interest number for Thursday showed what I had hoped…and that was a smallish decline of 32 contracts, which is far better than the large positive number that was in the preliminary report.
The spreads tightened in a few pennies in the nearer delivery months in 2011 and 2012…but the silver price doesn’t really slip into backwardation until the July 2013 delivery month. The April 2011 to December 2015 spread still sits at seventy-two cents…the same number as Thursday.
Here’s the 1-year silver chart…and the both the 50-day and 200-day moving averages continue to climb steadily higher.
Gold volume on Friday was a bit over 155,000 contracts net of all roll-overs…and the preliminary open interest number, considering the price action, was a pretty chunky 5,764 contracts. Both Ted and I were expecting to see a decline after a big drop in price that size…but maybe that fact was covered by a new spread trade being put on…and we won’t know that for sure until Monday’s final number is posted…or next Friday’s COT report.
Gold’s final open interest number dropped to 5,014 contracts…and although that’s down by half from the preliminary number, it’s still pretty big considering Thursday’s price action.
Silver’s open interest on Friday was a bit over 65,000 contracts net…and the preliminary open interest number was up an eye-watering 4,413 contracts, which did not warm the cockles of my heart. Like gold, that’s a very large increase for the trading action we saw yesterday.
Silver’s final open interest number for Thursday showed what I had hoped…and that was a smallish decline of 32 contracts, which is far better than the large positive number that was in the preliminary report.
The spreads tightened in a few pennies in the nearer delivery months in 2011 and 2012…but the silver price doesn’t really slip into backwardation until the July 2013 delivery month. The April 2011 to December 2015 spread still sits at seventy-two cents…the same number as Thursday.
Here’s the 1-year silver chart…and the both the 50-day and 200-day moving averages continue to climb steadily higher.
And here’s the 1-year gold chart.
I’d like to be able to say [one way or another] how next week’s price action in both metals is going to go…but I’m not a prophet. However, the long-term price direction in both metals is not in doubt.
Once again, there’s still time left to either readjust your portfolio…or get fully invested in the continuing major up-leg of this bull market in both silver and gold…and I respectfully suggest that you take a trial subscription to either Casey Research‘s International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations…as well as the archives.
