And Then There’s This…Tuesday, April 28th, 2009
Source: http://feedproxy.google.com/~r/ContrarianProfits/~3/lYX3BkMt2WE/15990Posted on Tuesday, April 28th, 2009 | In China, Economics, Market Commentary
There was a brief flurry of excitement in Globex trading on Sunday evening’s New York open. Both gold and silver were up right out of the starting gate…silver especially so.
The U.S. bullion banks [the only ones allowed to trade at that time of day] were either going long or covering shorts. This rally continued through the Sydney open in gold…and into the beginning of trading in Hong Kong for silver. At those two points, a not-for-profit seller showed up…or the buying/short covering stopped. Those were the highs of the day in both metals. It’s quite unusual for the not-for-profit sellers/price cappers to hit the metals at two widely separated times like this. Almost without exception, they hit both metals at precisely the same time. I should quickly point out that trading volume in New York on Sunday night…and in Sydney and the Far East early Monday morning….was basically air in both metals. Probably no more than a few hundred contracts in silver and not a lot more than that in gold.
Anyway, the balance of Monday’s trading through the rest of the Far East, London and New York, was down. Both gold and silver closed Monday’s electronic trading session virtually on their lows of the day. There was light volume in both metals yesterday…even when you add in London and New York.
Before continuing further, I must admit to an error in my commentary virtually every day last week. Friday, as it turned out, was not options expiry in gold and silver…it was yesterday…Monday. I was reading the CFTC’s 2008 chart. I won’t make that mistake again. My apologies to you.
Open interest for Friday’s trading showed the following changes. In gold, o.i. rose 2,010 contracts to 346,636. And silver o.i went the other direction…down 1,467 contracts to 95,610. As I’ve been pointing out for the last week, it’s very difficult to read anything into these numbers because of the switching that traders are doing right now. Those that hold contracts for May [both in silver and gold] are switching them into future months [or closing them out] to avoid having to take delivery when first day notice arrives on Thursday. Today [Tuesday] is the last day that the April contract in gold and silver can be traded on the Comex. Tomorrow [Wednesday] is the last delivery day for the April contract. And, as I mentioned a couple of lines back, first day notice for delivery into the May contract is Thursday, April 30th…the last day of the month. If they haven’t switched their contracts by then…they have to stand for delivery…which requires them to come up with a lot of money.
While I’m discussing Comex deliveries, there were 460 gold contracts delivered on Monday. The big deliveries [issuers] were Bank of America (NYSE:BAC) [again!] with 311 contracts and Goldman Sachs (NYSE:GS) with 95 contracts delivered. The big stopper [receiver] was the Bank of Nova Scotia (NYSE:BNS) [321 contracts]…with a raft of smaller stoppers picking up the rest. So, with those 460 contracts delivered on Monday, there are 523 gold contracts left to deliver in the next two trading days…plus whatever contracts are purchased today…the last trading day in the April contract [which I mentioned in the previous paragraph].
In other gold and silver news, I note that silver inventories over at the Comex-approved warehouses on Monday, declined by 573,422 ounces. Over in Europe at the Zürcher Kantonalbank in Switzerland, their gold ETF was up a smallish 9,996 ounces last week…and their silver ETF was up a respectable 298,534 ounces. I thank Carl Loeb for those updates. This week, the U.S. Mint decided to update their eagles early…and they are very nice numbers. The 1-ounce gold eagles showed an increase of 27,000 last week…now up to 147,000 for the month, while the 1-ounce silver eagle mintings were up 611,500 for the week that was…for a monthly total of 2,479,500. There are still four more production days in April. The U.S. Mint may [or may not] update them one more time this month…or, as they frequently do, they’ll just include the rest of this month’s production in next month’s. There were no changes in either GLD or SLV yesterday.
Because of the weekend, there were a lot of stories that are worth your time. I’ve narrowed it down a bit…with the hope that there is no news today that is worth mentioning…so I can run the balance of these weekend stories tomorrow.
The first is from Ambrose Evans-Pritchard at The Telegraph in London. As Ambrose says…”The world is running out of capital. We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere.” The story is entitled “The capital well is running dry and some economies will wither.” and the link is here.
Today’s second offering comes from James Turk over at goldmoney.com. James has analyzed the gold price chart and finds a reverse head and shoulders pattern that he finds very bullish. Turk’s analysis is headlined “Gold’s Strong Technical Position” and you can find it linked here.
The next story is from the hallowed pages of The Wall Street Journal. It’s written by Judy Shelton. Ms. Shelton, an economist, is the author of Money Meltdown: Restoring Order to the Global Currency System. The commentary is entitled “The IMF’s Gold Gambit: The fund’s misuse of bullion reserves is crucial to its plan to use the financial crisis to expand its power”. The link is here.
And lastly…silver market analyst Ted Butler’s new commentary notes the recent scandal involving Bank of America, the U.S. Treasury Department, and Federal Reserve and wonders aloud what many of us may have been thinking. That is, if the U.S. government is intervening surreptitiously in the financial stock market, why is it so wild to suggest that the government is doing the same thing in the precious metals markets? Butler also examines the current structure of the silver futures market and concludes that the chances for a sharp rise are good. Butler’s commentary is headlined “Dangerous Parallels” and you can find the story linked here.
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I note that the S&P futures aren’t looking too good for the Tuesday open right now. Of course they weren’t great on Monday either…and it looked like there were ‘gentle hands’ in the equity markets for a while yesterday…and that dollar rally looked suspicious as well. In early Tuesday morning trading in Sydney, I see that we had a discontinuous event in gold…and nearly the same in silver, as the not-for-profit seller was driving the price down in both metals. Only a handful of contracts were being traded at the time. Let’s see how things look in gold and silver on Friday once first day notice for the May contract is out of the way.
See you on Wednesday.
Source: And Then There’s This…Tuesday, April 28th, 2009
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