This is not being allowed to manifest itself in the price

Yesterday In Gold & Silver

The gold price didnt do a thing at the open in New York on Sunday evening. But the price went vertical around 9 a.m. Hong Kong time—and da boyz had to throw a decent amount of Comex paper at it to stamp out that rally, such as it was. From that point the price traded flat until the 8 a.m. London open—and at that time the price began to rally a few dollars more. From its 10 a.m. BST high, it got sold down a few bucks until 1 p.m. BST. The smallish rally that developed at that point got capped shortly after 8:30 a.m. in New York—and a big chunk of what little gains there were, had vanished by shortly before noon EDT. The price traded almost ruler flat from there into the close of electronic trading at 5:15 p.m. in New York.

The lows and highs were recorded by the CME Group at $1,299.70 and $1,315.80 in the June contract.

Gold closed in New York yesterday at $1,309.70 spot, up $9.10 from Fridays close. Net volume was pretty light at 96,000 contracts, so you shouldnt read too much into yesterdays price action. However, having said that, about 15% of that volume occurred in a one hour period beginning when gold spiked at 9 a.m. Hong Kong time. That was JPMorgan et al showing up as short sellers of last resort once again.

The silver price action was similar—and the 8:30 a.m. EDT price capping even more obvious in silver than it was in gold—with most of Londons gains disappearing by 10:15 a.m. in New York trading. The silver price didnt do much after that.

The high tick in the July contract yesterday was reported as $19.745—and the low tick was recorded as $19.485.

Silver finished the Monday session at $19.585 spot, up only 12.5 cents from Fridays close. Volume, net of May and June, was decent at 28,500 contracts.

It should be obvious that both gold and silver would have finished much higher in price if allowed to do so.

The platinum price chart looks similar to both gold and silver—but after having its rally capped in Far East trading on their Monday, palladium managed to rally a bit into the close.

With the strike in South Africa now in its 15th week, one would think that supply/demand fundamentals would be more obvious that they are. But it should be just as obvious that JPMorgan et al are keeping their respective prices in check as well.

The dollar index did absolutely nothing yesterday—and finished flat at 79.50. Heres the current chart, which includes Fridays activity.

The gold stocks opened up a bit over a percent—and then began to slide right away—hitting the unchanged mark just minutes before noon in New York. They rallied a bit from there—and manged to close in the black, as the HUI finished up 0.36%.

The silver stocks also opened up a percent, but they slid a lot more—falling to their lows by around 11:30 a.m. EDT—and the tiny rally from that point vanished by the close. Nick Lairds Intraday Silver Sentiment Index closed down 0.83%—despite the fact that silver finished in positive territory.

The CME Daily Delivery Report for Monday showed that 11 gold and 9 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday. Not much to see here.

While I was away, First Day Notice for delivery in the May silver contract came and went—and here are the hi/low lights. There were 1,658 silver contracts posted for delivery, of which JPMorgan posted the lions share with 1,072 contracts out of its in-house [proprietary] trading account—about 65% of the total. Jefferies, Scotiabank—and JPMorgan out of its client account—posted 336, 184 and 66 contracts respectively. The long/stoppers were Credit Suisse, Jefferies, ABN Amro, HSBC USA and JPMorgan out of its client account. The contracts involved were 353, 332, 187, 151 and 232 respectively.

In gold on the same day, the big short/issuer was Scotiabank with 407 contracts—and the largest long/stopper was JPMorgan out of its in-house [proprietary] trading account with 421 contracts. In total, there were 428 gold contracts issued, so you can see that it was two of the biggest Comex crooks involved here.

On Day 2 of the silver delivery month JPMorgan out of its client account posted 119 contracts for delivery—and Scotiabank stopped 63 of those.

On Day 3 there was little action in silver—but in gold, Scotiabank issued 160 gold contracts and JPMorgan stopped 149 of them in its in-house [proprietary] trading account.

There were no reported changes in GLD yesterday—and as of 10:16 p.m. EDT yesterday evening, there were no reported changes in SLV . either. But when I was editing todays column at 3:55 a.m. EDT this morning, I noted that SLV had reported receiving another big chunk of silver. This time it was 2,262,091 troy ounces. There was also big in/out action in both ETFs while I was away—and Ill just steal the goings-on/commentary on this from silver analyst Ted Butler last Saturday, as I dont have the time to wordsmith this on my own right now.

Another hard metal fact at odds with depressed silver prices, both on an absolute and relative basis is the movement in the metal holdings in the big silver ETF, SLV. On Wednesday, April 30th, I described my surprise at the big 3.3 million oz withdrawal following the strong, high volume price action the previous week. I was actually more surprised by an even larger 4.2 million ounce deposit into SLV following a high volume price decline earlier this [past] week. Has the world gone mad metal withdrawals on price strength and deposits on weakness? I think there is an alternative explanation in conformity with my previous findings.

Previously, I explained the big withdrawal on price strength as related to a large buyers desire to avoid hitting SEC reporting requirements that a 5% share ownership would mandate. Converting shares to metal accomplishes the avoidance of reporting. Having reduced SLV share ownership (but not silver metal ownership), the large buyer was free to buy shares again without having to report to the SEC.

Since there are more than 347 million shares of SLV outstanding, a 5% stake would amount to more than 17 million shares. As long as a large entity keep its share ownership below that level, it would not have to report under the 5% mandate. I believe the previous withdrawal reduced the large buying entitys share ownership sufficiently lower that it was able to buy more than 4 million new shares without breaching the 5% reporting cap. If there is an alternative explanation, it escapes me.

When considering the activity in GLD. the big gold ETF, the activity in silver stands out even more. Where the SLV had a huge deposit on price weakness this [past] week, GLD has had nothing but the steady drip of metal withdrawals on price weakness. I dont believe GLD will be significantly drained further, but the big deposit in SLV does stand in stark contrast and points to someone desiring to own more silver and knowing that can be more easily accomplished by manipulating prices lower.

Of course the 2.26 million troy ounces posted on the iShares Silver Trust website late last night does nothing to demystify the situation.

Before leaving SLV—here the weekly report [from last Thursday, May 1] from Joshua Gibbons. the Guru of the SLV Bar List . Heres what he had to say: Analysis of the 30 April 2014 bar list and comparison to the previous weeks list—3,362,808.5 troy ounces were removed (all from Brinks London). No bars were added or had serial number changes.

The bars removed were from Degusa (1.1M oz), Handy Harman (0.8M oz), Noranda (0.5M oz), Asarco (0.2M oz) and 15 others. As of the time that the bar list was produced, it was overallocated 705.1 oz. All daily changes are reflected on the bar list. The link to Joshuas website is here .

The U.S. Mint reported the last three sales days of April as follows. They sold 7,000 troy ounces of gold eagles—3,500 one-ounce 24K gold buffaloes—and a whopping 915,500 silver eagles.

The April sales stats are as follows: 38,500 troy ounces of gold eagles—17,500 one-ounce 24K gold buffaloes—and 4,590,500 silver eagles—along with 1,200 platinum eagles. Based on these numbers, the silver/gold sales ratio for April works out to 82 to 1. Thats amazing! Year-to-date the silver/gold sales ratio from the U.S. Mint works out to 70 to 1.

And lest I forget, so far in May, the U.S. Mint has sold only 500 ounces of gold eagles—1,500 one-ounce 24K gold buffaloes—and 171,000 silver eagles.

Id been checking the Royal Canadian Mint s website every day [including weekends] for the last couple of months waiting for their 2013 annual report and, of course, it came out last Friday while I was on holidays.

Here, in a nutshell, is what they said in the Management Discussion and Analysis section on Page 25 of that report —Sales of bullion exceeded the historic records established in 2011. Sales of Gold Maple Leaf (GMLs) coins increased 47.7% to 1,140,400 troy ounces compared to 771,900 troy ounces in 2012 while sales of

Silver Maple Leaf (SMLs) coins increased 55.8% to 28.2 million ounces from 18.1 million ounces in 2012. The

Mint continues to maintain a leading market share of the global investment bullion coin market.

This is what Ted Butler had to say about it on Saturday—and Im in full agreement with his assessment of the situation:

However, a new report on sales of Silver Maple Leafs from the Royal Canadian Mint indicates surging silver sales are not confined to U.S. coins, as new records were established in Canadian [bullion] coins in 2013. As was the case with Silver Eagles, it does not appear that plain vanilla retail buying was responsible for the surge in Silver Maple Leafs. By process of elimination, that leaves a big buyer being behind the silver coin sales surge.

Over at the Comex-approved depositories on Friday, they reported receiving 110,056 troy ounces of gold —and all of that went into the vault over at HSBC USA. The link to that activity is here .

In silver. 777,994 troy ounces were reported shipped in—and only 65,618 troy ounces were shipped out. All of the activity was confined to CNT and Scotiabank. The link to that activity is here .

That was only last Fridays activity—and I made no attempt to keep up with the in/out activity in these warehouses while I was gone, so [with permission, of course] Im borrowing more commentary from Teds weekly review to his paying subscribers that he posted on his website on Saturday.

Lets look at the turnover or movement of metal into and out from the COMEX-approved silver warehouses. Please keep in mind that this is as physical (and not paper) as it gets; every bit a reflection of actual metal as would be the mining and fabrication of silver. This [past] week (after two weeks of average movement), more than 5 million oz of silver flowed into and out from the various COMEX warehouses, as total inventories fell again, to 173.1 million oz, down a significant 3 million oz for the week. Again, its not the ocean, its the motion.

While I am virtually alone in my focus on this easily verifiable daily data series, I remain convinced of its importance and the message it is sending. No one moves this quantity of metal without good reason. This [past] weeks 5 million oz turnover equates to 250 million oz on an annual basis, a truly staggering amount. As I explained [last] Wednesday, after subtracting the amount of silver that is owned by investors (and therefore would not be involved in the turnover), there may be a core working inventory of 35 million oz or much less in the COMEX silver warehouses. This weeks turnover is staggering compared to total inventories; compared to the true working inventory, it is almost beyond description. Tightness, hand to mouth supply conditions or any other depiction is inadequate to explain this phenomenon. That this physical turnover exists against a backdrop of chronically weak prices is other-worldly; with that other world being price manipulation in COMEX futures trading .

Youre going to get the Readers Digest version of last weeks Commitment of Traders Report. but youre not missing much, as it was a fairly quiet week.

But before getting to that, I made an error in silver in the COT Report from the prior week in my column on April 26. I incorrectly stated that the Commercial net short position in silver had increased by 521 contracts. In fact it had decreased by 521 contracts. I apologize for that mistake—and I thank Connecticut reader Marty Wetter for pointing out the error of my ways.

And now for the COT Report for positions held at the close of Comex trading on Tuesday, April 29. In silver, the Commercial net short position increased by only 583 contracts, or 2.92 million ounces—more than negating the prior weeks small improvement The Commercial net short position now stands at 116.8 million troy ounces. Ted says that JPMorgans short-side corner in the Comex silver market appears unchanged at 20,000 contracts, or 100 million troy ounces.

In gold, the Commercial net short position increased by a healthy 6,645 contracts, or 664,500 troy ounces. The Commercial net short position now stands at 9.72 million troy ounces. Ted mentioned that JPMorgans long-side corner in the Comex gold market is also unchanged at around 38,000 contracts, or 3.8 million troy ounces of gold.

Here are a couple of comments about last weeks COT Report that I stole from Ted as well.

The biggest difference between gold and silver is that the 8 largest shorts in gold are holding an historically low short position, while the big 8s silver short position is historically large at more than 320 million oz. The difference can be explained by JPMorgan having been successful in getting to be the biggest long in gold, while remaining the largest short in COMEX silver. The fact that the actions of one bank can explain the difference also makes it easy to point to JPMorgan as the prime market crook in COMEX gold and silver.

Under the hood, there also was a surprise with technical fund positioning in silver (as was the case in gold) in that they increased their gross short position by more than 1800 contracts. This is unabashed good news as it puts the technical fund gross short position over 30,000 contracts and close to the historical high water mark. Aside from the role that JPMorgan plays, a real standout in COMEX gold and silver is the technical funds gross short positions in each market.

In the current disaggregated COT report, the technical funds gross short position in silver is actually slightly larger than these funds gross short positions in gold; something that I believe has not occurred previously. Its not so much that the gross short position of the tech funds is slightly larger in silver than it is in gold, but more the fact that COMEX gold is two and a half times or more the size of the COMEX silver market in contract terms. For silver to be larger in any category compared to gold must be considered highly unusual.

I have the usual number of stories today—and I hope you can find time to read the ones that interest you.

Critical Reads

NYSE Margin Debt Declined in March after Eight Months of Increase

The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Lets examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.

The first chart shows the two series in real terms adjusted for inflation to todays dollar using the Consumer Price Index as the deflator. I picked 1995 as an arbitrary start date. We were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak.

There are some really excellent charts in this commentary posted on the advisorperspectives.com Internet site on April 30—and I thank reader U.D. for sending them our way on Sunday sometime.

Doug Noland: Serial Booms and Busts

I see ample ongoing confirmation of the Granddaddy of all Bubbles thesis. The stock market is reminiscent of 1999 except todays excesses are more broadly based (and the risks much greater!). Credit market excesses recall 2007, with record leveraged lending fueling record M&A. In total, financial asset prices have inflated to unprecedented levels in nominal terms and as a percentage of GDP. Globally, record low bond yields in Italy and Spain are indicative of a historic Bubble in European debt and financial assets more generally. Reckless Japanese monetary inflation has made an absolute mess out of Japanese stock and bond markets. Throughout EM, I see financial asset prices that in no way reflect the huge risks overhanging vulnerable Credit systems and real economies. I believe China is an unfolding financial disaster with historys most maladjusted economic structure. Throughout Asia, massive overcapacity portends trouble for financial assets.

These days, accommodation doesnt do justice to ongoing unprecedented monetary stimulus, which ensures that manic equities and Credit markets completely disregard major fundamental changes in the global landscape. China doesnt matter. Ukraine and Russia dont matter. A conspicuously underperforming U.S. economy doesnt matter. The approaching end to QE doesnt matter. An alarmingly deteriorating geopolitical environment doesnt matter. As they say, It doesnt matter until it does. Yet, through it all, dont lose track of an important fact: They all matter and together they will matter a great deal.

Heres Dougs Credit Bubble Bulletin from last Friday—and this one is definitely a must read .