Saturday, May 7, 2011

Massive Drain of Silver from Comex Vaults/Open interest in Silver Remains High

Good morning Ladies and Gentlemen:

Before commencing as is my custom on Saturday, I would like to inform you that we had one bank enter our banking morgue:

Coastal Bank of Cocoa Beach Florida.

Yesterday gold finished the session up $10.20 to $1491.20 having experiencing quite a roller coaster ride whereby in the early morning it fell to its lows of around $1478.00 at both 4 am eastern standard time and again at 9 am.  It then zoomed to $1496.00 as the afternoon London fix was set.  Once London was put to bed, it was sent down again by the crooked bankers back down to $1491. 20 which was the comex closing.  In the access market it continued its advance and finished at $1495.40.

Silver also had a roller coaster ride as this metal absorbed the shock of a massive hike in margin requirements announced on Wednesday night whereby two hikes were to take effect:

1. Thursday night
2. This coming Monday night.

During the wee hours of the morning silver straddled the 35.00 dollar mark.  Once Comex opened, the crooks certainly fixated their attentions on silver as they knocked the price all the way down to the lows of around $33.20. It then rocketed northbound all the way to its high of around $36.20 at 11 am est exactly the time that London was put to bed.  After the physical pricing of the metal it was sent down to its closing price of $35.28.  In the access market it rebounded with gold to $35.68.

Let us head over to the comex and see how trading fared over there yesterday.
The total gold comex open interest fell by only 3248 contracts despite the massive raid on Thursday.
Please remember that the open interest reading is basis Thursday night.  The front options expiry month of May saw its open interest mysteriously remain relatively constant falling by only 4 contracts from 178 to 174.
Remember that we had 76 deliveries so we lost zero oz to cash settlements and thus we gained considerable gold oz. standing.  All eyes will begin focusing on the big June delivery month.  Here the open interest fell by 8711 contracts from 329,173 to 320,462.  This is a normal reaction to the raid.  The estimated volume at the gold comex on Friday came in at a very strong level of 253,829.  Wait until you see the confirmed volume on Thursday:  361,199 with minor switches.  The bankers threw everything at the speculators trying to drive this ancient metal of Kings down.  The bankers are using high frequency trading in these metals and it is certainly getting the attention of the CFTC commissioners.  I will delve into this in the body of the commentary.

The total silver comex open interest shocked everyone with the announcement that the OI rose by 4279 contracts from 130,525 to 134,804.  The crooked bankers threw the "works" at the silver longs trying to shake as many leaves off the tree as possible. Some weaker guys left but stronger ones arrived on the scene to take up the cause and this weekend our banking cartel are having another of those secret retreats planning on what they are going to do on Monday. They will have the benefit of that second margin increase taking effect at the opening of trading on Monday. This is the first time ever that I can recall  that we had an open interest increase with several days of massive hits orchestrated by the bankers.

The front delivery month of May saw its open interest fall from 700 to 627 for a fall of 73 contracts. Remember that we had only 23 deliveries so  Blythe was busy buying off some silver comex longs with fiat dollars and a huge premium to boot. The next front month of July saw its OI advance from 75,089 to 77,140 as the bankers assault could not shake any leaves from the next front month. The estimated volume on the silver comex was a monstrous 177,135 with no switches on Friday. This is equivalent to 885 million oz or
126% of annual global silver production.  Take a look at the confirmed volume on Thursday:  226,412 contracts or
1.132 billion oz.  This is 161% of annual global silver production. The comex is experiencing massive high frequency trading in the silver complex as well as gold.



Here is the chart for May 7.2011 regarding deliveries and inventory changes at the comex

Silver
Ounces
Withdrawals from Dealers Inventory 112,220 (Brinks)
Withdrawals from Customer Inventory 450,181 (Brinks,Scotia)
Deposits to the Dealer Inventory NIL
Deposits to the Customer Inventory NIL
No of oz served (contracts) 90,000  (18)
No of oz to be served  (notices) 3,045,000  (609)
Total this month oz silver served (contracts) 770,000  (154)
Total accumulative withdrawal of silver from the Dealers inventory this month 208,643
Total accumulative withdrawal of silver from the Customer inventory this month 1,989,779





Gold
Ounces
Withdrawals from Dealers Inventory
 NIL
Withdrawals fromCustomer Inventory
326 (Scotia, HSBC)
Deposits to the Dealer Inventory
5100 (Brinks)
Deposits to the Customer Inventory
 NIL
No of oz served (contracts)  today
 7200  (72)
No of oz to be served  (notices)
 10200   (102)
Total monthly oz gold served (contracts) so far this month
 27800 oz (278)
Total accumulative withdrawal of gold from the Dealers inventory this month
zero 
Total accumulative withdrawal of gold from the Customer inventory this month
264,713


Let us begin with gold. 
First the comex announced that we had another of those exact round numbers of gold deposits to the tune of 5100 oz. It seems that the recipient of all of these round number gold deposits is always Brinks. It looks like this is a paper deposit, not real gold coming in.
Please note again that there has been no withdrawals of gold from the dealer as we approach the June delivery month, and this is quite unusual.  We did experience minor withdrawals of gold of 100 oz from Scotia and 226 oz from HSBC.  There were no adjustments.
The comex folk notified us that 72 notices for delivery were sent down which equates to 7200 oz of gold.  The total number of notices filed so far this month total 278 or 27800 oz.
To obtain what is left to be served, I take the OI standing for May (174) and subtract out Friday's deliveries (72) which leaves me with 102 notices left to be served which is identical to Thursday. Thus someone was in great need of gold to put out fires somewhere.

Thus the total number of gold oz standing in this non delivery month is as follows;

27,800 oz (already served)  +  10,200 (oz to be served) =  37,800 oz vs Thursday's reading of 30,800 oz.  This number will rise steadily as we close out May.  If you are keeping score, in tonnage the amount standing so far is 1.209 tonnes.

And now for the wild activity inside the silver vaults.
The customer and dealer received no silver and this is quite surprising in a delivery month.
However there were massive withdrawals of silver from both the dealer and the customer:

Dealer withdrawal:

112,220 oz from Brinks

Customer withdrawal:

240,906 oz from Brinks
209,275 oz from Scotia
total withdrawal from customer:  450,181.

For what it is worth the registered silver at the comex is now below the 33 million mark at 32.9 million oz.  There were no adjustments.

The comex folk notified us that 18 delivery notices were sent down for servicing for a total of 90,000 oz.  The total number of silver notices so far this month total only 154 for 770,000 oz.  To obtain what is left, I take the OI standing for May (627) and subtract out Friday's deliveries (18) which leaves me with 609 notices left to be served or 3,045,000 oz.

Thus the total number of silver oz standing in this delivery month is as follows:

770,000 oz (already served)  +  3,045,000 (oz to be served)  =  3,815,000

Thursday night we had a reading of: 4,065,000 so we lost 250,000 oz of silver to cash settlements.

end
Let us head over to our ETF's


The two ETF's that I follow are the GLD and SLV.  These two funds have no metal behind them and you should steer away from these fraudulent vehicles.

First GLD inventory changes:  May 7.2011:


Total Gold in Trust

Tonnes: 1,205.39
Ounces:38,754,406.24
Value US$:
57,583,017,941.90


Total Gold in Trust: May 5


Tonnes: 1,208.42
Ounces:38,851,883.13
Value US$:
58,680,421,117.28


Total Gold in Trust: May 4.

Tonnes: 1,219.94
Ounces:39,222,301.93
Value US$:
60,417,442,186.78


We lost another 3.03 tonnes of gold. This removal of gold is no doubt putting out massive fires in London as many sovereign wealth funds remove the metal and put it onto their shores. The bang here will be much greater than a comex default as this gold that is being removed belongs to the Bank of England and they will ask for their swapped gold back when the time comes.  This is when the fun will begin.







How about the SLV?  May 7.2011:




Ounces of Silver in Trust329,665,590.000
Tonnes of Silver in Trust Tonnes of Silver in Trust10,253.75

May 5.2011:
Ounces of Silver in Trust330,153,362.000


May 4.2011:
Ounces of Silver in Trust333,958,061.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,387.26


We lost another .488 million oz of silver. In the past 3 days we have lost 24.073 million oz of silver.
Where did this go? It certainly did not arrive at the comex's doorstep. It looks like we have many funds removing this metal and placing it in private facilities.




Let us head over to our closed physical funds that we follow: the Central Fund of Canada and Sprott's gold and silver funds:
Wait to you see the central fund's Nav!!!!!

1. Central Fund of Canada: It rose from a negative price to NAV of 8.5% in Usa funds and negative 8.6% in Canadian funds to a positive 2.6% in USA funds and 3.0% in Canadian funds.  It seems that there was massive chatter that this fund had only paper gold certificates and paper silver certificates.  This was refuted by the Spicer family as they stated that 98% of the inventory is in bar form and not paper. The market reacted to this in a very kindly fashion.  
2. Sprott silver fund  (PSLV):  Premium to NAV rose nicely and remains at a high of 15.21%
3. Sprott gold fund (PHYS): premium to NAV rose to positive .48% to NAV

In summary, the concerns of a negative price to NAV in the Central Fund of Canada has been resolved and we will continue to see positive price advances in this physical vehicle.

end

Friday night saw the release of the COT report and it was something to behold:
Let us see the Gold COT report:



Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
259,440
66,784
27,637
161,934
402,036
449,011
496,457
Change from Prior Reporting Period
-1,167
7,443
-725
-5,101
-13,993
-6,993
-7,275
Traders
222
62
63
49
54
296
159


Small Speculators




Long
Short
Open Interest



73,312
25,866
522,323



-816
-534
-7,809



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, May 03, 2011


Please remember that this report is from April 27 to May 3.  It does not include the last 3 days of the gold raid.
Those large speculators that were long in gold lightened up their positions by 1,167 contracts.
Those large speculators that were short added a huge 7743 contracts to those positions as the raid was already in progress and they wanted to join forces with the raiders.

And now for our commercials:
Those large commercials that have been long in gold lightened up on those positions to the tune of 5101 contracts.
Those large commercials that have been short gold from the beginning of time covered a massive 13,993 contracts.  My bet was that most of the short covering here occurred on Monday May 2 and on May 3 the last day of this report.  The small specs have been obliterated again and minor amounts of contracts were shed.  I would like to point out that the increase in margin requirements remove the little guy who has been supplying much of the liquidity.  Thus the downfall in price is much magnified as will a price rise as the small speculators abandon this rigged casino.
Let us now see silver:

Silver COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
42,751
19,397
24,159
30,743
73,203
97,653
116,759
-327
1,314
-4,197
-5,020
-5,094
-9,544
-7,977
Traders
86
48
52
37
42
155
115

Small Speculators




Long
Short
Open Interest



34,254
15,148
131,907



-1,890
-3,457
-11,434



non reportable positions
Change from the previous reporting period

COT Silver Report - Positions as of
Tuesday, May 03, 2011



Those large speculators that were long pitched a very tiny 327 contracts. Remember that we were already in day 2 of the raid when this report was filed.
Those large speculators that were short silver added only a tiny 1314 contracts to their shorts.  This is a little surprising.

And now for our commercials:
Those large commercials that have been long silver lessened a huge 5020 contracts from their long position.  
Those commercials that have been short silver covered 5094 contracts by day 2 of the raid.
I would have thought that more would have been covered.
Next week's data will tell the tale with respect to the commercials in the amount of silver they covered.
The small specs got annihilated again.  Those small guys that have been long liquidated 
a rather large 1890 contracts.  Those small guys that have been short silver  used the opportunity to cover 3457 of their short positions.
The small specs will not be a factor having been blown out of the water with the massive fall in silver.  These guys provide the liquidity and thus price changes from now on will be magnified.

end.

There has been massive high frequency trading in all markets including the commodities especially gold and silver where the two ring leaders, Goldman Sachs and JPMorgan have a stranglehold on this. It seems that finally it has caught the eye of the regulators as they have woken up from their deep sleep to witness this phenomenon.  Bart Chilton was on CNBC explaining his alarm on this type of trading:

Here he is:



end.



Yesterday being the first Friday of the month always sees the release of the jobs number.
The crooked bankers always raid gold and silver around this day. The release showed a "good" 244,000 rise in the number of jobs.

Here is the official news release from Reuters:

Job gains largest in 11 months, but jobless rate up




WASHINGTON (Reuters) - U.S. employment increased more than expected in April as private companies created jobs at the fast pace in five years, pointing to underlying strength in the economy, even though the jobless rate rose to 9.0 percent.
Nonfarm payrolls rose 244,000 last month, the most in 11 months, the Labor Department said on Friday. The private sector accounted for all of the job gains last month, with payrolls rising 268,000, the largest rise since February 2006.
The gain in overall payrolls, above economist' expectations for a 186,000 increase, was supportive of views the economic recovery would regain speed this quarter after stumbling in the first three months of the year on high commodity prices.
Data for the previous two months was revised to show 46,000 more jobs were added.
Gains in April marked seven straight months of net job creation, but remained too little to make much of dent on the pool of 13.7 million Americans out of work.
The unemployment rate backed away from a two-year low of 8.8 percent. It is derived from a separate survey of households which showed a decline in employment and a moderate rise in the size of the labor force.
The unemployment rate had dropped a full percentage point since November and the latest rise will strengthen the Federal Reserve's resolve to stick to its ultra-easy monetary policy stance.
The Fed last month signaled it was in no hurry to start withdrawing its massive stimulus for the economy, even as other major central banks around the world have begun to raise interest rates.
High gasoline and food prices clipped U.S. economic growth in first quarter. The economy grew at a 1.8 percent annual rate after expanding at a 3.1 percent clip in the final three months of last year.
The economy has recovered only a fraction of the more than 8 million jobs lost in the 2007-2009 recession. Job growth of between 250,000 and 300,000 a month is needed to make significant strides in reducing unemployment.
WEAKNESS SEEN TRANSITORY
Details of the April employment report were generally upbeat with the exception of government employment, which contracted for a sixth straight month in April, shedding 24,000. The bulk of gains in payrolls last month were in the private services sector, which added 224,000 after 194,000 jobs March.
Employment in the goods-producing industries increased 44,000, with construction payrolls climbing by 5,000 and manufacturing hiring gaining 29,000.
The employment report also showed the average workweek unchanged at 34.3 hours for a third straight month and no sign of wage inflation, with average hourly earnings rising a mere 3 cents.
-END-

The market rejoiced with glee rising over 100 points.
Only one problem with the increase in jobs of 244,000 souls: 

1. the B/D  (Birth/Death) plug number which is a figure the BLS pulls out of its head to estimate how many people who have left the work place (Death) and started a new business (Birth) and thus add jobs.  This is a total ludicrous number and it totally falsifies all of the jobs reports. The B/D plug on Friday was 175,000 jobs.  Thus 72.4% of the gain was due to this fictitious number.


2. the MacDonald's hamburger firm hirings of 62000 is included in the 244,000 job gain.


If you remove both of these you gain only 7000 jobs.

 end.

John Williams weighs in on the jobs report:  (courtesy of Jim Sinclair and shadowstat.com,  John Williams )

Jim Sinclair’s Commentary
The latest from John Williams’ ShadowStats.com.
No. 367: April Labor Numbers, Money Supply, Dollar and Precious Metals
- Increasingly Misleading Seasonal-Factors Continued to Pummel Accuracy of Jobs Data 
- April Household Survey Showed 190,000 Employment Drop 
- April Unemployment Rates: 9.0% (U.3), 15.9% (U.6),22.3% (SGS) 
- Broad Money Supply Gains in April 
- Underlying Inflation, Dollar and Precious Metals Fundamentals Unchanged
"No. 367: April Labor Numbers, Money Supply, Dollar and Precious Metals" 
Web-page: http://www.shadowstats.com
ShareThis

end.


It seems that China is very nervous about the magnitude of the USA debt.
They are now heading for major talks on this issue.  Remember also that we have reached the Debt ceiling of 14.294 trillion dollars and that Geithner is asking for a 2 trillion dollar increase in the debt level.  That would put the Debt/GDP higher than 100%.
Here is this big Reuters story:

China pushes U.S. on debt ahead of high-level talks


BEIJING (Reuters) - China, wielding its huge dollar holdings, on Friday pressed Washington to tackle its huge fiscal deficit and said it would raise the issue of discrimination against Chinese investors at high-level talks next week.
Senior Chinese officials also made clear that U.S. demands for Beijing to raise sharply the value of the yuan currency and to end a crackdown on dissent -- both irritants in ties between the world's two biggest economies -- would gain little ground at next week's Strategic and Economic Dialogue in Washington.
"We are paying a lot of attention to this (the fiscal deficit)," Chinese Vice Finance Minister Zhu Guangyao told reporters at a briefing about the talks.
The White House is in tense negotiations with Republican lawmakers over rival proposals to tackle the budget deficit, expected to reach $1.4 trillion this year and a serious worry for governments like China that buy heavily in U.S. Treasury bonds and other dollar assets.
China's has the world's biggest foreign exchange reserves, with about two-thirds estimated to be held in dollars, and any sign it was alarmed by policy uncertainty could ripple through global markets.
"We hope that the United States in its fiscal clean-up will be able to adopt effective measures based on President Obama's proposal," Zhu said, giving unusually forthright backing to the Obama plan.
"For the present stage, we believe that the most crucial thing is that the U.S. economy maintains a vigorous impetus toward recovery and that this developing trend is maintained," Zhu said.
Zhu and Chinese Vice Foreign Minister Cui Tiankai, speaking to reporters ahead of the start on Monday of the two-day talks, laid out Beijing's positions on other economic and foreign policy disputes, stressing their desire for cooperation.
That included the yuan exchange rate, which Washington has repeatedly said is held too low, making Chinese exports unfairly cheap and deterring bigger Chinese purchases of U.S. goods.
The two agree on the direction of yuan reform, but differ on the pace of appreciation, said Zhu.
"On these specific issues, I frankly acknowledge that China and the United States have different views. Therefore, we need to have discussion."…
-END-

The Euro has lost considerable ground to the dollar during the past 5 days.   The reason for the fall from grace is due to Greece who are threatening to leave the Euro scene.



Greece raised possibility of euro exit-report




BERLIN, May 6 (Reuters) - Greece has raised the possibility of exiting the euro zone in discussions with the European Commission and other member states in recent days, Germany's Spiegel Online reported on Friday.
The magazine said euro zone finance ministers were meeting in Luxembourg on Friday evening to discuss the Greek crisis and that a possible restructuring of its debt would be on the agenda of the meeting.
"The government has raised the possibility of leaving the euro zone and reintroducing its own currency," the report said, without citing its sources.
-END-

Zero hedge comments on this early this morning:

Greece Update

Tyler Durden's picture




Just as expected:
  • EU'S JUNCKER SAYS `STUPID' TO TALK OF GREECE EURO EXIT
  • EU'S JUNCKER SAYS `NO WAY' GREECE WILL LEAVE EURO AREA
  • EU MINISTERS TO DISCUSS NEW `ADJUSTMENT PROGRAM' FOR GREECE
But yes, the EURUSD will open at 1.43 on Monday, not 1.45. FX ping pong game mission accomplished.
5
Your rating: None Average: 5 (2 votes)
end.

And on Friday, Tyler Durden chimed in with this:

Here Is Why A Voluntary Greek Restructuring Makes No Sense





While on one hand nobody can predict what the downstream effects on the European financial system will be from a Greek restructuring, and if Lehman is any indication, they would be quite dramatic to say the least, the biggest reason why Greece would likely never voluntarily initiate a pull out of the eurozone (which would mean an immediate default for all EUR-denominated Greek debt, which is all of it), comes courtesy of Credit Sights: "The reality from Greece's perspective is that if it unclear why restructuring would be a politically astute option.More than a quarter of Greek debt is held domestically - primarily social security (€28 billion) and banks (€31 billion), but even Greek households are holding €6 billion in short-dated securities. While those are relatively small amounts, we don't believe that asking those sectors to accept losses on their holdings of government securities would be a vote winner. What's more, Greece has the liquidity it needs until some time in 2013 thanks to the EU and IMF loan facility. There is €83 billion within Greece' EU-IMF facility that has not yet been drawn."


end.
I think that about does it for the week.
I wish all of you a grand weekend and I will see you on Monday
Harvey





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