Saturday, January 28, 2012
Good morning Ladies and Gentlemen:
Before commencing my report, here our Friday's entrants to the banking morgue:
1. Bank East, Knoxville Tennessee
2. Patriot Bank of Minnesota, Forest Lake MN
3. First Guaranty Bank and Trust of Jacksonville Fla, Jacksonsville FL
3. Tennessee Commerce Bank of Franklin, TN
The price of gold rose on Friday finishing the comex session at $1731.80 up $5.80 on the session. The price of silver rose by only 5 cents to close at $33.75. However in the access market both metals shot up considerably. Here is how they finished the evening:
Gold: 41737.30
Silver: $33.99
If gold and silver hold up on Monday, this will be the first time in a decade that these metals were not smashed prior to or right after options expiry. For many years the bankers modus operandi was to raid these precious metals prior to options expiry as they wanted to preserve as much physical as possible. They would knock the paper price of metal below the level where many options were written whether puts or calls. For the past several months, the bankers new ploy was to attack right after options expiry but before first day notice to inflict pain on those who exercised. The plan was to prevent the longs from putting up the entire contract price. If Monday holds up this will be a massive defeat to our bankers as many options were suddenly "in the money" and many will stand for metal. I will report on the progress of these longs for you once the delivery month of February commences for gold, and the non delivery options expiry month of February for silver.
Let us head over to the comex and assess trading, inventory levels, a final amount of silver and gold standing for January and then position levels by our major players with our COT report.
The total gold comex open interest fell by 1287 contracts from 434,997 to 433,710.
This occurred with gold sharply rising on Thursday which generally means that we lost some
of our banker friends. The front options expiry month of January saw its OI fall from 62 to 6
for a loss of 56 contracts. We had 61 delivery notices on Thursday so we gained 5 contracts
or 500 oz of additional gold standing. First day notice for the gold contract is this Tuesday.
Here the OI contracted from 110,572 to 75,705 which is a considerable drop. Monday night
we will receive delivery notices and on Tuesday we should be a good glimpse on how many gold oz will be standing. As always I will report this to you. The estimated volume on the gold comex on Friday was a very large 310,459 as we had considerable rollovers. The confirmed volume on Thursday was very high at 358,282. Now we await to see if we have many determined longs standing for February.
The total silver comex OI continues to trade in a narrow channel. On Friday, the resting OI for the silver comex rested at 102,006 down 510 contracts from Thursday's level of 102,514. The front options expiry month of January saw its OI drop from 84 to 52 for a loss of 32 contracts. We had 43 delivery notices on Thursday, so we gained another 11 contracts of additional silver or 55,000 oz. The next big delivery month is March and here the OI dropped from 51,142 to 49,576. Since silver had a great advance on Thursday, this must indicate some banking liquidation as they are probably scared out of their minds with the rapid rise silver. The estimated volume on the silver comex was an extremely anemic 31,194. The confirmed volume on Thursday came in at 43,149. If Butler is right, that the comex volume is approaching 100% for the HFT traders, this does not look good for our bankers as our longs are resolute and there is no activity whatsoever that will force the silver leaves to leave the silver tree. However I caution you that volatility in the silver comex will be like a yo-yo.
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