On Thursday morning in the Far East, gold did little if anything until Hong Kong opened, where it promptly got sold off. It recovered somewhat until "that magic time" of 3 a.m. in New York and then got sold off hard right up until the London a.m. fix. Then it recovered slightly until the p.m. fix and then drifted lower until the 5:15 Eastern time when the Comex closed for the Easter long weekend. Gold's low for the day was the London a.m. fix.
Silver followed a slightly different route. It followed gold until "that magic time," then was sold off all the way through London and New York without much of a break, finishing on its lows of the day at the Comex close.
Open interest in gold for Wednesday fell 14,599 contracts. That's not as much as I was expecting. There are two possible reasons why this number appeared low. Firstly, not all the changes were actually reported; and secondly, there was probably a lot of shorting going on in conjunction with the short covering. It actually could be a combination of both.
The same goes for silver, whose open interest dropped only 4,643 contracts.
As I've mentioned before, when the Cartel orchestrates a huge smashdown like this, they try to mislead those of us who keep track of such things, by being devious about their methods -- first by under-reporting, and secondly (and almost without fail) they orchestrate their market interventions by starting on a Tuesday afternoon when the cut-off for Friday's commitment of traders report is already past so that their shenanigans won't show up until next Friday. And they love to do it most on the Tuesday immediately preceding options expiry -- which, in this case, is early next week.
Well, it was the continuation of what happened on Wednesday. Once the boys gave the overbought positions a big enough shove on Tuesday, the Cartel pulled their bids on gold and silver (plus all the other commodities they've got their fingers in) and down went the prices.
As I said, the 50-day moving averages for both metals were ripe for the picking, and they did exactly that, in spades! This was way more than I (and Ted Butler) thought they would do. I had a chat with Ted yesterday in the early afternoon, and he feels that this take-down way past the 50-day moving averages probably got between 90 and 95% of all the spec longs out there, with a few more to follow early next week. We both feel that the 200-day moving average is too much of a stretch for the Cartel right now.
This all jibes with what Butler was saying in his latest commentary about the silver ETF being very slow in getting physical to meet its requirements. The U.S. Mint sales of silver eagles have gone through the roof in the last five months and they've run out of blanks a couple of times this year as well.
If this all turns out to be true, this silver pipeline will be very difficult to refill, as the back orders for physical silver of any kind will now be off the charts, as those fence-sitters who have been putting off purchasing because of the price, or because there was "always lots available" are now in a panic to get their hands on some.
Another thing Butler and I were talking about is that the "eight or less" silver traders who are short this mountain of silver have inside information as to how much physical silver really exists in good delivery form and at what price are probably more than aware of this unfolding situation. This is why gold and silver got hammered -- so they could cover as many short positions as possible before the inevitable upwards readjustment in price. Ted has always felt that this is how it would come to an end -- with one final smack to the downside --and this could have been it. As they say, we will find out in the fullness of time. Here's the silver commentary in question, and it's linked here:
Ed Steer on last week's smashing of gold and silver | Gold Anti-Trust Action Committee