Gold and Silver Update

There have been quite a few reports out there suggesting that a complete meltdown at the nuclear reactors in Japan has occurred. Reports of helicopters trying to pour water on the reactors seem to suggest that radiation is leaking as the fuel rods have probably fused and burst sending out radioactive iodine and cesium. This is very dangerous as the winds are heading south and that means Toyko. Tonight's commentary will be lengthy and give you all the necessary commentaries on Japan. It looks to me like we are very close to a banking holiday everywhere.

I would like to begin with the gold and silver market. Gold rose by $3.40 to close at 1:30pm (comex closing) at $1396, Silver also gained, rising by 35 cents to $34.47.

Let us proceed immediately to the comex floor and see what transpired today. The total gold comex open interest fell by only 3912 contracts to 507,760 with perhaps the greatest firepower of a raid possible yesterday.

(Remember OI is always 1 trading day back). The front options expiry month of March saw its OI fall from 90 to 19 for a fall of 71 contracts. The deliveries yesterday were 73 so all of the decline was due to those deliveries and we even gained a bit. As such there were no cash settlements in gold.

The new front month of April saw its total open interest fall from 257932 to 243,356 for a drop of 14,576 which is to be expected as we draw closer to April. The estimated volume today was rather on the low end coming it at 135,984. The confirmed volume yesterday was truly a monster criminal volume of 261,063.
To have the OI drop only 3900 contracts is quite a feat. The bankers are very annoyed.

Let us head over to silver;

The total silver comex OI stunned the bankers today as the OI dropped to 134,914 from yesterday's reading of 136,093. The drop was only 1179 contracts. The object of yesterday's raid was silver and you can imagine the faces of the bankers when they saw minor contraction in OI. They certainly have a problem in silver. All eyes are on the front delivery month of March in silver. The OI fell from 1309 to 1079 for a loss of 230 contracts. We had 188 deliveries so we also got some cash settlements today. It is highly unlikely that any long putting up 100% of cash would roll. Judging from the total OI numbers hardly anybody bailed. So Blythe must have enticed some longs with a handsome reward.

The estimated volume today was a very decent 68,590 contracts as it seems the world is after silver. The confirmed volume yesterday was 104,160. Each contract is 5000 oz so the volume yesterday equates to 520 million oz or 74% of annual silver production.  

Post by: Harvey Organ