Silver increased a decreased a whopping $-0.928 this past reporting period and gold wandered down $-7.30 but do you know how they got there?
Let's look under the hood.! Here is the CME Daily Bulletin report from April 17th most significant day of last week for you to see the most active volume month (MAVM) and the 2nd most active volume month (2MAVM).
If you decide you would like to monitor these reports on a daily basis to gain technical knowledge for following trading on the COMEX gold and silver futures, here is where you find the reports:
http://www.cmegroup.com/tools-information/build-a-report.html select asset class=metals, product name=silver or gold, and the date.
My CME daily bulletin aggregation spreadsheet is below, for reference, for the rest of this article.
On April 23rd, we see the price of silver dropped $-1.12 and this is the net result of -1366 contracts leaving the MAVM. Many contracts can trade during the day, but at the pit closing at 1:30PM EST those -1366 contracts are what matters most because all open interest with -1366 net contracts is what adds up to the $-1.12 price change.
In my previous article I explained the trading day and the manipulation attack by the commercial traders to lower the price of silver. Also explained was the somewhat unsuccessful attack though the commercials made potential millions off the attack by causing speculators to dump their longs but they bought back at lower levels and price returned to about the same point as when the day began.
Also notice that in the OI contracts per $0.05 change category in silver, it only took 61 contracts traded to effect the $-1.12 price fall for the day. That is a very low number. I use a nickel for silver and a dollar for gold as that is a 20:1 relationship between the two. Notice for gold it took 282 contracts to effect virtually no change in price. The battle was more fierce for the price change in gold.
Total silver volume for the week was a tremendous 1,629,310,000 ounces traded at 5000 ounces per contract. That is approximately at 54 to one relationship when compared to the registered ounces on the COMEX. For gold, 64,024,100 ounces traded and that is approximately a 43 to 1 relationship when compared to the registered ounces on the COMEX.
Comparing the total COT open interest change for gold, we see gold lost a total -3,137 contracts in the spot price setting MAVM and silver a -15,678 contracts. The reason for the huge difference is found here where we see that the silver traders have to move almost all MAVM contracts to July from May for the next spot price month but gold move to the adjacent month August (which becomes July on the first day of the month) from June.
Lastly, moving contracts for either metal when the adjacent months are a month apart is tricky business for the commercial traders as they have to maintain the spot price from getting away from them in the MAVM as well as all the futures months for the purpose of fighting huge options profits on the part of the many speculators. Notice the huge amounts of contracts in silver open interest for Dec 2012 and Dec 2013. There are always wars fought for the options. In gold, you will notice Dec 2012 has the most open interest as that is a huge delivery month in the future and si always an options battle as throughout the year.
I leave you to the rest of the numbers! If you have general questions, you can reach me at MSwing@MarshallSwing.com Answers will be posted on the website for all to see.
See you next week,