As March draws to a close, deliveries in the March Silver contract are ramping up. A total of 290 deliveries were posted for tomorrow with Merrill Lynch the biggest issuer for customers while JP Morgan was second also issuing for both customers and their own accounts.
Barclays continues to gobble up the silver for its clients.
The total deliveries for the month of March has thus far been 1,707. Open interest remaining in the March contract is 330 contracts.
Notable is the fact that the March silver contract, which recently had been trading at a small premium to the May is now back to a discount of about a cent and a half. That pretty much means any fireworks related to the delivery process for the rest of March are over. These front month spreads have been extremely volatile but they have not moved in the direction that would indicate any short squeeze is forthcoming. Such an event would have been marked by a steady and continuous widening of any premium that March would have held over the May.
Rollovers continue in the gold pit with traders' move into the June being accompanied by a further reduction in open interest as longs hesitate to push the market higher as the end of the quarter draws near.
Both gold and silver are weakening as they head into the close of pit session trading. We'll see if they are able to garner any strength in the after market hours. The end of the month is currently is working against the bulls. It will be up to physical market buyers to keep a floor of buying support under the market until the speculators decide to return to the long side more aggressively.
Strength in the HUI might be the result of hedge fund unwinding of ratio spread trades due to the move higher in the broader US equity markets.
Dollar strength is the result of downgrades to Portugal and Greek debt which is weighing slightly on the Euro. Additionally the Yen is seeing a strong bout of selling pressure today. Even at that, the Dollar is only marginally higher.
The long bond is looking heavy today.
Tuesday, March 29, 2011
Consumer Confidence Plunges - No Worries - We have the Fed
The Headline says it all - stocks shrug it off. Stocks shrug off Japan. Stocks shrug off unrest in MENA. Stocks shrug off the Housing Market woes. Stocks shrug off rising gasoline prices. Stocks shrug off the sun rising in the West and setting the East.
All you need to know is that the Fed keeps printing money.
All you need to know is that the Fed keeps printing money.
Monday, March 28, 2011
Internal notes on Gold and Silver open interest and deliveries
Open interest in both gold and silver were down for Friday's session. Rollovers continue in gold with the specs moving out of the April and into the June. For all practical purposes, June is now the most active contract although volume in the April is still higher. That will end by Wednesday this week.
Some of the weakness in gold is still associated with these rollovers continuing as the inability of gold to continue pushing through $1440 last week has engendered some light long liquidation. Once we clear option expiration and the rollover activity, we will be able to get a better sense for where the market is heading next. For now it is still consolidating above $1410.
Silver too experienced some long liquidation on Friday with some of the longs ringing the cash register after it was unable to keep pushing through the $38 level.
Open interest remaining in the expiring March contract is now down to 388 contracts. Deliveries for tomorrow will be lead by Morgan for its own account. Barclays is the largest stopper once again for clients. As stated last week, Barclays has some clients who want to take delivery. Total deliveries for March thus far are 1,417.
March silver remains at a premium to the active May of about a half a cent but May is slipping some in relation to July and is now trading at a 2 cent discount to it. While the backwardation structure on the overall board is noteworthy it is not dynamic enough to keep the front 3 contract months in a full backwardation mode. That takes some of the bullishness out of it somewhat compared to what I would consider it were March and May both trading at a premium to the July. I will continue watching to see how these spreads behave as we near the end of the month.
The HUI is lower today falling further from the 580 level and establishing that as an important technical chart resistance level. It is well off its worst levels of the session however and should it be able to close the day near current levels (563) it would be somewhat of a moral victory of the bulls after the disappointment of last week's inability to clear 580. The index is trading above all the major moving averages but the 10 day is below the 20 day which is not what one wants to see for a market that is in a bullish posture. The index will need to stabilize near its current level and hold here for the next few days to allow the shorter term 10 day moving average to make a bullish crossover of the 20 day. Downside support is near 549 - 546. I would not want to see the HUI below 538 for any length of time as that would move it back down to 520.
Some of the weakness in gold is still associated with these rollovers continuing as the inability of gold to continue pushing through $1440 last week has engendered some light long liquidation. Once we clear option expiration and the rollover activity, we will be able to get a better sense for where the market is heading next. For now it is still consolidating above $1410.
Silver too experienced some long liquidation on Friday with some of the longs ringing the cash register after it was unable to keep pushing through the $38 level.
Open interest remaining in the expiring March contract is now down to 388 contracts. Deliveries for tomorrow will be lead by Morgan for its own account. Barclays is the largest stopper once again for clients. As stated last week, Barclays has some clients who want to take delivery. Total deliveries for March thus far are 1,417.
March silver remains at a premium to the active May of about a half a cent but May is slipping some in relation to July and is now trading at a 2 cent discount to it. While the backwardation structure on the overall board is noteworthy it is not dynamic enough to keep the front 3 contract months in a full backwardation mode. That takes some of the bullishness out of it somewhat compared to what I would consider it were March and May both trading at a premium to the July. I will continue watching to see how these spreads behave as we near the end of the month.
The HUI is lower today falling further from the 580 level and establishing that as an important technical chart resistance level. It is well off its worst levels of the session however and should it be able to close the day near current levels (563) it would be somewhat of a moral victory of the bulls after the disappointment of last week's inability to clear 580. The index is trading above all the major moving averages but the 10 day is below the 20 day which is not what one wants to see for a market that is in a bullish posture. The index will need to stabilize near its current level and hold here for the next few days to allow the shorter term 10 day moving average to make a bullish crossover of the 20 day. Downside support is near 549 - 546. I would not want to see the HUI below 538 for any length of time as that would move it back down to 520.
Saturday, March 26, 2011
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