Why does Fresnillo price jump at the end of trading?

The share price of silver miner Fresnillo can leap more than 3% at the end of the day as it did on 8 May 2012 and 4 May 2012. I think it happens quite often - although it didn't happen today.

On 4 May it jumped from 1500p to 1546p or 3%.

On 8 May it jumped from 1396 to 1449 or 3.7%.

JPM's Blythe Masters vs Ted Butler on silver (and gold)

"That's wrong and we don't do it" is what Blythe Masters told CNBC when she was asked about the bank's massive short position in the silver futures market and whether it was manipulative. Her argument was that all the short positions are part of a hedging mechanism for metal held by their clients.

The veteran silver analyst Ted Butler  - the main force behind four investigations into silver manipulation allegations by the US regulator (CFTC) -disagrees. He questions the need for the bank to hedge in the futures market when it is a big player in the OTC market.

Decision time: gold fund vs gold etf

A further £3,000 should be transferring into my Hargreaves Lansdown account from another ISA that has been sitting out of sight for a decade. The question is whether I want to build up my gold or diversify.

However I don't understand other investments to any useful degree and so I'll probably use the cash to motivate more understanding of my existing investments - narrow as they may be.

One area I could look at is increasing the cash in the BlackRock Gold and General Fund which has fallen 6% over the last week or so.

The chart only goes up to 19 November but the fund's second biggest holding, silver Miner Fresnillo, and its biggest holding Newcrest Mining (NCM), both fell again on Monday and today (Tuesday) as this google chart shows. The chart also shows that my physical gold ETF (PHAU) hasn't fallen as much - and even less in sterling.

The two charts suggest the fund is behaving more in line with Fresnillo than gold or even gold miners.

So, if markets regain confidence, there is potentially more to gain from the fund than the gold ETF. Another advantage is that it's a fund and the cost of buying is much lower than the £11.95 flat fee for an ETF share purchase. The problem is that I have to make a decision to buy before 8am and that purchase won't be processed until midday - and by then anything could have happened. (Interesting observation from Harvey Organ today about a large amount of physical silver being shifted around - the significance of which I do not know... more general news suggests gold is up a lot since UK markets closed, so may be the chance has gone...)

Below is what has happened to my account since Sunday:

Tuesday 22 November

Monday 21 November

Sunday 20 November

When big banks like gold more than silver?

(Click on the chart to enlarge, the vertical axis is percentage of gold and silver futures markets) Sad hours plugging numbers into excel that probably don't mean anything. This chart takes data from the US futures market regulator's weekly report on the positions held by the largest traders in the gold and silver futures market. (Commitment of Traders report)

In the red it's the net short postions of the 8 largest traders in the gold (dotted red line) and silver (solid red line) futures markets. This measures how much of these metals banks/commodity traders are selling. This is measured as a percentage of the market (CFTC explanation) from the part of the report that measures trader concentration. Both the dotted lines represent gold, both the solid lines represent silver.

When the solid lines are above the dotted lines the banks are selling larger portions of the gold market than the silver market. The latest data shows that the biggest traders/banks on the markets have dropped their gold shorts and built up their silver shorts to such an extent that the relative market shares in the silver and gold futures markets have changed. This probably means nothing as the two markets are separate. If it does mean something I don't know what it is.

The big black arrow points to July 2009. That was the last time that the biggest 8 traders swapped their relative market shares in gold and silver. So, in July 2009 the eight biggest banks/traders were selling about 55% of futures contracts in the gold and silver markets but with the gold short positions falling and the silver shorts rising.