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Wednesday, August 28: Today In Gold And Silver

NEW YORK ( TheStreet) -- As has been the case for the last many weeks/months, the gold price got sold down a bit during the early morning trading session in the Far East.  Then, as I mentioned in The Wrap in yesterday's column, the price popped for ten bucks at 9 a.m. BST in London, before trading sideways into the noon silver fix, which was 7 a.m. in New York.

Then gold began to rally anew, and it struggled up to its $1,425.30 spot high minutes before 10:30 a.m EDT.  After that, it got sold down about ten bucks going into the 5:15 p.m. EDT electronic close.

The gold price finished the Tuesday session at $1,416.00 spot, up $11 dollars even from Monday's close, and well of its high.  Volume, net of August and September, was substantial… around 173,000 contracts.  It's obvious that a lot of Comex paper got thrown at the gold price to prevent it from launching materially higher, which it certainly would have done if allowed to trade freely, which it obviously wasn't.

The price pattern in silver was very similar to gold's price pattern, but without the 9 a.m. spike rally in London.  But the rally that began once the noon London silver fix was in, got capped at the same moment as gold, minutes before 10:30 a.m. EDT.  The high tick at that point was $24.84 spot according to Kitco.  The silver price also got sold down going into the close.

Silver finished the trading day at $24.52 spot, up 19 cents and obviously well off its high.  Gross volume was enormous, but once the rolls and spreads from the September delivery month were removed, volume fell to a more normal 35,000 contracts.

Neither platinum nor palladium did much in Far East and Europe/London trading, but both got sold down a bit, late in the morning session in New York.  Here are the charts.

The dollar index traded pretty flat on Monday and closed around the 81.36 mark.  It sagged a bit in the early going on Tuesday in Far East trading, but rallied sharply at 9 a.m. in London when gold spiked higher.  The index reached its zenith of 81.56 ten minutes later, and then headed south starting around 8:30 a.m. in New York.  Most of the decline was in by 11 a.m. in New York, but it continued to inch lower from there.  The dollar index closed at 81.17 on Tuesday, down about 19 basis points from Monday's close.

The gold stocks gapped up a bit more than two percent when trading began in New York at 9:30 a.m. yesterday morning, and it was all down hill from there.  The decline accelerated shortly before 2 p.m., and the HUI closed on its absolute low of the day, down 4.20%.

The silver stocks got smoked as well, and Nick Laird's Intraday Silver Sentiment Index closed down 4.27%.

(Click on image to enlarge)

If you're looking for the reason for such a giant decline in the precious metal shares, against a backdrop of increasing bullion prices, I don't have one.  When we at GATA saw such a dichotomy ten or more years ago, it was pretty much always a precursor to a price smash by JPMorgan et al.  We'll see if that holds true this time, but in the face of everything that's going on in the world at the moment, I highly doubt it.  I'll have more on this subject in The Wrap section below.

The CME's Daily Delivery Report for Tuesday showed that 255 gold and 1 silver contract were posted for delivery on Friday.  In gold, the big short/issuer was no surprise, as it was none other than HSBC USA with 226 contracts, and the only long/stopper of note was JPMorgan Chase out of its in-house [proprietary] trading account, with 241 contracts.  What else is new?  The link to yesterday's Issuers and Stoppers Report is here.

This activity only represents a little over half of the contracts still open for delivery in August.  Whoever the short/issuer is on the rest, only has today and tomorrow to make good.

Just as a point of interest, so far in August there have been 3,902 gold contracts delivered, and JPMorgan Chase has stood for delivery on 2,989 of those in its proprietary trading account, which is 76% of the total.

There were deposits in both ETFs yesterday.  In GLD an authorized participant added a smallish 28,974 troy ounces.  In SLV a pretty decent 1,446,339 troy ounces were deposited.  According to silver analyst Ted Butler, SLV is owned much more than that, at least five or six million ounces more, and I just know he'll have something to say about this in his mid-week commentary to his paying subscribers this afternoon.  I'll steal what I can for Thursday's column.

Over at Switzerland's Zürcher Kantonalbank, they had a report for the week ending 23 August.  Both their gold and silver ETFs showed small declines.  In gold it was 5,734 troy ounces, and in silver it was 112,141 troy ounces.

There was no sales report from the U.S. Mint yesterday.

However, the Royal Canadian Mint issued its second quarter report for 2013 yesterday, and this is what they had to say about bullion sales in general, and gold and silver maple leaf sales in particular:

"This is the first quarter in the Mint’s history that revenue has exceeded CAN$1 billion. The significant improvement was driven primarily by bullion demand. The fragile stability of the European economy and hesitant recovery in the U.S. combined with the decline in the gold price throughout the quarter to drive demand for the Mint’s bullion products to unprecedented volumes."

"The volume of Gold Maple Leaf (GML) sales increased 144% to 403,000 ounces compared to 165,000 ounces in the same period in 2012.  Sales of Silver Maple Leaf (SML) coins increased to 6.4 million ounces from 4.0 million ounces in the same period last year, which is a 60% increase."

"During the twenty-six weeks (H1) ended June 29, 2013, sales of GML coins increased 123% to 664,000 ounces while sales of SML coins increased 53% to 12.1 million ounces."

Over at the Comex-approved depositories on Monday, there was no gold reported either shipped in or shipped out.

In silver, the only activity worth mentioning was a big withdrawal from Canada's Bank of Nova Scotia, as they shipped out 718,649 troy ounces for parts unknown. The link to that activity is here.

I have the usual number of stories for a mid-week column, and I'll leave the final edit up to you.

¤ The Wrap

The U.S. has made a new weapon that destroys people, but keeps the building standing. Its called the stock market. - Jay Leno

Based on the volume figures in gold yesterday, it was pretty easy to tell that JPMorgan Chase et al were keeping a lid on the price.  Even more to the point was the terrible performance that the precious metal equities put in yesterday as well.  I'm still trying to figure out what for-profit sellers would unload shares like that in the face of rising precious metal prices.

I know that the general stock market got hit, but that doesn't come close to accounting for what happened to gold and silver stocks.  I could see that happening if gold and silver were down on the day, but that was far from the case.

Now if you're a T.A. person, the fact that the shares aren't confirming the move up in both gold and silver is a bad sign for the metals themselves.  The mysterious selling at the New York close that we've been seeing in the shares a few times during the last ten days or so, may be "da boyz" painting the charts to make it look that way, and they are old hands at this sort of thing.  While JPMorgan et al are managing the precious metal markets, I'm always on the lookout for "in your ear."  We'll find out soon enough if this idea has any validity to it.

Today is the last day for the large traders to roll out of the September delivery month, so I expect volume to be pretty big once again in both silver and gold.  The rest of the traders that hold Comex futures contracts have to be out by the end of the trading day tomorrow.  First day notice for delivery in the September delivery month will be posted on the CME's website late on Thursday evening EDT, and I'll have all that for you in Friday's missive.

In Far East trading on their Wednesday, there wasn't much activity until about half-past lunchtime in Hong Kong.  At that point, all four precious metals moved higher in unison, but the biggest price moves were in gold and silver.  Gold added a bit over twenty bucks in short order, with silver blasting well above the $25 mark.

Of course most of those gains weren't allowed to stand for long, and it remains to be seen what prices do as the Wednesday trading session unfolds in London and New York.

As I write this paragraph, London has been open about an hour.  Gold's gross volume is around 36,000 contracts, and silver's net volume is about 7,000 contracts.  About 80 percent of that volume was already in place by the 8 a.m. BST London open, so it's been rather quiet in London since trading started there.  And not that it matters much, the dollar index is up 11 basis points.

Yesterday, at the 1:30 p.m. EDT Comex close, was the cut-off for Friday's Commitment of Traders Report, and after yesterday's price action, I'm not optimistic about what it will show.

And as I hit the "send" button on today's effort at 5:15 a.m. EDT, gold is up ten bucks, and silver is up two bits, both well of their earlier highs.  Volumes are higher in both metals, but not by much.  The dollar index is now up about 15 basis points.

That's all I have for today, which is more than enough, and I'll see you here tomorrow.

This is an abbreviated version of Ed Steer's Gold & Silver Daily Sign-up to have to the complete market review delivered to your email inbox each morning for free.

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