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TheStreet Open House

Thursday, December 5: Today in Gold and Silver

NEW YORK ( TheStreet) -- The Wednesday trading session started off like every other during the last few months, under selling pressure right from the open in Far East trading, and the gold price put in a new low for this move down shortly before 11 a.m. GMT in London, which was probably the a.m. gold fix.

Then shortly before 1 p.m. GMT, the gold price began a $15 rally that ran out of gas about 9:15 a.m. in New York.  From there it traded more or less flat until 12:15 p.m. before taking off to the upside in earnest.  The rally, which appeared to be be short covering, got capped about 35 minutes later as it broke about the $1,250 spot mark, and then got sold off about eight bucks during the rest of the Comex session and the electronic session that followed.

The CME recorded the low and high ticks as $1,210.80 and $1,251.50 in the February contract.

Gold closed at $1,243.30 spot, up $19.00 from Tuesday.   Because the rally was vigorously opposed, net volume was heavy at 188,000 contracts.

Here's the New York Spot Gold [Bid] chart on its own, and once you look at the internal structure of that 35-minute short covering rally, the not-for-profit selling resistance at two different points should be obvious.

The silver chart for Wednesday is similar in most ways to the gold chart, including the new low price tick for this move down that came shortly after the 8 a.m. GMT London open.  But looking at the New York Spot Silver [Bid] chart on its own, you can see that the short covering rally was far from smooth, before running into the heaviest selling resistance shortly after 12:45 p.m. EST.  Unlike gold, the silver price wasn't totally back under control until shortly after 3 p.m. in electronic trading.

The CME recorded the low and high ticks as $18.89 and $19.89 respectively in the March contract.

Silver closed at $19.715 spot, up 54 cents from its Tuesday close, but well off its high.  Not surprisingly, net volume was a very chunky 60,500 contracts, as the short covering rally ran into huge resistance as well.

Here's the New York Spot Silver [Bid] chart on its own so you can see the internal structure of its short covering rally, and the resistance it ran into going into the 1:30 p.m. Comex close.

Platinum and palladium did not set new lows for this move down on Wednesday, and both metals rallied sharply once Zurich closed at 6 p.m. Europe time, which was noon in New York.  But these rallies got vigorously capped an hour later.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 80.61. After rallying about 15 basis point going into  8 a.m. GMT London open, the dollar fell down to 80.58 by 8 a.m. EST, before blasting to its high of the day a hair above the 80.90 mark minutes before the open of the equity markets in New York.  Then by 1 p.m. the dollar was down to its low of the day of 80.57 before rallying a handful of basis points into the close.  The index finished the Wednesday session at 80.64, up only 3 basis points on the day, but it had a bit of a wild ride between the closes.

The gold stocks opened in positive territory, but quickly sank back into the red shortly after 10 a.m. EST.  That lasted until the big short covering rally began around 12:15 p.m., and the shares quickly rallied to their highs just under the 200 mark on the HUI, but then gave back about a percent as the trading day wound down.  The HUI finished up 2.20%.

The silver shares did better, and Nick Laird's Intraday Silver Sentiment Index closed up 3.79%, with the index closing almost on its high tick of the day.

The CME Daily Delivery Report was a big one yesterday, as 2,472 gold and 53 silver contracts were posted for delivery on Friday within the Comex-approved depositories.

In gold, the biggest short/issuer by far was HSBC USA with 2,216 contracts, with Canada's Scotiabank a very distant second with 178 contracts.  It should come as no surprise to anyone that JPMorgan was the long/stopper on 2,389 of the total contracts, all of it in its in-house [proprietary] trading account.

In silver, it was Jefferies and Deutsche Bank issuing 51 contracts.  JPMorgan stopped 43 contracts.  All the details are in the Issuers and Stoppers Report, which is worth a look, and the link is here.

Not surprisingly, there was another withdrawal from GLD yesterday, as an authorized participant took out 86,822 troy ounces.  And as of 11:44 p.m. EST last night, there were no reported changes in SLV.

The U.S. Mint had another small sales report.  They sold 3,000 ounces of gold eagles; 500 one-ounce 24K gold buffaloes; and 25,000 silver eagles.

Over at the Comex-approved depositories on Tuesday, they reported receiving precisely 64,300 troy ounces of gold, which works out to exactly 2 metric tonnes of the stuff, so it's a good bet that the receipt was entirely composed of 2,000 one-kilo bars.  All of it was received in the Scotia Mocatta warehouse, and nothing was reported shipped out.  The link to that activity is here.

It was another busy day in silver, as 599,944 troy ounces were reported received, and 154,553 troy ounces were shipped out.  The link to that action is here.

I have the usual number of stories for a weekday, so I hope you can find the time to spend on the ones that interest you the most.

¤ The Wrap

The great thing about the manipulation premise is that it is a one-way conversion process. Those unsure of the manipulation can be converted into seeing the manipulation if they look deep and objectively enough; those who grasp the manipulation can never be converted back again after they recognize the truth. At some point, enough will become aware of the scam being run on the Comex so as to render it unsustainable. If a physical silver shortage hits first, then it won’t matter if enough learn of it or not. - Silver analyst Ted Butler: 04 December 2013

As I mentioned at the top of this column, yesterday's big jump in both gold and silver had all the hallmarks of a short covering rally that got stopped in its tracks once again before their respective prices went supernova.

If it was a short covering rally, JPMorgan et al were selling long positions for a profit.  But by doing so,  they became once again what they always are; sellers of last resort.  Of course it's not possible to deduce how this rally will unfold in the days and weeks ahead, so I'm not going to let myself read too much into yesterday's price action, except to tell you that I've seen this movie before, and the ending is always the same.  But it's far too soon to judge this budding rally in the same manner.

The gold imports into China through Hong Kong [and probably elsewhere] are certainly getting the coverage they deserve on the Internet and in the main stream media, and I can't shake the feeling that these Chinese imports are about to become problematic for Western central banks, if it's not a problem already. 

Like the fall of the London gold pool, it's entirely possible that the Chinese are attempting the same trick that the French did when they pulled out of that pool; buy as much gold as the can before the whole JPMorgan-led price management scheme blows up.  But while the Chinese are draining the West's gold reserves, the world's central banks can't raise a word of complaint about it, because if they did, the jig would certainly be up almost overnight, as it would bring into immediate question the true state of the world's central banks gold reserves.

The other question that I frequently ask myself is; what is the true state of Russia's gold reserves?  Officially, The Central Bank of the Russian Federation hasn't added any gold to their reserves in the last three months, but I'm wondering if they've learned from the Chinese and decided to withhold their data as well.  Time will tell. 

Grant Williams speculation of another bank holiday around a gold price reset is one of my pet theories, and that's a day that lot of us are waiting for, including this writer.

The fact that JPMorgan is now long the gold in the Comex futures market, plus making every attempt to get out of their silver short positions during the last year, gives credence to the idea that the Anglo/American stranglehold on the precious metals prices, and thus the price of all commodities, is on its last legs.  But how soon it will all come crashing down is unknowable, but it's coming.

In overnight trading, the prices of both gold and silver have been in slow decline ever since their respective rallies got capped in New York yesterday afternoon, but that decline accelerated a bit going into the London open this morning.  Volumes are pretty light [as of 3:53 a.m. EST] in both metals at the moment, but I was mildly surprised that there was zero follow-through either in Far East or early London trading. This short covering rally was a New York based event only, and I have no idea as to what it may portend for the Comex trading session today.

And as I hit the send button on today's column at 5:20 a.m. EST, both gold and silver are still edging lower, and volumes are about "normal" for this time of day. Platinum and palladium are more or less trading flat.  The dollar index, after taking a 25 basis point header during the Hong Kong afternoon session, is now back around unchanged.

That's all I have for today, which is more than enough, and I await the 8:20 a.m. EST Comex open with some interest.

See you 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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