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TheStreet Open House

Tuesday, December 10: Today in Gold and Silver

Stocks in this article: GLDSLV

NEW YORK ( TheStreet) -- The gold price didn't do much on Monday until shortly after the noon silver fix in London.  The subsequent rally lasted until 15 minutes before the London close before getting sold down a hair by 12:30 p.m. in New York.  Then the gold price  rallied anew, and really took off shortly after 3 p.m. in electronic trading in what looked like the beginnings of a "no ask" market, but got capped at 3:15 p.m. EST.  After that, the price didn't do much.

The low and high ticks according to the CME were $1,224.60 and $1,242.60 in the February contract.

Gold closed on Monday afternoon in New York at $1,240.40 spot, which was up $9.70 from Friday.  Net volume was extremely light at only 84,000 contracts.

It was more or less that same price action in silver, except for the fact that early rally ended at 10 a.m. in New York, and then rallied again once the 1:30 Comex close  was in.  That rally also got cut off at the knees as the price threatened to break above the $20 spot price mark and go vertical at 3:15 p.m. EST.  From there it got sold down into the 5:15 p.m. electronic close.

The low and high in silver were $19.435 and $19.98 in the March contract.

Silver finished the Monday session at $19.84 spot, up 30 cents from Friday's close.  Compared to gold's light volume, silver's net volume was pretty decent at 34,000 contracts.

Platinum had three separate rallies on Monday, and it, too, got capped around 3 p.m. in electronic trading, and finished the day up about a percent.  Palladium had just one rally, the same one the other three precious metals enjoyed that started shortly after the noon silver fix in London.  That rally ended/got capped at 9:30 a.m. in New York as the equity markets opened.  Here are the charts.

The dollar index closed late Friday afternoon in New York at 80.26, and spent all of Monday chopping quietly lower and finished the session around 80.16, which was down 10 basis points.  Nothing to see here.

The gold stocks gapped up about 2% by the London p.m. fix at 10 a.m. EST, and then traded more or less sideways for the remainder of the day.  The HUI finished up 2.16%.

It was more or less the same chart pattern in the silver shares up until about 2:30 p.m. in New York.  Then, as the silver price began to move higher, the equities followed.  Nick Laird's Intraday Silver Sentiment Index closed up 2.47%.

The CME Daily Delivery Report showed that 206 gold and an eye-popping 1,089 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.

In gold, the short/issuer was Canada's Bank of Nova Scotia with 200 contracts.  The only long/stopper of note was JPMorgan Chase in it's in-house [proprietary] trading account.  The number of contracts that they stood for delivery on was -- 200 contracts!

But the shocker was in silver, as sitting in the bushes as short/issuer was none other than the " Vampire Squid" themselves---Goldman Sachs---with 1,037 contracts, over 5 million ounces.  Not surprisingly, the two biggest long/stoppers were the two biggest Comex silver shorts; JPMorgan Chase and Canada's Bank of Nova Scotia.  JPM stopped 737 contracts, and Canada's Scotiabank stopped 209 contracts.  ABM Amro was a distant third with 74 contracts stopped.

My first reaction when I saw GS as the big short/issuer was -- what client's face did they rip off on that trade so JPMorgan could pick up this silver?  Or maybe a "Friend of the Shorts" arranged this. Nothing would surprise me, dear reader, as the red flags are flying on this one.

Yesterday's Issuers and Stoppers Report is a must to view here, and to me it reeks of collusion.

There were no reported changes in GLD, and as of 9:24 p.m. yesterday evening, there were no reported changes in SLV, either.

Since yesterday was Monday, the U.S. Mint had a sales report.  They sold 4,000 troy ounces of gold eagles; 4,000 one-ounce 24K gold buffaloes; and 526,000 silver eagles.  Very decent.

Over at the Comex-approved depositories on Friday, they reported receiving precisely one metric tonne of gold: 32,150 troy ounces.  I would guess that would be 1,000 kilobars at 32.15 troy ounces a copy.  They also reported shipping out a smallish 898 troy ounces.  The big receipt was at HSBC USA, and the link to all this activity is here.

In silver on Friday, these same depositories didn't report receiving any, but they did ship out 498,474 troy ounces of the stuff.  The link to that action is here.

The news that China imported about 130 tonnes of gold through Hong Kong came out about two weeks ago from an inside source and is now old news.  But now that the numbers have been "officially" released, here's Nick Laird's chart of the situation as it stands as of October 31.  Note that the "Cumulative Imports" from this one official source is now double what China has stated they have in reserves.  Without doubt they have more they haven't told us about, and probably much more.

Here's another set of numbers that Nick sent my way yesterday.  It shows the credit creation, a.k.a. money-out-of-thin-air, for these "G4" countries/geographic areas.  Except for Japan, credit creation was pretty wild in 2007 before the financial crisis.  In Q2 and Q3 of 2013 in these same places, it's radically different.  Even Japan's "improvement" is nothing to write home about, and the situation in Europe is wildly deflationary.

I have a decent number of stories for you today, and I hope you can find the time to read the ones that are of interest to you.

¤ The Wrap

Even though JPMorgan’s gold position is “only” 70,000 contracts, that is 21.7% of the entire Comex gold market (minus spreads). It is also more than 46% of all the long contracts held by commercial traders. There is no possible legitimate explanation that could justify JPMorgan’s outsized COMEX gold market corner. By any measure, this is a concentration and market corner of scandalous proportions. - Silver analyst Ted Butler: 07 December 2013

The price action on Monday was interesting from a price perspective, especially considering the fact that in gold it was done on such light volume.  Silver had the same price pattern as well, but volume was much higher, relatively speaking.

I took a quick look at the preliminary open interest/volume numbers for yesterday that are posted on the CME's website, and it shows that gold's open interest only rose by 500 contracts and silver's open interest was actually down on the day.  There appears to have been considerable short covering involved in yesterday's price action.

But I've learned from hard experience that these preliminary numbers can't be totally trusted, as "da boyz" can hide their tracks well.  However, if I had to bet ten bucks based on what I've seen, I'd bet that yesterday's price action was quiet short covering, and Friday's Commitment of Traders Report may, or may not, shed some light on this.

While I'm on the subject of the COT Report, the cut-off for Friday's report is at the 1:30 p.m. EST Comex close today, so I'll be more than interested to see what happens during the rest of the Tuesday trading session, particularly in New York.

The other thing I noticed when looking at the CME's preliminary report from yesterday was silver's open interest in the December delivery month.  It currently sits at 1,500 contracts, but that will drop by more than a thousand contracts once Goldman Sachs delivers to JPM and Scotiabank tomorrow.  I would also guess that most of the other 500 contracts still open for December will also be picked up by these two bullion banks, because I said further up, they are the two biggest Comex silver shorts on Planet Earth.

Not much happened in Far East trading on their Tuesday, but all four precious metals rallied going into the London open, and all met with same fate---a seller of last resort.  London has been open for an hour as I write this paragraph, and volumes are on the lighter side, and mostly of the HFT variety.  The dollar index is down a handful of basis points and clinging to the 80.00 mark by its fingernails.

And as I hit the "send" button on today's missive at 3:15 a.m. EST, none of the four precious metals have regained their London open highs.  Volumes are about average for this time of day, and the dollar index is still sitting on its precarious perch a few points above the 80 level.

Before heading out the door, I'd like to remind you one more time that Doug Casey’s new book Right on the Money will be released on December 16.

Right on the Money is the second book in the Conversations with Casey series.  This time, the conversations focus on speculating, economics, investing, politics, and how to profit in times of political and economic chaos.

“In it, famed speculator and New York Times best-selling author Doug Casey tackles investing head on.  In his typical no-holds-barred style, Doug shares his philosophical views on economics, politics, and life itself… and his tools to turn them into actionable investment ideas.

This book is nothing less than a speculator's guide to profiting from the Greater Depression… a set of keys to a potential fortune, available only to contrarians who are brave enough to use them during a time of chaos and volatility gripping our world.”

If you want to learn more, or find out how you can order it, all you need to know is at this link here.

That's all for today, 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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