Friday, December 13: Today in Gold and Silver
NEW YORK ( TheStreet) -- As I mentioned in The Wrap in yesterday's column, the gold price did very little in Far East trading on their Thursday, but that all ended at the London open as JPMorgan et al conducted one of their patented bear raids by engineering prices lower, hitting sell stops, and then watching nature take its course as the technical funds went from covering shorts on Monday and Tuesday, to putting new ones on yesterday.
And, not surprisingly, the low of the day appeared to come at the London p.m. gold fix, and every subsequent rally, no matter how tiny, got sold down before it could get very far.
The CME recorded the high and low ticks as $1,256.50 and $1,222.60 in the February contract.Gold finished the day in New York at $1,225.20 spot, down $27.10 from Wednesday. Net volume was more than decent at 161,000 contracts. Little has to be said about the silver price action yesterday, as it had a price pattern nearly identical to gold's. Most of the price damage was done by 9:45 a.m. EST, and the price chopped sideways into the close. The high and lows ticks in silver were $20.345 and $19.41 in the March contract. Silver closed at $19.495 spot, which was down 80.5 cents from Wednesday. Net volume was pretty decent at 49,500 contracts, but I was sort of expecting worse. I shan't rhapsodize on platinum and palladium except to note that palladium got the snot kicked out of it compared to platinum. Here are the charts. For the day, Kitco showed that gold closed down 2.16%; silver was down 3.97%; platinum closed lower by 1.67%---and palladium finished the day down 2.59%. Virtually without exception, it's always silver that gets it worse in these engineered price declines, and yesterday's price action was more proof of that, if any was needed. The dollar index closed late on Wednesday afternoon in New York at 79.87---and then traded more or less sideways until 7 a.m. EST, which was noon in London. Then away it went to the upside, topping out shortly after the 1:30 p.m. EST Comex close. After that it chopped sideways into the close, finishing the day at 80.24---which was up 37 basis points on the day. One would be hard pressed to see any correlation between the currency move and the engineered price declines in all four precious metal, except for the fact that it occurred during part of it, as most of the down-moves in the precious metals started before---and were mostly done for the day---long before the dollar index topped out. After seeing the carnage in the metal prices when I powered up my computer late yesterday morning, I was more than apprehensive about what I would find when I checked out the share prices. But even though the stocks gapped down a bit more than 2% at the open, they bottomed out at the London p.m. gold fix just before 10 a.m. EST, and then spent the rest of the day working their way higher. The HUI finished down only 1.06%. Not surprisingly, the silver equities didn't fare quite as well, but the chart pattern was very similar to the HUI's , with the low coming at the p.m. fix. Nick Laird's Intraday Silver Sentiment Index closed down 1.37%. I guess we shouldn't be surprised considering the hammering that JPMorgan et al dished out to the silver price yesterday. The silver stocks have now given up 100% of their Tuesday gain. The CME's Daily Delivery Report showed that 56 gold and 83 silver contracts were posted for delivery within the Comex-approved depositories on Monday. In gold, the biggest short/issuer was Canada's Bank of Nova Scotia, and it should come as no surprise that JPMorgan stopped 55 contracts in its in-house [proprietary] trading account. In silver it was ABN Amro, Jefferies and ADM as issuers on all 83 contracts. JPMorgan stopped 52 contracts in its in-house [proprietary] trading account, and Canada's Bank of Nova Scotia took delivery of 21 contracts. The link to yesterday's Issuer and Stoppers Report is here. There were big withdrawals from both GLD and SLV yesterday. In GLD it was a very chunky 192,920 troy ounces---and in silver it was 1,444,191 troy ounces. If these withdrawals had anything to do with yesterday's price action, then they must be the fastest withdrawals in history, as normally it takes a day or two---especially in silver---for an authorized participant to get it done. I note that the good folks over at shortsqueeze.com updated their website with the new short positions in both SLV and GLD on Tuesday evening with data for the end of November. There weren't big changes in either ETF. SLV showed a decline of 1.55%, which reduces the short position down to 18,426,700 shares/troy ounces, or 553 tonnes. In GLD, the short interest declined by 2.89%---which reduces the short position in that ETF down to 2.171 million ounces, or 67.5 tonnes. Short positions shouldn't be allowed in any precious metal fund, because of the very nature of the underlying asset. All these short positions are naked shorts, as there is no physical metal backing any of them. Joshua Gibbons, the "Guru of the SLV Bar List" updated his website with the goings-on inside the SLV depositories as of the Wednesday cut-off. Here's what he had to say--- "Analysis of the 11 December 2013 bar list, and comparison to the previous week's list: 1,926,125.1 troy ounces were removed (all from Brinks London), no bars were added or had a serial number change." "The bars removed were from: Russian State Refineries (0.7M oz), Met-Mex (0.4M oz), Doe Run (0.3M oz), and 3 others." "Overallocation cannot be determined this week, as only about half of Tuesday's deposit has been accounted for. 1,154,959.7oz were removed Tuesday, but not yet reflected on the bar list." The link to Joshua's website is here. The U.S. Mint had a sales report yesterday. They sold 5,000 troy ounces of gold eagles; 1,000 one-ounce 24K gold buffaloes; and 25,000 silver eagles. Over at the Comex-approved depositories on Wednesday, they reported receiving 66,711 troy ounces of gold---and for the second day in a row, JPMorgan took in precisely two metric tonnes of the stuff, so it was obviously in the form of 2,000 one-kilogram bars. I was always under the impression that "good delivery" for gold bars on the Comex was of the 100 or 400 troy ounce variety. But not any more, obviously. However, all of it went into the Eligible category, so it may have been for a client. The link to that activity is here. In silver, there was nothing reported received, but 510,854 troy ounces were shipped off to parts unknown. The link to that action is here. Casey Research's own Jeff Clark sent me the FRED chart below showing the latest Adjusted Monetary Base from the St. Louis Fed. Jeff said that he's "Now taking bets on how soon a new line at the top of the chart will need to be created." I have a decent number of stories again today, and I'm sure there will be a few in here that you like, as there are some excellent must reads today.
¤ The WrapIn the financial markets, a person that is one step ahead of the crowd is considered a genius, but two steps ahead, a crackpot. Call us the latter, or just resolute, but we hereby go on record as downgrading the sovereign debt of all democracies to junk status. - John Hathaway: 12 December 2013 Well, JPMorgan et al weren't exactly subtle yesterday, were they? As Ted Butler said on the phone, all the short positions that the technical funds rushed to cover during the first couple of days of the week were all put back on during the engineered price decline yesterday. So when today's Commitment of Traders Report puts in an appearance at 3:30 p.m. EST today, whatever the numbers show, will already be yesterday's news. I don't have much to add to today's column in the way of further comments except to say that if you do have some time on your hands either today, or on the weekend sometime, I would suggest that you re-read John Hathaway's piece. I've read it twice already myself---and will give it another look on the weekend. Not much happened price wise in Far East trading on their Friday. Gold volume was very light, and at the same levels it was this time yesterday morning at the London open, which is when I wrote this paragraph. But silver volume is almost double what it was at this time of day on Thursday. Virtually all the volume in both metals is in their respective front months, so it's mostly of the HFT variety. The dollar index is flat. A bit more than two hours have passed since I wrote the above paragraph, and gold and silver prices still haven't made it back above the unchanged mark, and I see that gold spiked down just before I hit the send button at 5:20 a.m. EST. However, both platinum and palladium are rallying a tiny bit, and are currently higher than their Thursday closing prices in New York---at least for the moment. Gold volume is up quite a lot, but nothing out of the ordinary. Silver volume, which was already high, is higher still, and by a goodly amount. The dollar index is flat. With today being Friday, nothing will surprise me during the Comex trading session in New York today. Where we go from here is anyone's guess. Just when we though there was some light at the end of the tunnel, the usual suspects showed up to douse any optimism that may have reared its head. It's obvious that "da boyz" can, and will, do anything they please to precious metal prices, as there is not a soul that's prepared to raise a finger to stop them---including the mining companies that we 'own', but have no say in running. However, having said that, the situation as it stands today can't exist for much longer. As many have already noted, with John Hathaway being the latest, the day of reckoning in the precious metal markets is in our future---and as I've stated before, how far in the future is unknown, and unknowable. But as Ted Butler has been saying for about 15 years---"When the day arrives, you won't have to ask if this is it, or not, as it will be self-evident." Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see here tomorrow.
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