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Saturday, December 14: Today in Gold and Silver

NEW YORK (TheStreet) -- The short, but sharp sell off shortly after 10 a.m. in London Friday morning that I reported on in The Wrap in yesterday's column, turned out to be the low tick of the day.  After that, the price rallied until precisely 10:30 a.m. in New York trading---before getting capped.  Then it sold off a bit until 2 p.m. in the electronic market before rallying and closing almost on its high tick of the day.

The CME recorded the low and high as $1,219.50 and $1,238.20 in the February contract.

Gold closed in New York on Friday at $1,238.70 spot, up $13.50 from Thursday.  Net volume was pretty light at 117,000 contracts.

The price pattern for silver was similar in the broad strokes, but the low came during Far East trading.  The subsequent rally got sold down in the final hour before the Comex open---and the rally after the London p.m. gold fix got cut off at the knees at 10:30 a.m. EST as well.  The silver price didn't do much after that.

According to the CME, the low and high ticks in silver were $19.28 and $19.74 in the March contract

Silver closed on Thursday at $19.68 spot, up 18.5 cents on the day but, like gold, would have finished materially higher if the metal hadn't run into that 10:30 a.m. EST not-for-profit seller.  Net volume was pretty decent at 34,000 contracts.

Platinum and palladium didn't do much yesterday---trading flat in the Far East, rallying a bit in London, then giving all of that back during the Comex trading session.  Here are the charts.

The dollar index closed on Thursday in New York at 80.24---and then did nothing until 10 a.m. in London.  From there it rallied about 20 basis points, and then gave it all back by 9 a.m. in New York trading.  After that the index didn't do much, closing on Friday at 80.18---which was down 7 basis points on the day.

The gold stocks dipped a bit at the open, and then rallied until shortly after the 10:30 a.m. EST high tick was in for gold.  And even though the gold price hung onto all its gains, the gold equities couldn't manage the same feat, finishing barely in positive territory, as the HUI closed up 0.15%.

The silver stocks did better.  They gapped up at the open and the chopped sideways for the remainder of the day.  Nick Laird's Intraday Silver Sentiment Index closed up 1.10%.

The CME's Daily Delivery Report showed that 45 gold and 71 silver contracts were posted for delivery on Tuesday within the Comex-approved depositories on Tuesday.  It matters not who the short/issuers were in gold, because all eyes should be on the big long/stopper, which continues to be JPMorgan in its in-house [proprietary] trading account.  They stopped 44 of those contracts and, as Ted Butler continues to point out at every opportunity, have taken 95+ percent of all gold deliveries during December.

In silver, of the 71 contracts issued, JPMorgan was the largest stopper with 42 contracts in its in-house [proprietary] trading account. Canada's Bank of Nova Scotia received 20 contracts. JPMorgan has stopped a bit over 60% of all silver deliveries during December so far.

The link to yesterday's Issuers and Stoppers Report is here.

There were no reported withdrawals in GLD yesterday---and as of 9:38 p.m. EST yesterday evening, there were no reported changes in SLV.  But when I was editing today's column at 5:11 a.m. EST this morning, I note that an authorized participant withdrew 770,221 troy ounces.

The U.S. Mint had a tiny sales report, as they sold 27,000 silver eagles, and that was all.  So far in December the mint has sold 32,500 troy ounces of gold eagles; 5,500 one-ounce 24K gold buffaloes; and 1,200,000 silver eagles.  That puts the silver/gold sales ratio at a hair under 36 to 1.

Over at the Comex-approved depositories on Thursday, they reported receiving precisely two metric tonnes of gold, or 64,300 troy ounces---2,000 kilobars in total.  And, for the third day in a row, this two metric tonne shipment disappeared into the eligible category over at JPMorgan's vault.  The link to that activity is here.

It was another big day in silver, as the Comex-approved depositories reported receiving a chunky 1,569,014 troy ounces, but only shipped out 30,399 troy ounces of the stuff.  The link to that action is here.

The Commitment of Traders Report numbers were somewhat muddied by the fact that there were big deliveries in both gold and silver during the reporting week, and that certainly affects the numbers in the Commercial category in both metals.

But, as Ted Butler has already pointed out---and as I mentioned in yesterday's column---these numbers are already "yesterday's news" because all, or nearly all of the short positions that were covered on Monday and Tuesday, were put right back on when JPMorgan et al engineered that price decline in all four precious metals on Thursday.

Here are the numbers, and there was one disappointing revelation.

In silver, the Commercial net short position blew out by a surprisingly large 5,367 contracts, or 26.8 million ounces.  The Commercial net short position now stands at 87.7 million troy ounces.

The technical funds covered short positions, and rather than selling long positions to offset them, the commercial traders bought all the short positions offered.  Ted says that the raptors [the Commercial traders other than the 'Big 8'] were barely involved in action during the reporting week---and it mostly involved the 'Big 8' traders.  The unhappy thing that Ted Butler discovered was the JPMorgan increased their net short position by about 3,000 contracts, and now hold a short-side corner in the Comex silver market of approximately 13,000 contracts.  That's 65 million ounces, which represents a hair under 75% of the entire Commercial net short position in silver.  How's that for concentration?

In gold, the Commercial net short position increased by only 6,663 contracts, or 666,300 troy ounces---and the Commercial net short position now stands at 2.90 million troy ounces.

The technical funds covered short positions, and the raptors sold longs.  The 'Big 8' were barely involved.  Ted says that JPMorgan's long-side corner in the Comex futures market in gold has been reduced by 4,000 contracts and is now down to 66,000 contracts, or 6.6 million ounces---and that's all due to the fact that they took delivery of that many gold contracts during the reporting week.

That act of delivery extinguishes both a long and a short contract, as the short/issuer makes good on his promise to deliver physical metal to the long/stopper who requests it on First Notice Day.

I await next week's Commitment of Traders Report with great interest.

Nick Laird sent me his updated "Days of World Production to Cover Comex Short Positions" chart, which is derived from the data in yesterday's COT Report---and happily announced that silver was now back on top as the most heavily shorted precious metal on Planet Earth once again.  As you can tell, it only beat out the previous world champion, palladium, by a hair.

JPMorgan is mega-long Comex gold and copper; mega-short platinum and palladium; and still very short in the Comex futures market in silver.  You couldn't make this stuff up.

I have a decent number of stories for you today, and only one that I've been saving for my Saturday column.  I hope you can find the time this weekend to read the ones that interest you.

¤ The Wrap

JPMorgan continues to take almost every gold contract issued for delivery in the Comex December futures contract and most of the silver deliveries despite being net short Comex silver, so nothing has changed in that bullish circumstance from [last] Saturday’s review. I think the fact that JPMorgan didn’t add to its Comex gold futures market corner over the past five weeks has emboldened the bank to continue taking virtually all Comex gold deliveries this month. By not adding more futures contracts at least JPM can put up some façade to show that it is not blatantly squeezing the market, even though that is exactly what the bank is doing. - Silver analyst Ted Butler: 11 December 2013

Today's pop "blast from the past" was another record I used to play when I was spinning 45s on CHAR-FM in downtown Alert, N.W.T. back in the early 1970s.  The tune was from a "one hit wonder" band called Looking Glass---but what a hit it was.  I'm sure I've posted this before, but this version is live, a rarity back in those days---and I hope you enjoy it.  The link is here.

Today's classical "blast from the past" is a short piece from the Messiah by George Frideric Handel, which he composed in 1741.  I consider this 1982 recording by [Dame] Emma Kirkby to be the definitive version of the work---and I've owned the CD for almost 30 years.  She performs with the Academy of Ancient Music---and Christopher Hogwood conducts.  It starts at the 1:37 minute mark of this youtube.com video clip---and the link is here.

It was a pretty quiet day in the precious metal markets on Friday---and except for the fact that the rallies in both gold and silver were stopped dead in their respective tracks at exactly 10:30 a.m. EST in New York yesterday, I'm not prepared to read too much into yesterday's price action.

John Hathaway's overview of the situation as it currently stands in the gold world, pretty much puts the stamp of approval on all the work by silver analyst Ted Butler, along with Chris Powell and Bill Murphy of GATA---whether people wish to acknowledge it or not.

What we're doing now, like what happened to the London gold pool back in the 1960s, is waiting for this covert price management scheme to go the way of the Dodo bird.  The only question is whether it will end with a whimper, or a bang.  And because we're so far down the road on this, I would expect the latter scenario to play out, most likely on a weekend when the markets are closed.

JPMorgan Chase has not been spending the last 12 months or so attempting to rid itself of its Bear Stearns-inherited silver short position for no reason---and is probably the same reason that it now holds a long-side corner in gold in the Comex futures market.  The CFTC was told to back off for a very good reason, as the current situation has probably become a national security issue for the United States---and Britain.  I'm sure Jim Rickards would agree in whole [or in part] with that comment.

And I've also wondered who have been the buyers of last resort for all the precious metal mining shares that have been sold over the last couple of years.  It certainly hasn't been the precious metal mutual funds, or the general public, for the matter.  For the most part, they're out of the market, never to return.  So the question has to be asked as to whose possession they now reside.  That's a question that will probably be answered only after the precious metals, along with the rest of the world's commodities, are sporting shiny new---and very much higher prices.

If that speculation turns out to be correct, these stocks now reside in the strongest of hands.

And as I said yesterday, only the timing is unknown---and unknowable.  However, this central bank game of musical chairs in the gold world is very long in the tooth---and Germany asking for its gold back, along with Her Majesty's tour of the gold vaults at the Bank of England are indications that this situation is in its terminal phase.

All we can do is wait---and hope we live long enough to enjoy the fruits of our patience---and also hope that the world that follows is worth living in.

Before heading off to bed, I'd like to remind you one last time that Doug Casey’s new book Right on the Money will be released on December 16, which is Monday.

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.

I'm done for the day---and the week.

See you on Tuesday.

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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