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Tuesday, December 31: Today in Gold and Silver

NEW YORK (TheStreet) -- It was another Sunday night where gold ticked up at the open in New York, but ran into a willing seller immediately---and by the London a.m. gold fix, the price was down over ten bucks.  There was a tiny rally that began at 1 p.m. GMT in London, 20 minutes before the Comex open, but that ran into the usual seller of last resort at 9 a.m. EST---just like it did on Thursday and Friday of last week.

From that New York high, gold got sold down lower and lower until the HFT-types pulled the plug at 3 p.m. in the thinly-traded New York Access Market.  Up until that point, the gold price had managed to hang onto the $1,200 spot price mark, but by 3:30 p.m. it was down to $1,196 spot---and traded sideways from there into the 5:15 p.m. EST close of electronic trading.

The CME recorded the high and low ticks as $1,215.80 and $1,193.30 in the February contract.

Gold finished the Monday session in New York at $1,196.70 spot, down $17.10 from Friday's close.  Net volume was only 84,000 contracts---4,000 contracts less than Friday's volume.

And as obvious as the sell-off was in gold before the London open yesterday, JPMorgan et al really did a number on silver after its rally attempt at the New York open on Sunday night---resulting in a chart pattern that you've seen many times in the past, dear reader, as the HFT guys engineer prices lower in the most thinly-traded of all markets.

Silver's rally attempt off it's pre-London low got sold down starting around 11:30 a.m. GMT---and from there it got sold down for most of the rest of the day, culminating in the spike down just before 4 p.m. EST close in New York.  The price recovered a bit from them, but only just.

The high and low for silver were reported as $20.18 and $19.46 in the March contract.

Silver closed in New York yesterday at $19.565 spot, down 51 cents from Friday's close---and safely back under the $20 spot price once again.  Net volume was pretty impressive at 32,000 contracts---8,000 contracts more than on Friday.

Platinum's rally attempt on Sunday evening in New York fared no better than the similar rally attempts in gold and silver.  Platinum also had it's low at the same time as gold and silver---in the thinly traded New York Access Market around 4 p.m. EST.  Palladium's decent rally attempt in New York got squashed as well---and it, too, got sold down for a loss.  "Da Boyz" took no prisoners yesterday, despite the fact that the dollar index was in the toilet throughout most of the trading day on Monday.  Here are the charts.

The dollar index closed late on Friday afternoon in New York at 80.33.  From there it rallied to its "high" of 80.42 shortly after 1 p.m. Hong Kong time on their Monday.  From there it was all down hill into the 79.95 low at exactly 11 a.m. EST, as someone was waiting to catch that proverbial falling knife once again, as the index broke decisively  below the 80.00 mark for the second business day in a row.  From that low, the index recovered a bit, closing at 80.01---which was down 32 basis points from its close on Friday.  Here's the 3-day chart.

The gold stocks opened down about a percent---and then traded close to unchanged up until the 3 p.m. arrival of the high-frequency traders.  The gold stocks reacted accordingly---and the HUI finished down 2.60% on the day.  The good folks over at ino.com had trouble with their HUI chart once again, so I only have half a chart for you today.  But it's the most pertinent half.

The silver stocks gapped down a bit over 2% at the open, before climbing back to almost unchanged by noon in New York.  From there they slowly chopped lower until the not-for-profit sellers showed up in the Comex futures market at 3 p.m.---and that was it for the day.  Nick Laird's Intraday Silver Sentiment Index closed down 1.90%.

There were no last minute December deliveries in either gold or silver for later today, so the deliveries I spoke of in Saturday's column were it for the month.  First Day Notice for the month of January showed that 3 gold and an absolutely stunning 1,030 silver contracts were posted for delivery on Thursday within the Comex-approved depositories.

The short/issuers of note were Canada's Bank of Nova Scotia with 368 contracts---but the big kahuna was JPMorgan, with 651 contracts out of its client account!  There's no prize for guessing the biggest long/stopper, as it was JPMorgan Chase once again with 988 contracts in its in-house [proprietary] trading account.  The link to yesterday's Issuers and Stoppers Report is here, and it's worth a look.

This is really a big deal, as January is not a regular delivery month in silver---and the fact the JPMorgan took delivery of five million ounces on the very first day, should make everyone stand up and take notice.  As Ted Butler has pointed out on many occasions---JPMorgan is mega-short the Comex paper market, but taking physical delivery of every ounce they can lay their hands on.

Not surprisingly, there was another withdrawal from GLD yesterday.  This time it was 96,451 troy ounces.  And as of 6:54 p.m. EST yesterday evening, there were no reported changes in SLV.

There was no report from the U.S. Mint yesterday---and I'll be very surprised if there's one today, either.

There was virtually no in/out activity in gold at the Comex-approved depository on Friday.  Nothing was reported received---and only 95 troy ounces were shipped out.

But it was an entirely different kettle of fish in silver, as 1,643,911 troy ounces were shipped in---and 1,526,663 troy ounces were reported shipped out.  Of the amount shipped in, 1.05 million troy ounces disappeared in the JPMorgan depository.  The link to all that activity is here.

The Commitment of Traders Report that came out yesterday afternoon was certainly a disappointment.  Both Ted and I were expecting some fairly substantial improvements in the Commercial net short positions in both silver and gold for the reporting week ending on Tuesday, December 24.  That expectation was on the back of the engineered price declines in both metals on Wednesday and Thursday of the prior week.  The price declines didn't translate into anything close to what we were expecting.  Here's what the COT Report showed.

In gold, the total commercial net short position declined by a scant 600 contracts to 26,500 contracts. There have been very few weeks where the total commercial net short position has been lower and as such the market structure is still extremely bullish. With such a small total net change, the individual commercial category change couldn’t, by definition, be dramatic. For the record, the big 8 shorts added almost 1,800 new shorts and the raptors added 2,400 new longs.

The technical funds (in the managed money category of the disaggregated COT report) did add over 3,100 contracts of gross new shorts to come close to their previous high-water mark, but I had expected more.

In silver, the total commercial net short position actually increased by 500 contracts to 19,700 contracts. Like in gold, this is still a very low number on any historical basis and must be considered strongly bullish. The changes by commercial category were all in the low hundreds of contracts and not worth detailing. The technical funds did add a few hundred new short contracts, but I was hoping for more there as well. As a result of the minor changes, JPMorgan looks to still be short 13,000 contracts [65 million troy ounces of silver].

I stole the above comments from silver analyst Ted Butler's short essay to his paying subscribers yesterday.  And since I was born in Missouri in another life, the thought also crossed my mind that these COT numbers from the CFTC yesterday were not reported correctly, or some data was withheld because of the holiday.  We'll find out next Monday.

Ted figures that JPMorgan Chase's long-side corner in the Comex futures market in gold is in the order of 67,000 contracts, or 6.7 million ounces.

I have a decent number of stories today, and I'll happily leave the final edit up to you.

¤ The Wrap

The commercials may not know in advance precisely how many technical fund shorts they can lure into the market. The commercials keep rigging prices lower until the tech funds can’t short anymore. At that point, the bottom in price is established. It seems to me we are close to that point---and that may be why there was not more technical fund selling in the current COT report.

Of course, the collusive commercials, particularly the low lifes at JPMorgan, are likely to press prices until it’s crystal clear to them that the tech funds are sold out to the max. I think that’s the explanation for today’s price action and any further rigged sell-offs. But considering how extreme the price action and resultant market structure has become, it has to be played as a crooked game at the very end of its existence. - Silver analyst Ted Butler: 30 December 2013

It should be obvious to anyone with a couple of synapse to rub together that the HFT boys were out in the thinly-traded Far East market on their Monday.  As Ted Butler said in his short COT commentary yesterday---"there was a clear intent by the commercials to press prices lower to induce more technical fund selling, as there was no legitimate supply/demand justification for the lower prices", and as I scan the Far East price action for today, I see the same intent again, with new low ticks for this move down.

Today is the last trading day of the year---and also the cut-off for next Monday's Commitment of Traders Report, which is delayed one day because of the New Year's Day holiday.  It certainly appears that JPMorgan et al are attempting to send the year out on the most negative tone possible---and nothing will surprise me during the trading action in New York later this morning.

But the real surprise yesterday was the amount of silver that JPMorgan Chase stood for delivery on, on the first day of the January delivery month.  Events like this put "paid" to the Butler quote above that states that it is a "crooked game at the very end of its existence."

With the London open about five minutes away as I type this paragraph, the gold price traded pretty flat throughout the Far East session on their Tuesday, with a spike down around 1:30 p.m. Hong Kong time.  It rallied back over the $1,200 spot price mark, but that got sold down right away.  Silver made a rally attempt in early Far East trading, but that ran into selling pressure at 9 a.m. Hong Kong time---and then spiked to its low at the same moment as silver.  Gold is up three bucks---and silver is down about 15 cents.  Platinum had the same spike low at the same time---and is unchanged in price.  Palladium is up four dollars.  Gold volume is very light, a hair under 14,000 contracts----and silver's volume is under 6,000 contracts.

And as I hit the send button on today's column at 5:15 a.m. EST, there hasn't been much change in any of the four precious metals during the last two hours of trading, although they have all rallied a bit since the London open---and gold is up about seven bucks and silver is back to unchanged on the day.  Volumes in both gold and silver are still very light---and I'm must admit that I'm expecting things to remain that way.  The dollar index is up a handful of basis points.

I await the 8:20 a.m. EST Comex open with a great deal of interest, but I expect the markets will close early.

I may or may not have a column tomorrow---and whether I do or not, obviously depends on what happens as the trading day unfolds in New York.

If there's nothing in your in-box tomorrow, then I'll certainly have something on Thursday morning.

Happy New Year---and all the best in 2014 to you and yours.

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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