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TheStreet Open House

Saturday, January 25: Today in Gold and Silver

NEW YORK ( TheStreet) -- As I mentioned in The Wrap in yesterday's column, the gold price did nothing through all of Far East and early London trading on their Friday.  But the rally that developed shortly after 11 a.m. GMT got capped about 30 minutes later, with the high tick coming at the noon silver fix.

From there, the gold price got sold down until just before noon in New York---and then it chopped quietly higher for the remainder of the day.

The high and low ticks were recorded by the CME Group as $1,273.20 and $1,256.80 in the February contract.

Gold finished the Friday trading session at $1,269.00 spot, up $4.40 on the day.  As far as the volume was concerned, once the roll-overs out the February delivery month were subtracted out, the net volume was down to 115,000 contracts, which is still quite a bit for such a 'quiet' trading day.

Up until the noon silver fix in London, the silver chart looked similar to the gold chart, except for the fact that silver price was up 2% during that rally.  Once the silver "fix" was in, the price got sold down until just before 11:30 a.m. in New York.  Then the HFT boyz really put the boots to the metal---and within 30 minutes, they had carved another 30 cents off the price. [The same happened to the gold price at that time, but it was a much smaller move in percentage terms, although very visible on the Kitco chart above. - Ed]

The low tick came around 2:15 p.m. in electronic trading---and the subsequent rally, such as it was, got capped an hour later---and from there the silver price was flat into the 5:15 p.m. EST electronic close.

The high and lows price ticks in the March contract were recorded as $20.285 and $19.715---an intraday move of almost 3%.

Silver closed in New York on Friday afternoon at $19.91 spot, down 10.5 cents from Thursday.  Volume, net of January and February, was very decent at 48,500 contracts.

Platinum and palladium did nothing in Far East and early London trading.  However, the moment that the Comex began trading at 8:20 a.m. EST in New York---the HFT boyz showed up.  Here are the charts.

The dollar index closed the Thursday session in New York at 80.48---and then traded flat until 11 a.m. GMT in London, when there was a quick down/up move to its low of 80.20---and then back up to unchanged.  From there it traded flat into the close, finishing on Friday at 80.46---which was down 2 whole basis points.

The gold stocks gapped up and then hit their highs of the day just minutes after trading began in New York.  From that point they sold off until gold's low was in about 11:45 a.m. EST in New York.  From there they managed to rally back to almost unchanged, but couldn't squeeze a positive close, finishing down a tiny 0.04%.

The silver shares got clubbed---and although the chart pattern was about the same as the HUI, they got sold off harder---and barely recovered from their pre-noon low in New York.  Nick Laird's Intraday Silver Sentiment Index dropped 3.15%.

With very few days left in the January delivery month, the CME's Daily Delivery Report showed that only 14 gold contracts were posted for delivery within the Comex-approved depositories on Tuesday.  JPMorgan was the issuer---and Canada's Bank of Nova Scotia was the stopper.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday---and as of 9:35 p.m. EST yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had a tiny sales report.  They sold another 10,500 silver eagles.  Month-to-date the mint has reported selling 89,500 troy ounces of gold eagles---39,500 one-ounce 24K gold buffaloes---and 4,014,000 silver eagles.  Based on this data, the silver/gold sales ratio is 31 to 1.

Over at the Comex-approved depositories on Thursday, they reported receiving 4,822 troy ounces of gold.  However, the big surprise was that precisely 11 metric tonnes of gold were reported shipped out.  Ten metric tonnes out of JPMorgan---and 1 metric tonne out of Canada's Scotiabank.

If you remember back in the December delivery month, there were days on end where JPMorgan was receiving precisely one or two metric tonnes of gold every day.  I commented on that at the time saying that it was unusual, because gold kilobars are not good delivery bars---at least not in the West.  They are, however, exactly that in China.  I would guess that would be where the bars were headed.  If that's the case, the question that I'm asking is this:  If that was their final destination, why did they have to make a pit stop at JPM's vault in New York on the way?  Always questions with no answers.  The link to Thursday's action is here, so you can see for yourself.

By the way, there was a story about this posted on the Zero Hedge website early yesterday afternoon.  It's headlined " JPMorgan's Gold Vault Has Biggest One-Day Withdrawal Ever"---and the link to that is here.  I thank West Virginia reader Elliot Simon for being the first reader through the door with this story.

It was also a big day in silver as well, as 1,560,856 troy ounces were reported received---and 39,799 troy ounces were shipped out the door.  The biggest deposit---1,260,606 troy ounces---went into Scotiabank's vault.  The link to that activity is here.

Yesterday's Commitment of Traders Report, for positions held at the close of Comex trading on Tuesday, January 22, contained a mixed bag, with no really significant changes.

In silver, the Commercial net short position declined by 858 contracts, or 4.3 million ounces.  The Commercial net short position now sits at 119.8 million ounces.  Ted Butler said that JPMorgan still has a short-side corner in the silver market of about 16,000 Comex futures contracts, which works out to 80 million ounces of the stuff.  That's no change from the prior week.

In gold, the Commercial net short position increased by a tiny 836 contracts, or 83,600 troy ounces.  That's a rounding error in the grand scheme of things.  The Commercial net short position now stands at 4.61 million troy ounces.  Ted pegs JPMorgan's long-side corner in the Comex gold market at somewhere between 60 and 61 million ounces, an increase of maybe a million or so ounces from the prior week's report.

Of course the above data is already "yesterday's news," as what has happened in the three days following the cut-off of this week's COT Report, has changed everything.  I mentioned in my Friday column that this would be the case.  We also have Monday and Tuesday's data from next week to add---and who knows what will happen on those days.  So, again, we wait.

Here's a chart that Casey Research's own Jeff Clark sent my way on Thursday.  But because I already had lots of "stuff" in my last column, it had to wait until today.  Jeff has sent this chart our way before---and it needs no introduction or explanation.

Here's another chart.  This one is courtesy of our good friend Nick Laird.  He sent it to me in the wee hours of this morning---and I thought I'd stick it in here.  It's updated as of this week's market closes around the world---and as you can see, the hand-wringing has already started and the current decline is barely visible on this chart---which needs no further explanation from me.

Since this is my Saturday column---I have a lot of reading material for you today.  I certainly hope you can find the time over what's left of the weekend to read the important stuff---and there's a fair amount of it.

¤ The Wrap

I continue to be amazed at the amount and level of commentary in gold and silver that centers on manipulation. While I don’t agree with everything that is being said, there is no denying that the commentary about price manipulation in gold and silver is intensifying to an extent never witnessed previously. Hardly a day goes by when someone new doesn’t raise the issue, either pro or con. Further, the subject of manipulation appears to be unique to gold and silver, as I am unaware of any similar discussion in any other market. What does this mean? Since this is a highly unusual circumstance, there is no sure way of blueprinting how it turns out. But something tells me that the more widespread the subject of gold and silver manipulation becomes, the greater the likelihood it will end. - Silver analyst Ted Butler: 22 January 2014

Today's pop "blast from the past" dates from 1971.  Karen Carpenter [R.I.P.] sang one of her greatest hits live on BBC.  She died of anorexia---and you can already see the signs of it in her face in this youtube.com video.  There will never be another voice like hers.  The link is here.

Today's classical "blast from the past" is a piece performed by the Tallis Scholars, one of the world's leading ensembles in Renaissance polyphony---and it's a performance [and recording] which I consider to be definitive.  It was composed around 1630 by Gregorio Allegri for use in the Sistine Chapel during Holy Week.  I've posted this before, but it's been a while.  I'd like to dedicate this piece to Andrew and Nigel, two proper English gentlemen in every sense of the phrase, that I broke bread with at the Vancouver Resource Investment conference last weekend.  The link is here.

As you're already aware, the 11 a.m. GMT rallies in both gold and silver during the London trading session weren't allowed to get far---and the HFT boyz that work for JPMorgan et al actually drove the silver price back below the $20 spot level once London closed for the day.

And why they would also take platinum and palladium to the cleaners during the Comex trading session is hard to fathom.  I guess it's because they can---and with their massive short positions in the Comex futures market in both both these metals, an engineer price decline has the technical funds heading for the hills.  And also, one wouldn't want to have a price rally in these two precious metals while the entire South African platinum industry is shut down, now would we?

Silver is being kept from seriously breaking above its 50-day moving average, but the gold price is already there---and the technical funds that are rushing to cover their short positions are being met by a wall of selling by JPMorgan et al, so it was the "same old, same old" again yesterday.

Both Ted Butler and myself are not exactly happy with this state of affairs as we are fearing the worst for next week's Commitment of Traders Report.  The technical funds are covering shorts and going long---and JPMorgan et al are selling long positions, plus buying all the short positions that the tech funds are selling.  That's why these rallies aren't running away to the upside, because these not-for-profit sellers/short sellers of last resort, are ever watchful.

Ted is more than concerned that "da boyz" have enough ammunition to engineer a semi-serious sell-off in gold if they really want to---and that would drag silver with it.

Here are the six-month charts for both gold and silver.

We have the Fed meeting on Tuesday and Wednesday---and what JPMorgan et al do when the smoke goes up the chimney at the end of the meeting on Wednesday afternoon will be something that I'll be watching most carefully---and so should you, dear reader.

Here's another graph that Nick Laird sent out way early this morning.  It's his famous "Total PMs Pool" chart---and even though it's not rising, one can be comforted by the fact that it's not declining, either.

If you've been reading Doug Noland for any length of time, he's been giving dire warnings about the world's credit markets for some time now---and it's obvious that Planet Earth's economic, financial and monetary systems as we currently know them, are under serious stress.  Will the powers that be try to save them once again?  I would suggest that an even more important question will become---will they even try---and if they do, how much money will they have to print to make it so?

I've been writing about this for almost fifteen years now---and it appears the day of reckoning is at hand.  Let's hope we've done enough to protect ourselves.

That's it 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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