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Tuesday, January 28: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- The gold price began to rise right from the open of Sunday evening trading in New York.  Then shortly before 9 a.m. Hong Kong time, the price spiked up, only to run into a wall of selling which probably came from the usual bunch of not-for-profit sellers---led by JPMorgan et al.

The gold price was back in the box within a couple of hours---and it proceeded to traded more or less sideways until 10 a.m. GMT in London.  The sell off from there lasted until the London p.m. fix---and then proceeded to rally a few dollars until 1 p.m. EST in New York.  Then the HFT boyz showed up---and by 2:35 p.m. EST, the low was in for the day.  From there, the gold price rallied a few dollars into the 5:15 p.m. close of electronic trading.

The CME Group recorded the high and low ticks as $1,279.80 and $1,251.90 in the February contract.

Gold closed in New York on Monday at $1,256.50 spot, which was down $12.50 from Friday's close.  With options/futures expiry for the February contract upon us, gross volume was very heavy.  But net of everything, the volume was actually quite light at 93,000 contracts---with a decent chunk of that needed to put the gold price pike in Hong Kong in its place.

With some minor differences, the silver price action was similar to gold's, so I'll dispense with the play-by-play.

The high and low ticks in silver were $20.09 and $19.55 in the March contract.

Silver closed yesterday at $19.685 spot, down 22.5 cents from Friday.  Volume, net of January and February, was about 40,500 contracts.

Both platinum and palladium traded basically flat until an hour or so after the London open---and then like gold and silver, down they went as well.  Here are the charts.

The dollar index closed in New York late on Friday afternoon at 80.46---and then proceeded to trade flat for the entire Monday session on Planet Earth.  There was a 30 basis point down/up/down move embedded in yesterday's price 'action'---but by the end of the day, the index closed at 80.43---which was basically unchanged.  Nothing to see here.

The gold stocks gapped down a bit at the open---and then traded sideways until shortly after the London p.m. gold fix.  Then, as the gold price began to rally to its 1 p.m. EST high, the gold stocks got sold down---and continued lower for the remainder of the day.  The HUI finished virtually on its low of the tick of the day, down 3.06%.

The silver shares fared even worse, as the outcome was never in doubt right from the open---and Nick Laird's Intraday Silver Sentiment Index got clocked by 4.37%.  That's the second big down day in a row for silver stocks.  Since the Thursday close, silver is only down 33 cents, but the shares have been hit for about 7.5% on both Friday and Monday combined.

Not surprisingly, the CME's Daily Delivery Report was pretty skinny yesterday as the January delivery month draws to a close.  It showed that 46 gold and 18 silver contracts were posted for delivery on Wednesday.  JPMorgan provided all the gold contracts---and Canada's Scotiabank stopped all of them, along with all 18 silver contracts.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD---and as of 9:19 p.m. EST yesterday evening, there were no reported changes in SLV, either.

For whatever reason, the good folks over at shortsqueeze.com haven't updated their website with the mid-month short interest for both SLV and GLD.  I've been expecting it for about a week now, but so far, nothing.

I got an e-mail from Switzerland's Zürcher Kantonalbank just before I hit the send button on today's column.  They updated their gold and silver ETF for the week ending Friday, January 24---and this is their first update since January 3.  During those three weeks, their gold ETF declined by 117,788 troy ounces---and their SLV dropped by 248,301 troy ounces.

And, as an aside to the above, I note that Sprott's physical silver trust, along with their platinum and palladium trust, have quietly turned from a discount to their NAV---to a premium, over the last week or so.

The U.S. Mint reported selling 512,000 silver eagles yesterday---and that was it.

Over at the Comex-approved depositories on Friday, there was no gold reported received---and only  546 troy ounces reported shipped out.  The link to that action, such as it was, is here.

And, as is almost always the case, the activity in silver was much more dramatic---and Friday's activity was no exception to that rule, as 593, 571 troy ounces were reported received---all into the CNT Depository---and 109,108 troy ounces were shipped out.  The link to that activity is here.

There were a lot of stories over the weekend---and on Monday---that I thought worth posting, so what's posted below will keep you off the streets for a while.

¤ The Wrap

What allows the manipulation to exist on the Comex is the sanctity of the delivery process. It is the delivery process itself, whether utilized or not, that makes the Comex legitimate. It is the possibility of converting a futures contract into actual metal [should one demand to do so] that legitimizes the exchange. The alternative of no delivery mechanism being present on a physical commodity futures contract [a cash settlement], removes any link or connection between paper trading and the actual commodity in question. Who in their right mind would trade on any futures exchange that didn’t allow for physical delivery should any seller or buyer choose to do so? Without the possibility of actual delivery there would be no connection between traded contracts and the actual commodity. Should Comex gold and silver futures contracts remove the physical delivery requirement and announce cash settlement only, trading would quickly migrate elsewhere, to other exchanges and instruments (ETFs). The Comex would quickly cease to exist. - Silver analyst Ted Butler: 25 January 2014

Today is options expiry for February on the Comex---and tomorrow is the last day for the large traders to roll out of their February futures contracts on the Comex as well---and by the end of trading on Thursday, every other trader holding a February Comex contract in any physical commodity must have either sold it, rolled it, or are standing for delivery on First Day Notice---and the first of those statistics will be posted on the CFTC's website late Thursday evening New York time.  And, as always, it's who the issuers and stoppers are that matter.  How big a part will the HSBC USA, Canada's Scotia Bank and, most importantly, JPMorgan Chase have in all of this?  I'd guess that it will be almost all of it.  It will be interesting to see how the delivery month unfolds.

The above Comex timetable, along with the FOMC meeting that starts today---and ends tomorrow afternoon---will be what drives the market for the remainder of the week.  It matters not that platinum production is shut down in South Africa, or that China is sucking the world dry of every gold bar it can lay its hands on.  Supply and demand mean---and have always meant---nothing.  It's only what JPMorgan et al do, or are instructed to do, that matters---period.

Of course, in silver, there was a time when supply and demand mattered greatly---and that's when JPMorgan almost got overrun during the latter part of March and all of April in 2011---and why they and others took a sledge hammer to the Comex futures market in the drive-by shooting that began in the thinly-traded Far East market on Monday, May 1, 2011.  That's also the day they began accumulating silver for the first time in their own warehouse.  Ted Butler spoke about this at length in his commentary to his paying subscribers last week---and I've touched on this from time to time as well.

Reader and GSD contributor Michael Cheverton commented in an e-mail late last night---"This week has a surreal feel to it, but maybe I'm just getting old."  My reply was that "No, you're right.  Surreal is a good word---and the further down this rabbit hole we get, the more surreal it becomes.  But when it does end---look out!"

And it won't end until either JPMorgan decides it's time, or is instructed to stand aside, as this state of affairs can't go on forever---and it won't.  As I've said before, this is now a national security issue for the U.S.---especially pertaining to the status of the dollar and, as an extension to that, the entire world's financial system.  The only way this will end will be suddenly---and violently.  When it does, we will all be bystanders with our faces pressed against the glass in disbelief.

I will be one of them---as even though I've been mentally preparing myself for that day for the last 15 years, it will still be a shock when it happens.

In Far East trading on their Tuesday, prices are comatose---and net volume in gold is as low as I can remember, as most of the volume is rolls out of the February contract---and into the new front month which is April.  Silver is quiet as well---and most of the volume is in the current front month, which is March---and it's mostly of the HFT variety.  The dollar is comatose.  London opens in about 15 minutes as I write this paragraph.

And as I fire today's effort off to Stowe, Vermont at 5:05 a.m. EST, I note that there's still not much going on in any of the precious metals.  Net volumes are extremely light---and for that reason alone I wouldn't read a thing into the price action of any of them.  The dollar index, which hit a low of 80.40 at 2:40 p.m. Hong Kong time, is now up to 80.60 as of 10 a.m. GMT in London.

I note that Casey Research has a new FREE video event coming our way.  It's entitled " Upturn Millionaires: How to Play the Turning Tides in the Precious Metals Market"---and it's happening at 2 p.m. EST on Wednesday, February 5.  You probably received notification of this last week, but if you've been sitting on the fence about it, you can find out more by clicking here.

You're guess is as good as mine as to how the trading day will turn out in New York.  Because of options expiry, I'm not expecting a lot of big price movement, but you just never know.

Enjoy your day---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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