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Friday, January 31: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- It was all gently down hill right from the open in New York at 6 p.m. on Wednesday evening.  Then, at precisely 3 p.m. Hong Kong time---and one hour before the London open---the dollar index headed north---and the precious metals began to head south at an even faster rate.  The final coup de grâce began a few minutes before the 8:20 a.m. EST Comex open when the HFT boyz showed up---and it was all over except the crying by 9:20 a.m.   The gold price recovered a few dollars going into the London p.m. fix, but then traded basically flat for the remainder of the day.

The low and high ticks were recorded by the CME Group as $1,267.80 and $1,237.50 in the new front month, which is April.

JPMorgan Chase et al closed the gold price in New York at $1,243.10 spot, which was down $24.60 from Wednesday's close.  Volume, net of the last of roll-overs out of February, was pretty heavy at 176,000 contracts.

Not surprisingly, silver got hit the hardest---and the price chart in most aspects, was almost the same as gold's---with the low coming at precisely the same moment as well.  The rally off the low had a bit more life to it, but even that wasn't allowed to get far.

The high and low ticks were recorded as $19.73 and $18.97 in the March contract, an intraday move of almost 4%.

JPMorgan's new silver price at the end of the day was $19.135 spot, down 57.5 cents from Wednesday.  Volume, net of February, was pretty chunky at 52,500 contracts.

The platinum and palladium charts look almost the same as their gold and silver brethren.  The only real difference between them was that the lows in both metals came shortly after 11 a.m. EST, which was right after the London close.  Here are the charts for them.

The dollar index closed late on Wednesday afternoon at 80.57---and then did nothing once trading began 45 minutes later as the Far East went to work on their Friday morning.  And as I pointed out in the chart posted in The Wrap yesterday, at precisely 3 a.m. Hong Kong time---and an hour before the London open---the index began to head north with some authority.  The rally ended at 81.12 just a few minutes before noon in New York, before giving back a small handful of basis points going into the close.  The index closed at 81.05 which was up 48 points from Thursday's close.

Of course the big loses in both gold and silver happened in the one hour between 8:15 and 9:15 a.m. EST---and during that time period, the dollar index was trading flat.  Here's yesterday's chart.  Please note the precise beginning of the dollar rally.  The metals really began to sell off at the point---and at exactly the same moment.  I know, because I was watching the screen at the time.

This was a bear raid on the precious metals hidden behind the skirts of a manufactured rally in the dollar index.

The gold stocks gapped down---and barely did anything after that.  The HUI closed down 2.49%.  I was surprised it wasn't more.

It was pretty much the same chart pattern for the silver equities, although they did recover a bit off their lows.  Surprisingly enough, Nick Laird's Intraday Silver Sentiment Index closed down only 1.61%.

The CME's Daily Delivery Report for Day One of the February delivery month wasn't quite what I was expecting.  It showed that only 55 gold, but 181 silver contracts were posted for delivery on Monday from within the Comex-approved depositories.  In gold, it was JPMorgan Chase with 53 contracts issued out of its client account---and there were seven different firms as stoppers.  Nothing much to see here.

The big surprise was silver.  Jefferies was the big short/issuer with 145 contracts---and in distant second was JPMorgan Chase with 35 contracts out of its in-house [proprietary] trading account.  There were only two long/stoppers---and Canada's Bank of Nova Scotia was one of them.  They gobbled up 176 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

For the second day in a row there was an addition to GLD.  It was a smallish 19,282 troy ounces.  And as of 9:24 p.m. EST yesterday evening, there were no reported changes SLV.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 29,000 silver eagles---and that was it.

Over at the Comex-approved depositories on Wednesday, it was the second day in a row where there was no reported in/out movement in gold.

There was more activity in silver, of course, as 600,360 troy ounces were reported shipped in---and 220,490 troy ounces were reported shipped out.  The link to that activity is here.

Casey Research's own Jeff Clark always has an eye on the chart for the St. Louis Adjusted Monetary Base over at FRED.  Jeff send me the chart below with the comment that it had jumped 4.3% in just two weeks.

Yesterday I posted the historic derivatives data for gold from the quarterly reports from the OCC.  Today I have the same reports, except it's for the "White Metals".  The OCC doesn't break silver, platinum and palladium into separate categories, but lumps them all in together, so there is no tonnage chart.

The first chart shows the derivatives positions of all U.S. banks and, like the same chart for gold yesterday, the positions held by some of these banks over the years were so tiny, that they are literally invisible.

But it's safe to say that the lion's share of the white metal derivatives held by the U.S. banks are in silver.

Once all the smaller banks are lumped into the "Other" category, the chart looks like the one below.  And, like in gold, the vast majority of the derivatives in the "Other" category are also held by HSBC USA.

Of the 6,096 registered banks in the U.S.A., 99.95% of all precious metal derivatives are held by these three banks.

And as I've been saying for years, the price management scheme in the precious metals is 100% "Made in the U.S.A."---with a little international flavour in silver from Canada's Scotiabank.

And before leaving this subject, I extend my profuse thanks to Nick Laird over at www.sharelynx.com for his excellent work in providing us with these charts.

Despite my best editing efforts, I have another big pile of stories for you today

¤ The Wrap

You seem to have missed the point that the price (of gold) is rigged more than a 19th century Tea Clipper. - a quote from a Bloomberg blog

Well, I suppose I should have expected nothing less from JPMorgan et al on the last day that all traders had to roll over out of the February contract.  We should be used to these engineered bear raids when they occur, but we never are.  And as I said further up in today's missive---"This was a bear raid on the precious metals hidden behind the skirts of a manufactured rally in the dollar index."

"Da Boyz" can do what they like, as there is no one to stop them---and the precious metal miners just pretend that it's not happening and are just hoping that will all end soon so they don't have to pretend to shareholders that everything is just fine.  They have become quite adept at ignoring the screams from their real owners, which is us.

If there was anything positive to be gleaned from yesterday's price action, it was the fact that neither the gold or silver equities got smoked to the downside.  I was expecting much worse in gold---and the fact that the silver equities did as well as they did, was a surprise.  I'm not sure what it means, if anything.

Today, at 3:30 p.m. EST, we get the latest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday, January 28.  I'm not sure what to expect in gold, as we had that big "up" day last Wednesday---and just eye-balling the silver chart, I'd guess that we'll see some improvement in the Commercial net short position in silver.  However, I'll be ready for anything that the report shows.

Of course the results of yesterday's bear raid won't be know until next Friday's COT Report---and literally anything can happen between now and then, but it's already a given that the report we get today will already be "yesterday's news" the moment it's released, as the sell-off yesterday will have changed everything.

Here's the six-month chart in silver.  As you can see, the brief plunge below the $19 price mark puts as almost back at record lows, so silver from a COT perspective looks pretty washed out.

As Ted pointed out on the phone yesterday, the gold price touched, but did not penetrate, the 50-day moving average to the downside---and this may be a target for JPMorgan et al either today, or in the very near future.  Of course if they take down gold, they'll take down silver as well, but the technical fund cupboard is pretty bare at these price levels, unless they can convince these traders to go even more short than they already are.

This is speculation on my part, but I'm just thinking out loud at the moment.  Here's the six-month gold chart.

Very little happened price wise in any of the four precious metals during the Far East trading day on their Friday---and not much is going on now that London has been open a bit over 30 minutes.  Volume is nonexistent in both gold and silver, so the HFT boyz are obviously nowhere in sight---and the dollar index is trading ruler flat as well.

Today is not only Friday, but it's the last trading day of the month---and I'm not sure what to expect during the New York session today.  JPMorgan et al were there in full force yesterday morning---and it remains to be see if they show up again today.

And as I send this off to Stowe in Vermont at 5:15 a.m. EST, the precious metal prices still continue to trade sideways.  Volumes are higher, or course, but not by much---and the dollar index is up 10 basis points.

That's it for another day.  I hope you enjoy your weekend---or what's left of it if you live west of the International Date Line---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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