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Tuesday, February 4: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- The gold price didn't do a whole lot of anything during the Far East trading day on their Monday.  Their was a slight dip going into the London open, with the low of the day coming shortly before 9 a.m. GMT.  The subsequent rally was less than impressive, but once the London p.m. gold "fix" was in at 10 a.m. EST---the gold price blasted higher in a short covering rally that immediately turned into a "no ask" market.  The sellers of last resort were there in an instant---and within a couple of hours, the rally had been crushed.  After that, the gold price didn't do much.

The CME Group recorded the low and high ticks at $1,240.40 and $1,266.10 in the April contract.

Obviously the gold price finished well off its high---and Kitco recorded that at $1,257.10 spot, up $11.20 from the Friday close.  Net volume was around 130,000 contracts.  One can only fantasize about what the close might have been if JPMorgan et al hadn't put in an appearance.

The chart pattern in silver was identical---and for the same reasons as they were in gold.

The CME recorded the low and high as $19.06 and $19.62 in the March contract.

Silver closed at $19.335 spot, up 17 cents from Friday.  But, if left to its own devices, it could have easily have been up $17.  Net volume was around 30,000 contracts.

The platinum chart was a mini version of the gold and silver charts.  But JPMorgan et al began hammering the palladium price about 15 minutes before the Comex open---and instead of finishing the day up a bunch, as it looked like it was going to do, JPMorgan et al closed it unchanged.  Here are the charts.

The dollar index closed on Friday afternoon in New York at 81.25.  When it opened in Far East trading on their Monday, it struggled up to 81.32---and then hung on until the 8 a.m. GMT London open.  From there it chopped lower, until a not-for-profit buyer showed up to catch the proverbial falling knife at the 81.000 mark about 11:20 a.m. EST---and from there it didn't do much. The index closed the Monday session at 81.07---which was down 18 basis points from Friday's close.

The gold stocks gapped up a bit at the 9:30 a.m. EST market open---and then spiked higher on the blast off at the London p.m. gold fix.  But that was all she wrote, as the stocks chopped lower for the remainder of the session---and a thoughtful soul sold them into negative territory minutes before the 4 p.m. EST close.  The HUI finished lower by 0.15%.

The chart pattern in the silver stocks was similar, but on much weaker price action---and Nick Laird's Intraday Silver Sentiment Index closed down 1.10%.

I would guess that some of the weakness in the latter part of the trading day should be attributed to the fact that the general equity markets got smoked yesterday, so I wouldn't read much into yesterday's declines.

The CME's Daily Delivery Report showed that 253 gold and 141 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  In gold, Canada's Scotiabank was the short/issuer on all 253 contracts---and HSBC USA and Barclays were the largest long/stoppers with 162 and 58 contracts respectively.

In silver, there were only two short/issuers---ABN Amro with 93 contracts---and JPMorgan Chase out of it's in-house [proprietary] trading account with 48 contracts.  Canada's Scotiabank stopped 131 of the 141 contracts.  Scotiabank which, in my opinion is the only non-U.S. bank that's massively short silver on the Comex futures market, has been taking delivery of a pretty decent amount recently, but I would guess that's it's a drop in the bucket compared to what their short position really is.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday.  However, there was a fairly chunky deposit into SLV, as an authorized participant added 2,129,673 troy ounces.

The U.S. Mint had a sales report yesterday.  They sold 2,000 troy ounces of gold eagles---3,000 one-ounce 24K gold buffaloes---and 560,500 silver eagles.  There were no changes made to January sales, but I'd bet a fair chunk of dough that the sales reported on Monday actually occurred in January---and were withheld until the new month was underway.

Over at the Comex-approved depositories on Friday, they reported a withdrawal of 60,129 troy ounces of gold---and all of it, except for one kilobar---came out of the Scotia Mocatta depository.  The link to that activity is here.

In silver, there was no silver reported received---and only 111,627 troy ounces were reported removed.  The link to that action is here.

Nick Laird was quick out out of the blocks with the intraday average price charts for both gold and silver for January, as they were in my in-box early yesterday evening.  Except for New Years Day, there were 22 trading days in the month of January---and when you average each 2-minute segment of every one of those 22 days, you get charts that look like the ones below.

The highs in gold came during the Far East trading session---no surprises there---but notice what happened to the price two hours before the London open. That's when the price management scheme manifests itself every day, on average----and all of those gains, and more, have disappeared by the low of the day which came minutes after 9 a.m. GMT in London.  After that, the gold price rallied but, on average, never rallied higher than the high ticks in the Far East.  This is the Anglo/American price management scheme in action.

You'll note that the sell-off in silver by JPMorgan et al began at precisely the same time, on average, every day during the month of January---and that was a couple of hours before the London open as well.  We've seen this pattern on the daily charts as well---and I've pointed that out on several occasions during the month.  The low for silver comes at the same time as gold---minutes after 9 a.m. GMT.

However, the selling pressure on silver never let up---and the high for the day, on average, came exactly one hour after the noon GMT London silver fix was in---and the selling pressure continued all through the Comex trading session in New York after that.  As Ted Butler has pointed out on several occasions, "day boyz" went out of their way to make the silver price action look lousy compared to gold during January---and their efforts were an unqualified success.

The other thing I noticed about the price structure in both gold and silver was that the a.m. and p.m. London gold fixes hardly register on these two charts, although the New York high in gold during January came at the London p.m. gold fix at 10 a.m. EST.  Using yesterday's price action in gold as a proxy, it's easy to see why, as JPMorgan et al are always there to make sure that any short covering rally that develops after the "fix is in" is hammered the moment it occurs.

Since this is my Tuesday column, I have a lot more stories than usual---and since there are so many, I'll happily leave the final edit up to you.

¤ The Wrap

After the first two days of deliveries in the big February contract in COMEX gold futures, only 59 contracts have been delivered against versus an estimated 5,900 remaining February contracts still open. The big gold futures long holder, JPMorgan, took 11 of those contracts on the first delivery day, but none on day two, perhaps suggesting that JPM has (or will) roll over its remaining Feb contracts and not press for delivery, as it did in August and December (when JPM took more than 9,000 deliveries combined). There is no way of handicapping what will transpire in the Feb gold delivery, but I’m still convinced that JPMorgan has no interest in squeezing the gold shorts in a forceful manner and causing price disruptions. But I am just as convinced that JPMorgan could squeeze the gold shorts should it desire. All that said, the resolution of the February delivery period will be of interest. - Silver analyst Ted Butler: 01 February 2014

Another day---and another major intervention by JPMorgan et al, which may have also included the BIS, but there's no way of knowing for sure.  However, it should be obvious to all but the willfully blind, that "da boyz" were at battle stations at the London p.m. gold fix yesterday.

There's little to be added to that concerning yesterday's price action, dear reader---as you know the routine by heart by now.  Nothing happens in the precious metal markets unless it's allowed to happen---and right now, it isn't.  Once again the technical funds covered short positions---and JPMorgan et al sold whatever long positions were necessary to kill the rallies stone-cold dead.

Surprisingly enough, business at the bullion store has been rather brisk this year.  We're selling a very decent amount of silver---but gold sales in the last 10 days are through the roof.  So despite all the anti-precious metal commentary and price action, more and more people aren't buying it---and that's the overriding theme of customers walking through the door since the beginning of the year.

It wouldn't take much more of an increase in business for us to concern ourselves with the possibility of shortages developing at some point---and any further increase in price in either gold or silver would certainly increase demand by another order of magnitude almost overnight.

I'm sure that the New York bullion banks are concerned about retail demand only in the sense that it would be a proxy for demand in all the various precious metal ETFs out there.  Because once activity picks up in one, the other is soon to follow---and it's a good bet that "da boyz" will be watching the premiums on the various gold and silver funds like a hawk.

Living in Canada, Sprott's funds, along with Central Fund of Canada, are foremost in my mind.  However, there are so many now, that physical off-take [over and above demand from China and India] must now be top-of-mind for the powers that be that ride shotgun over such things.

Precious metal price action in the Far East on their Tuesday was dead, dead, dead.  As I write this paragraph, London has been open about 50 minutes---and volumes in gold and silver are infinitesimally small, especially in silver.  Once again, the dollar index was saved from falling below the 81.00 mark about 2:10 p.m. Hong Kong time---and is now up about 11 basis points.  It's obvious from the U.S. dollar index chart that it's not showing it's true value, but would if left to its own devices.  Remember what I said about "everything being propped up that wanted to crash and burn" in my Saturday column.

And as I fire this off to Stowe, Vermont at 5 a.m. EST, not much has changed since I wrote the last paragraph.  Prices aren't doing much----and volumes, although up a bit, are still extremely light.  The dollar index isn't doing much, either.

Today, at the 1:30 p.m. EST close of Comex trading, is the cut-off for Friday's Commitment of Traders Report---and there will probably be a new Bank Participation Report as well.  Needless to say, the price activity during the New York session will be of great interest, as all that data will be in these two reports.

That's more than enough for one 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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