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Wednesday, February 5: Today in Gold and Silver

NEW YORK (TheStreet) -- It wasn't much of a day in gold yesterday.  Not much happened in Far East trading, but right on cue at gold's high of the day, such as it was---and two hours before the London open---the selling pressure began.  The low of the day, such as it was, came shortly before 9 a.m. EST in New York.  The smallish rally that developed from there, ran out of gas just before 4 p.m. in electronic trading---and the price didn't do much after that.

The CME recorded the high and low at $1,246.80 and $1,260.70 in the April contract.

Gold closed on Tuesday in New York at $1,254.40 spot, down $2.70 from Monday's close.  Net volume was pretty light at only 101,000 contracts.

The silver price didn't do much either.  It rallied a hair going into the London open, with the low tick coming at the London a.m. gold fix.  After that it chopped higher until minutes after 3 p.m. EST in electronic trading in New York---and then traded sideways into the 5:15 p.m. close.

According to the CME Group, the low and high ticks were $19.26 and $19.51 in the March contract.

Gold finished the Tuesday session at $19.51 spot, up 17.5 cents from Monday.

Platinum and palladium traded sideways until the Comex opened at 8:20 a.m. EST in New York yesterday---and then they got sold down pretty good by "da boyz".  They recovered a bit in afternoon trading, but both finished down on the day.   You'd sure never know that there were strikes going on at the platinum mines in South Africa based on this price action---and I'm sure that's deliberate.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 81.07---and then chopped very quietly higher in a fairly wide range during the Tuesday trading session.  It did dip briefly below the 81.00 mark minutes after 2 p.m. Hong Kong time, but that only lasted for a few seconds, just like the dips below that mark on Monday.  The index finished the Tuesday trading session at 81.15---which was up a whole 8 basis points.

The gold stocks gapped down about a percent at the open---and then struggled mightily to get into positive territory.  They finally succeeded about an hour before the close---and the HUI finished up 0.50%.

It was more or less the same chart pattern for the silver stocks, but they had an easier time of it, as Nick Laird's Intraday Silver Sentiment Index closed up 1.08%.

The CME Daily Delivery Report showed that 1,024 gold and 8 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  In gold, JPMorgan Chase out of its in-house [proprietary] trading account---and Canada's Bank of Nova Scotia---were the two biggest short/issuers with 643 and 336 contracts respectively.  The only two long/stoppers of note were HSBC USA with 659 contracts---and Barclays with 261 contracts.  All 8 silver contracts were stopped by Canada's Scotiabank.  Yesterday's Issuers and Stoppers Report is worth a look---and the link is here.

There were no reported changes is GLD, but there was a smallish withdrawal/adjustment for exactly 13,000 troy ounces in SLV.  I suspect the latter reason, as it's too small to be a legal withdrawal---and not big enough to be a fee payment of any kind.  It's also a very round number.  But regardless of the reason, it's too small to matter in the grand scheme of things.

Just after 4 a.m. this morning, I got an update on the gold and silver ETFs that are managed by Switzerland's Zürcher Kantonalbank.  They are updated as of the close of trading on Friday, January 31.  For the reporting week, their gold ETF showed a decline of 58,653 troy ounces---and their silver ETF showed a small drop of 103,686 troy ounces.

The U.S. Mint had another sales report.  They sold 2,000 troy ounces of gold eagles---3,000 one-ounce 24K gold buffaloes---and another 234,500 silver eagles.

Over at the Comex-approved depositories on Monday, they reported receiving 64,919 troy ounces of gold, the bulk of which disappeared into the vaults over at HSBC USA.  The link to that activity is here.

It was pretty quiet in silver on Monday, as these same depositories only reported receiving 18,076 troy ounces of silver---and shipped out 2,045 troy ounces.  The link to that 'action' is here.

It was a pretty quiet news day yesterday---and I'm more than happy to report that I have considerably fewer stories today than I did on Tuesday.

¤ The Wrap

A disturbing aspect to the new silver COT report [on Friday] was that JPMorgan does not appear to be signaling a turn up in silver prices just yet, as the bank added a thousand contracts to its short position. In fact, JPMorgan appeared to be the only commercial short seller in silver for the reporting week, something that happens with disturbing regularity, but not usually as silver prices decline. When you think about it, nothing could be more manipulative. At 17,000 contracts net short, JPMorgan holds a short corner in Comex silver futures of 14.4% on a net basis.

With JPMorgan having cornered the Comex gold futures market to the long side---and simultaneously holding a short market corner in silver, there should be little surprise in how prices moved during the reporting week; strong in gold, weak in silver. I don’t deny that the raptors have a strong influence on price and in maneuvering the technical funds to buy and sell, but when you hold a controlling market share (as JPMorgan does), you basically control the market. - Silver analyst Ted Butler: 01 February 2014

As I stated at the top of the page, price action was very subdued on Tuesday---and there wasn't a lot of volume.  I'm sure the fact that China is shut tight until Thursday for their New Year celebrations has something to do with that, but the fact remains that prices are set by JPMorgan Chase et al---and what happens in the Comex futures market is not determined by whether China is open for business or closed.  It does matter in the physical market of course, but "da boyz" are there to ensure that this incredible physical demand doesn't manifest itself in the price.

I noted in Tuesday's preliminary report from the CME that was posted on their website in the wee hours of this morning, that gold's open interest in February is now down to 4,058 contracts---and silver's open interest for the same month is down to 19 contracts.  Of course, as I reported further up in this blog, a bit over a 1,000 gold contracts were posted for delivery tomorrow within the Comex-approved depositories---and you can subtract that number from the February open interest, so it's now down to 3,000 contracts left.  We'll have to wait and see how much of that amount the long holders will demand delivery on---and how much of it just fades away as the delivery month progresses.

As I type this particular paragraph, it's about an hour before London opens on their Wednesday---and the price action in Far East trading up to this point is comatose.  Volume is less than half of what it was this time yesterday---and I thought it was fumes and vapours then.  Not even in the period between Christmas and New Years have I seen such low volumes at this time of day.  In gold, volume is only 6,000 contracts---and in silver it's 2,500 contracts.  The dollar index is dead as well.  Is anybody out there?

And as I hit the send button on today's column at 5:10 a.m. EST, I note that there is some positive price action going on in all four precious metals now that London has been open a bit more than two hours---and it remains to be seen how they fare during the rest of the day, particularly what happens after the noon London silver fix and the Comex open.  Volumes are a bit heavier of course, but still exceedingly light for this time of day---and the dollar index is hanging on to the 81.00 mark by a thread.

I'd like to remind you ONE LAST TIME about Casey Research's FREE video event coming your 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.  THAT'S TODAY!!!  You've already been bombarded with  all kinds of notifications about this, but if you're leaving it to the last minute, you can find out more by clicking here.

I hope your day goes well---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.

Stock quotes in this article: GLD, SLV 

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