Thursday, February 6: Today in Gold and Silver
NEW YORK ( TheStreet) -- Well, dear reader, it's not like I really have to paint you a picture of yesterday's price action in both gold and silver, as you've seen this particular movie before---and on numerous occasions---although yesterday's interventions were particularly egregious.
The gold price traded flat on virtually no volume until about an hour before the London open on their Wednesday. At that point, the price developed a slight positive bias. Then at 1 p.m. GMT in London---and 20 minutes before the Comex open---the price began to rally sharply, culminating in a big spike at the open of Comex trading in New York. JPMorgan et al capped the spike 10 minutes later---and they had everything back under control by the London p.m. gold "fix".
The subsequent rally wasn't allowed to get far---and the gold price did little after that.The CME Group recorded the low and high ticks at $1,251.80 and $1,274.50 in the April contract. The gold price finished the Wednesday session at $1,257.60 spot, which was up $3.20 from Tuesday's close. Net volume was around 133,000 contracts. The same can be said about silver, so I'll spare you the play-by-play. The CME recorded the low and high ticks in silver at $19.435 and $20.335 in the March contract. That's a 90 cent intraday move. Silver finished the trading day yesterday at $19.895 spot, up 38.5 cents from Tuesday, but still below the $20 spot price mark. Net volume was 41,000 contracts. The price action in both platinum and palladium were mini versions of what happened in gold and silver. Both metals were allowed to close in the plus column as well, but would have posted far bigger gains if they had been allowed free rein, which they obviously weren't. Notice the chart patterns that both these metals have had over the last three trading days---rallying into the New York open, only to get sold down by the usual not-for-profit sellers. It's particularly noticeable in palladium. No free market operates like that. Here are the charts. The dollar index closed on Tuesday in New York at 81.15---and then chopped quietly lower except for a very prominent 30 basis point down/up/down spike between 8 a.m. and the 10 a.m. EST London p.m. gold fix. That was when all the price action in all four precious metals occurred yesterday, so you just know that the accompanying currency move wasn't a coincidence. The index closed at 81.05 in New York---down 10 basis points from Tuesday's close. The gold stocks opened just above unchanged---and by shortly after 11 a.m. EST, they were in the red. Then some thoughtful soul came along shortly before 3 p.m. EST and sold gold stocks right into the close---and the HUI finished on its low tick of the day, down 1.92%. You have to wonder who might do that---and why. The silver stocks opened up a couple of percent, but despite the fact that silver closed up almost 2% on the day, there was a willing seller in the silver equities as well. They showed up shortly after 2 p.m. EST time---and sold them down so that Nick Laird's Intraday Silver Sentiment Index not only closed down 0.27%---but also on its absolute low of the day. I, along with many others, have always believed that the precious metal equities are managed just as much as the price of the metals themselves at times---and yesterday's price action does nothing to change my mind. You can form your own opinion, dear reader. The CME Daily Delivery Report showed that 1,036 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Friday. Once again it was JPMorgan Chase as the big short/issuer with 891 contracts, with ABN Amro a distant second with 109 contracts. The two biggest long/stoppers were HSBC USA and Barclays with 673 and 266 contracts respectively. Yesterday's Issuers and Stoppers Report is worth a quick look once again. I checked the preliminary price/volume data for Wednesday which was posted on the CME's website in the wee hours of this morning EST---and I note that, once the above 1,036 contracts are subtracted from the current open interest in gold, there are about 2,000 contracts left open in the February delivery month---and 11 in silver. There were no reported changes in GLD yesterday, but there was another rather small withdrawal from SLV yesterday. This time it was 140,750 troy ounces. There was no sales report from the U.S. Mint on Wednesday. Over at the Comex-approved depositories on Tuesday, there were no reported in/out movements in gold. And, as is almost always the case, it was different in silver, as they reported receiving 420,032 troy ounces of the stuff---and shipped 583,455 troy ounces out the door. The link to that activity is here. Here's an interesting chart that Washington state reader S.A. sent our way yesterday---and it's obvious where he 'borrowed' it from. Here are a couple of charts and some words about them that were sent to us by Australian reader Wesley Legrand. It's the gold price in U.S. and Australian dollars versus their version of the HUI---which is the XGO. It's comforting to know that "da boyz" are treating precious metal equity owners the same way everywhere on Planet Earth. I have the usual number of stories for a mid-week column---and I hope you have the time to read/listen to the ones that you find of interest.
¤ The WrapThe basic problem is that the Comex, over time, has come to be dominated by banks and large financial speculators. I’m not against speculators (I am one myself) and know full-well that without speculators willing to assume risk from hedgers, there would be no market. But neither can a real market exist without legitimate hedgers and populated only with speculators and banks pretending to be market makers and hedgers. That’s what the Comex has evolved into – a speculative playground in which prices are determined by banks and technical trading funds and then dictated to the world’s producers, consumers and investors. It would be hard to intentionally design a pricing system more unfair to gold and silver miners than is the Comex in its current form. Effectively excluded from trading (why would a mining company engage in day-trading?) and then being held captive to the uneconomic pricing that has resulted from JPMorgan’s desire to buy gold and silver as cheaply as manipulatively possible. The Comex and JPMorgan have profited handsomely by causing gold and silver prices to crash in 2013, just as all miners and investors have suffered mightily. This is the result of distorting the playing field to favor financial speculators at the expense of real producers. - Silver analyst Ted Butler: 05 February 2014 What else can be said here about yesterday's price action that I didn't already mention in my commentary at the top of this column---or Tuesday's for that matter. The world could be down to its last good delivery bars of all four precious metals---and if it was in their best interests, JPMorgan Chase et al would go short [or sell longs] on the futures market somewhere to prevent the prices from rising. I don't know what's more amazing, perverted, or troubling---the miners that know what's going on, but won't do anything about it; or the some of the so-called "analysts" out there that would never once mention the fact that precious metal prices are managed, as it would destroy their credibility because they've denied its existence for so long. As I said yesterday, if everyone was on the same page on this, it would make a world of difference. However, there are some mining companies and analysts that have no interest in the truth---and will go to their graves without uttering it, even if it meant that their companies, stockholders, or subscriber bases were being ravaged. Winston Spencer Churchill had a quote that summed up the mind set of these kind of people when he said: "Once in a while you will stumble upon the truth; but most of us manage to pick ourselves up and hurry along as if nothing had happened." Amen to that, bro! During our chats over the last couple of days, Ted has expressed concern that JPMorgan et al are setting the technical funds up to be smashed to the downside once again. Of course "da boyz" can do it anytime they wish---but I'm not about to argue with Ted on this point, because I haven't caught him on anything yet in the decade that I've known him. It was another day of no activity in the Far East on their Thursday---and now that London has been open about 35 minutes, all four precious metals have developed a positive price bias and are up a bit from Wednesday's close. Once again, volumes in both gold and silver are microscopic, but as we found out yesterday, that all changed starting around 8 a.m. EST in New York---and probably will again today. The dollar index continues to hover just above the 81.00 mark---and is up 11 basis points as of this writing. And as I send today's efforts off into cyberspace at 5:10 a.m. EST, I note that the precious metals aren't doing much of anything---and are more or less marking time, almost like they're being held in place for some reason. I also noted that silver's attempts to break back above the $20 spot price are being turned back. Volumes, although up a bit, are still microscopic---and the dollar index isn't doing a thing. After yesterday's price shenanigans in New York, I wouldn't hazard a guess as to what may happen today during the Comex trading session, so nothing will surprise me once again when I power up my computer later this morning. That's all I have for today---and I'll see you right tomorrow. If you live on the west side of the International Date Line, I hope you have a good weekend.
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