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Wednesday, February 12: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price opened flat in New York on Monday evening, but around 8:30 a.m. Hong Kong time a rally began that got capped at 11 a.m. Hong Kong time right on the button.  From there it chopped sideways---and volume was pretty heavy by the time I hit the send button on yesterday's column at 5:30 a.m. EST, which was 10:30 a.m. in London.

Then shortly before 1 p.m. GMT, the gold price rallied a few dollars---and at 1 p.m. GMT the gold price, along with the other three precious metals, got sold off in unison, with the low tick in all four coming at 9:15 a.m. EST in New York.  The subsequent rally in gold topped out/got capped shortly after 11:30 a.m. in New York---and the price traded flat for the remainder of the day.

The CME Group recorded the low and high ticks at $1,273.50 and $1,294.40 in the April contract.

Gold closed the Tuesday session at $1,290.90 spot, up $15.90 on the day.  Volume, net of February and March, was very decent at 161, 000 contracts.

With some minor variations, the silver price action followed the same path as gold, complete with the 8 a.m. to 9:15 a.m. EST sell-off that the other three precious metals experienced.

The low and high ticks were reported as $19.915 and $20.29 in the March contract.

Silver finished on Tuesday at $20.24 spot, up 16.5 cents from Monday's close.  Net volume was 39,000 contracts.

Platinum and palladium had similar days, with the outstanding feature being the same engineered price decline as gold and silver---and during precisely the same times.  Nothing free market about these, either.  Here are the charts.

The dollar index close in New York late on Monday afternoon at 80.64---and by the 8:20 a.m. Comex open, it was down to 80.46.  After rallying back to 80.65 by 9:10 a.m. EST, it fell back to 80.46 shortly before 11 a.m.---and by the 1:30 p.m. Comex close it was back to basically unchanged on the day.  The index closed at 80.62---down 2 basis point.

The gold stocks gapped up about a percent at the open---and then rallied to their highs of the day just a few minutes before noon in New York.  After that they chopped sideways, giving up a point or so going into the close.  The HUI still managed to finish up a healthy 4.20%.

The silver equities more or less followed the same path as the gold shares, with the high tick of the day coming at precisely noon EST---and Nick Laird's Intraday Silver Sentiment Index closed up 3.82%.

Reader 'h c' asked me to send him an updated version of the long-term Silver 7 chart, which I did--- and it's something I haven't posted in this column for more than a year, as it was so ugly to look at.  It's still not a thing of beauty, but we can only hope that the worst is behind us.

[Note: You may notice that there is a discrepancy in the daily percentage gains between the Intraday Silver Sentiment Index chart---and the Long-Term Intraday Silver 7 Index chart posted above.  Nick uses two different data sets to produce each chart.  The intraday data comes from Yahoo quotes---and is computed from that.  The info on the second chart is taken from the end-of-day open, high, low, and closing data, which is not always the same.  "So the intraday data is always just a whisker off."---as Nick puts it. - Ed]

The CME's Daily Delivery Report for Tuesday showed that 36 gold and 1 lonely silver contract were posted for delivery tomorrow within the Comex-approved depositories.  Canada's Bank of Nova Scotia, HSBC USA and Barclays were the largest movers and shakers in what little delivery action there was.  The link to yesterday's Issuers and Stoppers Report is here.

There were deposits in both GLD and SLV yesterday.  In GLD, an authorized participant added 57,839 troy ounces of gold---and in SLV, there were 1,442,970 troy ounces added, which was within a hundred ounces of what was withdrawn from that ETF last Friday.

The good folks over at the shortsqueeze.com Internet site updated their short positions for both GLD and SLV [as of January 31] late yesterday evening EST---and here's what they had to report.  The short position in SLV fell by a very decent 15.50% ---and is now down to 16.47 million ounces/shares held short, or 512 tonnes of the stuff.

But the drop in GLD was a shocker, as the short position there fell by a very chunky 29.15% ---and is now down to 12.54 million shares, or 1.254 million troy ounces, or 37 metric tonnes.

These are very impressive numbers---and I know that Ted Butler will be a happy camper when he sees them this morning---and will certainly have something to say about it in his mid-week commentary to his paying subscribers later today.  The fact that the short positions in both these ETFs declined so significantly in the face of flat gold prices and falling silver prices during the 2-week reporting period, is very bullish.

The U.S. Mint had another sales report yesterday.  They sold 1,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 249,500 silver eagles.

Over at the Comex-approved depositories, they didn't receive any gold, but did ship out 26,858 troy ounces---all of it from Scotia Mocatta's warehouse.  The link to that activity is here.

In silver, they reported receiving 277,845 troy ounces---and shipped out 7,000 ounces of the stuff.  Most of the receipts went into Scotia Mocatta's vault.  The link to that action is here.

Here's a chart that Nick Laird sent around late yesterday evening MST---and it doesn't require any further explanation from me, or anyone else for that matter.

I have a far more reasonable number of stories today---and I'm sure you're happy about that.  I know I am.

¤ The Wrap

JPMorgan’s short market corners of 20% in COMEX gold and 35% in COMEX silver of a year ago---and the bank’s 21% long market corner in COMEX gold currently---meet or exceed the market shares held in the previous manipulations. On that basis alone, the CFTC should be prosecuting JPMorgan today. The Sumitomo copper trader who manipulated the market was known as “Mr. 5%” for his share of the market. Shouldn’t JPMorgan be referred to as Mr. 20% or Mr. 35%? - Silver analyst Ted Butler: 08 February 2014

Despite the fact that gold and silver finished in the plus column again yesterday, it was obvious that all four precious metals ran into sellers of last resort at 11 a.m. Hong Kong time---and then again between 8 and 9:15 a.m. in New York.  This isn't rocket science, as all one has to do is give a cursory glance at all four precious metal charts posted at the top of this column---as the chart data speaks for itself.

But it was another amazing day for the precious metal equities.  I must admit that I was taken aback by the strong showing yesterday, the third day in a row of big gains on less-than-impressive price performance---especially in silver.  From it's low of last Thursday, the HUI has gained a bit over 10%.  Here's the 5-day chart.

Looking at the 3-year HUI chart, you can see that the last three days of gains have put the RSI trace very close to the overbought level, which is a situation that hasn't existed since back in September 2012.  And it's also self-evident, that we have miles to go to get back to anywhere near where the precious metal stocks were trading in 2011.

The metals themselves [gold and silver] are still some distance from overbought level themselves, so it will be interesting to see how things develop [or are allowed to develop] in the days and weeks ahead.

I'd sure like to think that the worst is over.  I know that the Commitment of Traders Report is screaming that a bottom is in---and Ted Butler has been expecting the precious metals to fly.

But, as Ted always points out---and rightfully so---how far and fast we go to the upside is 100% dependent on what JPMorgan et al do in the current rally.  Will they stand by and "let 'er rip" to the upside---or will it be the same old, same old---as I said in my column yesterday.

They have obviously been around every trading day so far this week---and have stepped in where they felt it necessary, but that still doesn't alter the fact that we could still move sharply higher from here if that is what they have decided to let happen, or have been instructed to do.

Of course, I'm cheering for "let 'er rip"---but constantly aware that nothing happens to precious metal prices without their consent.  This time is no different.

As I also mentioned in this space yesterday, the cut-off for this Friday's Commitment of Traders Report was at the 1:30 p.m. EST close of Comex trading on Tuesday.  I was not overly happy to see such big volume on such small price moves in both metals yesterday.  But that is tempered by the fact that the 75 minute sell-off in all four precious metals added to the volume considerably as "da boyz" turned on the technical funds for that brief period.

I'm also mindful of the fact that, despite the price action, the numbers in last week's COT Report were a big surprise, especially in silver---and despite the price action of the last three days, I'm not going to attempt to second guess what might be in this Friday's report.  On the surface it may be the same old thing---but it's what's going on out of sight under the hood that I'll be interested in---and I'll get that all from Ted on Friday afternoon.

In the Far East on their Wednesday, both gold and silver got sold down a bit in the first hour of trading---and haven't recovered back above their Tuesday closing prices now that London has been open about 25 minutes.  Volumes are very light for this time of day---and down well over 50% from where they were this time yesterday.  JPMorgan et al didn't have to put out any precious metal price fires in the Far East today, so that's the entire reason why volumes have shrivelled up.  The dollar index isn't doing anything.

And as I hit the send button on today's missive at 5:10 a.m. EST, the precious metals aren't doing anything, although volumes have picked up quite a bit, especially in gold---and the volumes in both metals are all of the HFT variety.  The dollar index is still chopping sideways.

As for what might happen during the remainder of the trading day today---I haven't a clue, and won't hazard a guess.

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.

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