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Friday, February 14: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price didn't do much when Far East trading began on their Thursday---and shortly after trading began, the price started drifting quietly lower.  The low tick came shortly after 8:30 a.m. GMT in London---and it began to rally quietly from there.  The rally continued for the rest of the day---never getting out of hand to the upside.  Gold closed virtually on the high of the day---and above the $1,300 spot price mark.

The low and high ticks were recorded by the CME Group as $1,286.20 and $1,303.00 in the April contract.

Gold closed the Thursday session in New York at $1,302.80 spot, up $11.00 from Wednesday's close.  Volume, net of February and March, wasn't exactly light at 134,000 contracts.

Silver's price pattern was virtually the same, with only real difference being the high tick of the day, which came at precisely 4 p.m. EST in electronic trading.  After that, the price got sold down a bit into the close.

The low and high ticks were $20.125 and $20.52 in the March contract.

Silver finished the trading day on Thursday at $20.485 spot, up 24.5 cents from Wednesday.  Net volume was 30,000 contracts.

Platinum and palladium sagged a bit in Far East and London trading, but rallied rather sharply in New York until 1 p.m. EST.  Here are the charts.

The dollar index closed at 80.70 late on Wednesday afternoon in New York, then fell down 20 basis points around 8:30 a.m. Hong Kong time on their Thursday morning---and it continued its losing ways until 8:30 a.m. in New York.  From there it chopped sideways in a 10 basis point range until it closed at 80.30---which was down 40 basis points on the day.

The gold stocks opened in the red, but didn't stay there long, powering their way higher for the remainder of the day.  The HUI closed up a very decent 3.73% ---and virtually on its high tick of the day.

The silver equities followed a very similar path---and Nick Laird's Intraday Silver Sentiment Index closed up a healthy 4.25%.

The precious metal equities gained back everything they lost on Wednesday, plus a bunch more.

The CME Daily Delivery Report was a real yawner, as only 8 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Monday.

There was a big addition to GLD yesterday, as authorized participants added a chunky 240,991 troy ounces of the stuff---and as of 9:53 p.m. EST yesterday evening, there were no reported changes in SLV.  It's a good bet that SLV is owed many days worth of world silver production---and the question still unanswered is whether or not the authorized participants add physical silver, or short the shares in lieu of.

Over at Switzerland's Zürcher Kantonalbank for the week ending February 7, they reported that their gold ETF had a tiny increase.  It was only 4,416 troy ounces, but it's the first up week they've had since that latter part of October last year.  Their silver ETF showed a decline of 164,129 troy ounces.

The U.S. Mint had a small sales report yesterday.  They sold 33,500 silver eagles---and that was it.

Over at the Comex-approved depositories on Wednesday, they reported receiving 20,125 troy ounces of gold---and didn't ship any out.  The link to that activity is here.

It was a strange report on silver from within the Comex-approved depositories on Wednesday.  The report showed that nothing was shipped in, but a chunky 1,384,755 troy ounces were shipped out---all from the HSBC USA depository.  The strange thing about the report [which Ted Butler pointed out to me early yesterday afternoon] was that the line items that contain the Delaware depository information were completely missing, as was their silver from the total number of ounces---both registered and eligible.  I'm sure that the reasons are technical---and I'm also sure that they'll have it corrected today sometime.  They may even have it corrected before you check the Wednesday silver warehouse stocks in this report---and the link to that is here.

Once again I don't have that many stories for you today and, like yesterday, I'm very happy about that.

¤ The Wrap

Let me stop here for a moment to state the unspoken obvious. Had not the U.S. Treasury Secretary, the Fed chairman, the CFTC, the CME and the head of JPMorgan agreed to bail out Bear Stearns and extend the gold and silver manipulation by preventing a free market resolution for covering Bear Stearns’ short positions, the price of gold and silver would have soared to the heavens. Quite frankly, if the Feds hadn’t bailed out, effectively, all the shorts by having JPMorgan backstop Bear Stearns I can’t see how the price of gold wouldn’t have exceeded $2,000 and silver $100 or more on short covering (of which there was none into the price highs). - Silver Analyst Ted Butler: 12 February 2014

I was happy to see the rallies in both gold and silver yesterday, but as Ted pointed out on the phone, they are ever so quiet and orderly, as there is no rush for the exits by the technical fund shorts, even though we're well above the 50-day moving averages in both gold and silver---and knocking on the door of the 200-day moving average in gold.

Here are the six-month charts for both metals so you can see the current lay of the land after Thursday's close.

Certainly the reason the gold price is rising is that the technical funds are covering short positions---and the current long holders, of which JPM is the biggest, are selling out their long positions at a profit.  In silver, JPMorgan may be adding to its short-side corner in the Comex futures market as the silver rally progresses---and it's a near certainty that the raptors [the Commercial traders other than the Big 8] are happily selling their longs for a profit.

But Ted was rather surprised that the Commercial traders were letting the technical funds off the hook so easily.  All the Commercial traders would have to do to is stop selling longs to, or buying shorts from, the technical funds [a 'no ask' market]---and we would see prices within a few minutes[ or few hours] that would make your eyes glaze over---and the long holders even more wealthy than they already are.

This obviously isn't happening---and it's a pretty good bet that the Commitment of Traders Report won't make for happy reading when it's posted on the CFTC's website at 3:30 p.m. EST this afternoon---and it's only gotten worse since the Tuesday cut-off.  I'd like to proven wrong, of course.

As I said a few times earlier this week, this rally in the precious metals feels like it's going to end up the same old way as every other rally in the precious metals has ended.  It appears that the precious metal prices are being controlled not only on price declines, but on the rallies as well.  Today's COT Report will tell us a lot---and I'll have all the [gory?] details for you tomorrow.

But, having said that, any sell-off should be used to add to your positions in either the physical metal or the shares themselves---as this rally, despite any setbacks, should have a long way to run.

Here's a chart that Nick Laird sent our way in the wee hours of this morning.  It's a graph of the Australian gold miners index [ASX] going back five years.  I'm sure the equivalent Canadian gold stock chart would look very similar---as would the five-year charts of the HUI and XAU.

By the way, Nick has a complete complement of charts posted in the clear [FREE] that covers virtually the entire gold sector in the Australian mining industry---and the URL for that is here.

In Far East trading on their Friday morning, three of the four precious metals didn't do much price-wise.  But at 9 a.m. Hong Kong time, the silver price took off like the proverbial scalded cat---and was up 40 cents in no time at all---and would have gone materially higher if a seller of last resort hadn't put in an appearance within thirty minutes.  Then, with less than an hour to go before the London open, the price of all four precious metals spiked up a bit---and as I write this paragraph, there are 25 minutes to go before the London open.  Volumes in both silver and gold are pretty high already---and about double what they were this time yesterday.  The dollar index is down 13 basis points.

And as I put the finishing touches on today's column at 5:10 a.m. EST, I note that the precious metal prices aren't doing a lot after their little price pop going into the London open.  All are up from Thursday's close---silver substantially so.  But that comes with a price, as gold volume is north of 40,000 contracts already---and silver's net volume is a bit north of 15,000 contracts, so it's more than obvious that these rally attempts are being met almost contract for contract by the sellers of last resort.  The dollar index isn't doing much.

Today is Friday and, like yesterday, I wouldn't want to hazard a guess as to how the trading day will unfold---especially in New York---because, despite how bullish things really are for the precious metals, JPMorgan et al are still running the price show in all of them, at least for the moment.

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.

Stock quotes in this article: GLD, SLV 

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