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Tuesday, February 18: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price opened in positive territory at 6 p.m. EST in New York on Sunday night---and then, starting at 9 a.m. Hong Kong time on their Monday morning, the price jumped through the $1,330 mark only to run into a wall of selling that prevented it from rallying any further.  Volume was well over 20,000 contracts by lunchtime in Hong Kong---and well over 30,000 contracts by the London open.  It was obvious that JPMorgan et al were waiting for the Sunday night open of the Globex trading system just as eagerly as I was.

The low after the smack-down in Hong Kong, such as it was, came shortly after trading began in London.  The price developed a positive bias after that, but never broke above the $1,330 price mark again---and with New York closed for the day, Globex trading ended at 1:15 p.m. EST.

The high tick at the price spike in Hong Kong trading was recorded at $1,332.40 in the April contract.

Gold 'closed' yesterday at the $1,329.00 spot mark---and up $9.90 from Friday's close.  Gross volume was around 57,000 contracts, with well over half of that occurred before the London open.

It was almost the same story in silver during the Hong Kong trading session---and at the high tick, silver was up almost 50 cents from Friday's close, but once London opened, silver got sold back down to within a dime of Friday's close, only to gain 20 cents shortly before 1 p.m. GMT---and then as the price headed back towards the $22 spot market, it got tapped back down at precisely 11:30 a.m. EST in Globex trading.

The CME Group recorded the high tick on Monday morning in Hong Kong at $21.97 in the March contract.

Silver closed at $21.84 on Monday---up 33.5 cents from Friday's close.  Net volume was a bit under 25,000 contracts and, like gold, half of it was used to snuff out the 9 a.m. rally in Hong Kong.

Silver, like gold, would have finished materially higher if allowed to do so, which it obviously wasn't.

Platinum and palladium had tiny rallies in the early going on Sunday night in New York.  Both managed to finish in positive territory, but only just.  It's a good bet that the volume was very light---and the market very illiquid.  Here are the charts.

The dollar index closed late on Friday afternoon in New York at 80.14---and began to head lower the moment that trading began in New York on Sunday evening.  The low of 79.95 which, just glancing at the 3-day chart below, occurred around 9 a.m. Hong Kong time, appeared to come at the precise moment when gold and silver price took off to the upside.

The subsequent rally in the dollar index had it back to unchanged by shortly after 12 o'clock noon in London---and from there it proceeded to chop sideways in a very tight range for the remainder of the Monday session.  The index closed basically flat at 80.13.  Here's the 3-day chart.

With the equity markets in New York closed for President's Day on Monday, there were no HUI or Silver Sentiment Index charts.  Canada's markets were closed for Family Day.

Also there was no Daily Delivery Report from the CME Group, nothing from GLD and SLV, the U.S. Mint---or the Comex-approved depositories.

The real reason for a column today is to deal with the backlog of stories accumulated over the weekend---and I do have quite a few.

¤ The Wrap

A $200 adverse price move on 75,000 COMEX gold contracts would result in a mark-to-market loss and margin call of $1.5 billion. A $7 adverse price move on 35,000 COMEX silver contracts would result in a mark to market loss and margin call of $1.2 billion. Bear Stearns had to come up with $2.7 billion because gold and silver prices rose sharply in the first quarter of 2008 and the company bet the wrong way. That it couldn’t come up with all the margin money for the losses in gold and silver, is the most visible reason it went under. - Silver analyst Ted Butler: 17 February 2014

With the the U.S markets closed on Monday for their holiday, the trading volume was very quiet.  But it was more than obvious from what happened before lunch Hong Kong time on their Monday, that "da boyz" were not asleep at the switch.  They, or their proxies, were ever vigilant, as they did whatever it took to kill the silver and gold rallies in the Far East.

I posted the 6-month gold and silver charts in The Wrap section of Saturday's column, so I shan't post them again.  But what they show is that both metals have now broken clear of their respective 200-day moving averages---and it's a pretty good bet that "da boyz" are trying to prevent prices from doing what they want to, which is blast significantly higher---so they showed up on Monday morning in Hong Kong with all guns blazing as that event began to unfold.

And as I put the finishing touches on today's column, I see that the not-for-profit sellers have been at it again in Far East trading on their Tuesday morning.  Both gold and silver ticked higher right out of the gate at 6 p.m. on Monday evening EST---and less that 15 minutes later, the HFT boyz showed up.  The lows [for the moment] in all four precious metals came shortly after 2 p.m. Hong Kong time---and have rallied a bit from there.  That has continued for about the first hour of trading in London---and it will be interesting to see how the precious metals perform, or are allowed to perform, as the Tuesday trading session unfolds in both London and New York---especially New York.

Volumes [net of Monday's volume] as of 3:55 a.m. EST are huge already, which is not surprising considering the price action---and the dollar index isn't doing much, not that it matters, as the precious metal price action has nothing to do with the dollar index, at least not at the moment.

Now that we know that JPMorgan has received carte blanche approval to do what they wish within the precious metal market, you should be looking at these markets with new eyes---as all should be clear to you now.  I know that it was a revelation to me---and it puts everything in perfect perspective, as all the puzzle pieces from March 2008 onwards, now fit together perfectly.  It's obvious that Bart Chilton knew exactly what you know now, but was forbidden [probably under the pain of death] from saying anything about it.  Well, the secret is out.

The one question remaining would be whether or not this immunity from prosecution for JPMorgan will mean the continuation of the price management scheme forever.  From what I've seen in the COT Reports over the last couple of weeks---and JPMorgan's actions in the last twelve month or so---I'd say they're heading for exits, but at their own pace.  This coming Friday's COT Report should tell us a lot.

As I hit the send button on today's efforts, I note that not much has happened in the hour or so since I commented on the price action last.  Gold is down 12 bucks---and silver is down 30 cents.  Both metals have 'given back' all their gains from Monday, plus a bit more.  Volumes have cooled off quite a bit in the last hour or so---and the dollar index is flat.

But minutes after I wrote the above paragraph, the HFT boyz appeared---and this is what the Kitco gold and silver charts look like as of 5:20 a.m. EST.

As I said further up in The Wrap, the rest of Tuesday trading could prove interesting---and that has already turned out to be the case.

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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