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Tuesday, February 25: Today in Gold and Silver

NEW YORK (TheStreet) -- As as has been the case for a while, all four precious metals got sold down in early Far East trading on their Monday morning.

Gold was no exception---and it hit its low price tick shortly after 1 p.m. Hong Kong time.  The subsequent rally lasted until around 11:30 in New York---and that was pretty much it for the day, as it got sold down a few dollars going into the 5:15 p.m. EST electronic close.

The CME Group recorded the low and high ticks as $1,318.70 and $1,339.20 in the April contract.

Gold closed the Monday session at $1,336.60 spot, up $10.50 from Friday's close.  Volume, net of February and March, was pretty decent at 143,000 contracts.

Silver really got hit pretty hard in early Far East trading on Monday, with the low tick coming shortly afternoon Hong Kong time.  From that point, the silver price rallied back to unchanged by the London a.m. gold fix at 10:30 a.m. GMT---and then it really took off to the upside, and appeared to go 'no ask' shortly after 11 a.m. GMT.

That state of affairs wasn't allowed to last long---and once that spike was beaten down, the rally assumed a more leisurely pace, with the high in New York coming at the same 11:30 a.m. EST that gold did.  From that point, the silver price ran into selling pressure---and by the 5:15 p.m. electronic close, the price was safely back under the $22 spot price once again.

The low and high ticks were recorded as $21.59 and $22.18 in the March contract, an intraday move of almost 3%.

Silver finished the Monday trading session at $21.965 spot, which was up 11.5 cents from Friday's close.  Net volume was pretty chunky at 37,500 contracts.  We are in the final days of the roll-over out of the March delivery month in silver, so volumes will be quite high for the next three trading days.  First Day Notice numbers will be posted on the CME's website late on Thursday evening EST---and I'll have all that for you on Friday.

Platinum and palladium both got sold down in morning trading in the Far East.  From those lows, they rallied right up until almost the 1:30 p.m. EST Comex close---and then both got sold down into the 5:15 p.m. close of electronic trading.  Both finished up a few dollars on the day.  Here are the charts.

The dollar index closed at 80.27 on Friday afternoon in New York---and traded in a 15 basis point range on either side of that number for the entire Monday session.  The dollar index closed 80.22---down 5 basis points on the day.

The gold stocks opened in positive territory---and then chopped and flopped sideways for the rest of the day.  The HUI finished up 0.35%.  I was underwhelmed.

I was even more underwhelmed by the performance of the silver shares.  They were up about 1.5% until shortly after 1 p.m. EST---and then down they went, closing in the red---and on their absolute low of the day.  Nick Laird's Silver Sentiment Index closed down 0.08%.

The CME's Daily Delivery Report for Monday showed that 9 gold and 1 silver contract were posted for delivery tomorrow within the Comex-approved depositories.  Checking the CME's website  I note that there are still several hundred gold contracts are open in the February delivery month---and it remains to be seen how many will stand for delivery between now and Thursday.

There were deposits in both GLD and SLV yesterday.  In GLD an authorized participant added a decent 106,025 troy ounces---and in SLV there were 384,740 troy ounces deposited.

The U.S. Mint had a sales report on Monday.  They sold a chunky 825,500 silver eagles---and that was it.

There was only a small movement in gold over at the Comex-approved depositories on Friday.  They reported receiving 5,144 troy ounces---and that was all.  All of it went into Scotia Mocatta's vault. The link to that activity is here.

There was a big deposit in silver on Friday as well---and all 1,566,700 troy ounces ended up in Scotia Mocatta's vault, too.  It wouldn't surprise me in the slightest if this silver wasn't being brought in to cover their short position in the Comex futures market.  As I've said on many occasions, it's my opinion that outside of JPMorgan Chase and two other U.S. bullion banks, Canada's Bank of Nova Scotia is the only bank that holds a material short position in that metal.  The link to that 'action' from Friday is here.

It was a very eventful weekend---and I have the most stories that I can ever remember posting---and I'll happily leave the final edit up to you.

¤ The Wrap

After buying back short silver contracts in the prior two reporting weeks (as well as adding long gold contracts), JPMorgan returned to the sell side in silver with a vengeance, accounting for the entire big 4 short increase or more than 43%  of the commercial silver selling this [past] week. While there’s no doubt in my mind that the raptors behave conclusively with JPMorgan in playing the technical funds, it must be noted that the raptors were selling existing long positions, not adding to shorts. In the reporting week, JPMorgan increased its short COMEX silver position to 17,500 contracts, or to a 15% net market share (minus spread positions).

From what I can tell, JPMorgan was the only commercial increasing short positions in the reporting week, something that has recurred on previous silver price rallies. Please think about that for a moment. JPMorgan was the sole short seller in COMEX silver and the largest seller in COMEX gold, accounting for 43% and 52% of all the commercial selling in each market this week. How could such large shares of net weekly trading not be manipulative to the price of silver and gold? And why is the nation’s largest bank also allowed to be its largest precious metals speculator? - Silver analyst Ted Butler: 22 February 2014

Precious metal prices yesterday followed a pattern similar to what they did most of last week, which was down in Far East trading---and then a rally back from there.  There were a couple of times during the Monday trading session, one in London and the other in New York, where  it appeared that a not-for-profit seller showed up and touched the brakes on these rallies in gold.  Once just after 11 a.m. in London---and the other at 11:30 a.m. in New York.  If these sellers hadn't put in an appearance, the closing price in gold would have been materially different.

And if that was true for gold, it was beyond blatantly obvious in silver, as the price appeared to go 'no ask' shortly after 11 a.m. GMT in London---and JPMorgan et al hammered that spike flat in short order.  And as I mentioned at the top of this column, they also closed silver back below the $22 spot price once again.

The price action of the precious metal shares didn't impress me, either.

So despite the rallies in all the precious metal since the New Year began, it's obvious that their rallies are being managed, as JPMorgan et al are letting the technical funds shorts off the hook easily, without ripping out a pound of flesh by demanding much higher prices.  If "da boyz" stood back and did nothing, there would be a disorderly rally in hours, or maybe minutes---which is the last thing that the powers that be want.

As Ted said on the phone yesterday, these rallies could go on for months---but whatever length of time they last [or are allowed to last] the ending will be the same; an engineered price decline where JPMorgan et al ring the cash register one more time.  It was ever thus.

Of course the precious metal mining companies, fully aware of what's happening, do nothing.

In Far East trading on their Tuesday, all four precious metals got sold down just a bit.  The exception was silver, which got sold down over a percent going into the London open, an event that occurred about 10 minutes ago as I write this paragraph.  Gold volume is already sky high at 33,000 contracts---and all of it is of the HFT variety.  Silver's volume isn't exactly light, either---although a goodly chunk of it is roll-overs out of the March contract and into May, which is the next front month.  The dollar index has rolled over a bit and is down 9 basis points at this time.

And as I send this off to Stowe in Vermont two hours later at 5:15 a.m. EST, the precious metal prices aren't doing much---and with the exception of platinum [at least for the moment] the other precious metals are all down from Monday's close in New York.  Gold volume is over 40,000 contracts---and all of it of the HFT variety.  Silver's volume, even net of roll-overs is way up there as well.  Based on these volumes, it's a good bet that JPMorgan et al are selling up a storm in order to prevent prices from rising.  The dollar index, which dipped dangerously close to the 80.00 mark in late Far East trading, is now rallying a bit, as it appears that someone was there to catch that proverbial falling knife once again.

I have no idea what's in store for prices during the New York trading session, but the big volumes at this time of day---considering the tepid price action---doesn't make my heart go pitter patter, if you get my drift.  But, in this market, you just never know.

That's more than enough for today---too much, actually---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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