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TheStreet Open House

Friday, March 7: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price traded pretty flat up until 2 p.m. Hong Kong time---and then got sold off a bit going into the 8 a.m. GMT London open two hours later.  The low of the day came minutes after that---and by 9 a.m. EST the gold price was back to where it was when it closed in New York on Wednesday.

Then away went the price to the upside---and the rally ended minutes after 12 o'clock noon EST.  From there it traded pretty flat [except for its 3:15 p.m. spike high tick] into the close of electronic trading.

The CME Group recorded the low and high ticks at $1,331.30 and $1,353.90 spot in the April contract.

Gold closed the trading day in New York at $1,350.40 spot, up $13.60 on the day.  Net volume wasn't overly heavy at 112,000 contracts.

It was a very identical price scenario for silver as well, but once the high was in shortly after noon in New York, the price got sold down well off its high tick.

The low and high were recorded as $21.105 and $21.65 in the May contract.

Silver finished the day at $21.435 spot, which was up 28 cents from Wednesday's close, but down almost 2% off its high tick.  Volume, net of March and April, was very decent at 39,000 contracts.

Platinum and palladium prices didn't do much until around 9 a.m. GMT in London on their Thursday---and the highs were in by 9:30 a.m. EST in New York.  After that, they didn't do much for the remainder of the day.  Here are the charts.

The dollar index closed in New York late on Wednesday afternoon at 80.09.  Once trading began in the Far East on their Thursday, the index rallied to its 1 a.m. Hong Kong high, before turning gently lower.  The decline turned into a face plant starting at 8:30 a.m. EST---and by noon the index was down to 79.61---and barely rallied from there going into the close.  The index finished the Thursday session at 79.65---down 44 basis points from Wednesday.

The big rallies in gold and silver didn't begin until 9 a.m. which was a good half an hour after the dollar index fell out of bed.  As a matter of fact, the dollar index loses were about half done by the time that both gold and silver reacted to that fact, although their respective rallies ended about the same time as the dollar index stabilized.  The other thing that has me wondering is why platinum and palladium didn't react in a similar way during  the dollar's swan dive during the morning trading session in New York.

I was underwhelmed by the reaction of the gold stocks.  They opened a bit higher---and only rallied a bit more going into the 12:10 high tick for gold.  After that the shares didn't do much---and the HUI only finished up 1.42%.

The silver equities didn't exactly set the world on fire yesterday, either---and Nick Laird's Intraday Silver Sentiment Index closed up only 1.46%.

The CME's Daily Delivery Report showed that zero gold and seven silver contracts were posted for delivery on Monday within the Comex-approved depositories.  JPM stopped six of those contracts in its in-house [proprietary] trading account.  The link to yesterday's Issuers and Stoppers Report is here.

There were no changes in GLD---and as of 9:18 p.m. EST yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had a sales report yesterday.  They sold 500 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and 56,000 silver eagles.

There was no in/out activity in gold over at the Comex-approved depositories on Wednesday.  But there was a big shipment in silver, as 755,931 troy ounces were reported received, with virtually all of it ending up at Scotiabank.  Nothing was shipped out.  The link to that action is here.

Here's the latest FRED chart showing the St. Louis Adjusted Monetary Base.  It's still looking like a NASA space launch to me.  I thank Casey Research's own Jeff Clark for sharing it with us.

I have another boat load of stories for you again today---and the final edit is all yours once again.

¤ The Wrap

While it's true that silver and gold prices can rally sharply even in a manipulated state (as they did for the decade ended in 2011), it is the end of the manipulation that promises the most reward for investors, particularly in silver. Without the willingness or ability to sell unlimited quantities of COMEX silver contracts to deliberately suppress prices by JPMorgan or any concentrated substitute, the manipulation will be terminated. Then, for the first time in history, the world will discover the true free market price. What is so remarkable is that it has come to this specific point, namely, what JPMorgan does or doesn’t do. - Silver analyst Ted Butler: 05 March 2014

While I was happy to see the rallies on my computer screen when I got up yesterday morning, I also noticed [for the umpteenth time] that gold wasn't allowed to rally more than one percent.  This is a phenomenon that Bill Murphy over at lemetropolecafe.com mentions constantly.  Gold can be clobbered to the downside for just about any amount, but it's a rare day indeed when the gold price is allowed to rally much more than a percent.  Yesterday's price action was continuing confirmation of that fact.

This new lawsuit against various and sundry bullion banks for rigging the London p.m. gold fix is admirable in its intent, but just like the lawsuit against the price rigging in the Comex silver market, this one is misdirected as well.  There's no question, that the "fix is in" to a certain extent at 3 p.m. GMT in London---and here's Nick Laird's most excellent five-year chart that shows that.

What this chart lays bare for all to see is the Anglo/American price fixing scheme against gold over the long term.  The chart for silver is similar.  The gold price begins to rally at the 10 a.m. EST low in New York [the "fix"] and also during Far East trading.  But the moment [about 30 minutes before, actually] that London opens, it's all down hill from there, with the low of the day coming at the London p.m. gold fix---and then the cycle repeats.

In a lot of the day-to-day trading action, this pattern is partially obscured, but when averaged out over five years, it's beyond obvious.  This is all work done more than 10 years ago by German gold analyst Dimitri Speck.  Nick just improved on his chart.

Here's another killer chart from Nick which, along with the one above, I've posted several times in this space.  It's simple to read, as the dialogue boxes tell all---and I urge you to take a minute to grasp its meaning and significance.

This one goes back more than 40 years to January 1, 1970, but it's the data from 1999 up to and including 2011 that is the most telling.  The green bars show the positive price action when London is closed.  The red bars shows the negative gold price action when London is open.  During the 1999-2011 bull market, the biggest bull market in gold in history, gold prices, on average, declined every year during the London trading session.  That is simply not possible unless prices are being actively managed.  And just as an aside, look at the 1978-80 bull market on this chart as a comparison.

This chart, along with the one above it, are prima facie evidence of the Anglo/American price management scheme centered on the Comex futures market.  This applies to silver too---and probably platinum and palladium over the last 10 years as well.

The point I'm making here is that although the London p.m. gold "fix" is important, both lawsuits missed, or are missing, the overall picture---and that is that the price-setting mechanism/price management scheme is within the Comex futures market itself---24 hours a day, every day.  JPMorgan is running the show---and neither they, nor the concentrated short/long positions [or the collusion] in the Comex futures market, are even mentioned in this new lawsuit.  Ted Butler went into this at great length in his Wednesday commentary to his paying subscribers and, as you can tell, I'm in total agreement.

Unless the plaintiffs get lucky, or they change the direction or scope of this lawsuit, I doubt that it will meet with any measurable success---at least not the kind of "success" we're hoping for.  But I do wish them well.

Today we get the long-awaited Commitment of Traders Report, along with the companion Bank Participation Report---and I'll have all the gory details for you in tomorrow's column.

There's not a creature stirring in Friday trading in the Far East.  Prices are comatose in all four precious metals---and volumes are pretty light---and the dollar index is dead as well.  There's about 40 minutes left before the London open---and it remains to be seen whether the HFT boyz show up between now and then.

And now that London has been open a couple of hours, all four precious metals got sold down a bit in early trading---and are making some attempt at a recovery as I send today's effort off to Stowe, Vermont at 5:10 a.m. EST.  Volumes in both gold and silver are up quite a bit since I wrote the above paragraph---and are now about average for this time of day, with most of it being of the HFT variety.  The dollar index is now down a handful of basis points.

With today being Friday, it's anyone's guess as to how the precious metals will trade for the rest of the day---and as is almost always the case, it's what happens during the Comex trading session that matters most.  I'm hoping for the best, of course, but always on the lookout for "in your ear."

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.

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