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Friday, March 14: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- Although it certainly appeared that not much happened in the gold market yesterday, it's a case of appearances being deceiving.  For the second day in a row there was a morning rally between 9 and 10 a.m. Hong Kong time---and once again volume was off the charts, but not quite as big as it was on Wednesday.

Once that rally was capped, the gold price didn't do much until the London open.  From there the price developed a negative bias into the New York low, which came at 8:45 a.m. EDT---25 minutes after the Comex open.  From that point the price developed a positive bias---and then rallied sharply starting around 10:45 a.m. in New York.  The high tick of the day came about 12:35 p.m.---and the price chopped slightly lower in the close of electronic trading.

The CME Group recorded the low and high price ticks as $1,364.90 and $1,375.70 in the April contract.

Gold finished the Thursday session in New York at $1,371.10 spot, up $3.90 on the day.  Gross volume was very heavy at around 218,000 shares, but once the roll-overs out of the April delivery month were subtracted, the net volume was only around 114,000 contracts.  For the second day in a row, a huge percentage of the gross volume occurred during the early going in Far East trading.

It was more or less the same type of chart pattern in silver, except for a rally at the Comex open, which got dealt with in the usual manner by JPMorgan et al.  And, like gold, a seller of last resort showed up at 12:35 p.m.---and had the silver price sold back down for a loss on the day by the 1:30 p.m. Comex close.  After that, the silver price didn't do much.

The low and high price ticks were recorded at $21.105 and $21.48 in the May contract.

Silver finished the Thursday trading session at $21.175 spot, down 14.5 cents from Wednesday's close.  Volume, net of March and April, was 45,500 contracts.

Here's the New York Spot Silver [Bid] chart on its own, so you can see the shenanigans at the Comex open---along with the sell-off from the high into the Comex close---in more detail.

Platinum and palladium prices didn't do much, but managed to eke out gains of a few dollars each.  Here are the charts.

I note that JPMorgan et al weren't through with copper, as they smacked it for another nickel yesterday---and it closed down three cents on the day.

The dollar index closed late on Wednesday afternoon in New York at 79.61---and traded flat until about lunchtime in Hong Kong.  Then down it went, hitting its 79.28 low at 9:30 GMT in London.  From there it gained back a handful of basis points until minutes after the 1:30 p.m. EDT Comex close.  Then it popped back above unchanged---and sank back to basically unchanged on the day, closing the Thursday session at 79.59---down 2 basis points.

The gold stocks opened flat, but began to rally strongly almost immediately.  The rally ended the moment the high tick in gold was painted---and the shares traded pretty flat for the remainder of the New York session.  The HUI finished up an impressive 3.14%.

You have to ask yourself who was buying when the gold price was only up a couple of bucks---and the general equity markets in New York were getting sold off.

The same can be said about the silver equities.  They got sold off a bit after the price was capped at its New York high minutes after 12 o'clock noon---but once the Comex closed, they rallied a bit---gaining back part of what they lost.  Nick Laird's Intraday Silver Sentiment Index closed up 1.89%.

For the second day in a row the CME Daily Delivery Report showed that no silver or gold was posted for delivery within the Comex-approved depositories on Monday.  That has to be a first, as I don't remember there ever being two consecutive days where there were no deliveries posted.  The CME's Preliminary volume report posted in the wee hours of this morning EDT show that there are now only 385 silver contracts still open in March.

After a withdrawal on Tuesday, an authorized participant added more gold to GLD yesterday.  This time it was 67,458 troy ounces.  And as of 9:25 p.m EDT yesterday evening, there were no reported changes in SLV.  However, based on the price action, it's a good bet that the ETF is owed a decent chunk of silver---and it remains to be seen if the authorized participants deposit it as required by the prospectus---or short the shares in lieu of, because they don't have it and can't get it in a timely manner.

The U.S. Mint did not have a sales report yesterday.

There was a very decent amount of gold deposited in the Scotia Mocatta warehouse Wednesday----60,044 troy ounces to be exact---and1,318 ounces were reported shipped out.  The link to that activity is here.

For a change, there wasn't much activity in silver on Wednesday.  Nothing was reported received---and a smallish 45,170 troy ounces were shipped out.  The link to that "action" is here.

Casey Research's own Jeff Clark delights in sending me this FRED chart every time it gets updated with a new high water mark.  Here's the latest St. Louis Adjusted Monetary Base chart inching its way closer to the $4 Trillion dollar mark.

It seems to be the new normal that I have a lot of stories again today---and I hope there are a few in here that interest you.  Most of them are centered around the situation in Ukraine---and I only have two precious metal-related stories today, so it's slim pickings in that area.

¤ The Wrap

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. - Ernest Hemingway: " Notes on the Next War: A Serious Topical Letter" first published in Esquire (September 1935)

There's not much to talk about regarding yesterday's price action in both gold and silver, except for the exceptional volumes in both metals in Far East trading that we've been seeing all week.  Of course most of that volume has been JPMorgan et al stepping in front of the technical funds and small traders as they place new long positions---and cover short positions.  "Da Boyz" just stand there buying all the short positions the technical funds and small trading are selling---with JPMorgan selling longs as required from their long-side corner in the Comex gold market---in order to prevent prices from exploding to the outer edges of the known universe, which is what they would do if JPMorgan et al weren't there as sellers/buyers of last resort.

But I was happy to see the counterintuitive price action in the precious metal equities.  It certainly wasn't what I was expecting to see when I checked the HUI chart yesterday morning when I got on the Internet.  Maybe somebody knows something we don't.

Today we get the new Commitment of Traders Report for positions held at the close of Comex trading on Tuesday, March 11---and I'm not overly optimistic about what the numbers will show when the report does get released later this afternoon EDT.  I'm just hoping that all the price/volume action from Tuesday will show up in that report, as "da boyz" have a tendency of withholding data if it suits them.

And as bad as those numbers may or may not be, they will pale in comparison to the deterioration in the Commercial category of the COT Report that we'll see next Friday, as the volume/price action since the 1:30 p.m. EDT Tuesday cut-off has been ugly.

From a technical point of view---and using the past as prologue---the current rallies in gold and silver are about done in the short-to-medium term, especially considering the price/volume action so far this week.  But with the situation in the Ukraine/Crimea/Russia almost at the "daggers drawn" stage, it's impossible to say whether things will turn out that way this time around.  Nothing will surprise me in the days that follow---nor should it you, dear reader.

Of course there's always the possibility that the powers that be will use this international crisis [either now, or at some point in the near future] as cover to declare force majeure---and bring an end to the price management scheme in all the precious metals, plus a lot of other commodities as well---copper, oil and natural gas are three that come to mind at the moment.  It would be the perfect cover to end a perfect crime.

Not much happened in Far East trading on their Friday.  The smallish rally early in their morning was on pretty light volume, so there's nothing that can, or should, be read into that.  The London open is about 20 minutes away as I write this paragraph---and gold volume is "normal" and silver volume is on the lighter side.  The dollar index isn't doing much.

And as I send today's effort off to Stowe, Vermont---I see that none of the precious metals are doing much now that London has been open a bit more than an hour.  Gold volume is certainly a bit heavier than I'd like to see it, but silver's volume is rather quiet.  And the dollar index still isn't doing much.

Since today is Friday, nothing would surprise me during the New York trading session.  I hope you 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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