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Friday, March 28: Today in Gold and Silver

NEW YORK (TheStreet) -- It was another day when not much happened during the Far East trading session---and volumes were microscopic.  But as you already know, that all changed once London opened.  At that point the gold price got sold down a bit more than six bucks---and I was expecting the worst when I got up late yesterday morning, but was much relieved to find out that the worst had already past.  Gold rallied a bit until precisely 10 a.m. EDT in New York, before getting sold down for the remainder of the day.

The CME Group recorded the high and low ticks at $1,307.60 and $1,289.60 in the April contract.  Glancing at Friday morning activity in Hong Kong right now, I note that most of the trading activity is now in the new front month, which is June.

Gold closed in New York on Thursday afternoon at $1,291.70 spot, down $14.10 from Thursday's close.  Not surprisingly, gross volume was over the moon at 335,000 contracts, as all the large traders [except those standing for delivery] had to be out of their April positions by the Comex close yesterday.  Net volume was a tiny 34,000 contracts.  And, as an aside, the rest of the traders have to be out of their April positions by the end of the Comex session today.  That applies to all Comex contracts, regardless of the commodity.

The silver chart was a mini version of the gold chart---and after the 10 a.m. EDT rally got capped, the silver price traded pretty flat for the remainder of the day in New York.

The high and low ticks were recorded as $19.87 and $19.575 in the May contract.

Silver closed the Thursday session at $19.69 spot, down only 4.5 cents on the day.  Considering the price action in early trading in London, I'd call yesterday's price action in New York a win.  Volume, net of March and April, was 37,500 contracts, which wasn't a lot compared to other days.

Platinum rallied ten bucks in the first two hours of trading in the Far East on their Thursday morning but, like gold and silver, once London opened the selling began, but ended at precisely 12 o'clock noon in New York.  After that, the price gained a few bucks into the close, finishing down on the day by a handful of dollars.

Of course, as I reported in The Wrap in yesterday's column, the long knives were out for palladium---and the metal was down over 3% in short order during the first hour of trading in London.  The subsequent rally, such as it was, got cut off at the knees at 11 a.m. in New York.  Then it got sold down to its absolute low of the day, which came minutes before 3 p.m. in electronic trading.  Then, like platinum, it rallied a few dollars into the close.  And just as a point of interest, the high/low in palladium in the June contract [the current front month] on Thursday was $782.20 and $756.35---an intraday move of 3.3%.

The dollar index closed late on Wednesday afternoon at 80.006---and by the end of the Thursday session had chopped its way up to 80.13.  Nothing to see here once again.

The gold stocks opened down, but quickly rallied into positive territory, hitting their high of the day at 10 a.m. EDT on the dot.  From there they sold off in fits and starts until the low was in shortly before 3 p.m.  Then a buyer showed up and bid the stock back into positive territory---and the HUI closed up 0.81%.

It was virtually the same price action in the silver equities as well---and Nick Laird's Intraday Silver Sentiment Index closed up 1.35%.

The CME's Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the Comex-approved warehouses on Monday.  As I said in this space yesterday, it was my opinion that the March delivery was complete as of Wednesday's report---and that has turned out to be the case.

There were no reported changes in GLD yesterday---and as of 10:15 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

For the third week in a row, there was no in/out activity in SLV---and Joshua Gibbons' report is the same as it has been since early March---and this is what he had to say about it on his website last evening: "Analysis of the 26 March 2014 bar list, and comparison to the previous week's list. No bars were added, removed, or had serial number changes. As of the time that the bar list was produced, it was overallocated 99.8 troy ounces. All daily changes are reflected on the bar list. This is three straight weeks with no silver added or removed to SLV, the longest since we started keeping track in July, 2010."  The link to Joshua's website is here.

The U.S. Mint had a tiny sales report.  They sold 25,000 silver eagles---and that was it.

Over at the Comex-approved depositories on Wednesday, JPMorgan Chase reported receiving 160,750 troy ounces of gold---and if you divide that number by 32.15---which is the number of troy ounces in a kilobar of any precious metal---you come up with precisely 5 metric tonnes to the ounce.  Nothing was reported shipped out.  The link to that activity is here.

There was pretty decent activity in silver, as nothing was reported received, but 764,360 troy ounces were reported shipped out for parts unknown.  Most of the activity was at HSBC USA---and the link to that is here.

I have an average number of stories for a weekday column---and there should be a couple in here that pique your interest.

¤ The Wrap

While the 40% change in ownership of the entire COMEX copper futures market in less than three months is an extreme example of the force that the technical funds can exert on a market, it is not an aberration. In the first two and a half months of this year on the $200 rise in [the gold] price, the technical funds bought a net 120,000 contracts of COMEX gold futures, or 37.5% of the net total open interest of that market. In COMEX silver, some 25,000 contracts were bought by the technical funds in just one month (Feb 4 to March 4), or 23% of the entire market, on a $2.50 rally.  Similar technical fund movements and resultant price changes can be verified in other markets.

The key point here is that it is undeniable that collective technical fund buying and selling causes prices to rise and fall. It is not possible that a sudden 25% to 40% change in the ownership of a total market wouldn’t be the price driver, almost to the exclusion of any other factor. In the short term, technical fund buying or selling is the only supply and demand equation that matters. It’s why I’ve studied the Commitments of Traders Report for 30 years. - Silver analyst Ted Butler: 26 March 2014

It was another day of surprises in the precious metal market---and I must admit that I was expecting more price damage then we got by the time I got out of bed late yesterday morning.  But, with the exception of gold, virtually all of the downside was in, in all the other precious metals by the time I went to bed about two hours after the London open.

Gold closed firmly below both its 50 and 200 day moving averages yesterday, but Ted and I feel that we haven't seen the final washout to the downside in either gold or silver.  And as Ted pointed out, it's not always the price that determines when the bottom is in, it's the number of long contracts that JPMorgan et al can force the technical funds to puke up with their HFT antics.  We'll find out soon enough when the bottom is in---and that will be determined by how quickly "da boyz" slice the salami to the downside.  They way they're going now, it could take a while.  I'd prefer the end to come with a big burst to the downside, but JPMorgan et al always prefer to take their time with a little slice each day, with the odd tiny rally sprinkled in every once in a while.  I'd prefer it to happen in a couple of day---but it could take a couple of months.

Here are the 6-month charts for both gold and silver once again, so you can keep a running tab on how the salami is being sliced---and as Jim Rickards said: "If I were running the manipulation, I would actually be embarrassed at this point because it's so blatant."  And except for the willfully blind---and all the precious metal mining companies---it's certainly all of that.

After Wednesday's big sell-offs in the mining stocks, I was happy [and relieved] to see rallies in these same stocks even though the prices for  gold or silver didn't finished in the plus column.  It was obvious that someone was bargain hunting.

This afternoon at 3:30 p.m. EDT, we get the latest Commitment of Traders Report---and if all the data for the reporting week was filed with the CFTC in a timely manner, we should see some rather significant improvements in the commercial net short positions in both gold and silver---and whatever the numbers show, I'll have that for you tomorrow.

And as I write this paragraph, the London open is still 90 minutes away---and with the exception of palladium, the other three precious metals are up a bit.  Volumes are about average for this time of day---and the dollar index is still barely above the 80.00 mark.

And as I send this off to Stowe, Vermont---all four precious metals haven't changed much, although the tiny rallies in gold and silver got sold down a hair at the London open.  Volumes are higher, but still reasonably light---and there's a lot of roll-over activity in gold, which is to be expected.  The dollar index is up a whole 10 basis points since London opened.

I have no idea what to expect in New York trading action later this morning, but since it's Friday and the end of the month, we should be prepared for any eventuality.

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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