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Wednesday, April 23: Today in Gold and Silver

NEW YORK (TheStreet) -- [Note: After three years without a break, I'll be taking some time off.  There will be no Gold and Silver Daily next week.  Ed]

The gold price got sold down a few dollars in the first three or four hours of Far East trading on their Tuesday.  The tiny rally that was born out of that around 1 p.m. Hong Kong time got met by the usual not-for-profit sellers 10 minutes after the Comex open---and by the time "da boyz" were done at 11:35 a.m. EDT in New York, they had sold gold down about 14 bucks from its 8:30 a.m. high.  The subsequent rally from that point, such as it was, met with a willing seller the moment that it really started to gather strength shortly before 4 p.m. in electronic trading---and that was that.

The CME Group recorded the high and low prices as $1,293.10 and $1,275.80 in the June contract.

Gold finished the Tuesday session in New York at $12,83.70 spot, down $6.60 from Monday's close.  Volume, net of April and May, was pretty decent at 131,000 contracts---and a lot of that came as a result of the engineered price decline that began at 8:30 a.m. EDT, as "da boyz" took another slice off the golden salami.

The silver price action was very similar to gold's price action, but quite a bit more subdued---and the major inflection points as far as price was concerned, also occurred at the same times.  Silver would have closed higher on the day, except the same seller of last resort in gold that showed up at 4 p.m. EDT, also showed up in the Comex silver market at the same time as well.  And, for the second day in a row, no new lows were set.

The high and low ticks, such as they were, were reported as $19.53 and $19.285 in the May contract.

Silver closed in New York yesterday at $19.385 spot, down 5.5 cents on the day.  Gross volume jumped up to 73,300 contracts, but once the huge amount of May roll-overs were deducted, net volume fell all the way down to about 22,500 contracts.

The general shape of the platinum chart was similar in virtually every way to the gold and silver charts posted above.  But the timing of the high and lows ticks was slightly different.  Platinum's engineered price decline also set a a new low price tick for this move down.  Palladium attempted to rally starting around 2 p.m. Hong Kong time, but the tiny gain got taken away during the London lunch hour.  After that it didn't do much.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 79.95---and then did nothing until shortly after 2 p.m. Hong Kong time on their Tuesday afternoon.  From there it chopped lower, hitting its 79.80 low tick at the 8:20 a.m. EDT Comex open.  From there it rallied back to just above unchanged on the day by around 10:35 a.m., before sliding a bit lower into the close.  The index finished the Tuesday session around 79.90, which was basically unchanged.

The rallies in all four precious metals began the moment that the dollar index headed south in Hong Kong trading, but all four got scuppered at different times than the dollar's absolute low and, of course gold, silver and palladium's engineered price declines extended long after the dollar index had rallied back to unchanged.  As a matter of fact, the index had rallied back to unchanged before prices really cratered, so the sell-offs had zero to do with what was happening in the currency markets.

And, for the second day in a row, the scale of the chart makes the index movements look far more impressive than they actually were.

Despite the shenanigans of JPMorgan et al, the gold stocks chopped around the unchanged mark until the low was set around 10:45 a.m. in New York.  Then, despite the smack-down in the metal itself, the stocks moved solidly higher---and closed on their high tick of the day, which was probably the result of that tiny rally in gold going into the 4 p.m. close of the equity markets.  The HUI finished up 1.49%.

Everything that the HUI lost on Monday and Friday, plus a bit more, was recovered in Tuesday's rally.

The silver equities also finished in the black, but Nick Laird's Intraday Silver Sentiment Index only finished up 1.36%---which was everything it lost on Monday.

The CME Daily Delivery Report showed that 51 gold and 1 lonely silver contract were posted for delivery within the Comex-approved depositories on Thursday.  Once again the biggest short/issuer was Jefferies and, once again, JPMorgan and Canada's Scotiabank [the largest silver shorts on the Comex] were the largest stoppers. The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday---and as of 9:33 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had another sales report yesterday.  They sold 2,500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---399,000 silver eagles----and 100 platinum eagles.

Over at the Comex-approved depositories on Monday, they reported receiving a decent chunk of gold, as 89,248 troy ounces were accepted.  It was divided up between Canada's Scotiabank and HSBC USA.  The link to that activity is here.

And, for the second day in a row, there wasn't a lot of silver activity.  Nothing was reported received---and 27,003 troy ounces were reported shipped out.  The link to that 'action' is here.

Here's a chart that reader Brad Robertson sent our way yesterday.  It's the 2-minute price tick chart [The time scale is Mountain Daylight Time---BST-7].  It shows the final smack-down in gold just after 11:30 a.m. EDT, when the final slice of the golden salami took place in Comex trading yesterday.

Here are two more charts courtesy of Nick Laird over at sharelynx.com that he sent my way a couple of days ago, but had to wait until today because of space issues.  They look colourful---which they are---and complicated---which they're not.

This is the data for both gold and silver---and it comes out of the weekly Disaggregated Commitment of Traders Report.  It's precisely same data as what's in the legacy COT Report that I talk about every week, but it just reported in different categories---in these cases, four.

The first chart is the price of the metal itself.   The last chart in the sequence are the spread trades in each category.  They are trades that are market neutral because they represent a pair of trades that are long one month and short another, or vice versa.  The middle chart is the all-important net figure---total open interest minus spread trades.

It's the overall shape of the 'net figure' over time, versus the price of the metal itself in the top chart that is of interest---especially when you compare what's been going on with gold and silver prices lately.  The internal dynamics of one vs. the other, especially over the last few years---and few months---is striking.

As Ted Butler said to his paying subscribers on Saturday---as the net open interest in gold is approaching historic lows---the net open interest in silver is blowing out almost to new highs, despite the fact that both gold and silver are either at, or within spitting distance of their low prices as this current rendition of the engineered price declines unfold.
Here's the chart for gold.

And here is silver's chart.

When the next rally in both metals begins, it will be interesting to see what happens to the net open interest in both metals.  This blow-out to the upside in silver's net open interest can't go on forever.  And as Ted also mentioned, the Big 8 shorts in silver are holding their biggest short position in three and a half years---and with silver at its lows for this move down, will they continue to add to their already grotesque short positions on the next rally?  Stay tuned?

I have the usual number of stories for a mid-week column---and I hope you find some in here that you like.

¤ The Wrap

I suppose it’s possible these new [Managed Money] longs could still end up selling at even lower prices, but anything is always possible, even if it is unlikely. Taking everything into account, including a near-record raptor net long position, a near-record technical fund short position and what may be a fully liquidated technical fund long position; that is a compelling list of buy signals. I know that the concentrated and manipulative short position of the Big 8 shorts is way too high, but between the raptors---and what now looks like new value players on the long side of the managed money category---it’s just possible those concentrated shorts may have met their match. If we do rally at some point in the short term, it will be interesting to see if the big silver shorts add aggressively from current holdings and expose themselves to greater criticism.  - Silver analyst Ted Butler: 19 April 2014

It was another day of salami slicing in gold and platinum on Tuesday.  Not much happened in palladium---and likewise silver, but the bottom, as Ted Butler has pointed out on several occasions in this column, already appears to be in.

Now all we have to do is wait and see if JPMorgan et al can force more technical funds to go short in gold as the days pass.  It was 'mission accomplished' yesterday---and it wouldn't surprise me in the slightest if the same thing happened again today, although I reserve the right to be wrong about that.

Here are the 6-month charts for both gold and silver, so you can see the lay of the land in both metals after yesterday's price action.

After heavy trading volume in silver yesterday, I was somewhat surprised to see that open interest in May had only declined by 6,223 contracts when I checked out the CME's Preliminary Report at 3:32 a.m. EDT this morning.  There are still 50,000+ contracts that have to be rolled or sold by the end of trading on Monday, so there's miles left to go.

Not much happened in gold in Far East trading on their Wednesday---and the same can be said now that London has been open 35 minutes.  Silver had a price spike about 9:30 a.m. Hong Kong time on their Wednesday morning, but it didn't take long for a seller of last resort to hammer that flat---and the silver price hasn't done much since.  Gold volume is very light for this time of day---around 18,000 contracts.  Silver's volume is pretty light as well---and about 25% of it is roll-overs out of May and into July, the next front month once May goes off the board next week.

Platinum and palladium aren't doing much of anything---and prices are mostly flat.  I note that platinum had the audacity to rally a few dollars over the $1,400 the ounce price mark---and it will be interesting to see how long that state of affairs is allowed to last.

Yesterday was the cut-off for this Friday's Commitment of Traders Report---and I'm expecting some pretty decent numbers when the report is released at 3:30 p.m. EDT on that day.

And as I send today's commentary off to Stowe, Vermont at 5:10 a.m. EDT---I note that nothing much has changed in London trading since my previous paragraph about 35 minutes after the market opened over there.  Prices are still flat across the board and volumes are up---but not by a lot---and roll-overs in silver are up by a noticeable amount.  The dollar index, which hadn't been doing much of anything up until 2 p.m. Hong Kong time, has become more agitated---and the index is currently down about 16 basis points.

Like the trading pattern in all four precious metals yesterday, I'm not expecting a lot of price activity until Comex trading begins in New York at 8:20 a.m. EDT---and after that, all bets will be off.

Enjoy your day---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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