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Tuesday, May 20: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price got sold off a few dollars the moment that trading began on Sunday evening in New York.  But a few hours later it began to chop unsteadily higher.  However, the rally that began at the 8:20 a.m. New York open on Monday morning got dealt with in the usual manner by the usual suspects 10 minutes after the open---and by the end of the day the gold price was back to where it started at Friday's close.

The low and high ticks according to the CME Group were recorded as $1,289.50 and $1,305.70 in the June contract.

Gold closed in New York on Monday at $1,292.60 spot, down one thin dime.  Net volume was pretty light at only 95,000 contracts, so anyone with an agenda had an easy time pushing the gold price in whatever direction they chose---and that's precisely what they did.

The price path for silver was virtually identical to that of gold, with all the highs and lows coming at the same times---along with the ensuing sell-off during the New York trading session, so I shall spare you the details.

The low and high ticks in silver were posted as $19.31 and $19.685 in the July contract.

Silver closed yesterday at $19.335 spot, down a penny from Friday.  Volume, net of May and June, was 38,000 contracts, of which 3,400 contracts was in the September and December delivery months.  And as I said last week, it's hard to tell whether these positions in the far months are new ones, roll-overs, or one leg of a spread trade.

Platinum was up about five bucks by lunchtime in Hong Kong---and then jumped up another ten bucks just before 9 a.m. BST in London.  It tacked on another five spot in early New York trading---and it's attempts to rise further ran into the usual sellers of last resort.  By the 1:30 p.m. Comex close, virtually all of the Monday gains had vanished.  Platinum close up a whole four bucks.

Palladium's rally was a bit more anemic, but even those gains vanished under the feet of JPMorgan et al during New York trading.  Palladium closed down a buck.

It was obvious, at least to me, that the sellers of last resort were toying with all four precious metal prices---and what surprised me the most was that they didn't close palladium down on the day as well.

The dollar index closed late on Friday afternoon in New York at 80.05---but then began to head quietly lower shortly after trading began in the Far East on their Monday morning.  The index sank down to 79.89 shortly before 10:30 a.m. EDT---the London a.m. gold fix---and then it looked like a buyer of last resort showed up close it just above the 80.00 mark at 80.01.  Here's the 3-day dollar chart.

The gold stocks gapped up just over a percent at the open, but then chopped lower, hitting their low ticks about one minute to noon in New York.  From there they chopped sideways, but then rallied a hair with the HUI managing to close in the black, up 0.13%.

For the second day in a row the silver stocks turned in a bit of a surprise performance.  After opening lower, they rallied into positive territory---and spent most of the day bouncing off unchanged until shortly before 2 p.m. EDT.  Then they rallied from there---and Nick Laird's Intraday Silver Sentiment Index closed up 0.66%.

The CME's Daily Delivery Report showed that 28 gold and 167 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  In gold, Jefferies was the short/issuer on all 28 contracts---JPMorgan and Canada's Scotiabank stopped all but one of them.  In silver, the largest short issuers were ABN Amro, Jefferies and JPMorgan, with 72, 70 and 19 contracts respectively.  JPMorgan stopped 127 contracts---and Scotiabank stopped 13. The link to yesterday's Issuers and Stoppers Report is here.

There were no changes in GLD yesterday---and as of 6:45 p.m EDT yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had a tiny sales report yesterday.  They sold 1,500 troy ounces of gold eagles---and that was it.  If they follow last week's procedure, they should have a more decent sales report today.

There wasn't much gold activity over at the Comex-approved depositories on Friday.  Only 4,406 troy ounces was reported received---and a grand total of eight, one kilo gold bars were shipped out---257.200 troy ounces.  The link to that activity is here.

There was much more activity in silver, of course, as 367,190 troy ounces were reported shipped in---and 126,161 troy ounces were shipped out.  The link to that action is here.

I have a pretty decent number of stories for you today---and I hope you find some that are of interest.

¤ The Wrap

There’s a very good reason why gold and silver prices (along with other CME metals) don’t respond to developments as most would imagine. The reason is because the price-setting mechanism, which is the COMEX, doesn’t have anything to do with supply or demand or world events. Instead, the COMEX sets gold and silver prices on its own terms, namely, by who is zooming who among an incredibly small circle of traders isolated from the rest of the world or any influence from actual metal supply and demand.

I'm not telling you anything new here, but it is amazing how gold and silver pricing has become so effectively captured by a private club of paper traders that anyone who follows the market could fail to see it. The rally early [last] week was exclusively the result of technical fund buying/commercial selling and the sell-off on Thursday and Friday was the reverse. There was no other explanation or real world influence on price this week or any other week. And for certain, future price action will be due to positioning by the traders in the COMEX’s private club.
- Silver analyst Ted Butler: 17 May 2014

It was another trading day where the gains of the Far East and London sessions were crushed under the heels of the trading algorithms of "da boyz" as the critical $1,300 price point---and the 50-day moving average in gold were both penetrated to the upside again yesterday.  For the moment, it doesn't seem that they are going to allow any excitement in the precious metals, as the 50 and 200-day moving averages in gold are being strongly defended.  Here's the 6-month gold chart.

[In silver, it's the 20 and 50-day moving averages that are in play.

And as we've already discovered this year---and every other year since 2011---is that even if these moving averages are broken, JPMorgan et al are there to snuff out any rally before they can get far.  Will this time be different?  Who knows.

As Ted Butler has pointed out on many occasions, that although there's little room to the downside in silver, the potential exists for further downside price movement in gold, as the COT Reports of late have show that the technical funds are not loaded up on the short side as they were last year when an important price low was reached.  It remains to be seen whether the powers that be still have that in store for us.

Of course, if that is in the cards, they will certainly use the opportunity to pound the other three precious metals as well because, as we already know, supply/demand fundamentals mean nothing when "four or less" U.S. bullion banks have short-side corners in silver, platinum and palladium.  JPMorgan controls the gold market with its long-side corner---and as Ted also pointed out in his Saturday commentary, they sold 5,000 contracts of that long positions, leaving him "with the distinct impression that JPM capped gold prices single-handedly during the reporting week."

With about five minutes to go before the London open, I see that all four precious metals got sold down a bit during the lead-up to the open---and it will be interesting to see what happens as the Tuesday trading session unfolds in both London and New York.  Gold volumes are already pretty decent, but silver volume is very light---and the dollar index is barely above the 80.00 mark.

And as I send this out the door to Stowe, Vermont at 5:05 a.m. EDT, I see that both silver and gold are chopping lower.  Platinum and palladium are attempting to rally, but each attempt, no matter how tiny, is being sold off.  Net gold volume has just topped the 30,000 contract mark, which is pretty heavy for this time of morning---and silver's volume is nothing special.  The dollar index is up 8 basis points.

I note that Casey Research has a limited-time offer [it ends at midnight EDT on Friday, so you don't have a lot of time] on their Casey Extraordinary Technology subscription service.  Alex Daley is all pumped up about the successes they've had over the last year, with an average return of 47%.  The commentary is rather provocatively headlined "Gold is Dead: Long Live Tech".  It costs nothing to check it out, which I urge you to do when you have a spare minute.  The link is here---and Casey Research's usual 3-month guarantee applies.

That's all I have for today---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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