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TheStreet Open House

Tuesday, May 27: Today in Gold and Silver

NEW YORK ( TheStreet) -- With the precious metal markets closed in the U.S. for Memorial day---and a bank holiday in the U.K.---there was very little activity in any market yesterday---and the principle reason for today's column is to post the stories that have accumulated over the weekend, as I have quite a few.

Here are the four charts.  Volumes were fumes and vapours---and there wasn't much in the way of roll-overs out of the June gold contract.  Friday's big volume day in gold was most likely traders unloading/rolling positions before the long weekend in both the U.K. and the U.S.

The closing prices are basically irrelevant.  Net gold volume on Monday was was a bit under 15,000 contracts---and silver volume was around 4,700 contracts.  Just for fun I thought I'd check platinum and palladium volumes---and they were 2,200 contracts traded in platinum---and palladium net volume was only 450 contracts.  June is a delivery month for palladium, as well as gold---and gross volume was only 900 contracts.  You can see that Pl and Pa are tiny markets compared to gold and silver---and it's not hard for the four U.S. bullion banks in platinum---and '3 or less' U.S bullion banks in palladium, to control prices there, either.

The May Bank Participation Report showed that the four U.S. banks were net short 18% of the entire Comex platinum market---and '3 or less' U.S. bullion banks were short 20.5% of the Comex palladium market.

There was a story over at the miningweekly.com Internet site on the weekend that was questioning how much 'transparency' there was in the platinum market, as well as the gold market.  Another good question with an answer that's hiding in plain site.  The story is posted in the Critical Reads section, but if you can't wait, the link is here.

The dollar index closed in New York late Friday afternoon at 80.35.  It got as high as 80.42 during the early going on Monday morning in Far East trading, but by late afternoon trading London time, it was down to 80.25.  It gained a handful of basis points going into the close---and finished the Monday session at 80.29.  Here's the chart for Monday---and the previous Friday.

Obviously there were no reports from any of the usual sources on Monday, so I here is today's list of stories.  The final edit is yours.

¤ The Wrap

It’s relatively easy to predict how the technical funds will behave to price stimuli and, in fact, this predictable behavior is how the manipulation endures. That’s because the commercials control the price stimuli on the COMEX. More difficult is predicting what the commercial price controllers have up their sleeve. Will the commercials toy with technical funds for a while longer (as they have been), or will the commercials (the raptors) let prices rip to the upside, forcing the tech funds to pay up on the buy side? Or will the commercials take a small slice of flesh from the funds on a moderate rise in price and then engineer another sell-off to lure the technical funds into selling again? Only the collusive commercials know for sure. That said, the set up in silver is as bullish as it has ever been. - Silver analyst Ted Butler: 24 May 2014

Of course there was nothing to say regarding yesterday's price/volume action at the top of this column---and nothing to say here, either.  And naturally enough, the gold and silver charts over at stockcharts.com weren't updated.

But here's an interesting chart that reader Brad Robertson sent our way yesterday.  This is for gold---but the silver chart looks very similar.

The only thing we're waiting for is to see how JPMorgan et al react when we break out from here.  Silver is pretty much done to the downside, but  the question in gold still remains---will it break up or down?  As Ted Butler has pointed out on numerous occasions, the technical funds still aren't completely loaded up on the short side, so there's room to go to the downside if the HFT traders that do the dirty work for "da boyz" are instructed to go that route.

But as I've mentioned a few times over the last month, you just have to wonder how long the powers that be can keep a lid on the prices of all four precious metal, as the walls are closing in from all directions in all four precious metals.  As Jim Rickards said in his interview about gold manipulation with Greg Hunter: “It will end when the physical shortage gets to the point that someone fails to deliver; which, at that point, there will be a buying panic.  There could be a buying panic or what some people call a demand shock.  One of the things I said about gold manipulation is if I was the manipulator, I would be embarrassed at this point.  The manipulation is obvious.  The evidence is coming in from all directions. The manipulation is clear.  When will it end?  It will end when there is a physical shortage that pops up somewhere, or it will end with a short squeeze.

So, as usual, we wait.

As I write this paragraph, the London open is still about 90 minutes away.  The trend in gold is down as of 1:30 p.m. Hong Kong time---as it is in the other three precious metals as well.  Volumes, once you subtract out the Monday volumes, are microscopic once again---and all the activity in gold is pretty much roll-over related.  Based on this volume, I wouldn't read a thing into the current price action.  It's very quiet out there.  Almost too quiet, considering that the final few days to roll out of the June delivery month are upon us.

Today at the close of Comex trading is the cut-off for this week's Commitment of Traders Report, so whatever happens during the Tuesday session will [hopefully] show up in this Friday's report.  However, knowing how tardy they can be on reporting on time, all the data may not be there.  We'll find out soon enough.

And as I sent this off to Stowe, Vermont at 4:55 a.m. EDT, I note that the selling pressure has stepped up a bit more since I wrote the previous paragraph three and a half hours ago.  It looks like the traders are fishing for sell stops as we head into options and futures expiry today and tomorrow.  Gold was down ten bucks at one point, with silver down 30 cents from its 'close' yesterday.  Platinum wasn't spared, either---however, palladium seems to be holding its own at the moment.  Gold volume has picked up---with net volume [less yesterday's volume] north of 27,000 contracts.  Silver's volume [net of yesterday as well] is on the lighter side.  The dollar index is down a handful of basis points.

With the June contract in gold going off the board on Thursday afternoon EDT, the trading volume between now and then should be quite frantic---and it's up in the air as to what the price action will be that will accompany it.  So nothing will suprise me as the last trading week of May unfolds---nor should it you.

See you 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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