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TheStreet Open House

Wednesday, July 9: Today in Gold and Silver

Stock quotes in this article: GLD, SLV

NEW YORK ( TheStreet) -- After the obligatory sell-off at the New York open on Monday evening, the gold price headed a bit lower in Far East trading on their Tuesday---and didn't rally until 2 p.m. Hong Kong time, an hour before the London open.  That rally, such as it was, got dealt with in the usual manner by a seller of last resort once the London p.m. gold "fix" was in.  The low came around noon EDT---and from there it rallied gently until 4 p.m.---and then traded flat from there.

The high and low tick were recorded by the CME Group as $1,325.70 and $1,314.30 in the August contract.

Gold finished the Tuesday trading session at $1,319.60 spot, down 40 cents from Monday's close.  Net volume was pretty light at 96,000 contracts.

Silver also had the same obligatory sell-off at the New York open on Monday night.  Silver traded lower until a rally began at the noon silver fix in London---and that rally got stepped on minutes after the 8:20 a.m. EDT Comex open.  The HFT boyz did the rest once the p.m. gold fix was done.  Silver's low was also at noon in New York---and the subsequent rally made it back to Monday's close minutes after 4 p.m. in electronic trading, before selling off a few pennies.

The high and low were recorded as $21.245 and $20.955 in the September contract.

Silver finished the day at $21.015 spot, down 3 cents from Monday.  Volume, net of July and August, was very robust at 44,500 contracts.

Platinum had a similar trading pattern on Tuesday as it did on Monday---and the price finished exactly on its Monday close as well---$1,491.00 spot---and a dollar off its Friday close.  What are the chances that these were free market events?

Palladium didn't do much until shortly before 11 a.m. in Zurich.  The tiny rally from there tacked a percent on the price, but the traders in New York cut that gain in half by the close---and palladium finished up another four bucks at $869.00 spot.  They're certainly not letting this metal, and platinum, run away to the upside, which is what they both want to do.

The dollar index closed late on Monday afternoon in New York at 80.22---and it rose to its 80.29 'high' by 11:15 a.m. BST in London.  By noon in New York it was at its 80.15 'low' by noon in New York.  It didn't do much after that---and finished the Monday session at 80.17---down a whole 5 basis points.

The gold stocks gapped up a bit at the open---and stayed up until the HFT boyz took gold down at the London p.m. gold fix.  From that point the stocks slid into negative territory, with the low of the day coming minutes after 11:30 a.m. EDT.  The subsequent rally took the stocks back into positive territory, hitting their absolute highs around 2:30 p.m. in New York---and then traded sideways into the close.  The HUI finished up 1.49%.

The silver equities traded almost in lock step with their golden brethren---and Nick Laird's Intraday Silver Sentiment Index closed up 0.73%.

The CME's Daily Delivery Report showed that 25 gold and 40 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  Jefferies was the issuer on all of them in both metals---and the stoppers were "all the usual suspects"---and the link to yesterday's Issuers and Stoppers Report is here.

There was another deposit into GLD yesterday.  This time an authorized participant added 67,372 troy ounces.  And as of 9:47 p.m. yesterday evening, there were no reported changes in SLV.

Just as a matter of interest, since the rallies in both gold and silver began a bit over a month ago, there has been 424,653 troy ounces of gold added to GLD---and 10.31 million troy ounces of silver withdrawn from SLV.  There have been no deposits of silver at all---only withdrawals.  Ted Butler says that SLV is owned about 8 million ounces.

The U.S. Mint had a sales report yesterday.  They sold 2,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes----and 130,000 silver eagles.

The Royal Canadian Mint posted its Q1-2014 report on its website the other day---and here is what they had to say about bullion sales on pages 5 and 6---" Sales of Gold Maple Leaf (GML) coins declined 34.6% to 176,000 ounces compared to 269,000 ounces in the same period in 2013. Sales of Silver Maple Leaf (SML) coins increased 24.2% to 8.2 million ounces from 6.6 million ounces in the same period last year. The decline in GML sales reflects the lack of volatility in the gold price during the fourth quarter of 2013 and first quarter of 2014 as well as continuing activity in the gold bullion secondary market. The increase in SML sales reflects continued strong demand in North America, Europe and emerging markets such as Southeast Asia."

" Refinery revenues were up slightly in the thirteen weeks to March 29, 2014. Gold rough deposits increased as the Mint competes successfully for a growing market share. This was partially offset by a decline in silver rough deposits due to increased competition in the silver refining sector. Also contributing to this growth was an increase in sales of 1 kg gold bars, which increased 525% to 18,099 bars, which offset a contraction in sales of 100 oz silver bars, which decreased 25% to 12,562 bars."

Over at the Comex-approved depositories on Monday there was a decent amount of gold deposited, as HSBC USA took in 32,092 troy ounces.  None was reported shipped out.  The link to that activity is here.

As is almost always the case, the activity in silver was far bigger.  Only 9,903 troy ounces were reported received, but a very decent 1,157,462 troy ounces were shipped out the door.  The link to that action is here.

I have a far more reasonable number of stories today---and there should be at least a couple in here that you'll find of interest.

¤ The Wrap

It was one of the largest three week Commitment of Trader changes in memory for gold, as more than 97,000 commercial contracts were sold on a $70 gold price rally since June 10. Most notable was that the raptors accounted for 80,000 contracts of the commercial selling and the technical funds 88,000 contracts of the buy side. Never have two distinct groups controlled so much of the positioning.
 
In COMEX silver futures, the 9,100 contract increase put the total commercial net short position at 52,000 contracts. This is highest level of commercial shorts in COMEX silver since December 18, 2012. I hope everyone knows that “highest” here means, in COT terms, most bearish. I must point out that in December 2012 silver was around $34; whereas today the price is near $21 and below the cost of production for many primary silver miners. - Silver analyst Ted Butler: 07 July 2014

Another day---and another non-for-profit seller in both gold and silver at the London p.m. gold fix---and it was a Groundhog Day in platinum.  Here are the 6-month charts for both gold and silver updated with Tuesday's trading data.

As you can see, we're still chopping sideways in price in both metals waiting for some sort of resolution to this this current overbought situation---and the now wildly bearish COT numbers, especially in silver.  I'm also aware that there may be a 'black swan' out there---and just as much as a precious metal shortage would end the price management scheme, the same can be said for some other potential " long tail" events that are unknown to us at the moment.

Yesterday at the close of Comex trading, was the cut-off for Friday's COT Report---and just looking at the five day reporting period on the charts above, I would guess that we'll see more deterioration in the Commercial net short position in both gold and silver, but mostly in gold.  I'll be happy to wrong, but that's the way I'd bet ten bucks if forced to.

As I type this paragraph, it's about 45 minutes to the London open.  All four precious metals are up a bit from their respective closes on Tuesday.  Gold volume is pretty light, but higher than it was this time yesterday.  Silver volume is light as well---and lower that it was on Tuesday at this time.  The dollar index is flat.

And as I prepared to send this out the door at 4:45 a.m. EDT, I note that not a lot has changed since I wrote the above paragraph a bit over two hours ago.  All four precious metals are hanging onto some or all of their gains from back then---and volumes are more or less what I expect at this time of day when there isn't much going on from a price perspective.  The dollar index, which had been flat, dipped within spitting distance of the 80.00 level about forty minutes before the London open, but a buyer of last resort was there to save the day.

I haven't the foggiest idea as to what the rest of the Wednesday trading session will bring---and nothing will surprise me when I look at the gold chart later this morning.

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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