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Tuesday, July 15: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- As is usually the case, the gold price ticked down at the 6 p.m. Sunday evening open in New York---and it was all down hill from there, with at lot of help from "da boyz" and their algorithms within a hour of the London open.  The decline continued once the noon silver 'fix' was in---and the low tick came at precisely 9:30 a.m. at the open of the equity markets in New York.  The price recovered a couple of dollars after that, but chopped sideways in a very tight range for the remainder of the day.

The high and low tick according to the CME Group was $1,341.10 and $1,303.70 in the August contract.

Gold closed at $1,306.80 spot, down $32.20 on the day.  Net volume was very heavy at 177,000 contracts.

It was more or less the same price pattern in silver, with most of the damage done by 9 a.m. EDT in New York.   After that, the silver price didn't do much.

The high and low ticks were $21.53 and $20.90 in the September contract.

Silver finished the Monday trading day at $20.90 spot, down 54.5 cents from Friday's close.  Volume, net of July and August, was 58,000 contracts---of which 3,580 were trade in December.  If that amount was, in fact, a roll-over out of the September contract, you can reduce yesterday's 58,000 contract volume by that amount.

Platinum wasn't spared, either---and it's low came shortly before the Comex close---but it recovered a handful of dollars from there.  It closed down $22 on the day.  Palladium sort of got caught in the crossfire---and it traded in less than one percent price range for the whole day, finishing down 3 bucks.  Here are the charts.

The dollar index finished the Friday trading session at 80.19---and topped out at 80.24 around 2:20 p.m. in Hong Kong trading---about the same moment that gold really got hit hard for the first time.  The low tick of 80.09 roughly came around 10:40 a.m. BST in London---and then it 'rallied' back to 80.22 shortly after the Comex close.  From there it slid a few basis points into its 80.17 close---basically unchanged on the day.

I'm sure you've figured out by now, dear reader, that the machinations in precious metal prices have virtually nothing to do with what's happening in the currency markets.  Sometimes there is correlation, but yesterday wasn't one of them.

The gold stocks gapped down a bit over 3 percent at the open---and had really cut their loses by a goodly amount by shortly before 11 a.m. EDT. Unfortunately, the rally didn't last---and the stocks got sold down as the day progressed.  However, they did rally a titch into the close---and the HUI finished down only 2.53%.  It could have been worse.

It was the same price pattern in the silver equities, but they got hit harder at the open---and as a result, Nick Laird's Intraday Silver Sentiment Index closed down 3.36%.

The CME's Daily Delivery Report showed that 4 gold and 3 silver contracts were reported for delivery within the Comex-approved depositories on Wednesday.  There are still around 190 gold contracts open in July---and about 580 contracts or so in silver.  There are still a couple of weeks left to go in the July delivery month---and it will be interesting to see how many of these contracts disappear between now and then---and how many actually stand for delivery.

I was surprised to see a really big deposit into GLD yesterday.  An authorized participant added a very decent 229,094 troy ounces, a bit over 7 tonnes.  And as of 7:32 p.m. EDT yesterday evening, there were no reported changes in SLV.

Just as a note of interest.  Since June 1 there has been 753,913 troy ounces of gold added to GLD since the recent rally began.  Since June 1 there has been 7.91 million ounces of silver withdrawn from SLV.

But after yesterday's smack down, it's a good bet that some of that gold is headed out the GLD door---and the authorized participants over at SLV are covering their short positions like mad.  That's one of the reasons that this price decline is being engineered in the first place, so JPMorgan doesn't have to deposit real metal.  They short the shares---and then cover at no cost to them, or a small profit as they whipsaw the technical funds in and out of their positions.  How slick is that?

The CFTC and the CME Group are obviously [as Ted Butler has so correctly pointed out] complicit in all this.  Don't expect The World Gold Council or The Silver Institute to help, as it's their job to keep the miners in line.  It would be wonderful for all of us stockholders in these companies if one one of them would develop a conscience and realize that they have this thingy called fiduciary responsibility.  But I suppose it's a bit too much to ask at this stage of the game.

The U.S. Mint had a sales report to start off the week.  They sold 3,000 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes----and 400,000 silver eagles.  We are halfway through June and the mint has sold only 835,000 silver eagles.  Ted Butler's big buyer has obviously backed away from the table.

There was some gold movement over at the Comex-approved depositories on Friday, as 32,159 troy ounces were reported received---all of it at HSBC USA---and 198 troy ounces were shipped out.  The link to that activity is here.

Of course there was much more movement in silver, as 312,979 troy ounces were reported received---and 604,721 troy ounces were shipped out.  The link to that action is here.

Here's the 5-minute gold chart courtesy of reader Brad Robertson.  The times on the chart are Mountain Daylight Time, so you have to add two hours for EDT.  Note the high volumes as the HFT boyz spun their algorithms and hit the technical funds' sell stops on their engineered price decline.  They were forced to cover---and "Bob's your uncle!"

Since this is my Tuesday column, I have more than a decent number of stories for you today and, the final edit is yours.

¤ The Wrap

Both the increase in the short position of SLV as well as the hefty withdrawals of metal, point to physical tightness. For sure there was net buying in SLV over the past six weeks, as it would be virtually impossible for there not to have been given price action and trading volume. For silver to be withdrawn---and for the short position of SLV to have increased---is a double-whammy pointing to physical tightness.

Combined with the extraordinary level of physical turnover in the COMEX silver warehouses, it’s hard to imagine more compelling signs of wholesale tightness in silver, shy of a public announcement of a physical silver shortage. After all, the COMEX silver warehouses and SLV are, by far, the two largest repositories of physical silver in the world; holding a combined total of nearly 500 million silver oz, or close to 60% of all the recorded and visible silver bullion in the world. - Silver analyst Ted Butler: 12 July 2014

As I said in the closing paragraphs in The Wrap section of Saturday's column---" one should be on red alert for an engineered price decline at some point in the not-too-distant future."  I was hoping that I had called it right, but couldn't imagine that JPMorgan et al were going to show up as quickly as they did.

Here are the 6-month gold and silver charts complete with Monday's data.

As you can see, the overbought situations in both metals no longer exist---and now the 50 and 200-day moving averages beckon.  Is this their target?  Beats me.  Ted figures that they could carve a hundred bucks off the gold price real easy---along with three bucks or so in silver.  Then it remains to be seen whether JPMorgan et al will be satisfied with that, or will they take prices lower.  All questions with no answers at the moment.

The only other questions remaining are, how low in price---and over what time period, will "da boyz" continue this engineered price decline in both metals, especially silver.  Ted Butler calls it " slicing the salami"---and it remains to be seen how many more slices there are to go, and how big they will be when they occur.  But there's always a chance we could be done to the downside already.  But if I had to bet ten bucks, that's not how I'd bet it, at least not using past history as a guide.

And as I type this paragraph, the London open is about 25 minutes away.  Gold and silver prices have traded pretty flat so far on Tuesday---and at the moment, gold is up a buck or so---and silver is down about 6 cents.  Volume in both metals is extremely light---and the dollar index is up a handful of basis points.  Platinum and palladium aren't doing much, either.

The only good thing about this engineered price decline is that the opening salvo began on a Monday, so that means that nearly all the trading data associated with yesterday's activity should be in Friday's Commitment of Traders Report.  The cut-off for that report is at the close of Comex trading this afternoon.

And as I fire this out the door to Stowe, Vermont at 4:47 a.m. EDT, I see that not much has happened since my last update before London opened.  All four precious metals are higher by tiny amounts, but nothing you would call a trend.  I see that gold volume has more than doubled since the open---and is now about 24,000 contracts net---and silver's volume is not quite double.  I don't know what that's about, as there's nothing in the price action to indicate that volumes should be this high.  Maybe it was more technical fund long liquidation.  The dollar index is back to almost unchanged.

And before heading off for bed, I'd like to mention that Casey Research's 2014 Summit Thriving in a Crisis Economy, is being held in San Antonio, Texas - September 19-21 at the beautiful Hyatt Hill Country Resort & Spa.  I'll be presenting at that conference---and I'd like to meet you there as well but--- this is your last opportunity to sign up at the early-bird discount and save $400 - as it expires TONIGHT, Tuesday, July 15 at 11:59 p.m. EDT.  So please, if you're interested, act fast---or more specifically, act before midnight tonight.  You can view the list of faculty, the schedule, and access the secure early-bird registration form through this link.

That's it 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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