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Thursday, August 7: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- The gold price didn't do a lot up until 1 p.m. BST in London on their Wednesday, as it traded a couple of dollars either side of $1,290 spot up until that point.  Then, at the time mentioned, away it went to the upside, with most of the gains of the day recorded by minutes after 9:30 a.m. EDT.  From there, the price didn't do much, as it chopped sideways into the 5:15 p.m. EDT close of electronic trading.

The CME Group recorded the low and high ticks as $1,288.50 and $1,311.00 in the December contract.

Gold finished the Wednesday trading session at $1,305.90 spot, up $17.30 on the day.  Volume, net of August and September, was pretty hefty at 171,000 contracts.

After the obligatory downtick at the New York open on Tuesday evening, it was more or less the same chart pattern in silver on Wednesday.  The metal began to rally sharply at 1 p.m. BST as well---and the spike high at 9:30 a.m. EDT got hammered back down to the $20 spot mark within minutes.  After that, like gold, it traded within a few pennies of that price for the remainder of the day.

The low and high ticks were recorded as $19.77 and $20.135 in the September contract.

Silver closed yesterday at $20.005 spot, up 26.5 cents from Tuesday's close.  Net volume was way up there once again at 45,500 contracts.

With some minor variations, platinum and palladium had similar charts patterns as well.  Platinum closed up $10---and palladium finished the Wednesday session up $3.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 81.53---and then chopped sideways in a tight range until 9 a.m. BST in London yesterday morning.  From there it rallied up to 81.70 by 11:30 a.m. BST.  Then it was pretty much all down hill into the close, as the index finished the Wednesday session around 81.43, which was down 10 basis points on the day.

Not surprisingly, the gold stocks gapped up more than 2% at the open---and did manage to tack on a bit more in the way of gains later in the day, but got sold down off their highs in the last thirty minutes of trading.  The HUI finished up 2.30%.

It was more or less the same chart pattern for the silver equities, although they managed to finish the Wednesday session up a bit more, as Nick Laird's Intraday Silver Sentiment Index closed up 2.77%.

The CME's Daily Delivery Report for Day 5 of the August delivery month showed that only 10 gold and 2 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  Nothing to see here.

And checking the CME's Preliminary Report for Wednesday, I note that gold open interest for August is now down to 2,618 contracts.  Silver's open interest in August is currently a dozen contracts or so.  But total open interest in gold blew out by more than 8,100 contracts with Thursday's price action, however silver's total o.i. was flat.  The gold number is not a surprise, but the silver o.i. number, is.  However, it's dangerous to read too much into these preliminary numbers.

There was a withdrawal from GLD yesterday, as an authorized participant removed 76,974 troy ounces---and as of 7:38 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I was editing today's column at 3:45 a.m. EDT, I noticed that an authorized participant had added 767,711 troy ounces of silver.

The U.S Mint had its third sales report in as many days, as they sold 2,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 380,000 silver eagles.

There was more movement in gold over at the Comex-approved depositories on Tuesday, as 26,692 troy ounces were reported received---and 353 troy ounces were shipped out.  The link to that activity is here.

Ted pointed out something that I'd missed in Tuesday's column on Comex gold inventories---and that was the fact that the 595,102 troy ounces that the report showed withdrawn from JPMorgan on Friday was, with the exception of a few ounces, totally reversed in Monday's report from the Comex.

It was a decent day in silver, as 55,676 troy ounces were reported received----and 778,776 troy ounces were reported shipped out.  The link to that action is here.

Here's the 5-minute tick gold chart from yesterday---and note all times are MDT, so add two hours for EDT.  The chart runs from 11:30 p.m. on Tuesday evening Denver time, up until the 5:15 p.m. EDT close of the electronic market in New York yesterday---and once again I thank reader Brad Robertson for passing it along.  Note the huge volumes that were associated with yesterday's rally.

Once again I have a very decent number of stories---and I hope you have the necessary time to read the ones that interest you the most.

¤ The Wrap

One question that has never been answered by those denying that the COT reports are accurate, is why in the world would the CFTC publish data which provided proof of a silver manipulation by intentionally misreporting the data? There have been times in the past several years where JPMorgan held 40% of the short side in Comex silver; why would the CFTC report that if it wasn’t true? To those that may suggest JPMorgan’s concentrated short position was even greater, perhaps that may be true, but the market share was great enough to prove manipulation as reported.

More than ever before, the changing structure of the COT reports has come to represent the sole reason for price movement on the Comex, with actual supply/demand fundamentals not mattering at all. That’s why, despite allegations the reports can’t be relied upon, more analysts and commentators than ever before have embraced the COTs as an important market tool. Ask yourself this – if it were not for the remarkable changes in the COT structure this year in Comex silver, gold and copper, what else could possibly explain the price moves to date? - Silver analyst Ted Butler: 06 August 2014

I was happy to see the nice rallies in all four precious metals yesterday, but I wasn't happy to see the big volume associated with both gold and silver.  It was obvious, whether the rally was short covering or new long buying as the 50-day moving average in gold was broken, that JPMorgan et al. were going short against all comers in order to cap the rallies---and that's why the volume was as high as it was.

All the improvements in the Commercial net short position that occurred on Tuesday, were totally negated by the end of trading on Wednesday.  So we're almost back to square one---and tomorrow's Commitment of Traders Report is most likely "yesterday's news" already.

Here are the updated six-month charts for both gold and silver.

Where we go from here is unknown.  Higher perhaps?  Sure, but that monster Commercial net short position in silver is still there---and in gold as well.  So whether yesterday's price action is the beginning of a new rally, or a temporary respite from the ongoing engineered price declines, it doesn't change the situation one iota.

Of course JPMorgan et al. could get overrun and blown out of the water.  But as Ted Butler has been saying for more than a decade---if they do, it will be for the first time.

Here are a couple of charts that Nick Laird sent my way yesterday evening.  They're the mont hly average intraday charts for both gold and silver for the month of July based on the two-minute tick.  Nick computes it by adding up every two-minute tick from each trading day---and averages them out for the month---and it produces the two charts below---the first for gold---and the second for silver.

And as you can see, the daily price has a pattern in both metals once the "noise" is averaged out.  The downside price pressure in both metals begins about an hour after the London a.m. gold fix---and ends at 11:30 a.m. in New York.  Ditto for silver.  As a matter of fact, the gold and silver charts are virtual carbon copies of each other over the entire 24 hour periods.

This sort of price pattern would never occur in a free market---ever!

And as I write this paragraph, the London market has been open about 10 minutes on their Thursday morning.  The gold price has barely twitched since the New York closed yesterday---and it's only up a couple of bucks at the moment.  And it's been mostly the same in silver, as the price is up only a penny or two.  But platinum and palladium have rallied a decent amount.  Gold volume is extremely light---and silver volume is almost nonexistent.  The dollar index is up a small handful of basis points.

As is almost always the case, there is no follow-though in the rallies that begin [and end] in New York trading.

And as I send this off to Stowe, Vermont at 4:55 a.m. EDT, I see that all four precious metals have rolled over a bit.  Both gold and silver are down a fraction---and a lot of the gains that platinum and palladium had, have disappeared.  Gold volume is now a bit over 20,000 contracts, but is increasing at a crawl at the moment.  Silver volume is higher as well, but very much on the extremely light end of the spectrum.  The dollar index is now up a slightly larger handful of basis points.

After yesterday's price action, nothing will surprise me when I power up my computer later this morning---and it shouldn't surprise you, either.

I hope your day goes well---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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