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Tuesday, August 12: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- It was pretty quiet in gold everywhere on Planet Earth on Monday.  The price got sold down five bucks by 10:30 a.m. Hong Kong time, but gained it all back by the Comex open---after that it chopped and flopped into the close.

The high and low ticks aren't worth looking up.

Gold finished in New York on Monday afternoon at $1,307.90 spot---down $1.20 on the day.  Volume was exceedingly light---and net of August and September, it was only 70,000 contracts.

As has been the case for well over a month now, silver got sold down the moment that trading began on Sunday night in New York.  It bounced off $19.75 three time before rallying---and got stopped in its tracks about 20 minutes after the Comex open when it broke through the $20 spot mark.  From there it traded ruler flat until just before 1 p.m. in New York.  From there it rallied a bit more than a dime going into the 1:30 p.m Comex close---and then traded flat once again until shortly before 4:00 p.m. EDT in electronic trading.  Then it got sold down a bit into the 5:15 p.m. close.

The low and high ticks were recorded as $19.915 and $20.18 in the December contract.

Silver finished the day at $20.01 spot, up 9.5 cents on the day.  Net volume in silver was very light as well, only 20,500 contracts.

Platinum got sold down five bucks by around 10:30 a.m. Hong Kong time as well---and then chopped sideways for the remainder of the day---and then got sold down a few more dollars going in to the close.  It finished the day down 7 bucks.

Palladium got sold down a couple of bucks as well in the early going in Far East trading on their Monday, before trading flat until shortly after Zurich opened---and then rallied for the remainder of the day---and as the chart shows, the price appears to have been capped at the $874 level.  Palladium finished up $15 on the day.

The dollar index closed late on Friday afternoon in New York at 81.40.  It rallied a handful of basis points during Far East trading before chopping sideways for the remainder of the Monday trading session.  It closed at 81.44.

The gold stocks opened in negative territory, but didn't stay there long---and rallied into positive territory within ten minutes of the New York open.  After that they crept higher for the remainder of the Monday session---and the HUI closed up 0.74%.

The silver equities opened unchanged---and took off from there, with most of the gains in by 10 a.m. EDT.  From there, they also crept higher, before selling off a hair into the close.  Nick Laird's Intraday Silver Sentiment Index closed up a healthy 2.03%.

The CME Daily Delivery Report showed that 607 gold and zero silver contracts were posted for delivery on Wednesday within the Comex-approved depositories.  The only short/issuer worth noting was Jefferies with an even 600 contracts.  The three largest long/stoppers were JPMorgan in its client account with 306 contracts---Canada's Scotiabank with 135---and Barclays with 94.  Morgan Stanley was a distant 4th with 58 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

CME's Preliminary Report for the Monday trading session showed that open interest in gold for August is now down to 1,882 contracts---and to get a more accurate picture of what's left in the August delivery month, you have to subtract out the 607 contracts posted for delivery tomorrow, so that leaves about 1,200 contracts and a bit left.

There were no reported changes in GLD yesterday---and as of 6:36 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

Joshua Gibbons, the " Guru of the SLV Bar List" finally updated his website with the weekly changes in SLV as of the close of trading last Wednesday---and here is what he had to say.  "Analysis of the 06 August 2014 bar list, and comparison to the previous week's list: 141,357.9 troy ounces were removed, no bars were added or had a serial number change.  The bars removed were from: Henan Yuguang (all).

As of the time that the bar list was produced, it was overallocated 90.8 oz.---and does not reflect a 767,710.4oz deposit on Wednesday."

The good folks over at the short squeeze.com Internet site updated the short positions in both SLV and GLD up to and including July 31---and this is what they had to report.  The short position in SLV declined by 15.01 percent---from 20.44 million shares/troy ounces, down to 17.37 million shares/troy ounces.  The 2.8 million net ounces of silver added to SLV since the beginning of August will have to wait for the next report, which will be close to the end of month.  Undoubtedly, this silver that was deposited was being used to pay down a short position.

There was also a decent decline in the short position of GLD as well, as it dropped by 21.65 percent, from 1.47 million troy ounces, down to 1.15 million troy ounces.

I'm happy to see these numbers---and I'm sure that Ted Butler will have something to say about them in his mid-week commentary to his paying subscribers on Wednesday afternoon.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 1,500 troy ounces of gold eagles---and 200 one-ounce platinum eagles.

There was big movement in gold over at the Comex-approved depositories on Friday, as 389,015 troy ounces were reported received---and only a tiny 195 troy ounces were shipped out the door.  All the big receipts were at JPMorgan and HSBC USA.  The link to that action is here---and it's worth a quick peek.

The activity in silver was a bit more subdued than normal, as 182,118 troy ounces were received---and 240,639 troy ounces were shipped out.  Almost all the activity was at Brink's, Inc.---and the link to that is here.

I have a boat load of stories for you today---and feel free to edit ruthlessly.

¤ The Wrap

The average weekly turnover this year in the COMEX silver warehouses is 4.5 million oz or two full days of world silver mine production (2.2 million oz of silver are mined daily). While we’ve had some unusual recent activity in the COMEX gold warehouses (as previously reported), I would guess (from memory) that COMEX gold warehouse weekly turnover has been no more than 40,000 oz over this year, making the weekly gold turnover 15% of one day’s world mine production (275,000 oz). The weekly silver warehouse turnover is 200% of daily mine production, while the weekly COMEX gold turnover is 15% of a day’s gold mine production. Why the disparity?

The most plausible explanation that comes to my mind is related to silver’s industrial demand component. Silver is being brought into and taken out from the COMEX warehouses because it is in high demand from industrial and other fabrication needs. There is much less urgency for investors to move metal around (as long as it’s in a safe place) and since gold is primarily an investment metal, there would appear to be little need to move it for investment purposes. And it’s not just against gold that silver’s warehouse turnover appears stark; compared against purely industrial metals (like copper), the silver warehouse movement relative to mine production is also off the charts. The almost unreal level of physical turnover in the COMEX silver warehouses begs for an explanation. I say it points to physical tightness and I continue to solicit your explanations. - Silver analyst Ted Butler: 09 August 2014

There's not a lot to talk about regarding yesterday's price action, as it was pretty anemic---along with the volume figures that went with it.  But I was happy to palladium make a decent move.

Here are the 6-month charts for both gold and silver---and not a thing has changed since Friday.

One thing I forgot to mention in Saturday's column was how well the silver equities were doing compared to the underlying metal itself.  The silver stocks have risen every day for the last five consecutive days regardless of how well, or poorly, silver itself has done---and Nick Laird's Silver 7 Index is up almost 10% during that time period.  It would appear that someone is taking a position.

Of course, having said that, the shares will probably get crushed today.

As I write this paragraph, London has been open about twenty-five minutes.  Gold got sold down a few bucks in Far East trading, with the low coming minutes after 1 p.m. Hong Kong Time.  But then it rallied back to just above unchanged---and it's not doing much at the moment.  Silver got sold back below the $20 spot price mark the moment that trading began at 6 p.m. on Monday evening in New York---and it's still below that mark as I write this, although it has recovered off it current low.  Volumes in both metals are fumes and vapours---and one shouldn't read a thing into what's going on price-wise at the moment.

It's more or less the same in platinum and palladium as well---and the dollar index is up 9 basis points at the moment.

Because of the Bank Participation Report on Saturday, I didn't post Nick Laird's " Days of World Production to Cover Comex Short Positions"---so here it is now.  It looks pretty much the same as it has for years now, with three of the four precious metals permanently pinned to the right-hand side of this chart---and the only reason that gold doesn't make it a clean sweep, is because of JPMorgan's long-side corner in that metal.  But at the speed they've been reducing it, it's only a matter of time before the chart reverts to what it used to look like---and that's all four metals on the far right.

As to where we go from here is anyone's guess.  Right now we have all these black swans vs. JPMorgan et al---and guessing how this plays out in the days and week's ahead, is certainly a mug's game.  But summer is getting a little long in the tooth in the Northern Hemisphere---and things may become clearer once we get into September. 

However, it's also reasonable to assume that we might have some sort of denouement before then.

So we wait.

And as I send this off into cyberspace at 5:05 a.m. EDT, I see that there have been some interesting price movements in both gold and silver during early London trading, but their respective prices weren't allowed to get far---although silver is now back above the $20 spot price once again, but who knows for how long.

Volumes in both metals are up quite a bit from where they were about ninety minutes ago, but are still very much on the lighter side.  It's obvious that 'da boyz' are having little difficulty keeping prices under control with such low volumes.  So, like Monday's price action, one shouldn't read too much into what's going on right now except for the fact that gold and silver prices are being capped once again.

Platinum isn't doing much---and there was absolutely no follow-through on the big run-up in palladium prices when Zurich opened at 9 a.m. Europe time.

Of course, it's always what happens in New York that matters---and I'll be very interested in what the Kitco charts show when I roll out of bed later this morning.

That's all for today, which is more than enough---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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