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Wednesday, August 13: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price got sold off five bucks in Far East trading on their Tuesday, with the low tick of the day coming shortly after 1 p.m. Hong Kong time.  The subsequent rally got capped at, or shortly after the London p.m. fix---and after that the HFT boyz spun the algorithms---and by the 1:30 p.m. Comex close had the spot price back to unchanged on the day.  After that, the gold price didn't do much.

The low and high ticks were recorded by the CME Group as $1,306.80 and $1,319.30 in the December contract.

Gold finished the Tuesday trading session in New York at $1,308.50 spot, up 60 cents on the day.  I thought it too cute for words that they closed gold exactly half way between its Friday and Monday closing prices.  I wonder if there was a prize for that?  Volume, net of August and September, was 110,000 contracts, which was not overly heavy.

Silver followed a similar path to gold, but the rally that commenced at 1 p.m. Hong Kong time did not make it to the London p.m gold fix, as the powers-that-be showed up ten minutes after the Comex open, with the low of the day being printed a few minutes before the Comex close---and also back below the $20 spot price mark.  After that, the silver price chopped sideways in a tight range into the 5:15 p.m. close of electronic trading.

The low and high ticks were reported as $19.875 and $20.155 in the September contract.

Silver closed at $19.915 spot, down 9.5 cents from Monday.  Net volume was reasonably light at 28,500 contracts.

Platinum and palladium also had smallish price rallies that began well before New York opened, but they met the same fate as gold and silver during the Comex trading session---and both got sold down off their highs, with platinum closing unchanged, and palladium finishing the day up two bucks.  Here are the charts.

The dollar index closed in New York late on Monday afternoon at 81.44.  From the open it traded flat, but jumped up a bunch of basis points around 9 a.m. in Hong Kong.  It traded as high as 81.65 by 10:30 a.m. BST in London, but by noon it as on its way lower, closing the New York session at 81.51, which was up 7 basis points on the day.

The gold stocks opened in positive territory---and moved higher right away, completely ignoring the price capping and sell off that began at 10:15 a.m. EDT. The gold stocks hung around their highs until about 12:15 before selling off a bit into the Comex close, but they still managed to turn in a strong positive showing, especially into the close, as the HUI finished up 1.88%.

The silver equities rallied along with the gold stocks, even though the silver price was long past its high at that point.  However, the high tick for the silver stocks came about the same time as gold's high---and by the 1:30 p.m. Comex close, and silver's low tick of the day, the silver equities were back in negative territory.  But they, like their golden brethren, manage to  rally a bit---and Nick Laird's Intraday Silver Sentiment Index eked out a tiny gain of 0.16%.

The CME's Daily Delivery Report showed that 15 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  Nothing to see here.

The CME's Preliminary Report for Tuesday trading shows that there are still 1,284 gold contracts open in the August contract, so it appears that more deliveries will be posted before the end of the month and, as always, I'll be interested in seeing who the issuers and stoppers are.

There were no reported changes in GLD--and as of 10:13 p.m. yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had another tiny sales report yesterday.  They sold 50,000 silver eagles---and that was it.

It was another huge day in gold at the Comex-approved depositories on Monday, as 221,109 troy ounces were reported received---and nothing was shipped out.  All of the activity was at HSBC USA and Brink's, Inc.  The link to that activity is here.

There has been a lot of big movements in gold during the last couple of weeks---and most of it has been receipts.  I'm not sure what to make of it, as it has nothing to do with deliveries, because there are only 1,284 contract still open in the August.  Of course more could be added between now and the end of the month, but if that turns out to be the case, nobody will be more surprised than I---and I'm hoping that Ted Butler will weigh in on this issue in his mid-week column later this afternoon.

There was real decent in/out activity in silver, as 600,165 troy ounces were reported received---and 628,539 troy ounces were shipped out.  The in activity was at Canada's Scotiabank---and the silver was shipped out of Brink's, Inc.  The link to that action is here.

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

¤ The Wrap

Adding to the unusual pattern of COMEX silver warehouse turnover, there was an unusual (at least to me) deposit of nearly 3 million oz this [past] week in the big silver ETF, SLV. I say unusual because silver price action has been punk---and I would have suspected that the SLV would have experienced withdrawals and not deposits, thus continuing the counterintuitive pattern I wrote about recently. Don’t get me wrong, I’d rather see deposits in SLV than withdrawals, but most of all, I’d prefer to see a logical pattern of both.

The most plausible explanation for metal coming into SLV at this time amid weak price action and lackluster trading volume is, of course, that the deposit was made to reduce the short position in SLV shares which has been increasing recently. The short share reduction due to this week’s deposits [wasn't] reflected in Monday’s new short sale report because the cut-off for the report was July 31. But the important takeaway is that it is highly likely that the metal that came into SLV [last] week wasn’t available when the short sales were originally made. This would seem to confirm my premise of physical silver tightness, as is seen also in COMEX warehouse movement. Maybe 1 + 1 does equal 2 after all. - Silver analyst Ted Butler: 09 August 2014

It was the second day in a row that all four precious metals, with the exception of palladium on Monday, ran into sellers of last resort during the Comex trading session.  Once again volumes were on the lighter side, so it was not a difficult matter to keep prices from getting out of hand to the upside, which is very much what they wanted to do---not only yesterday and Monday, but just about any day you care to mention.

Here are the 6-month charts for both gold and silver once again---and, once again, nothing has changed.  But I'm still impressed by the performance of the precious metal shares in light of this less than impressive price action in the underlying metals themselves.  However, I don't want to read too much into that at the moment, although I am encouraged.

As I write this paragraph, London has been open about ten minutes---and not much happened in the precious metals during the Far East trading day on their Wednesday---and the same can be said in the first few minutes of the London trading session as well.  Gold volume is barely 10,000 contracts---and silver's net volume has yet to break through 3,500 contracts, so it's very quiet out there.  The dollar index is chopping around the unchanged mark.

Yesterday was the cut-off for this Friday's Commitment of Traders Report.  I would guess from looking at the two charts posted just above, that there will be very decent deterioration in the Commercial net short position in gold---and silver should be mostly unchanged.  But never forget for one second that we are well into the danger zone for an engineered price decline, especially in silver.  Having said that, there's nothing stopping JPMorgan et al from letting prices run higher to get more brain dead tech fund 'Managed Money' mice in the trap before they reach for the handle.

So we continue to wait.

And as I send this out the door at 4:45 a.m. EDT, there's still nothing going on from a price perspective in any of the precious metals.  Gold volume has increased by 60 percent in the first ninety minutes of the London trading session---and silver's volume is up a bit more than 40 percent.  But at such low volume levels, it doesn't mean a whole heck of a lot.  The dollar index is up 9 basis points.

As usual, it's the trading action in New York that matters most.

That's it for today.  I'm off to bed---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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