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Wednesday, August 27: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price showed signs of life in early morning trading in the Far East on their Tuesday---and was up more than ten bucks by around 12:45 p.m. Hong Kong time.  Then about an hour and a half after that, the price looked like it was about to run away to the upside until JPMorgan et al showed up with their HFT algorithms and, as I mentioned in The Wrap on Tuesday, the high of the day was in at the London open.  And except for a capped rally at the Comex open, the gold price slid down hill for the remainder of the day.

The low and high ticks were recorded as $1,275.70 and $1,291.90 in the December contract.

Gold closed on Tuesday in New York at $1,280.60 spot, up only $4.40 on the day after "da boyz" got through with it.  Net volume was 97,000 contracts, which wasn't overly heavy, but a good chunk of that was used to put out the rally fires at the London and New York opens.

Silver followed a similar path to gold, but the rally at the London open was much more anemic, with the real fireworks starting shortly before 1 p.m. BST---and within ten minutes of the Comex open, JPMorgan et al had capped the price and, like gold, it was all down hill from there.

The low and high ticks in silver were reported by the CME Group as $19.305 and $19.66 in the September contract.

Silver closed yesterday at $19.355 spot, up 1 cent from Monday.  Only the willfully blind wouldn't admit the price management that was self evident in the silver market yesterday.  One wonders how much more egregious it can get before they do.

Platinum and palladium both had rally attempts at the London and New York opens---and they, too, got dealt with in a similar fashion.  Both finished down on the day---platinum by 6 bucks and palladium by five.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 82.58---and then chopped around in a 25 basis point range for the entire Tuesday trading session.  The 80.45 low came at 2:30 p.m. Hong Kong time---and the 82.69 high came around 2:40 p.m. in New York.  It closed at 82.67---up 9 basis points on the day.  Here's the 3-day chart so you can see the action.

The gold stocks gapped up a percent and change at the open---and then began to work their way higher starting around 10 p.m. EDT.  Then from 3 p.m. onward, they traded flat.  The HUI finished up 2.28%.

The silver equities had a very similar price path as the gold stocks---and Nick Laird's Intraday Silver Sentiment Index closed up 2.45%.

I was rather amazed to see the gold and silver equities rise for most of the trading session, while the underlying metals headed south at the same time.

The CME Daily Delivery Report showed that 46 gold and 1 silver contract were posted for delivery within the Comex-approved depositories on Thursday.  Morgan Stanley and ABN Amro issued---and HSBC USA and Scotiabank stopped.  The link to yesterday's Issuers and Stopper Report is here.

The CME Preliminary Report for Tuesday's trading action showed that only 55 gold and 2 silver contracts are left for delivery in the August contract---and after you subtract the deliveries mentioned in the previous paragraph, the August delivery month is pretty much done.

There was another withdrawal from GLD yesterday.  This time it was 48,097 troy ounces.  And as of 9:57 p.m. EDT yesterday evening, there were no reported changes in SLV.

The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETF holdings as of the close of business on Friday, August 22.  Their gold ETF declined by 12,475 troy ounces---and their silver ETF shed 96,838 troy ounces.

The good folks over at the shortsqueeze.com Internet site updated their short position data for both SLV and GLD [as of the July 15 cut-off] late last night.  Their new report showed that the short position in SLV declined by 8.97 percent---from 17.37 million shares/troy ounces, down to 15.81 million shares/troy ounces.  I was expecting/hoping for more than that, but the numbers are what they are---and that's if all the deposits made during the reporting period were included.  There should be another big decline in the next report in two weeks from now, as 4.5 million ounces of silver have been reported added to SLV since the July 15 cut-off.

The short position in GLD went the other direction, increasing by 16.95 percent, from 1.15 million troy ounces, up to 1.35 million troy ounces.  This increase was probably of the 'plain vanilla' variety.  Regardless, the short position in GLD remains very low on an historic basis.

The U.S. Mint had another sales report yesterday.  They sold 3,500 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes---and 105,000 silver eagles.

It was very quiet in gold over at the Comex-approved depositories on Monday, as nothing was reported received---and only 321 troy ounces were shipped out.

Of course it was an entirely different kettle of fish for silver, as 890,790 troy ounces were reported received---and 600,040 troy ounces were reported shipped out.  The link to that action is here.

At the moment, I have a lot less stories for you than I did on Tuesday.  However, that could change as the evening progresses.

¤ The Wrap

Thanks to a heavy 2.7 million oz turnover [on Friday], the physical movement of metal into and out from the COMEX-approved silver warehouses exploded [last] week to 6.25 million oz, well above the torrid 4.5 million oz average turnover this year. Total inventories rose 2 million oz to 178.2 million oz, but total inventories are not the key story; this is all about the remarkable turnover over the past 3.5 years.

We have seen an increase in COMEX silver stocks of almost 80 million oz to current levels since 2011 and much of that might be explained by the liquidation of 60 million oz from the SLV starting in May 2011. But increases or decreases in total COMEX inventories are much less important to me today than the phenomenal turnover since April 2011. Since we’re no longer in a silver deficit, I expect total inventories to grow, all things being equal. But I never expected this frantic turnover, nor did I expect it to continue for as long as it has. - Silver analyst Ted Butler: 23 August 2014

Yesterday's blatant capping of gold and silver prices was obvious to most---and it's important to remember that if JPMorgan et al, along with their HFT algorithms, weren't standing in the way, we would have a market clearing even of biblical proportions not only in those two metals, but in platinum, palladium---and copper as well.

As Jim Rickards said so succinctly, the price management scheme is now so obvious, that the price manipulators should be absolutely embarrassed by what they're doing.  He would be right about that.

Here are the 6-month charts for both gold and silver, updated with Tuesday's price/volume data.

Gold and silver prices haven't been allowed to do much in the last four trading days, but as I said in this space yesterday, the Commitment of Traders Report is an ugly looking document, even factoring in the improvement over the trading week just past---which we won't see until Friday's report.  But as I've also said on many occasions, there will come a day when the COT Report doesn't matter.

As I write this paragraph, the London open is just under twenty minutes away.  The gold price has been sneaking higher all day in Far East trading---and is up about 4 bucks as of this writing.  Silver is up a few pennies, platinum up 9 dollars---and palladium a couple of bucks.  Gold volume is extremely light, under 10,000 contracts---and silver's net volume is microscopic at 1,000 contracts.  The dollar index, which hadn't done much for most of the Hong Kong session, is down 10 basis points in the last hour.

Taking a look at the CME Preliminary Report once again, I note that there are a bit over 500 contracts left to roll out of the September delivery month, but it's a reasonable assumption that a decent chunk of these will be standing for delivery.  I'll have a clearer picture in a couple of days.

In silver, September open interest is still way up there at 27,253 contracts---and except those future contracts holders standing for delivery on Friday's first notice day, the remainder of these contact holders have to sell or roll over into future months before the close of Comex trading on Thursday.  So there has to be decent volume during the next 48 hours to get that all done in time, but so far, the Wednesday volume is off to a real slow start.  All the large traders have to be out of their positions by the end of Comex trading today, so it's pretty much a given that volumes will increase significantly as the trading day progresses.

And as I hit the send button on today's effort, not much has changed in the first 90 minutes of the London trading session, as prices in all four precious metals have changed very little.  Gold volume is a bit over 14,000 contracts, which is very light for this time of day---and silver's net volume is now around 1,500 contracts, however there is decent roll-over activity now.  The dollar index is now down 15 basis points.

While on the subject of the dollar index, here's the 3-year chart---and as you can tell at a glance, the overbought condition is now extreme.  Sooner or later this condition has to reverse itself---and now it's only a matter of how soon we see some sort of sell-off to alleviate this overbought condition---and how low it goes when it does.

That's all I have 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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