Saturday, August 24: Today In Gold And Silver

NEW YORK ( TheStreet) -- Gold did virtually nothing price wise until minutes before the London a.m. gold fix.  At that point the price started to move sharply higher, and once the "fix was in" the gold price was up to $1,395 spot by 10:30 a.m. EDT.  From that point it traded basically flat, but began to slowly inch higher once Comex trading was done for the day at 1:30 p.m.

For a few minutes, the gold price actually poked its nose above the $1,400 spot price mark, but quickly got sold back below it, and from there traded sideways into the close.  Kitco reported the high tick as $1,401.40 spot.

Gold finished the Friday session at $1,397.80 spot, up $21.70 from Thursday's close.  Volume, net of August and September, was a very chunky 171,000 contracts, so this rally did not go unopposed.

It was more or less the same story in silver, except for the fact that there were two rallies of note during the New York trading session, the one right after the London p.m. gold fix, and the second one after Comex trading ended for the day.  The 2:20 p.m. EDT high tick checked in at $24.24 spot.

Obviously the silver price got sold down a bit from there, but still manged to close above the magic $24 spot price mark, at $24.08.  Net volume was pretty high at 50,500 contracts.

You'd never know that gold and silver had big rallies in New York yesterday if you were looking at the platinum and palladium charts as a guide, as both traded mostly flat, and both finished basically unchanged.  Here are the charts.

The dollar index opened on Friday in Far East trading at 81.48 and proceeded to chop sideways in a very tight range.  The spike high [81.66] came minutes after 9 a.m. in New York, and from there headed south in a hurry, hitting its nadir of 81.23 around 10:40 a.m. EDT.  The dollar nose dive and the price rally in gold happened more or less at the same time, but to say that the currency move caused the big rallies in gold and silver at the time, is more than a stretch, especially when you consider that it had zero impact on either platinum or palladium.

The gold stocks opened flat before taking off to the upside with the rally in gold that began shortly before the London p.m. gold fix.  By 10:40 a.m., the rally ended, and the the stocks traded sideways for the remainder of the day, before selling off a hair into the close.  The HUI finished up 2.81%.

With a such a resounding rally in the metal itself, I was expecting the silver equities to turn in a better performance that they did, as Nick Laird's Intraday Silver Sentiment Index closed up only 2.72%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 72 gold and 9 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  Canada's Bank of Nova Scotia was the short/issuer on 65 of those gold contracts, and as you probably already suspect, it was JPMorgan Chase in its in-house [proprietary] trading account that took delivery of 64 of them.  JPMorgan Chase was also the short/issuer on all 9 silver contracts.  The link to yesterday's Issuers and Stoppers Report is here.

There was a pretty large amount of gold deposited in GLD yesterday, as an authorized participant[s] added 212,482 troy ounces.  And as of 10:05 p.m. on Friday evening, there were no reported changes in SLV.  It's a good bet that the reason no silver is being added is because there just isn't any available for the authorized participants to buy without sourcing it on the Comex and driving the price to the moon and the stars.  Since the silver isn't available, the authorized participants [read JPMorgan] is shorting SLV shares in lieu of depositing the metal.

Without a doubt, Ted Butler will have more to say about this situation in his weekly review for his paying subscribers later today.

There was no sales report from the U.S. Mint yesterday.

Over at the Comex-approved depositories on Thursday, the only activity was a 20,809 troy ounce of gold transfer from Canada's Bank of Nova Scotia to the vaults of JPMorgan Chase.  This is just more gold that JPMorgan is finally taking delivery of in the physical form, and is a direct reflection of what's being reported in the CME's Daily Delivery Report four paragraphs up from this one.

Its the August delivery month for gold, and those entities [including that paragon of virtue, JPMorgan Chase]  that have stood for delivery in the Comex futures market, are now doing exactly that, and what you're observing is the natural order of things.  There's nothing mysterious or illegal about this process, but you'd never know it if you read the breathless tripe that passes as gospel, and posted yesterday on the Zero Hedge website yesterday.

Anyway, the link to yesterday's action in gold, is here.

In silver, these same depositories reported receiving 371,193 troy ounces of silver, and shipped a smallish 80,010 troy ounces out the door.  The link to that activity is here.

As expected the Commitment of Traders Report showed deterioration in the Commercial net short positions in both gold and silver.  That was the bad news.

The good news was that the deterioration wasn't anywhere nears as bad as either Ted or I expected it was going to be, particularly in silver

In silver, the Commercial net short position increased by only 3,000 contracts.  Under the hood, it was slightly worse as Ted Butler said the technical funds covered about 5,000 of their short contracts, and the Big 4 increased their short position by about 700 contracts.  It could have been far worse.

In gold the technical funds covered about 10,000 contracts of their short position, and all the selling was done by JPMorgan Chase, which sold about 11,000 of their long contracts.  Ted says that JPMorgan is down to a long position of 6.6 million ounces, or around 20 percent of the entire Comex futures market in gold on a net basis.

I'll have more to say about this in The Wrap at the bottom of today's column.

I have a reasonable number of stories for you today, and I hope you can find the time in what's left of your weekend to read the ones that interest you.

¤ The Wrap

There are no market anymore, only interventions. - Chris Powell, GATA

Today's pop "blast from the past" was a big hit when I was in Grade 11 back in 1965, and if you're of the vintage, you should remember it as well, as it's a classic for sure. The link is here.

Today's classical 'blast from the past' is something that I've posted before, but I heard it on CBC Radio 2 here in Edmonton when I was driving to work yesterday, and I couldn't get it out of my head after that.

Jules Massenet composed this piece as incidental music to his opera Thaïs, which was first performed in Paris on 16 March 1894.  The opera has faded into almost total obscurity since, although there have been attempts to revive it in recent years.  However, it's the " Méditation" that has survived in the concert halls of the world to this day, and the only composition still commonly associated with his name.  It's by far my most favourite encore piece for violin and orchestra, and I had the chance to fit it into the concert schedule of the Edmonton Symphony Orchestra on a couple of occasions when I was on their board of directors.  The audience melts when they hear it, and there's hardly a dry eye in the hall when it's over, as it just tears your heart right out.  Here's the incomparable Sarah Chang doing the honours, and you won't find a better performance anywhere.  The link is here.  Turn up the sound and enjoy!

I was astonished and very happy with what I saw when I turned on my computer yesterday morning.  That, coupled with a not-as-bad-as-expected Commitment of Traders Report, makes me believe that this rally really does have some legs after all.

I took a peek a the CME's preliminary volume and open interest numbers for Friday's price action, and gold's open interest was up less than 4,000 contracts, and silver's o.i. change was flat.  These were numbers I wasn't expecting, to see.  However, as I've stated before, I've learned from hard experience that these numbers can't be taken at face value, and it's only the final numbers that will show up in next week's COT Report that can be believed.  It seems like I'm always anxiously waiting for the next COT report by the time I've devoured the latest one, with yesterday's COT Report being a case in point.

Over the last couple of weeks JPMorgan Chase has been selling part of their massive Comex long position in gold into this rally in order to keep prices from rising too quickly.  I was sort of hoping that they would really let prices rip to the upside at some point, but that hasn't happened yet, as everything to date has been very orderly, for now, that is.

Here are the six-month charts for both gold and silver.  As you can see from the silver chart, the RSI is well into overbought territory, and gold's RSI is heading in that direction at a good clip as well.  As I've said on several occasions recently, it really is a mug's game trying to guess what happens from day to day, but it appears likely that we'll see substantially higher prices in all four precious metals before the 2013 calendar year breathes its last.

(Click on image to enlarge)

(Click on image to enlarge)

Next week is the last week of deliveries in the August delivery month for gold.  There are still 572 gold contracts left open, and as I said yesterday, it will be interesting to see who the short/issuer is that has waited until the last possible moment to announce their presence.

Next week is also the last trading week of the month, and it's very possible that there could be more price surprises in store for us then, as well.  First notice day for the September delivery month in silver will be posted on the CME's website late Thursday evening, and I'll have all the details for you in next Friday's column.

Before heading out the door, I'd like to remind you about the Casey Research 2013 Summit which is happening October 4 - October 6.  Some of the speakers include Dr. Ron Paul, Doug Casey, Donald Coxe, James Rickards, John Hathaway, John Mauldin, and Chris Martenson, so you can see that it's an ALL STAR LINEUP.

You save $100 if you register before August 31st, and you can find out all about it by clicking here.

That it for the day, and for the week.

See you Tuesday.

This is an abbreviated version of Ed Steer's Gold & Silver DailySign-up to have to the complete market review delivered to your email inbox each morning for free.


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