Friday, December 27: Today in Gold and Silver

NEW YORK ( TheStreet) -- With a lot of the markets in the West still closed on December 26 for the Boxing Day holiday, it was very quiet in Far East and London trading yesterday, as the gold price traded in a tight range either side of the $1,200 spot price mark.

But once trading began in New York at 8:20 a.m. EST yesterday morning, a rally began that either ran out of gas or got capped in pretty short order.  The high of the day came at, or just before, the London p.m. gold fix---and gold got sold down quietly for the rest of the day from that point onward.

The CME recorded the low and high ticks in New York as $1,200.50 and $1,215.40 in the February contract.

The gold price closed at $1,211.20 spot, up $5.90 on the day.  And you can add the December 24 gain of $6.90 to that as well.  Not surprisingly, net volume yesterday was very light at around 62,000 contracts.

The rally in silver was similar.  The only differences were that the rally began about 20 minutes before the Comex open---and the rally obviously got capped at the 9:30 a.m. EST open of the equity markets as it broke above the $20 spot price mark.  After that it, too, got sold down as the Thursday trading session wore on, closing safely back below twenty bucks once again.

The low and highs were recorded as $19.415 and $20.03 in the March contract.

Silver finished the Thursday session in New York at $19.80 spot, which was up 30.5 cents from Tuesday's close.  Tuesday's gain was 3.5 cents.  Silver's net volume was pretty close to 19,500 contracts which, although light, wasn't that light, so it's obvious that the not-for-profit sellers had to dump a fair amount of paper silver into the Comex futures market to cap the rally.

The platinum and palladium prices popped at the Comex open as well, but met the same price fate as gold and silver---and at the same times.  Here are the charts.

Here's the three-day dollar index chart---which I wouldn't read a thing into.  And yesterday's rally in all four precious metals at the 8:20 a.m. EST Comex open had zero to do with the currencies.  The index closed at 80.51---which was down about eight basis points from Tuesday's close.

Naturally enough, the gold stocks gapped up at the open, but the party ended once the HUI broke through the 200 mark at the 10 a.m. EST London p.m. gold "fix"---and that was it for the day.  The stocks struggled to stay in positive territory at times, but did manage to close in the black, as the HUI finished up a meager 0.42%.  But not to be forgotten is the fact that the HUI closed up 3.03% on Tuesday.

It was pretty much the same for the silver equities, as they turned in a slightly better performance, but just barely, as Nick Laird's Intraday Silver Sentiment Indicator closed up 0.83% on Thursday.  On Tuesday, Nick's indicator was up 2.27%.

The CME Daily Delivery Report for Tuesday, December 24 showed considerable activity in gold, as 506 contracts were posted for delivery for sometime today.  The short/issuers of note were Jefferies and Canada's Bank of Nova Scotia with 322 and 101 contracts respectively.  Not surprisingly, the report also showed that JPMorgan Chase was the stopper on 501 of those contracts, all in its in-house [proprietary] trading account.

There were only six silver contracts posted for delivery---and JPM stopped four of them.

The CME's Daily Delivery Report for yesterday, showed that nine gold and 33 silver contracts were posted for delivery on Monday.  JPMorgan stopped all nine gold contracts---and 20 of the silver contract---all in its in-house [proprietary] trading account.  The link to yesterday's Issuers and Stoppers Report is here.

With the exception of a handful of contracts, that should just about do it for the December delivery month in both gold and silver.  First Day Notice for the January delivery month is upon us already---and the numbers will be posted on the CME's website late on Monday evening EST.  January is not an overly big delivery month in either metal.

There were no reported changes in GLD on the day before Christmas, but an eye-watering 4,187,436 troy ounces of silver were withdrawn from SLV.  That's an awful big withdrawal to be of the "plain vanilla" liquidation variety---and I'll be interested in what Ted B. has to say about it in his Saturday column.

But there was a withdrawal from GLD on Thursday, as an authorized participant took out 48,222 troy ounces.  And as of 6:13 p.m. EST yesterday evening, there were no reported changes in SLV.

Joshua Gibbons, the "Guru of the SLV Bar List" had this to say in his weekly update for SLV:  " Analysis of the 25 December 2013 bar list, and comparison to the previous week's list---No silver was added, removed, or had a serial number change.  As of the time that the bar list was produced, it was overallocated 734.0 oz.  4,187,436.4 troy ounces were removed on Tuesday, but not yet reflected on the bar list."  The link to Joshua's website is here.

The good folks over at the Internet site updated their short interest numbers for both SLV and GLD as of mid-December---and here's what they had to report.  The short interest in SLV rose by 10.58% since the first of the month---and now stands at 20,376,400 shares/troy ounces.  That works out to just under 634 metric tonnes of the stuff.  That's 10 days of world silver production that should be on deposit with SLV, but isn't.  About 6.1% of all SLV shares outstanding have been sold short.

The percentage sold short in GLD over the same period of time increased by 7.03%.  The short interest in GLD now stands at 23,236,900 shares, or 2.32 million troy ounces, or a bit over 72 tonnes.  About 8.7% of all GLD shares outstanding have been sold short, which is outrageous.

As Ted Butler says, because of their very nature, no precious metal fund should ever allow its shares to be shorted.  Not one of these shorted shares in either SLV or GLD have any metal backing them at all.

The U.S. Mint had a smallish sales report since Monday.  They sold 4,000 troy ounces of gold buffaloes---and that was all.

I don't have the in/out activity for Monday at the Comex-approved depositories in either gold or silver.  There's no historical data---and the previous day's numbers are overwritten with the current day's data---and I didn't write anything down.

And, not surprisingly, there wasn't much in/out activity in gold on Tuesday.  The Comex-approved depositories only reported receiving 8,005 troy ounces off the stuff---and nothing was shipped out.  There was no in/out activity at all in silver.

Because of the holidays, I don't have that many stories for you today, so I hope you can find time to skim them all.

¤ The Wrap

It was another extremely active week in the movement of metal into and out from the Comex-approved silver warehouses. More than 5 million ounces were physically moved [last] week, as total silver inventories rose another 2 million oz to 173 million ounces. This is the highest level of Comex silver inventories in many years, but the real story is in the movement, not the total. This incredibly active physical turnover is unique to Comex silver.

There is no plausible explanation I can come up with other than it indicates that the vast bulk of Comex silver inventories are not available for sale at current prices and this necessitates new silver be deposited to satisfy demands for withdrawal. The active churn of silver coming and going in the Comex warehouses points to a much tighter wholesale market than the illegally-set prices on the Comex futures market would indicate. - Silver analyst Ted Butler: 21 December 2013

Even though volume wasn't overly heavy, the price action in all four precious metals at the Comex open yesterday morning in New York was certainly enough for most investors to stand up and take notice---and is one of several reasons why I have a column today.

It was equally obvious that JPMorgan et al were standing at the ready to cap the prices the moment it became apparent that the market was about to go "no ask".  But capping the price wouldn't have been an onerous task on such a light-volume day.  Unfortunately, yesterday's price action won't be included in the Commitment of Traders Report that's due out on Monday.

I was just browsing around over on Nick Laird's website--- I discovered something rather unusual about the Comex silver warehouse stocks.  There are currently six Comex-approved depositories for silver, but only three of them are showing any activity worthy of the name.  They are: the newest depository---CNT, JPMorgan Chase---and Canada's Bank of Nova Scotia/Scotia Mocatta.  The other three depositories, Brinks, Inc., Delaware and HSBC USA are basically flat over the last few years.  Here are the charts for the first three, as the other three are immaterial.

I've posted the above JPM Chase chart before---and made the observation that they started adding to their silver depository almost on the precise day of the drive-by shooting in silver on May 1, 2011---and that it was hardly a coincidence.  I'm still of that opinion today.

As for what these charts mean in the grand scheme of things is still unknown, but it seems odd that only half of the Comex depositories in silver are active to any degree and, until recently, two of them didn't even exist---and those two have had almost 58 million ounces of silver deposited in them since their respective inceptions.

All was quiet in Far East trading on their Friday morning.  Prices weren't doing much---and volumes, which I thought were light on Thursday at this time, were microscopic in both metals by comparison as of 1 p.m. Hong Kong time.  The dollar index, which did nothing all week, headed south to the tune of about 20 basis points starting around 9 a.m. Tokyo time on their Friday morning.  Of course, this face plant in the currencies had zero impact on precious metal prices.

And as I send this off to Stowe, Vermont at 4:35 a.m. EST this morning, the smallish rallies in all four precious metals that began around 1:30 p.m. Hong Kong time, all got met by a seller of last resort very shortly after the London open.  Not surprisingly, volumes have picked up quite a bit, but are still very light for this time of day.  The dollar index has really taken a header---and is now down about 48 basis points and just barely above the 80 mark---so I would guess that the rallies in the precious metals had something to do with the currency move.  But, as you can tell from the price "action", that means nothing when "da boyz" are out and about, however palladium is bucking that trend, at least for the moment.

I'm sure you've received notification about this from Casey Research already, but I see that they've opened the ultra-exclusive Casey's Club for a very short period of time.  It has a very high sticker price, but as I've said countless times in this column--- quality investment advice pays; it never costs.  If you have an interest, the link to all you need to know is here.

With today being Friday, I won't hazard a guess as to how the rest of the trading day will unfold, but nothing would surprise me once the Comex opens for business at 8:20 a.m. EST this morning.

That's all I have for today.  I'll have a column tomorrow, but there probably won't be much in it---and I'll see you then.

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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