Precious metal shares get hit as seller of last resort appears. Another withdrawal from GLD, but no reported changes in SLV. The U.S. Mint has another sales report. No in/out movement in gold on Monday within the Comex-approved depositories, but huge in/out moment in silver once again.
NEW YORK ( TheStreet) -- The gold price didn't do much in Far East trading, but got sold down a few dollars beginning at the London open. The rally that developed about 12:30 GMT, got stopped in its tracks at exactly 10:30 p.m. EST in New York---and 45 minutes later a not-for-profit seller peeled about ten bucks off the price in just a few minutes. After that, the gold price traded more or less sideways into the 5:15 p.m. EST electronic close. According to the CME Group, the high and low ticks were $1,254.90 and $1,241.10 in the February contract. Gold closed in New York yesterday at $1,245.00 spot, down $7.40 from Monday's close. Net volume was pretty light at only 102,000 contracts. Here's the New York Spot Gold [Bid] chart on its own so you can see the Comex price activity up close and personal. The price action in silver on Tuesday was virtually identical to gold's---with the high tick also coming at precisely 10:30 a.m. in New York---with the HFT coup de grâce occurring at 11:15 a.m. EST as well. The rally off the New York low that followed, wasn't allowed to get too far. The high and low prices for silver were reported as $20.67 and $20.125 in the March contract. Silver closed at $20.255 spot, down 15 cents from Monday's close. Volume, net of January and February, was very heavy at 55,500 contacts. Here's the New York Spot Silver [Bid] chart---and you can tell that the short seller of last resort was working both market simultaneously---and to the split second. The chart patterns in both platinum and palladium were similar as well. "Da Boyz" were leaving nothing to chance. The dollar index closed on Monday at 80.56---and then, like Monday, chopped sideways within a 20 basis point range for all of the Tuesday trading session. The index closed at 80.67---which was up 11 basis points on the day. The gold stocks started in the red, but quickly rallied into positive territory, with the high of the day coming shortly before 11 a.m. in New York trading. Of course they got sold back into the red when JPMorgan et al showed up at 11:15 a.m. EST---and then continued to weaken as the day progressed. The HUI finished down 1.71%. The silver equities had a similar chart pattern, except their fall from grace, starting at the same 11:15 a.m. EST, was much more pronounced than the gold stocks, as Nick Laird's Intraday Silver Sentiment Index closed down 2.79%. The remainder of the January delivery month is living up to its advance billing, as only 2 gold and 1 silver contract were posted for delivery within the Comex-approved depositories on Thursday. Unless a surprise delivery is requested, the rest of the month should be a real snooze fest. Surprisingly enough, there was another withdrawal from GLD yesterday. This time it was 114,614 troy ounces. Like the 1.9 million ounce silver withdrawal out of SLV on Monday, you have to wonder where the metal is going---and why---because the price action in both gold and silver over the last four or five business days indicates that the metal should be moving into these ETFs, not being shipped off to parts unknown. By the way, as of 10:03 p.m. EST yesterday evening, there were no reported changes in SLV. The U.S. Mint had another sales report yesterday. They sold 4,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 191,000 silver eagles. Over at the Comex-approved depositories on Monday, there wasn't a single solitary troy ounce of gold either shipped in, or shipped out. However, the activity in silver made my eyes water once again, as 599,806 troy ounces were reported received---and a monstrous 1,851,329 troy ounces were shipped out for parts unknown. None of the in/out activity involved JPMorgan Chase. The link to that action is here---and it's worth a look. I have the usual number of stories for you today---and I'll happily leave the final edit up to you.
¤ The Wrap
Let me define a flash crash as a sudden (within seconds or minutes) large price move (2% to 3%) in which after the sudden price move the price flat-lines and tens of thousands of Comex futures contracts are transferred from technical funds to commercial traders. Certainly, stop orders are triggered by the sudden move---and just as certainly, the subsequent COT data will confirm the continuous pattern of tech fund buying on up flash crashes and tech fund selling on down flash crashes (with the commercials as the counter-parties). I guess there could be some debate (not in my mind) as to who was zooming whom; technical funds or commercials, but there can be no debate about the actual cause and effect of flash crashes. Whether up or down, the flash crashes have nothing to do with gold or silver production or consumption or real investment; they are simply the result of a private betting war between traders that number no more than 50 on either side of Comex gold and silver. - Silver analyst Ted Butler: 11 January 2014 It was obvious that short covering rallies of some consequence, especially in silver, got nipped in the bud at precisely 10:30 a.m. EST in New York yesterday. About an hour later, their respective prices were well below where they began trading at the 8:20 a.m. Comex open. If I had to guess, I'd say that JPMorgan was selling long contracts in gold---and going even shorter than they already are in the Comex futures market in silver. Yesterday, at the close of trading, was the cut-off for this Friday's Commitment of Traders Report. Ted Butler is already suspecting that we'll see pretty impressive increases in the Commercial net short positions in both silver and gold, as JPMorgan appears to have stepped in front of these budding rallies with a surprising amount of aggression. From what I see in front of me now, these rallies are going to "fail" at their respective 50-day moving averages. Of course I reserve the right to be wrong, but as I've said on many similar occasions over the years, "I've seen this movie before---and it has turned out this way every time." We'll see if the current scenario ends the same---and we'll find out pretty quick I would think. Gold and silver both gold sold down a bit in early morning trading in the Far East on their Wednesday---but both are making a slight recovery in the afternoon.---and as I write this paragraph, the London open is still 90 minutes away. Volumes are very light----and the dollar index is up about 15 basis points. And as I type this paragraph at 4:42 a.m. EST, I see that all four precious metals came under more selling pressure at the London open---and then again an hour later at 9 a.m. GMT. Not surprisingly, volumes have picked up quite a bit, but virtually all of it is in the front months, so it's almost all of the HFT variety, which certainly fits with the current price action. The dollar index has risen a bit more---and is just under the 81.00 mark. Gold is down nine bucks---and silver is down two bits and hanging on to the $20 spot mark by its proverbial fingernails. I'm not expecting great things when I power up my computer later this morning. I'm off to bed---and I'll see you here tomorrow.