Wednesday, February 19: Today in Gold and Silver

NEW YORK ( TheStreet) -- As I mentioned in The Wrap yesterday, the tiny rally at the open of New York trading at 6 p.m. on Monday ran into not for profit sellers right from start---and the low of the day looked like it was in at the 10:30 a.m. GMT  London morning gold fix on their Tuesday.  A rally began at 1 p.m. GMT, which was 20 minutes before the Comex open---and the gold price worked its way higher until the London p.m. gold fix.  From there the rally lost a lot of steam, with the New York high coming minutes after the Comex close.  From there there the price declined a few dollars into the close of electronic trading.

The CME Group recorded the high and low ticks at $1,332.40 and $1,312.30 in the April contract.

Gold finished the Tuesday trading session at $1,322.30 spot, down $6.90 from Monday's close.  Volume, net of February and March, for both Monday and Tuesday combined was 194,000 contracts.

The silver chart was somewhat similar---except for the fact that the 10:15 a.m. GMT slam-down in London was much more obvious in this metal than it was in gold.  Also, the rally that began in silver at 1 p.m. GMT in London slowed down just a little once the London p.m. gold fix was in---and silver came close to finishing on its high of the day.

The low and high for silver yesterday were recorded at $21.315 and $21.98 in the March contract. Once again, silver was denied the $22 price mark.

Silver closed yesterday at $21.96 spot, up 12.5 cents from Monday's close.  The gross volume for the two days of trading was a bit over 122,000 contracts---and net volume was a very chunky 72,000 contracts. I would sure have loved to have seen what the COT Report in silver looked like at the close of Comex trading yesterday---but we'll have to wait until Friday for that, as yesterday was the cut-off.  One can only hope that all of yesterday's trading data will be reported to the CFTC in a timely manner.

The platinum and palladium charts had similar price patterns to gold and silver on Tuesday, as they weren't spared by the HFT boyz in Far East trading on their Tuesday morning, either.  Both metals finished down on the day.  Here are the charts.

The dollar index closed on Monday at 80.13---and when it opened in Far East trading on Tuesday morning, it didn't do much until 11 a.m. Hong Kong time.  From there it rallied up to its 80.22 high of the day.  From that point it didn't do much until 1 p.m. GMT, which was 8 a.m. in New York.  At that point the index headed south---and the precious metals headed north.  The 79.97 low in the dollar index came shortly after 9 a.m. EST---and only recovered a handful of basis points going into the close, finishing the Tuesday session at 80.005.  Except between 8 and 9:15 a.m. EST, there was little, if any correlation between what the precious metals were doing---and the actions of the dollar index.

The gold stocks gapped up over a bit over a percent at the open, but that only lasted for a few minutes.  The low [in negative territory] came around 11:25 a.m. EST---and from there the gold stocks chopped slowly higher for the remainder of the day---and back into positive territory.  The HUI finished up 0.75%.

Unlike the gold stocks, the silver equities were in positive territory all day long on Tuesday, hitting their highs shortly after 1 p.m. EST.  From there they sold down a bit into the close.  Nick Laird's Intraday Silver Sentiment Index closed up a very decent 2.15%.

The CME's Daily Delivery Report showed that 23 gold and 7 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  The biggest issuers and stoppers in both metals were "all the usual suspects"---and the link to that report is here.

Surprisingly enough, there were no reported changes in GLD yesterday---and it's a very good bet that they are owed a lot of metal, especially after the surprise withdrawal on Friday.  But in silver, there was a big deposit.  This time an authorized participant, or more than one authorized participant, added 3,847,744 troy ounces.  Don't forget that over 1.9 million troy ounces of silver was withdrawn last Friday as well, so I'd guess that SLV is owed more metal as well.

The U.S Mint had a decent sales report to start the holiday-shortened week.  They sold 2,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 654,500 silver eagles.

While on the subject of retail bullion sales, I can tell you that business has been brisk at the bullion store lately.  We're selling a lot of silver, but gold sales are way up in the last month.

Over at the Comex-approved depositories on Friday, they reported receiving 38,256 troy ounces of gold---and didn't ship any out.  The link to that activity in here.

As is always the case, it was much busier in silver at these same warehouses on Friday.  They only reported receiving 15,015 troy ounces, but shipped out a very large 1,136,107 troy ounces.  The link to that action is here.

I have the usual number of stories for a mid-week column---and the final edit is yours, as always.

¤ The Wrap

You have enemies? Good. That means you’ve stood up for something, sometime in your life. - Winston Churchill

For the second day in a row the precious metals ran into not-for-profit selling almost as soon as trading began in the Far East.  Trading action such as we witnessed before the London open on both Monday and Tuesday is not normal, as no "for profit" seller ever unloads a long position for maximum gain the way these sellers are dumping Comex futures contracts on the market during this time period.

A normal trader exiting a large long position feathers their sales into a rally---and enters and leaves without causing a ripple.  The sellers here are not attempting to make a profit, they are selling for the sole reason of influencing prices to the downside.

Now that both silver and gold have broken---and closed above---their respective 200-day moving averages, the not-for-profit sellers are there trying to break this rally any way they can.  In this case, the not-for-profit sellers are the high-frequency traders of JPMorgan et al.

The only question remaining is whether they can do it or not, and engineer another price decline---ringing the cash register in the process---just like they've been doing for as long as I can remember.  Of course the RSI in both gold and silver is well into overbought territory---and that is a telling indicator most of the time.  Here are the 6-month gold and silver charts updated with yesterday's data.

I note the same price pattern once again during Far East trading today, on their Wednesday.  There was no follow-through rally from events in New York, just selling right from the 6 p.m. EST open on Tuesday evening, which is the beginning of Wednesday trading in Tokyo.  All four precious metals got sold down, with the lows coming shortly after 1 p.m. Hong Kong time.  But with the London open 30 minutes away as I write this paragraph, the precious metals are rallying a bit.  Volumes are about average at the moment, but most of it occurred by 1 p.m. Hong Kong time---as the volumes have been pretty light since then.  The dollar index isn't doing a thing.

And as I send this off to Stowe, Vermont at 5:15 a.m. EST, three of the four precious metals are still struggling below their closing prices in New York yesterday afternoon.  Volumes in both silver and gold are now quite high---and virtually all of it is of the HFT variety.  The dollar index is waffling around unchanged---and barely back above the 80.00 mark.

I'm certainly cheering for a continuation of the current rally, but the price action and associated volume not only currently, but during the first two days of this week, certainly hints at the possibility that we've seen a short-term top.  And as I said the other day, if we do get an engineered price decline, it shouldn't last long---and should be considered a buying opportunity.  And as I also said, I'd be delighted to be proven wrong.  But whichever way the trend unfolds, we shouldn't be left in suspense for too long.

That's it for today.  I'm off to bed---and I'll see here tomorrow.

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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