Thursday, February 27: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price chopped a few dollars lower in morning trading in the Far East on their Wednesday.  Then, starting shortly after 1 p.m. Hong Kong time, the price rallied until minutes before 3 p.m.---and an hour before he London open.  That turned out to be the high of the day.  After that, the engineered price decline which began at that point, continued up until 11 a.m. EST, which was the London close.  From there, the gold price rallied until 15 minutes before the Comex close---and then traded more or less sideways into the 5:15 p.m. EST electronic close.

The CME Group recorded the high and low ticks as $1,345.60 and $1,322.30 in the April contract.

Gold closed at $1,329.80 spot, down $11.80 from Tuesday's close.  Volume, net of February and March was very decent at 154,000 contracts.

The silver price action was a virtual carbon copy of the gold chart above, with the high tick also coming an hour before the London open---and the low tick of the day coming a few minutes before 11 a.m. EST.  The subsequent rally also lasted until 1:15 p.m.---and the silver price got quietly sold down from there into the electronic close.

The high and lows ticks were printed at $22.035 and 21.11 in the March contract---an intraday move of over 4%.

Silver finished the Wednesday trading session at $21.25 spot, down 67.5 cents from Thursday.  Gross volume was monstrous, but net volume was only 1,000 contracts.  All the big traders in Comex futures had to be out of the March contract yesterday---unless they were standing for delivery---and all the rest have to be out by the 1:30 p.m. EST Comex close today.

The platinum price didn't do much until the noon silver fix in London---and then received the same treatment as gold and silver, except for the fact that the selling didn't end until around noon in New York.  Platinum traded flat until mid-morning in London---and then proceeded to lose a percent over the remainder of the Wednesday trading session.  Here are the charts.

The dollar closed on Tuesday at 80.135---and continued lower until it's 80.10 low around 9:20 a.m. in London.  The subsequent rally topped out around the 80.52 mark about 12:45 p.m. in New York---after that the index got sold down a bit into the close.  The index finished the day at 80.41---which was up about 28 basis points from Tuesday's close.

The gold stocks gapped down about a percent at the open, hitting their low tick shortly before noon in New York---and about an hour after the gold price hit its low of the day.  From that low, the gold shares chopped slightly higher as the day wore on, but the HUI still finished down 1.52%.  It could have been far worse.

It was more or less the same chart pattern in the silver equities, although their low tick didn't materialize until around 2:30 p.m. in New York.  They didn't do much after that, as Nick Laird's Intraday Silver Sentiment Index closed down another 2.19%.

The CME's Daily Delivery Report showed that 30 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Friday. Canada's Bank of Nova Scotia issued 29 contracts---and Barclays stopped 22 of them. And, except for maybe a handful of contracts in gold, that should pretty much do it for the February delivery month.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes to GLD, but there was a deposit made into SLV, as an authorized participant added 1,442,724 troy ounces.

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

Over at the Comex-approved depositories on Tuesday, they reported receiving 6,430 troy ounces of gold---and shipped 20,826 troy ounces out the door.  All the activity was at Canada's Scotiabank warehouse.  The link to that activity is here.

There was far more activity in silver, of course, as 924,279 troy ounces were reported received---and 125,564 troy ounces were shipped out the door for parts unknown.  The link to that action is here.

I have the usual number of stories for a mid-week commentary---and I hope you have time to read the ones that interest you.

¤ The Wrap

A more recent example of the disconnect between physical fundamentals and pricing can be seen in data from the U.S. Mint. While the price of silver has been lackluster compared to gold on a relative basis, the opposite condition exists in the sales of Silver Eagles vs. Gold Eagles. For the first two months of this year, Silver Eagle sales have never been higher relative to Gold Eagle sales. And this follows 2013, where the sales of Silver Eagles not only set an all-time record, but also set a record relative to Gold Eagles. So far, this year Silver Eagles are way ahead of last year’s record relative pace. For the first time ever, more total money is being spent on Silver Eagles than on Gold Eagles.

I understand that retail demand is different than wholesale and that Eagle sales from the US Mint are mostly retail. But I also believe that the U.S. Mint, by virtue of its booming sales of Silver Eagles the past few years, has become the largest silver user in the world. I’m not sure who exactly is buying all these Silver Eagles, as retail demand has not been robust until the past couple of weeks, but suspect it may be a large entity (like JPM). Certainly, the US Mint has been rationing Silver Eagles, while that has not been the case with Gold Eagles. With such pronounced relative demand for silver versus gold, it’s as if the record demand has no bearing on price. That’s because the pricing mechanism for gold and silver is separate from actual supply/demand considerations. - Silver analyst Ted Butler: 25 February 2014

I must admit that yesterday's price action, although depressing to watch, came as no surprise---and as you are already aware, I'd been expecting it---and had written about it nearly every day for the last week.  Still, it never feels good when JPMorgan et al show up and begin their engineered price onslaught in all four precious metals.

The only questions remaining are---how long will it take and when will it end?  Will it happen quickly, or will they "slice the salami" a bit every day for months on end---or is the worst already over?  It's impossible to know---and yesterday's price action occurred the day after the cut-off for tomorrow's Commitment of Traders Report, so we'll have to wait until the report on March 7 to get a clue as to what happened on Wednesday.  There are still four more days left in the reporting week for that report---and anything can happen between now and then.

Here's the three-month silver chart---and you can see how big a move we had to the downside compared to the rally in silver to date.

The three-month gold chart doesn't look as bad, so we have miles to go to the down side, if that's what JPMorgan has in mind.

The 200-day moving averages in both gold and silver aren't that far away, but their respective 50-day moving averages are a good distance off---and it remains to be seen how low "da boyz" push the prices and ring the cash register as they go along.

In Far East trading on their Thursday, all four precious metals got sold down to new lows at 11 a.m. Hong Kong time---but have recovered a bit since.  As I write this paragraph, the London open is still a bit over an hour away---and volumes are nothing special in either gold or silver---and most of the volume in silver is now in the new front month, which is May.  The dollar index hasn't done a thing since its close in New York yesterday afternoon.

As I said in this space yesterday, the First Day Notice numbers for the March delivery month will be posted on the CME's website later this evening EST---and the Issuers and Stoppers Report will be of great interest, at least to me.  I'll report on it in tomorrow's column.

And as I put the finishing touches on today's column at 5:20 a.m. EST, all four precious metals are off either their Far East lows, or early London lows---and are inching higher.  Volumes in both gold and silver have picked up substantially, with almost all of gold's volume being of the HFT variety.  There is roll-over action in silver out of the March contract, with today being the last day for that, but it's becoming an-ever smaller percentage of the total volume, as volume in the May contract is up sharply as well.  And the dollar index, which hadn't been doing anything earlier, began to rally around 3:20 p.m. Hong Kong time, which was about 40 minutes before London opened.  At the moment, the index is up 13 basis points.

With the March contract going off the board today, along with month end tomorrow, it's anyone's guess as to what the remainder of February's price action is going to be like.  I'm voting for up, but with JPMorgan et al obviously still around, nothing will surprise me, nor should it you.

That's it for another day, and I'll see you 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.

More from Gold

Commodities Surge as Energy Stocks Lead Market Higher

Commodities Surge as Energy Stocks Lead Market Higher

Enjoy This Market Hoorah Before the Worst Correction of Your Lifetime

Enjoy This Market Hoorah Before the Worst Correction of Your Lifetime

With Everything Going On, Why Is Gold Not Higher?

With Everything Going On, Why Is Gold Not Higher?

Kevin O'Leary: Stay Away From Gold Miners, Hold Bullion

Kevin O'Leary: Stay Away From Gold Miners, Hold Bullion

Surprisingly, Higher Gold Prices Aren't Being Driven By Fears of War With Russia

Surprisingly, Higher Gold Prices Aren't Being Driven By Fears of War With Russia