Tuesday, March 4: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price was up sharply at the 6 p.m. open on Sunday evening in New York, but the sellers of last resorts were also there as well.  Volume was immense, so the long buyers had no trouble finding a willing short seller to take the other side of the trade.  By the London open, volume was almost 50,000 contracts---a monstrous number.  The gold price hit its high 15 minutes after London closed for the day---and the gold price got sold down a bit going into the 5:15 p.m. electronic close.

The CME Group recorded the low and high ticks as $1,330.70 and $1,355.00 in the April contract.

Gold close in New York yesterday at $1,350.30 spot, up $21.70 from Friday's close.  Net volume was around 147,000 contracts---and as I mentioned in the first paragraph, more than a third of that came before the London open.

Silver was kept on a pretty short leash on Monday.  Every time it rallied above the $21.40 spot mark, there were not-for-profit sellers waiting to sell it back down to that price level again.  This happened in Far East trading---and in London and New York as well.

The low and high ticks were recorded as $21.26 and $21.74 in the May contract.

Silver finished the day on Monday at $21.405 spot, up 18 cents from Friday.  Net volume was very decent at 48,000 contracts---and a third of that amount was done before the London open as well.

Platinum and palladium prices didn't do much, or weren't allowed to do much---and the decision as to which scenario it was, is up to you.  Here are the charts.

The dollar index closed in New York on Friday afternoon at 79.78---and then didn't do much after it opened in Far East trading on their Monday morning.  then about 3 p.m. Hong Kong time a rally began that took the index up to the 79.95 level shortly before 1 p.m. EST. From that point it popped up to 80.08 in just a few minutes---and traded pretty flat into the close.  The index finished the Monday trading session at 80.06---up 28 basis points on the day.

The gold stocks gapped up over 3% at the open---and hit their high at 11 a.m. EST, which was shortly before the high tick of the day in gold.  After that, the HUI got sold down for the remainder of the New York trading session---and the HUI finished up only 1.71%.  Not a great gain, but certainly better than the general equity markets.

The silver equities gapped up as well---and were up not quite 3 percent by 11 a.m. EST right on the button.  But with the continued selling pressure in the underlying metal, the shares gave up almost all of their gains by day's end, as Nick Laird's Intraday Silver sentiment index only closed up 0.66%.

The CME's Daily Delivery Report for Day 3 of the March delivery month showed that zero gold and only 28 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  JPMorgan was the biggest long/stopper scooping up 25 of those contracts for its in-house [proprietary] trading account.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday---but surprisingly enough, there was a withdrawal from SLV, as an authorized participant took out 1,154,100 troy ounces and shipped it off to parts unknown.  Based on the current price action, silver should be pouring into SLV, not going in the other direction---but maybe the silver was more desperately needed elsewhere.  Or maybe silver was being withdrawn by a large holder of SLV that didn't want to go over the public reporting limit, a pet theory of Ted Butler's---and one I can find no fault with.

There was a sales report from the U.S. Mint yesterday.  They sold 1,500 one-ounce 24K gold buffaloes---and 599,000 silver eagles.

There was a decent amount of gold moved in and out of the Comex-approved depositories on Friday.  There were 30,037 troy ounces reported received---and 74,492 ounces shipped out.  The link to that activity is here.

There was more activity in silver, of course.  They didn't report receiving any on Friday, but did ship 802,063 troy ounces out the door.  The link to that action is here.

I had an e-mail from Joshua Gibbons yesterday---and it was all about Tulving.  This is what he had to say:  " The Tulving Company has ceased operations as of this morning. They are no longer answering the phones, and I have heard from a reliable source that employees have been told to go home."  Here's the link to Joshua's webpage on Tulving Company---and he has more to say there.

I had an interesting e-mail exchange with "Tim from China" who lives in a " tier 4 city outside of Chongqing"---and this, in part, is what he had to say:

Hi Ed,

I recall last month you included a link to some photos of some gold shops in China showing people falling over themselves to buy.

Being that I am on the ground, I though I would send you a pic I snapped at 11 a.m. today (Sunday) at one of the 6 gold shops in the town in live in here that services a population of a million locals. I would say Sunday is the biggest shopping day for many Chinese---and at neighbouring stores selling clothes, groceries and white goods there were LOTS of customers.

I lingered over the road at a Taiwanese style bakery that also sells coffee for about half an hour before I took the shot---and I can tell you they did not receive a single customer.  The other two gold shops I walked past were fully staffed but devoid of any customers as well.

Your readers might like to see the other side of the gold coin in China!

I'm going to send you some more photos when I go out this afternoon, I'll get the jewellery up close.   The entire left wall and rear counter is 24K jewellery, with a few decorative bars thrown in.  The central station is all silver.  You can only buy 24K, they don't have any concept of 9 or 18 or 22 like Western consumers.

Unfortunately they impose a tax that I believe is 9% of all gold, jewellery, and bullion from the banks on the mainland.  Hong Kong however does not have that tax, so it remains the best place to buy virtually at spot price from any bank there. In-the-know Chinese get gold from there… .

OK Ed, here is some Chinese eye candy for you.  All items carry weight in grams, today's price is 290 RMB per gram and the shop adds 10 RMB per gram for the "workmanship---but that is negotiable. Spot price per gram as of Friday is 262 RMB, so once taxes are removed the margin is pretty thin.

The chain necklace [photo #3 below - Ed] for example is 84.9 grams of 24K and price quoted is 26,150 RMB. Works out right about $50 U.S. per gram, which is not bad given spot is $42.60.

From what my wife tells me as much as 50% of gold jewelry sales for the year occur in the January lead up to spring festival. -- Tim

It was another weekend with a lot of stories---and the lion's share of the international news items involve the Ukraine, as it's Planet Earth's number one news story at the moment.  With the odd exception, I've lumped them all under one heading as I did last week.

¤ The Wrap

The bottom line is that JPMorgan has taken delivery of close to 4,000 silver contracts (20 million oz) since December and is in position to take another 3 million oz if March plays out as I’ve outlined. I still maintain that this a small percentage of the 100 to 200 million physical oz (or more) of silver that I believe JPMorgan has acquired over the past three years. - Silver analyst Ted Butler: 01 March 2014

I wasn't surprised to see both gold and silver take off to the upside when trading began on Sunday night in New York---and neither was I surprised to see the sellers of last resort at their posts.  Like I said further up, JPMorgan et al were selling longs and going short against all comers all day long yesterday, especially in the early going.  It's pretty much a given that this Friday's Commitment of Traders Report will be as ugly, if not more ugly, than the one we got last Friday.  Today at the close of Comex trading is the cut-off, so we'll see what the rest of the Tuesday trading day brings.

The precious metals didn't do much price wise in Far East trading on their Tuesday---and shortly before 2 p.m Hong Kong time, the HFT boyz showed up and took both silver and gold down a notch or two.  Platinum and palladium weren't spared, but the damage there was minimal.  London has been open about 10 minutes as I type this paragraph---and gold volume is already well north of 30,000 contracts---and silver volume is over 10,000 contracts.  The dollar index, which barely made it above the 80.00 mark in early trading in the Far East, is now back below that mark.

I have no idea what the trading day will be like for the remainder of the Tuesday session, but based on what's happened so far, it ain't looking good.

I'm off to bed early, as I'm feeling pretty wretched at the moment---and if I feel like this tomorrow evening, I probably won't have a column on Wednesday.

See you tomorrow---maybe.

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

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