Wednesday, March 5: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price did very little until just before 2 p.m. Hong Kong time---and that's when the HFT boyz showed up and shaved a bit more than ten bucks off the price in just a few minutes.  Volume was a hefty 32,000 contracts by the 8 a.m. GMT London open.  From there gold got sold off a bit to its low of the day, which came at the noon GMT silver fix.  The subsequent rally ran out of gas/got capped at 2 p.m. EST in electronic trading---and gave back almost all its New York gains by the 5:15 p.m. electronic close.

The high and low ticks were recorded by the CME Group as $1,352.90 and $1,331.20 in the April contract.

Gold finished the Tuesday session in New York at $1,334.40 spot, down $15.90 on the day. Net volume was around 123,000 contracts, with a quarter of that coming before the London open.

The price scenario for silver on Tuesday was virtually identical, so I'll spare you the details.

The high and low in silver were recorded at $21.54 and $21.04 in the May contract, an intraday move of more than 2%.

Silver closed on Tuesday afternoon at $21.14 spot, which was down 26.5 cents from Monday's close.  Volume, net of March and April, was pretty chunky at 45,500 contracts.

Platinum got taken to the cleaners a bit along with gold and silver in Far East and London trading, with the low coming around the noon silver fix in London as well.  The rally from there topped out shortly before noon in New York---with the spike high coming about 1 p.m. EST---and then got sold down a bit into the close.  Palladium didn't do much until very shortly after the Comex open---and then away it went to the upside as well, with the rally coming to an end minutes after the London close.  After that [except for its spike high] it traded flat for the remainder of the New York session.  Here are the charts.

The dollar index closed in New York late on Monday afternoon at 80.06.  It spiked a bit higher for a few hours before heading back below the 80.00 mark.  The low of 79.94 came at 8:40 a.m. in New York, with the 80.20 high tick coming at 12 o'clock noon right on the button.  After that, the index gave back a handful of basis points and traded more or less ruler flat into the close from there.  The dollar index closed at 80.16 on Tuesday, up a whole 10 basis points on the day.

Quite understandably, the gold stocks gapped down at the open, but rallied sharply until minutes after 10 p.m.---making it back within a point of unchanged.  But that was as high as they got, as they chopped a bit lower after that.  The HUI finished down only 0.81%---which I consider to be a win under the circumstances.

The silver stocks also got sold down at the open, but also rallied sharply until about 10:30 a.m. EST.  From there they slid lower, but caught a bid around 2 p.m. in New York---and actually rallied into positive territory during the last few hours of trading.  Nick Laird's Intraday Silver Sentiment Index closed up 0.09%.

The CME's Daily Delivery Report showed that 1 gold and 54 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  In silver, there were a variety of short/issuers but, as always, JPMorgan in its in-house [proprietary] trading account, was the long/stopper on 49 of those contracts.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday---and as of 9:32 p.m. EST yesterday evening, there were no reported changes in SLV, either.  Then when I was editing this column at 4:39 a.m. EST, I noted that there was a small withdrawal from SLV.  It was only 119,805 troy ounces, which may or may not have been a fee payment of some kind.

The U.S. Mint had another sales report.  They sold 1,500 troy ounces of gold eagles---and another 304,500 silver eagles.

There were no reported changes in gold inventories over at the Comex-approved depositories on Monday, but in silver there was 704,130 troy ounces deposited---and nothing was reported shipped out.  Most of the silver ended up over at Canada's Scotia Bank.  The link to that action is here.

Here are a couple of charts that Nick sent our way yesterday.  They show the intraday price averages [based on 2-minute tick data] for both gold and silver for the month of February---and as you can see, the prices in both metals were generally in an up-trend for the entire month.  I doubt very much if the charts for March will look this good.

It was another day where the news was dominated by events in and around the Ukraine and, once again, the stories I received from readers reflects that.

¤ The Wrap

After two days of delivery for the March silver contract, JPMorgan took 997 contracts, or two-thirds of the 1,494 issued. Since deliveries are generally assigned by the amount of open interest held by respective clearing members, unless many new contracts are established in the March COMEX silver futures contract before month end, it can be guessed that JPMorgan will likely take 600 or so of the roughly 1,000 contracts still remaining open (after adjusting for Monday’s deliveries). All this would tend to confirm that JPMorgan is still interested in acquiring physical silver despite its recent increase in silver futures shorting on the COMEX. It may not be far off to suggest that JPMorgan might be shorting silver futures contracts in order to buy physical at depressed prices, even though that’s as illegal as it gets. - Silver analyst Ted Butler: 01 March 2014

There's not too much to be read into yesterday's price action, although the huge volumes in both gold and silver during the trading days in the Far East lately is a sure indication that prices are being held in check in that particular time span.  I can remember a decade or more ago when 3,000 contracts in gold and 500 silver was normal volume going into the London open.  My how times have changed now that the bullion banks are up to their necks in the price management scheme in all metals.

As a "for instance"---here's February's Bank Participation chart for gold going back to the year 2000.  The 'click to enlarge' feature is useful here.  Note charts 2 and 4.  Chart 2 shows total Comex monthly open interest for the last 14 years.  Back then, total open interest was less than half, sometimes a quarter, of what it is today.  Chart 4 shows the involvement of the banking system, especially the '4 or less' U.S. banks [in red]. Their positions bordered on insignificant compared to where they are now.  [As a side note, you can see where JPMorgan went from being short the Comex gold market, to being long the Comex gold market back in June of 2013]

And if you really want to see bank involvement---here's what 14 years of platinum trading on the Comex looks like courtesy of '3 or less' U.S. banks.  The foreign bank involvement---in blue---although it appears large, is divided up into so many different banks that their individual positions are immaterial compared to JPMorgan.

Silver is a special case.  But charts 2 and 4 also apply as well.  Note the JPMorgan take-over of Bear Stearn's short position in silver August of 2008 that Ted Butler brought to the world's attention---and then in October 2012 when Scotia Mocatta's Comex short positions were transferred to its parent, Canada's Scotiabank.  All of a sudden these Comex futures positions, which were always there, but invisible because they didn't have to be reported to the CFTC before that because they were held by non-banking institutions---suddenly became visible for everyone to see.

While on the subject of the Bank Participation Report, we get March's BPR on Friday, along with the new [and ugly] Commitment of Traders Report.

Just eye-balling the gold and silver charts while I was on the phone to Ted yesterday, I made the comment that JPMorgan et al could peel a hundred bucks off the gold price and about two bucks off the silver price if that's what they wanted to do.  They've certainly set up the chart pattern for that to happen---but they could also let the price run if they chose to do so.  But they've kept such tight rein on the rallies in the precious metals over the last week, that the possibility of higher prices occurring before we have an engineered price decline, seems to be the lesser of the two probabilities---although I'd love to be proven wrong.

Not much happened in gold and silver price action in the Far East on their Wednesday---and now that London has been open 90 minutes, there's not much going on there, either.  Platinum and palladium are showing a little life, but with the strikes in South Africa heading for their sixth week, I'm surprised that these two metals haven't performed better.  But if you took note of the Bank Participation Report for platinum just above, then you may have your answer---and the palladium BPR chart looks almost the same.

Volumes in both gold and silver are very light for this time of day---and the dollar index has barely moved since it opened in New York yesterday evening.

That's all for this column---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.

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