Friday, June 6: Today in Gold and Silver

NEW YORK ( TheStreet) -- All was calm---and volume was microscope---up until 8:45 a.m. EDT on Thursday.  Then the gold price blasted higher, most likely on the ECB interest rate news.  But within minutes, the sellers of last resort were there with a tsunami of Comex paper to kill the rally stone cold dead---and actually sold it down about eight bucks off its high tick.  It's unknown whether it was new long buying, or short covering by the technical funds, but it doesn't matter.  All that mattered was that JPMorgan et al prevented what was certain to become a market-clearing event in gold.

The low and high ticks were recorded by the CME Group as $1,241.20 and $1,257.90 in the August contract.

Gold closed in New York yesterday at $1,253.20 spot, up $9.60 from Wednesday's close.  Volume, up the to big price spike, had been fumes and vapours, but exploded to 128,000 contracts, net of June and July.

It was more or less the same price activity in silver.  Volume was nonexistent, but once price volatility began to surface shortly before 1 p.m. BST in London---and then in the subsequent 8:45 a.m. EDT price spike---volume blew out as well, from substantially under 10,000 contracts to north of 40,000 contracts by day's end.

The low and high ticks in silver were reported as $18.67 and $19.155 in the July contract.

Silver finished the Thursday trading session in New York at $19.035 spot, up 24 cents from Wednesday---and would have obviously done much better if JPMorgan et al hadn't put in an appearance.  Net volume, which was around 3,500 contracts at 8:30 a.m. BST in London trading, was 40,500 contracts by the end of electronic trading in New York yesterday---more than double what it was on Wednesday.

After getting sold down to its low of the day at 1 p.m. Hong Kong time, the platinum price rallied in fits and starts right into the 5:15 p.m. close in New York yesterday, although most of the gains [such as they were] were posted by 1 p.m. EDT.  Platinum only closed up five bucks.

Palladium also got sold down a few dollars during Far East trading as well---and didn't mount much in the way of a permanent rally until just before 1 p.m. in Zurich.  It then appeared that a willing seller wasn't prepared to allow the price to break above the $838 spot  mark in New York trading---and the metal closed up an even five bucks as well.

It was another day where it was obvious that all four precious metals wanted to sail away to the upside---and would have done so if not met by determined sellers with very deep pockets.

The dollar index finished trading late on Wednesday afternoon in New York at 80.66---and then slid about 10 basis points up until 12:40 a.m. BST in London, or 7:40 a.m. in New York.  At the point, the index blasted higher, coming within a couple of basis points of the 81.00 level just minutes after 8:30 a.m. in New York, less than an hour later.

Then equally as quickly, the index began to sell off---and most of the selling was done by shortly before 2 p.m. EDT---and the index was down to 80.34.  From there it traded more or less flat, closing at 80.36---down 30 basis points from Wednesday.

The index was already heading south when gold and silver had their 3-minute spikes.  Undoubtedly the dollar index and gold price activity were related to the interest rate news out of Europe, but they didn't happen concurrently.

The gold stocks gapped up less than a percent at the open---and then climbed to their high of the day around 12:15 p.m. EDT, before giving part of those gains back as the trading day wore on.  The HUI finished up 1.42%

The silver equities had a terrific day.  Most of the gains were in by 12:15 p.m. as well, but traded flat after that---and Nick Laird's Intraday Silver Sentiment Index closed up 3.31%.

The CME Daily Delivery Report showed that 146 gold and 1 silver contract were posted for delivery within the Comex-approved depositories on Monday.  In gold, the only short/issuer of note was Barclays, with 143 contracts---and the list of long/stoppers included "all the usual suspects" with the exception of Scotiabank.
The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday---and as of 10:05 p.m. EDT yesterday evening, there were no reported changes in SLV, either.  But when I checked the website at 3:16 a.m. EDT this morning, I noted that an authorized participant had withdrawn 145,074 troy ounces.  This may have been a fee payment of some kind.

Joshua Gibbons, the " Guru of the SLV Bar List", posted his weekly report on the goings-on within the SLV ETF for the week ending at the close of business on Wednesday---and this is what he had to say--- " Analysis of the 04 June 2014 bar list, and comparison to the previous week's list: 2,401,783.9 troy ounces were added (all to Brinks London). No bars were removed or had a serial number change."

" The bars added were from Solar Applied Materials (0.9Moz), Kazakhmys (0.6Moz), Dowa Mining (0.2Moz), and 11 others.  As of the time that the bar list was produced, it was overallocated 691.4 oz.  All daily changes are reflected on the bar list."

" The bars added appear to be freshly minted bars (unlike the older bars removed recently)."

And shortly after I filed my column this morning, I received an e-mail from the good folks over at Switzerland's Zürcher Kantonalbank.  They had just updated their website with their gold and silver ETF data for the week ending May 30---and this is what they had to report.  Their gold ETF shed another 10,435 troy ounces---and their silver ETF declined by 135,580 troy ounces.

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

Over at the Comex-approved depositories on Wednesday, there was no in/out gold movement once again---and in silver, there was 91,158 troy ounces reported shipped out.  The link to that activity is here.

Reader Brad Robertson sent me a couple of charts yesterday.  The first one is the 5-minute gold tick chart---and the other is the 5-minute dollar index tick chart.  I mentioned at the top of this column that there was microscopic volume in gold yesterday, but that all changed as you can tell from the chart.  The same applies to the dollar index.

I have a large number of stories again today---and I hope you find some in here that interest you.

¤ The Wrap

The important thing is to recognize just how historic has been the amount of technical fund short selling in COMEX silver. I never expected the technical funds to exceed former levels of record silver shorts by the amounts reported. But as painful (to existing investors) as the recent price drop has been, it is precisely the unexpectedly large tech fund shorting that has created what may be the best silver set up ever. Make no mistake, the technical funds must buy back, rather than deliver metal to close out their short position. As a result of the record technical fund short selling in COMEX silver, there is now automatically embedded the largest amount of potential buying power in history. Coupled with the record long position of the raptors, silver could and should surprise to the upside at some point soon. I hate how we got to this circumstance, but love the fact that we’re there.  - Silver analyst Ted Butler: 04 June 2014

I'm not sure what to make of the spikes in silver and gold yesterday, as they didn't happen in direct conjunction with the machinations in the dollar index---and I'm not sure of the exact time that the ECB interest rate news was released.

But what I do know for sure is that the price spikes in both these metals most likely ran into a monster wall of paper from JPMorgan et al.  How much damage was done yesterday as the technical funds bought and the commercials sold, is hard to divine.  But---and that's a very big but at the moment---a quick peek at the CME's Preliminary Report for yesterday's trading showed small declines in total open interest in both metals, something I wasn't expecting at all---so maybe yesterday's price spikes were related to something else.

However, I've learned from hard experience [thanks to Ted Butler's repeated warnings] that 'da boyz' can cover their tracks real good as they're stomping around in the precious metal markets---and I've been wrong at the top of my voice before, so I'm " once bitten, twice shy" on these numbers at the moment.  But I did find them very encouraging nonetheless.  Time will tell, but we'll have to wait until next Friday's Commitment of Traders Report, which is a virtual lifetime away at the moment.

Here are the 6-month charts for both gold and silver once again.  I'm showing only the 50 and 20 day moving averages in both metals, as the 200-day m.a. is not even close to being in play in either metal at the moment.

As you can see, neither of the 20-day moving averages were penetrated yesterday, so maybe the technical damage wasn't that great.  But as I said a couple of paragraphs ago, we'll have to wait a week to find out what actually happened.

An as I type this paragraph, London has just opened, as it's exactly 8 a.m. BST.  Precious metal prices did nothing up until lunchtime in Hong Kong on their Friday, but popped a bit early in their afternoon---and going into the London open.  But all four are now off their highs---such as they were.  Volume is very light once again---around 15,000 contracts in gold and just over 4,000 contracts in silver.  The dollar index has barely moved since it opened in Tokyo earlier today.

Today is a big day for reports---jobs, the Commitment of Traders Report---and the Bank Participation Report derived from those COT numbers.  As I said yesterday, I'll have lots to talk about in Saturday's column.

And as I file today's column at 4:45 p.m. EDT, I note that not much has changed since the London open ninety minutes ago.  All four precious metal continue to struggle higher.  Gold volume is now 18,500 contracts---and silver's net volume is up to 5,300 contracts---which is not a lot of activity over that period of time.  The dollar index is now up a small handful of basis points.

As to what the remainder of the Friday session will bring, especially in New York, is a complete unknown.  I'm certainly expecting some activity at 8:30 a.m. EDT when the job numbers are released, but other than that, who knows?  I certainly don't---and nothing will surprise me when I power up my computer later this morning.

I hope you have a good weekend, or what's left of it if you live west of the International Date Line---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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