Tuesday, June 10: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do much of anything in Far East trading on their Monday morning.  A bit of a rally started around 1 p.m. Hong Kong time---and that lasted until the 8:20 a.m. EDT New York open.  But by the time "da boyz" were done at the 5:15 p.m. electronic close, they had closed it down on the day.  Volumes were exceedingly light.

The high and low are barely worth looking up, but here they are anyway.  The high was $1,57.30---and the low was $1,251.60 in the August contract.

The gold price closed on Monday at $1,252.00 spot, down 30 cents from Friday's close.  Volume, net of June and July, was around 57,000 contracts, which is basically no volume at all, so it wasn't difficult for anyone with an agenda to manage the price, which is what happened.

Silver's rally in the Far East on Monday began about an hour later than gold's, around 2 p.m. local time in Hong Kong.  The rally, such as it was, picked up a bit more steam after the London silver 'fix' was in but, like gold, the rally got capped at the New York open.  Silver was allowed to close up a few pennies on the day.

The low and high ticks were recorded by the CME Group as $18.985 and $19.19 in the July contract.

Silver closed on Monday at $19.055 spot, up 4.5 cents from Friday.  Net volume was a hair under 20,000 contracts, as the roll-overs out of the July contract are now on in earnest.

Platinum had a trading pattern similar to gold and silver---and also got sold down at the New York open.  The bottom was in an hour and a bit before the Zurich close---and it rallied back to a bit above unchanged by 12:30 p.m. in New York, finishing almost flat on the day, down a buck.

Palladium didn't do much, but the tiny gain at the New York open also disappeared---and palladium was closed down 3 bucks.

As I keep saying, you'd sure never know that there was a 20-week old strike going on in one of the world's largest platinum/palladium producing countries the way the prices of these two metals are acting, or allowed to act.

The dollar index finished the Friday session at 80.425---and barely moved until it rolled over a bit shortly before 2 p.m. Hong Kong time.  The low of 80.31 came minutes before London opened---and the subsequent rally topped out at 80.67 at, or very close to, the London p.m. gold fix.  After that it faded a few basis points---and closed that at 80.624---up 20 basis points from Friday's close.

The gold stocks opened slightly in the black---and struggled to stay there for the rest of the trading session.  However, they gave up the ghost just before 3:30 p.m. EDT---and closed down 0.41%.

The silver stocks opened up---and stayed up.  However, they gave up over half of what little gains they had by the time trading was done---and Nick Laird's Intraday Silver Sentiment Index closed up 0.26%

The CME Daily Delivery Report showed that zero gold and 12 silver contracts were posted for delivery on Wednesday within the Comex-approved depositories.  The link to yesterday's Issuers and Stoppers Report is here.  There are still over 1,100 gold contracts open in the June delivery month---and it will be interesting to see when the short/issuer steps up to the plate---and even more interesting will which bullion bank it is, as I'm sure it's only one.

There were no reported changes in GLD yesterday---and as of 6:25 p.m. yesterday evening, there were no reported changes in SLV, either.

The U.S Mint had a decent sales report on Monday.  They sold 4,000 troy ounces of gold eagles---and 375,000 silver eagles.

Over at the Comex-approved depositories on Friday, there was a decent withdrawal in gold, as HSBC USA shipped out 74,957 troy ounces of the stuff.  The link to that activity is here.

It was a very busy day in silver once again, as they reported receiving 614,506 troy ounces---and shipped out 439,914 troy ounces.  The link to that action is here.

Now that I've read Ted Butler's weekend review---and had a chance to talk to him after the fact---I have a few more things to report regarding the Commitment of Traders Report on Friday.

In gold, as I suspected, JPMorgan added to its long-side corner in the Comex gold market.  Ted said they purchased an additional 4,000 contracts---and they're now sitting at 38,000 contracts, or 3.8 million ounces.  Ted mentioned that the big sellers in gold were the technical funds, which added nearly 19,500 new short contracts on top of the 22,000 they added in the previous COT report.

In silver, I said that we'd reach a new low in the Commercial net short position.  That was wrong.  But it's the lowest level since last July.  The technical funds hit a new record short position when they added more than 4,300 short contracts on top of the 5,200 short contracts they added the prior week.

But the big surprise that Ted talked about was that JPMorgan reduced their net short position in silver by about 4,000 contracts---and their new short-side corner in Comex silver is now down to 14,000 contracts, the lowest level since February---and one of the lowest levels since they assumed the short position from Bear Stearns back in 2008.

Ted is a world authority on the COT Report---and I thank him for all of the above.

I did sort of catch the drop in the Commercial short position in another way.  I mentioned in Friday's column when talking about Nick's "Days to Cover Comex Short Positions" chart, that the short positions of the 8 largest short holders had fallen by eight days of world silver production from the prior reporting week. That's about 18 million ounces, which is 3,600 Comex contracts, which is pretty close to the 4,000 contracts that Ted mentioned that JPMorgan covered during the current reporting week.

I received a very interesting e-mail from reader Rick Cordes on the weekend---and being in the retail bullion business myself,  I though it worth sharing.
Hi Ted and Ed,   I hope this finds you well.  I wanted to share with you a new website that my friend Chris Mendola and I have developed called www.AllEngelhard.com.  Joshua Gibbons was kind enough to turn over his Engelhard "Definitive Pages" to Chris last year (as referenced on Joshua's about.ag site), and this has opened the door for a new platform which has now become a standard for Engelhard enthusiasts as well as Ebay auction reference.  Over the past 10 years, Chris and I have been fascinated by, and have focused almost exclusively on, collecting older poured Engelhard silver bars.  Through arduous digging, we have found no known lists indicating production numbers or serial number ranges of any varieties of Engelhard bars, so we set a mission to create our own serial number registry to define production ranges and mintages.  The fact that nearly all Engelhard bars were serial numbered by the time production ceased in 1986 has created a market not unlike that of numismatics. We hope you enjoy navigating through this site!


Rick Cordes, Managing Partner
1343 Locust Street, Suite 202
Walnut Creek, CA 94596

I have a lot of stories today---and I hope you can find the time to wade through the ones that interest you.

¤ The Wrap

In Friday's silver COT Report, the technical funds added more than 4,300 new Comex short contracts, on top of the near 5,200 shorts they added last week. At more than 42,800 contracts short, the technical funds have added an astounding 33,000 short contracts since the end of February, the equivalent of 165 million oz of silver. To put the price impact of the equivalent 165 million oz in proper perspective, please consider that both the Hunt Brothers and Warren Buffet bought less than this amount in causing silver prices to explode. How could 165 million oz sold in a few months not have the same effect to the downside? - Silver analyst Ted Butler: 07 June 2014

Like Friday, there was little volume associated with the price action on Monday.  However, also like Friday, it was obvious that the prices of all four precious metals were kept on a short leach starting when New York opened yesterday.

Here are the 6-month charts in both gold and silver with Monday's data in place.  Once again they are shown with their 20 and 50-day moving averages.

Gold came nowhere near its 20-day moving average.  However, silver touched its 20 day moving average for the second day in a row.

Whether it be the engineered "summer doldrums" or some other form of price management, it should be obvious that until silver and gold are allowed to penetrate these critical moving averages to the upside, we won't see a lot of short covering by the technical funds.  But when that does happen, either by a rising price, or a falling moving average---or a combination of both---how high we go and how fast we get there, will be entirely depended on how willing the raptors are to sell their long positions for a profit.  Will they let the tech funds off easy, or let the price melt up?  What will JPMorgan do in this circumstance---cover, put their hands in their pockets, or sell short once again?  As Ted Butler has been saying for years---it's these actions alone that determine how high prices go on any given rally.  That's all there is---there ain't no more---no matter what anyone else says.

And as I type this paragraph, it's still about one hour and forty minutes to the London open.  None of the precious metals are doing anything, although gold is up a couple of bucks, and everything else is flat.  Volume is ultra quiet, with gold at 8,000 contracts---and silver a hair under 2,000 contracts.  Not a creature is stirring at the moment---and the dollar index is trading as flat as pancake as well.

Since today is Tuesday once again, the cut-off for this Friday's Commitment of Traders Report comes at the 1:30 p.m. EDT close of Comex trading.  Using the past as prologue, I'll be amazed if much happens, or is allowed to happen as the remainder of the Tuesday trading session unfolds.  However, you just never know.

I was quite surprised to note that JPMorgan had covered a chunk of their short-side corner in the Comex silver market---and I'm wondering if there's more to come or not.  It would take another engineered price decline of biblical proportions to accomplish that feat---and I'll be prepared to bet that they won't be able to cover this short position fully.  However, they're probably covered in other markets.

And as I send this off to Stowe, Vermont at 4:50 a.m. EDT---I see that gold is back down to almost unchanged, silver is down about a dime from its close in New York on Monday---and the rallies at the London open in both platinum and palladium ran into not-for-profit sellers almost immediately, but are still attempting to rally regardless of that.  The dollar index, which had been down a handful of basis points going into the London open, is now up the same amount.

It could be an interesting trading day and, as usual, nothing will surprise me when I roll out of bed and check the charts later this morning.

I hope your day goes well---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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