Wednesday, June 11: Today in Gold and Silver

NEW YORK ( TheStreet) -- It was another yawner of a trading day on Tuesday---and the gold price did virtually nothing in Far East and morning trading in London.  Volume was microscopic.  But the moment that New York opened, the gold price blasted off---only to get capped within 20 minutes---and after that the price didn't do much, although volume was up sharply.

The low and high tick in gold according to the CME Group was $1,250.10 and $1,263.80 in the August contract.

Gold closed in New York on Tuesday at $1,259.90 spot, up $7.90 on the day.  Volume, net of June and July, was 128,000 contract---of which a bit over 18,000 contracts was in the October and December delivery months.  I'm not sure whether those were new longs being placed, or one leg of a spread trade, as it's a little early for traders to be rolling out of the August delivery month.

The silver price action, along with the associated volume, was even quieter in Far East trading.  About an hour before the London open, the silver price headed lower, hitting its low tick at the noon London silver 'fix'.  From there it rallied into the New York open---and then, like gold, blasted higher.  That vertical price spike got smashed to a standstill less than five minutes after the open---and the price chopped sideways in a ten cent price range for the remainder of the New York session.

The low and high tick were recorded as $18.97 and $19.245 in the July contract.

Silver finished the Tuesday trading session at $19.19 spot, up 13.5 cents from Monday's close.  Net volume was only 25,500 contracts, but would have been a lot lighter than that if "da boyz" hadn't thrown so much paper at the price at the New York open.

The price spikes at the New York open looked as impressive as they did because of the scale of the Kitco charts.  But, having said that, there should be no doubt in anyone's mind that both gold and silver would have had closing prices somewhere in the stratosphere on Tuesday, if not for JPMorgan et al.

The platinum price did nothing until Zurich opened yesterday morning at 9 a.m. in Europe.  Then it rallied until noon in New York before trading sideways for the remainder of the day. Platinum closed up 29 bucks.

Palladium had a very similar chart pattern, except the rally topped out at 10 a.m. in New York, before trading sideways.  Palladium closed up 12 dollars.

It appears that traders have finally cottoned on to the fact that platinum and palladium might be in short supply pretty soon.

The dollar index closed in New York late on Monday afternoon at 80.624---and then slid quietly to its 80.55 low at 7:30 a.m. BST in London.  The subsequent rally ran out of gas at the 80.82 mark around 11:20 BST---and the index traded more or less sideways for the rest of the day, closing at 80.805---up 18 basis points.

The gold stocks gapped up a bit at the open---and then crawled higher for the remainder of the Tuesday trading session, finishing on their absolute high tick.  The HUI closed up 2.28%.

The silver equities followed a somewhat more circuitous route before they, too, closed on their highs of the day.  Nick Laird's Intraday Silver Sentiment Index closed up 2.71%.

The CME Daily Delivery Report showed that 13 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  "All the usual suspects" were involved as issuers and stoppers, but the report itself isn't worth linking.

There were no reported changes in GLD yesterday---and as of 10:02 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

The good folks over at the Internet site updated the short positions in both SLV and GLD as of the end of May---and here is what they had to report.  The short position in SLV increased by 9.37%, from 13.01 million shares/troy ounces to 14.23 million shares/troy ounces.  The new short position works out to 442 metric tonnes of the stuff.  And as a note of interest, the surprise 2.4 million ounce deposit in SLV made on June 3 is obviously not in this report---and Ted figures that the authorized participant who made this deposit waited until the weekend was over to deposit it in the June month rather than the end of May, just to avoid it showing up in this report.  The same can be said about the deposit into GLD on the same date.

In GLD, the short position increased by 5.96%, from 1.19 million troy ounces to 1.26 million troy ounces---not a lot.

The U.S. Mint had a decent day yesterday.  They sold 2,500 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and 300,000 silver eagles.

It was another fairly big day over at the Comex-approved depositories on Monday.  They reported receiving 74,851 troy ounces of gold, with every ounce disappearing into Scotiabank's vault.  The link to that activity is here.

In silver, there was 818,708 troy ounces reported received, with virtually every ounce being deposited into Brink's, Inc.---and 31,215 troy ounces were reported shipped out.  The link to that action is here.

I have a lot less stories than I did yesterday, so you'll have an easier time of it today.

¤ The Wrap

I continue to notice that the long side of the managed money category has not shrunk in the recent silver sell-off and, in fact, increased this week past week by 1,000 contracts. Since technical funds sell on the type of price declines witnessed recently in silver, it is easy to conclude the managed money longs are not technical funds, even though those which are on the short side of managed money are very much technical funds. It would appear the managed money longs are not likely to sell on lower silver prices and this adds a separate bullish dimension to the extreme set up I wrote about last Wednesday.

In fact, the latest COT and Bank Participation reports augment the bullish setup in several meaningful ways. Having the raptors at record long extremes and the technical funds at record short extremes are what give the silver setup the most potential juice on the upside. And as much as JPMorgan’s activity during the reporting week was as clear a manipulation as seems possible to me, the bank’s silver buying only adds more juice to the setup. - Silver analyst Ted Butler: 07 June 2014

It was another quiet-as-the-proverbial-church-mouse day in gold and silver on Tuesday, but that all changed at the New York open.  Although total volume wasn't overly heavy, it was obvious that "all the usual suspects" had to throw reams of Comex paper at the prices of these two metals to cap the rallies as quickly as they did, especially silver, as they waited less than 5 minutes to administer the coup de grâce to that precious metal.  The only unknown here is how much paper that was---and since yesterday was the cut-off for this Friday's Commitment of Traders Report, there's hope that most, if not all of yesterday's trading data will be present in that report.

I checked the CME's Preliminary Report for Tuesday, which isn't posted on their website until after midnight EDT---and the open interest in gold was only up a couple of hundred contracts, however silver's open interest blew out by 4,236 contracts, over 21 million ounces of paper silver.  But, with Ted Butler's ever-present warning ringing in my ears, it can be dangerous to to one's credibility to read too much into these numbers---and even the final numbers, which come out later this morning, should be interpreted with caution.  I'll be checking them anyway.

And, as I write this paragraph, London has been open two minutes.  Nothing much happened in Far East trading on their Wednesday---and not much is going on in London trading, but I'm sure that will change as their trading day unfolds.  The same can be said for the other three precious metals as well.  Gold volume is right at the 10,000 contract mark---and silver volume has yet to crack the 3,000 contract mark on a net basis.  Nothing to see here---nor in the dollar index, which is basically unchanged from its close in New York late yesterday afternoon.

Before I forget, here are the 6-month gold and silver charts showing their respective 20 and 50-day moving averages.

You will note that the gold price is still miles away from any major moving average that would affect the majority of the technical funds.  However, you will note [for the second day in a row] that the silver price was carefully closed below its 20-day moving average---this time, just below.  Maybe someone is aggressively protecting a short position.

And as I prepare to send this off to Stowe, Vermont at 5:05 a.m. EDT---I note that there's still not much going on in any of the precious metals.  Gold volume is up 50% from the open, but still very much on the lighter side---and silver's volume is up about 35%---and mostly fumes and vapours.   The dollar index is still comatose.

This is about the same situation that existed in gold and silver yesterday at this time of day---and one has to wonder, based on yesterday's New York price action, if something similar may be in store at the 8:20 a.m. Comex open this morning.  Time will tell.

That's all for today.  I'm off to bed---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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