Gold and silver equities continue to rally. No changes in GLD, but a million ounces withdrawn from SLV. No sales report from the U.S. Mint---and more in/out movement in both gold and silver at the Comex-approved depositories on Wednesday.
NEW YORK ( TheStreet) -- Once again it was a nothing day in Far East trading---and the tiny rally that began around 9 a.m. in London, met the usual fate from the usual suspects shortly before 9 a.m. EDT. By 12:25 p.m. in New York, the gold price was back to unchanged---and traded flat for the rest of the Wednesday session. And, once again, the high and low ticks aren't worth trouble of looking up. Gold closed in New York yesterday at $1,260.60 spot, up 70 cents from Tuesday's close. Volume, net of June and July, was only 81,000 contracts. The silver price didn't do a thing in either Far East or morning trading in London---and the smallish rally that began shortly before New York open, ran into not-for-profit sellers moments before 9 a.m. EDT just like gold did. Nothing free market about this. From thereon in, the price pattern in silver was a mini version of what happened in gold. The low and high aren't worth looking up here, either. Silver finished the Wednesday session at $19.195 spot, up a half a cent from Tuesday. Net volume was pretty light at 20,500 contracts. Platinum traded flat until 10 a.m. in Zurich---and the tiny rally that started at that point didn't get far---and by the close of New York trading was only up a buck. The action in palladium was a bit more interesting. After trading flat in the Far East, the price began to inch higher at the Zurich open---and then jumped seven or eight bucks about 10:30 a.m. in New York. That rally obviously got capped---and the metal traded sideways for the remainder of the day, but closed up 6 bucks. The dollar index close late Tuesday afternoon in New York at 80.805---and jumped to its 80.89 high shortly after trading began in the Far East on their Wednesday morning. But from there, the index chopped quietly lower---and the index closed at 80.77, down a small handful of basis points. The gold stocks gapped up a bit---and then ran up to their high of the day by around 12:15 EDT in New York. From there they got sold down, but began to rally anew around 1:15 p.m. EDT---and came very close to gaining back all their loses. As it was, the HUI closed up 1.83%---and within a whisker of its 12:15 p.m. high tick. The silver equities put in a similar price performance---and Nick Laird's Intraday Silver Sentiment closed up 1.90%. The CME Daily Delivery Report showed that 235 gold and zero silver contracts were posted for delivery within the Comex-approved warehouses on Friday. The only short/issuer was Barclays. There was a decent list of long/stoppers, but the 'big 4' were Morgan Stanley, Barclays, JPMorgan in its client account---and Deutsche Bank. They will take delivery on 216 of those contracts between them---and if you want to see the details, the link to yesterday's Issuers and Stoppers Report is here. There was no reported change in GLD yesterday, but an authorized participant removed 1,056,400 troy ounces from SLV. Based on the silver price action over the last week or so, it's a good bet that this metal was needed elsewhere---and a buyer showed up, bought the shares---and immediately redeemed them. There was no sales report from the U.S. Mint. Over at the Comex-approved depositories on Tuesday, they reported receiving 16,075 troy ounces of gold---and shipped out 32,114 troy ounces. The link to that activity is here. And in silver, nothing was reported received---and 135,802 troy ounces were shipped out the door for parts unknown. The link to that action is here. Before I start posting stories, here are four charts showing the long-term trends in Japan---and certainly gives credence to why Kyle Bass is short Japanese bonds. I thank Casey Research's Louis James for passing these around yesterday---and Nick Laird for getting them in shape for posting. I have the usual number of stories for a weekday column---and I'm more than happy to leave the final edit up to you.
¤ The Wrap
In trying to gauge how far the coming price blast might carry, there is one key variable to consider, namely, how aggressive the commercials will be in selling to the technical funds when (not if) those funds enter the market on the buy side. The image in my mind is that the technical funds are like a large herd of wild stallions corralled and itching to bust out. Then a gate is suddenly opened (an upside penetration of the moving averages) and the herd bolts in a flash. Unless some equal and counterbalancing force restrains the herd, the stallions will run like the wind. The only restraining force for the technical funds which are short in the silver corral, is commercial selling---both the selling of existing long positions and the new short selling of additional COMEX contracts. I want to be consistent here; the commercials maneuver and control the technical funds whether the funds are selling or buying. While there is no way to know for sure how aggressive the commercials will be in selling to the technical funds, we do know from past experience that the technical funds will likely be as aggressive as they usually are when closing out positions moving against them. That is to say that when the technical funds move to buy back their silver shorts they will do so with “at the market” orders and not by trying to buy as low as possible with limit buy orders placed under prevailing prices. That’s how technical funds operate, by and large. The only question is how high the commercials will force the technical funds to pay up to buy back short positions. - Silver analyst Ted Butler: 11 June 2014 It was a very quiet day for both gold and silver on Wednesday---and volumes certainly reflected that. However, as I pointed out in this space yesterday, any sign of a rally during the New York session in either of these metals is always greeted the same way---and they finish with little or no gain---especially silver. That was the case again yesterday---and also applies to platinum and palladium as well. Here are the 6-month charts for both gold and silver and, as usual, they have the 20 and 50-day moving averages showing. The current gold price is about ten bucks below its 20-day moving average---and for the third day in a row, the silver price was stopped cold at its 20-day moving average. Please re-read Ted Butler's quote above concerning the script of what will happen when these moving averages are penetrated with some authority to the upside. His comments on silver apply almost equally to gold. As you already know, the major difference being that JPMorgan is controlling the gold price with a long-side corner in the Comex gold market. I'm relieved to see that the precious metal equities are starting to show signs of life. Nothing too extravagant to be sure, but the trend, at least for the moment, is up. Here's the 3-year HUI chart---and although we're off the low of late December 2013, we have a ways to go to get back to the March high---and the old November 2011 high would require gold equity increases in the order of 200 percent from where they are now. Here's the Silver 7 Index going all the way back to January 2009---and the configuration since the May 1 drive-by shooting by JPMorgan et al is pretty much the same as gold's---and the old high is a 200 percent move away as well. Please don't forget for one second that these charts are a paint job by JPMorgan et al. We would be back the old highs---and beyond, in one day---if "da boyz" just put their hands in their pockets and let a market-clearing event occur in all four precious metals. And as I type this paragraph, the London open is six minutes away. Prices didn't do a thing in Far East trading on their Thursday, but all four precious metals have a positive bias at the moment---and it remains to be see if this continues much past the open. Volumes are shockingly low---8,400 contracts in gold---and 2,700 net in silver. It wasn't even this low between Christmas and New Years. The dollar index isn't doing a thing, either. It's time to hit the send button on today's column. It's now 5:10 a.m. EDT---and London has been open a bit more than two hours. Both gold and silver aren't doing much. Volumes in both metals are up quite a bit, but that's not saying much at these levels. The other two precious metals are showing more price volatility---especially platinum---and it remains to be see how it, and the other three precious metals fare, as the Thursday trading day progresses. See here tomorrow.