Friday, August 8: Today in Gold and Silver

NEW YORK ( TheStreet) -- Very little happened in either Far East or London trading on Thursday.  The low tick of the day, if you wish to dignify it with that name, came at the 10:30 a.m. morning gold fix in London.  From there it struggled about $5 higher---and then popped for another $6 just before lunch in New York.  After that, the price didn't do much.

The low and high ticks were recorded by the CME Group as $1,303.00 and $1,316.40 in the December contract.

Gold closed in New York at $1,313.00 spot, up $7.10 on the day.  Volume, net of August and September, was heavier that I would have like to have seen it at 134,000 contracts.

The silver price didn't do much yesterday---and by the end of the day it was closed back below the $20 spot price mark.  The low and high ticks aren't worth the trouble of looking up.

Silver finished the Thursday session at $19.945 spot, down 6 cents from Wednesday's close.  Net volume was on the lighter side at only 29,000 contracts.

Platinum's rally attempt in Far East trading ended just before 1 p.m. Hong Kong time.  From there it got sold back to unchanged just before noon in Zurich.  The subsequent rally took it to its 1 p.m. EDT high---and from there it traded flat into the close.  Platinum closed up $15 on the day.

It was more or less the same chart pattern for palladium, except it got sold down just before 2 p.m. Zurich time---and stayed down before rallying just before lunch in New York.   All the price action was done by 1 p.m. EDT---and it traded flat after that.  Palladium closed up $7.

The dollar index closed at 81.43 late on Wednesday afternoon in New York.  From there it traded a few basis points lower until around 12:30 p.m. Hong Kong time.  It rallied in fits and starts to its 81.63 high, which came at 10 a.m. EDT in New York.  From there it got sold down---and gave up half its gains, closing at 81.53---which was up 10 basis points on the day

The gold stocks started off in the red, before rallying barely back into positive territory by noon in New York when gold had its little rally.  From there, the gold stocks flopped and chopped around, finishing the Thursday session basically unchanged, as the HUI closed up a miniscule 0.03%.  But that's better than the alternative.

Despite the fact that silver was down most of the day, their associated equities followed a similar path as gold's---and Nick Laird's Intraday Silver Sentiment Index closed up 0.29%.

The CME's Daily Delivery Report showed that 500 gold and 11 silver contracts were posted for delivery within the Comex-approved warehouses on Monday.  The only short/issuer was Barclays out of its client account.  The two biggest long/stoppers were JPMorgan with 237 contracts for its client account---and Barclays with 103 contracts for its in-house [proprietary] trading account.  The link to yesterday's Issuers and Stoppers Report is here---and it's worth a look.

The Preliminary Report for the Thursday trading session showed no change in August open interest---and it still sits at 2,615 contracts.  You can subtract the 500 contracts to be delivered on Monday from that number, but that still leaves a bit more than 2,000 contracts open in August.  I'll be interested in who the short/issuers are when they step out of the weeds.

There were no reported changes in GLD yesterday---and as of 7:37 p.m. EDT yesterday evening there was no reported changes in SLV.  But when I was editing today's missive in the wee hours of this morning, I noted that an authorized participant added a very chunky 2,159,154 troy ounces to SLV.  I would guess that the deposit into SLV on Wednesday, plus the one yesterday, was used to cover an existing short position.  And if you're looking for a name, it would be JPMorgan.

For whatever reason, there was no weekly update to the SLV bar list posted on the Internet site yesterday---and Joshua Gibbons, the " Guru of the SLV Bar List" left a note on his Web site that the data may be forthcoming on Sunday.  I'll update the situation in next Tuesday's column.

The U.S. Mint had a tiny sales report.  They sold 1,000 troy ounces of gold eagles---and 500 one-ounce 24K gold buffaloes.

It was pretty quiet over at the Comex-approved depositories on Wednesday.  Only 5,464 troy ounces of gold were reported received---and in silver, 200,754 troy ounces were shipped out.

I have the usual number of stories for a mid-week column---and I'm certainly happy that I have fewer than I've had all week so far.

¤ The Wrap

I openly confess to believing that the large trader reporting system and the COT reports are among the most reliable government reports of all. I say this not only from studying the COT reports for more than three decades, but also from having filed numerous large trader reports on behalf of clients many years ago. There are relatively few large reporting traders (around 250 in COMEX gold and copper and less than 200 in COMEX silver) and every large reporting trader, by strict regulation, must submit a daily report whenever a reporting position changes.

From the small number of traders required to submit reporting data to the fact that everything is computerized and recorded, the COT Report is not difficult to assemble. I would submit that this is what enabled the CFTC to uncover that many of JPMorgan’s reports were false. Further, since futures trading is zero sum and all long and short positions must balance, there is an additional built-in confirmation in that any trader reporting incorrectly would cause an imbalance in other traders’ positions. - Silver analyst Ted Butler: 06 August 2014

I'm not prepared to read much into yesterday's price action in either gold or silver---and I consider it just another day off the calendar more than anything.  I wasn't happy with the volume numbers in gold, but they were what they were.

Here are the six-month charts for both gold and silver once again---and yesterday's price action didn't change anything in the grand scheme of things.

Gold is still above its respective 50- and 200-day moving averages---and silver continues to languish.  I get the impression that this dichotomy won't last much longer.

As I write this paragraph, the London open is 30 minutes away.  After sliding a few dollars in the first four hours of Far East trading, the gold price began to rally---and at this point is up $8.  The other three precious metals are up decent amounts as well.  Needless to say, gold volume is quite substantial already, with volume in December at 37,000 contracts, net of August and September, so this rally is not going unopposed.  Silver's net volume is 6,100 contracts, which is decent, but not overly large.  The dollar index is down a handful of basis points.

Today we get the latest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday.  I'm expecting to see some improvement in the Commercial net short positions in both gold and silver---and how much improvement is directly dependent on how much of Tuesday's price decline in both metals was reported to the CFTC in a timely manner.

And as I've already mentioned in this space a couple of times this week, we also get the companion Bank Participation Report [BPR].  These data are extracted directly from the COT Report---and for this one day a month we get to see how big the long and short positions are for the big banks vs. the rest of the traders on the Comex.

I'll have all the COT and BPR data in this column tomorrow.

And as I send this out the door at 4:45 a.m. EDT, I see that all four precious metals peaked out just before the London open---and have sold off a hair since, but are still up from the New York close yesterday.  Gold volume, which was a huge before the London open, is now a monstrous 54,000 contracts net of August and September volume, which is highly unusual.  Silver volume is now way up there as well, a bit over 10,000 contracts net of roll-overs.  I'm at a loss to explain these volume numbers with so little price action associated with them.  The dollar index took a bit of a nosedive in the last hour going into the London open, dropping 20 basis points from its New York close yesterday, but has now recovered somewhat---and is only down 13 basis points.

Based on this activity, I'm not sure how the rest of the trading day will unfold, especially once the Comex opens at 8:20 a.m. EDT this morning, but since it's a Friday, nothing will surprise me when I check the charts when I get up later this morning.

Enjoy your 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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