Thursday, August 28: Today in Gold and Silver

NEW YORK ( TheStreet) -- Nothing much should be read into the gold price action yesterday, except to note that the tiny gains that were present at the Comex open in New York on Wednesday, got cut in half by around 11:30 a.m. EDT.  After the gold price traded flat into the 5:15 p.m. close of electronic trading.

Once again the low and high ticks aren't worth my effort to look up.

Gold closed in New York at $1,282.70 spot, up $2.10 from Tuesday's close.  Net volume was extremely light at only 55,000 contracts.

Not much happened in silver yesterday, either---although the 'rally' from the London silver fix into the Comex open met the same fate as it has for the last three days in a row.

The price traded well within a two-bit range, so I shan't look up the low and high ticks for silver, either.

Silver finished the Wednesday session at $19.435 spot, up a whole 8 cents from Tuesday's close.  And, as expected, gross volume was enormous at 79,000 contracts as the large traders had to be out of their September futures contracts by the end of Comex trading yesterday.  Net volume was a tiny 3,600 contracts.

Platinum rallied about a percent---and hit its high at 10 a.m. Zurich time---and that was it for the rest of the day, although it rallied a handful of dollars a few minutes before the 5:15 p.m. EDT close.  The metal finished up six bucks.

Palladium chopped around a dollar or two either side of unchanged until 9 a.m. EDT in New York.  Then it rallied up to $891 spot---and wasn't allowed to trade any higher than that.  Palladium got sold off four bucks going into the close of electronic trading---and only finished up 6 bucks at $887 spot.

The dollar index closed late on Tuesday afternoon in New York at 82.67---and then chopped sideways until London opened.  The 82.41 low came around 10:45 a.m. EDT---and from there it rallied a handful of basis points, finishing the Wednesday trading session at 82.47---down 20 basis points on the day.

The gold shares traded basically sideways in a very tight range either side of unchanged---and the HUI finished down 0.12%.  Nothing to see here.

The silver equities rallied into positive territory shortly after trading began at 9:30 a.m. EDT in New York yesterday, but it was quietly down hill from there, as Nick Laird's Intraday Silver Sentiment Index closed down 1.12%.

The CME Daily Delivery Report showed that 39 gold and one silver contracts were posted for delivery within the Comex-approved depositories on Friday.  Morgan Stanley issued all of them---and Canada's Scotiabank stopped most of them.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that 39 gold and one silver contract were still open for August---and once you subtract out the deliveries posted in the previous paragraph, you'll see that the August delivery month is done.  First day notice for delivery into the September silver contract should be posted on the CME's website late this evening EDT---and I'll have all the numbers for you in tomorrow's column.

There were no reported changes in GLD yesterday---and as of 9:15 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

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

There was a decent amount of gold deposited over at the Comex-approved depositories on Tuesday.  Canada's Scotiabank reported receiving 63,993 troy ounces---and none was shipped out.  The link to that activity is here.

In silver, nothing was reported received, but 494,747 troy ounces were shipped out the door, with almost 90 percent of that amount coming out of the CNT Depository.  The rest came out of Scotiabank.  The link to that action is here.

For the second day in a row I don't have all that many stories, at least not compared to Tuesday's Critical Reads section.

¤ The Wrap

Try to imagine for a moment that the warehouse movements were occurring, not in silver, but in another commodity, like gold or copper. If the equivalent of two full days of world production were being moved weekly into and out from the COMEX gold or copper warehouses, as is the case in silver, would anyone notice?

I would think that if 550,000 oz of gold came into and out from the COMEX gold warehouses on a weekly basis for years, that movement would be a prime topic of conversation. No, check that – tongues would be wagging in trying to discern why so much gold was being physically moved. Likewise, if 100,000 tonnes of copper (2 days world production) on average came into and out from the COMEX warehouses on a weekly basis, all would be astounded (especially seeing as total COMEX copper inventories are around 26,000 tonnes).

Since gold is not primarily an industrial commodity, it’s hard to imagine the motivation investors would have in physically moving so much metal in and out. And even though copper is very much an industrial metal, it’s almost impossible to imagine that much copper being moved. Then what the heck is going on in COMEX silver? If it isn’t extreme tightness, I don’t know what it is. And I hope no one asks that if silver is experiencing such tightness due to demand then why is the price so low? - Silver analyst Ted Butler: 23 August 2014

I wouldn't read a thing into the price action of either gold or silver yesterday.  As I've been writing about since Saturday, Wednesday was the last day for the large traders to sell or roll their September Comex contracts.  There wasn't much volume in gold, as September is not a traditional delivery month, but it is for silver---and as I said in The Wrap in my Wednesday column, I expected silver volume to pick up substantially as the trading day wore on, and that's exactly what happened.

Glancing at the CME's Preliminary Report for the Wednesday trading session once again, I see that open interest in the September silver contract took a big hit, as it plunged by more than 50 percent from Tuesday---and is now down to 12,328 contracts.  Expect that number to decrease just as dramatically in tomorrow's report, as the rest of the traders in the September contract have to be out by the end of Comex trading at 1:30 p.m. EDT this afternoon.  And as an aside, there are now 579 gold contracts still open in the September delivery month---and that's an increase of 63 contracts from Tuesday.  If forced to bet ten bucks, I'd guess that virtually all these contract holders will be looking for physical delivery next month.

Here, once again, are the 6-month charts for both gold and silver---and although they both show a positive bias at the moment, I'm still choked with caution, as JPMorgan et al show no signs of loosening their iron grip on precious metal prices.

And as I type this paragraph, the London open is about 45 minutes away---and all four precious metals are up a bit from their respective closes on Wednesday afternoon in New York.  Gold's net volume is a bit over 7,000 contracts, which is fumes and vapours---and silver's net volume is only 1,900 contracts.  Absolutely nothing to see here, although I know for a fact, as I mentioned earlier, that we'll see another big volume day in silver once again.  The dollar index is down a handful of basis points.

And as I fire this out the door at 5:05 a.m. EDT, there has certainly been some price activity in the precious metals worthy of the name, especially in silver.  As I mentioned in the previous paragraph, there were tiny rallies underway in Far East trading, but shortly after 2 p.m. Hong Kong time---and about 45 minutes before London opened, silver took off to the upside.  It ran into JPMorgan et al a couple of times, but that didn't slow the rally down by much.  However, shortly after 9 a.m. BST, it looks like they got the job done, at least for the moment.  Here's the Kitco silver chart as of 4:55 a.m. EDT.

Gold volume has now exploded out to a bit over 26,000 contracts, as the rally in gold ran into "da boyz" as well.  Silver's net volume has blown out to around 11,000 contracts, more than five times what it was just 45 minutes before the London open, so it's obvious that JPMorgan et al were at battle station selling however many Comex contracts it took to put out this silver price spike, because if they hadn't, we'd be looking at 3-digit silver price right now.

I'm surprised to see this sort of price action on the last day of the roll-overs out of the September silver contract, as I though it would be rather quiet from a price perspective, sort of like it was on Wednesday.  Obviously that theory is out the window---and I await the New York open with great interest.

See you 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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