Tuesday, September 2: Today in Gold and Silver

NEW YORK ( TheStreet) -- With the markets closed in the U.S. for the Labor/Labour Day holiday on Monday, the price action in any of the four precious metals is barely worth mentioning, except for palladium, which still continues to inch higher.

Gold and silver did manage to rally a bit during early morning trading in London on Monday, but both ran into selling at 10 a.m. BST---and both closed with tiny losses, sort of like what happened on Friday in New York trading.

And, once again, silver got sold down at the open of New York trading on Sunday evening EDT.

The volume in both metals were fumes and vapours.

Here are the charts.

The dollar index closed late on Friday afternoon in New York at 82.73---and made it as high as 82.80 in late morning trading in Hong Kong on their Monday morning.  From there it began to slide, hitting its 82.68 low minutes after 10 a.m. BST in London yesterday---the exact high ticks for both gold and silver. A rather anemic looking rally began at that point, but it did make it back to 82.77 by the 'close.'

I doubt there was much volume with this---and despite the small movements in the dollar index, it's a certainty that the top in gold and silver prices---and the bottom in the dollar index, such as it was, were directly related.

With New York closed tight yesterday, there were no reports from anywhere.

Here are a couple of new charts that Nick passed around yesterday evening.  The first one shows the 5-year monthly transparent gold holdings for all published depositories, mutual funds, ETFs, etc beginning on Sept 1/2009.

The second is the same chart, except it's the 5-year monthly chart for silver.

The differences between the two charts is awesome to behold.

The main reason for today's column is to deal with the stories that have piled up over the weekend---and I have quite a few.

But before I get to those, I fired an e-mail off to Jim Rickards on the weekend, asking him for his take on the Henry Kissinger piece that was posted on The Wall Street Journal Internet site on Friday---and here's what he had to say about it:

"Kissinger, like other advocates of a world order, understands that the changes they advocate may not happen in years, decades or even a single lifetime. They understand that they are carriers of a flame that has to be passed from generation to generation. George Soros is another example of this approach. They are both guided by Karl Popper's definition of social engineering which championed the "piecemeal engineer" who does what he can to thwart particular evils rather than trying to complete utopian solutions all at once. For the piecemeal engineer like Kissinger or Soros, the key is not to change the world quickly, but rather to move incrementally and, above all, not to move backwards. What prompted Kissinger's editorial, apart from promoting his new book, is a fear that the U.S. is actually going backwards in in its ideals and goals. The most telling sentence is, "The affirmation of America's exceptional nature must be sustained. History offers no respite to countries that set aside their sense of identity in favor of a seemingly less arduous course." This is a clear slap at Obama and a warning that America must not move backwards from its exceptionalist identity and its progressive path. Kissinger understands that the tempo of American progress may vary. What he fears is not that Obama has slowed the tempo, but that Obama is moving America in the wrong direction." - Jim

¤ The Wrap

I continue to be amazed at the performance of gold and silver against the backdrop of increasing world tensions and unprecedented central bank monetary accommodation; which has resulted in high valuations for just about every asset class (stocks, bonds, real estate, art, collectibles, rare cars, etc.) except gold and silver. I can’t include all the precious metals in the non-performance category, as palladium has hit 13 year highs. My amazement is triggered by the understanding that money creation and world unrest were generally always accepted as reasons for gold and silver to rise in price.

My amazement is not all pervasive, of course, because I understand fully that there exists an overriding influence for why gold and, particularly, silver have been out of synch with all other assets. In fact, not only is the ongoing COMEX manipulation a greater price force than any other single influence on gold or silver (or copper), it is the only logical explanation for price behavior. So clear is the COMEX’s manipulation of price that the only question that matters is how long it can continue? Admittedly, that’s a tough question to answer, primarily because questions of timing always take on an aura of prophecy. - Silver analyst Ted Butler: 30 August 2014

I have little to add to what I said earlier, as Monday was a 'nothing' day---but I still had the feeling that there was a guiding hand there to make sure the precious metal price didn't create any excitement, even briefly during morning trading in London. If you look at the Kitco charts at the top of the page, the guiding hand was all too obvious on Friday going into the North American long weekend.

And as I type this paragraph, the London open is still 90 minutes away. All four precious metals got sold down a bit after Globex trading began at 6 p.m. EDT on Monday evening---and all are still down at the moment, but not by much.  Volumes in both gold and silver were insignificant on Monday---and almost the same can be said about them now.  The dollar index is up 11 basis points.

Returning to today's big story about the open invitation for central banks to rig the commodities prices through the Globex trading system [for fun, profit---and price management] for a moment. GATA and others have always suspected that this was the case---and we already had reams of evidence to back it up.  But this CME document posted on the CFTC's website really was the smoking gun---and there should be no doubt in anyone's mind at this point that some central banks are using the CME Group's carte blanche invitation to keep commodity prices exactly where they want them, regardless of supply and demand.

Ted Butler had a good reason for calling the CME Group, JPMorgan and the CFTC, crooks---and this is certainly the final piece in the puzzle.  Now we can surmise why the CFTC wouldn't do anything about the price management scheme in silver, no matter how obvious the evidence. Now it remains to be seen how the main stream press will handle this, if they touch it at all.

Peter Warburton in his classic essay of April 2001---" The Debasement of World Currency: It is inflation, but not as we know it"---had it figured out over a decade ago, but now the mechanism for how it is done has become a totally open book with yesterday's revelations.  You don't have to read the whole essay---but you should, anyway---you just need to read the three paragraphs under the sub-heading " Central banks are engaged in a desperate battle on two fronts."  More than ten years ago when I discovered this essay, along with those three paragraphs, I immediately called them " the three most important paragraphs in the world."  I still feel that way today.

And as I send this off to Stowe, Vermont at 4:20 a.m. EDT, I note that all four precious metals got hit by the HFT boyz starting moments before London opened.  It wasn't a lot in any of them, but it was obviously coordinated, since they all occurred at the very same time---and had nothing to do with the what was happening in the currencies, as the dollar index is about unchanged from when I reported on it about three hours ago.  Of course gold and silver volumes have blown out quite a bit, but with the Tuesday's numbers from the CME contaminated with Monday's trading volumes, I can't exactly tell how bad it is.

Now that we're in a brand new month, it's difficult to say how trading will proceed as the month unfolds.  But, as I've pointed out many times, if one uses the current configuration of the latest Commitment of Traders Report as a guide, neither Ted nor I are overly optimistic.  However, as I've pointed out on countless occasions as well, there's still that black swan out there, which could/would instantly negate the situation in the paper market on the Comex.

So we wait.

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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