Wednesday, September 17: Today in Gold and Silver

NEW YORK ( TheStreet) -- Looking at the Kitco chart below, you can see that the gold price made four attempts to rally during the Tuesday trading session, with the most impressive one coming at 11:40 a.m. EDT when the dollar index fell out of bed.  But each time there was a not-for-profit seller in the wings to make sure that those rallies didn't go anywhere, by throwing whatever Comex paper was necessary at them.

The low and high ticks were recorded as $1,232.20 and $1,243.20 in the December contract.

Gold closed in New York yesterday at $1,234.90 up only $2.20 on the day when all was said and done.  Obviously the price would have finished quite a bit higher if JPMorgan hadn't shown up when the did.  Net volume was only 113,000 contracts, so it wasn't overly difficult for 'da boyz' to keep the gold price in line.

After the obligatory down tick at the 6 p.m. open, the chart pattern in silver was more or less the same, so I won't dwell on it much further, but the price capping after the 11:40 a.m. rally is more than obvious.

The low and high ticks were reported by the CME Group as $18.61 and $18.885 in the December contract as well.

Silver finished the Tuesday session at $18.685 spot, up 3 whole cents from Monday. Net volume was 35,500 contracts.

The platinum and palladium charts looked similar in some ways to the gold and silver charts, with the most conspicuous feature in both being the rally at 11:40 a.m. EDT.  Platinum finished up 4 dollars---and palladium closed up 8 bucks.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 84.25---and then jumped around in a 25 basis point range for a large portion of the Tuesday session---and really looked like it wanted to head south a couple of times, but it appeared that a willing buyer was showing up to catch the proverbial falling knife until it really took at header at 11:40 a.m. EDT.  It's low tick of 83.90 was met with a buyer of last resort---and it rallied back to just above the 84.00 mark, closing the Tuesday session at 84.07---down 18 basis points.  I'm just speculating here, but it's a good bet that the dollar index would have closed significantly lower if left to its own devices, which it apparently wasn't.  Here's the 3-day chart.

The gold stocks opened a bit lower, but then quickly rallied into positive territory once gold rallied in New York.  But more than half of those gains disappeared by the end of the Tuesday session---and the HUI only finished up 0.48%.

The silver stocks got sold down much harder at the open---and the subsequent rally into positive territory didn't hold---as Nick Laird's Intraday Silver Sentiment Index closed down 0.15%.

The CME's Daily Delivery Report showed that zero gold and 251 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  There were only two short/issuers---Jefferies with 196 contracts and Barclays with 55. There's a decent list of long/stoppers---and it's worth a quick look. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that there are still 33 gold contracts open in September---and 609 silver contracts, down 15 from Monday's report.  But from those 609 contracts must be subtracted Thursday's 251 contract delivery.

I wasn't entirely surprised to see a withdrawal from GLD yesterday.  This time an authorized participant withdrew 134,637 troy ounces.  And as of 8:23 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was another sales report from the U.S. Mint.  They sold 3,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 850,000 silver eagles.

Over at the Comex-approved depositories on Monday, they reported that 32.250 troy ounces of gold were withdrawn---and all of it was from Canada's Scotiabank.  Nothing was reported received.  The link to that activity is here.

It was much busier in silver, of course, as 598,756 troy ounces were received---and a smallish 30,417 troy ounces were removed.  The big deposit was at CNT.  The link to that action is here.

As promised, I have a lot fewer stories today---and will probably have less as the balance of the week progresses.

¤ The Wrap

An additional signal in the physical silver market that has been unusual and unexpected (at least by me) are the deposits into the big silver ETF, SLV. This week close to 6.5 million oz. of silver were deposited into the trust and over the past four weeks nearly 14 million oz. have been deposited. I don’t recall a previous occasion of extended price weakness and significant metal inflows into the SLV, so the deposits were certainly unexpected by me. Clearly, there have been no net inflows into the big gold ETF, GLD, further highlighting the deposits into SLV. Between a different COMEX warehouse movement pattern and dissimilar ETF metal flows, the stagnant level of silver/gold price ratio becomes even more suspicious.

The real question is who is behind the net new buying of SLV shares? By process of elimination, we know it’s not technical trend-following or price-momentum traders because these traders never buy on extended price declines. By default, the new net buyers of shares of SLV must be value-type traders, attracted by silver’s low and undervalued price. As such, it would appear that these new buyers in SLV are unlikely to sell on yet-lower silver prices and may continue to buy. I may be missing something, but I don’t see how this is bearish. - Silver analyst Ted Butler: 13 September 2014

I must admit that I was not overly happy with the price action on the rallies in both gold and silver yesterday.  It was obvious, at least to me, that they got capped in the same old way.  Volume wasn't overly heavy, so maybe I'm overreacting, but I must admit to be overly sensitive to what happens to rallies, especially in silver, before they get out of hand.  Let's see what happens next time this happens. 

Here are the 6-month gold and silver charts with Tuesday's data included.

And as I type this paragraph, it's barely noon Hong Kong time---and the London open is still three hours away.  I'm way ahead today because I have a plane to catch early tomorrow morning---and I'll be filing today's column as soon as I can, as 5:00 a.m. comes way too early.

At the moment, none of the precious metals are doing a thing.  Gold volume is 7,400 contracts---and silver's net volume is only 1,500 contracts.  As you can tell, unless there is some serious price action, there's no Globex volume worth mentioning between the 6 p.m. open in New York---and the London open the following morning.  The real big volume is always in New York.

Yesterday was also the cut-off for Friday's Commitment of Traders Report---and although I'm expecting good things in it, yesterday's volume/price action will certainly take away a bit from the positive number, as 'da boyz' were either selling longs or going short against all comers in the gold and silver 'rallies' we had yesterday.

And as I fire this off to Stowe, Vermont at 2:10 a.m. EDT, gold, silver and platinum are up a bit---and palladium is flat.  Gold and silver volume is fumes and vapours at 8,700 and 1,700 contracts respectively.  The dollar index is flat.

See you tomorrow.

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