Wednesday, September 24: Today in Gold and Silver

NEW YORK ( TheStreet) -- After rallying a few dollar in early Far East trading on their Tuesday morning, the gold price didn't do much until about 9:20 a.m. BST in London.  The two-step price rally got capped at, or just after, the noon London silver fix---and by the 8:20 a.m. Comex open in New York, almost all the gains had vanished.  The gold price traded flat from there into the 5:15 p.m. EDT close of electronic trading.

The low and high ticks were reported by the CME Group as $1,214.70 and $1,237.00 in the December contract.

Gold finished the Tuesday session at $1,222.90 spot, up $8.10 from Monday's close, but would have obviously closed materially higher if allowed to do so.  Net volume was 140,000 contracts, with a big chunk of that used by JPMorgan et al to put out the rally fire in morning trading in London.

Brad Robertson sent along the 5-minute gold chart for the appropriate period---and you can see where all the volume occurred.  Note the big volume spike at the noon silver fix in London at 5:00 a.m. MDT on this chart.  That's the moment that last big spike in the gold price occurred.  The sell-off began shortly after that.  Don't forget to add two hours for EDT, as the time on this chart is MDT.  The 'click to enlarge' feature really helps here.

The silver price spiked as well shortly after 9 a.m. in London---and the price got hammered flat just as it caught sight of the $18 spot price---and it was obvious that there was a "Do Not Pass $17.95 Spot" line in the sand after that, when you check the Kitco chart below.

The low and highs were reported as $17.61 and $17.99 in the December contract.

Silver finished the Tuesday trading session at $17.78 spot, up the magnificent sum of 5 cents the ounce.  Net volume was 44,500 contracts, with half of that coming before the Comex open, as da boyz were obviously at battle station in this metal as well.

Platinum's rally began right at the 10 a.m. open in Zurich---and met the sellers of last resort around 9:20 a.m. London time.  Like gold, platinum also had a secondary rally that got capped shortly after the noon London silver fix---and it was all down hill from there.  Da boyz turned a big gain into a 3 dollar gain.

Palladium followed a similar pattern, although it managed to shake off the selling in the New York session---and actually rallied a bit until shortly after 11 a.m. in New York.  Then it traded ruler flat into the 5:15 p.m. close of electronic trading.  Palladium closed up 12 bucks but, like all the other precious metals yesterday, would have closed at an eye-watering price if da boyz had just put their collective hands in their pockets.  But, dear reader, that's precisely why they're there.

The dollar index closed late on Monday afternoon in New York at 84.70---and didn't do much until shortly after 2:30 p.m. Hong Kong time.  At that point it began to drift lower---and that decline really picked up steam starting at precisely 9 a.m. BST in London.  The low tick of 84.37 came minutes before 8:00 a.m. EDT.  From there it rallied back to 84.75 before trading more or less sideways into the close.  The index finished the trading day at 84.70---unchanged on the day.

There certainly was correlation between the dollar index and the precious metal price at the first part of the index move, but it was obvious that JPMorgan et al had to work hard to make the precious metal prices fit the dollar index action.   And in my opinion, they were less than successful.

The gold equities gapped up a bit over 2 percent at the open, sold off a bit into the 11 p.m. EDT London close---and then rallied until 3 p.m. before they got sold down a bit into the close.  The HUI finished up 2.02%.

The silver equities also jumped up at the open---and they followed a very similar path to the gold stocks, as Nick Laird's Intraday Silver Sentiment Index closed up 2.26%.

The CME Daily Delivery Report showed that 1 lonely gold contract and 31 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  There was nothing exciting to look at is as far as issuers and stoppers went, so I shan't link the webpage today.

The CME Preliminary Report for the Tuesday trading session showed that there are 14 gold and 113 silver contracts still open in the September contract---minus the contracts posted in the previous paragraph.

Another day---and another withdrawal from GLD.  This time it was 38,465 troy ounces.  And as of 9:56 p.m. yesterday evening, there were no reported changes in SLV.

Another day---and another decent sales report from the U.S. Mint.  They sold 2,800 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---345,000 silver eagles---and another 100 platinum eagles.

Mint sales for September are substantially ahead of August sales already---and I have a story about that courtesy of Mark O'Byrne over at in the Critical Reads section further down.

It was a pretty big day in both gold and silver over at the Comex-approved warehouses on Monday.  In gold, there was only 1,125 troy ounces reported received, but a chunky 164,093 troy ounces was shipped out.  Of that amount, 160,750 troy ounces came out of JPMorgan's vault.  I've seen that number before, so I decided to divide it by 32.15 troy ounces---and came out with precisely 5,000 kilobars of gold.  The link to that activity is here.

In silver there was a very chunky 1,204,226 troy ounces reported received---all into the CNT Depository---and only 1,000 ounces were shipped out.  The link to that action is here.

I have a reasonable number of stories, but the most import one is the last one.  So if you have limited time, just read the headlines of the other stories as you work your way down to the last offering of the day.  Its title is today's column headline.

¤ The Wrap

The main physical signal in silver to me continues to revolve around the turnover or movement of metal into and out from the COMEX-approved silver warehouses. On four days of the past week, turnover was well below year-to-date averages, but Wednesday’s very large turnover (3 million oz), brought the entire week’s turnover to an above average 4.8 million oz. Total COMEX silver inventories declined 1.1 million oz to 180.7 million oz.

I continue to be focused on the physical turnover---and not what the total inventory might be. Interestingly, total COMEX silver inventories are up the same amount year to date as the average weekly movement. Stated differently, the increase in total COMEX silver inventories this year is equal to just 1 of the 36 average weekly movements this year. The less than 5 million oz increase in total inventories compares to the more than 160 million oz moved in and out for the past eight and a half months. I’m convinced the physical movement of 160 million oz of silver seems much more important than the increase of 5 million oz over the same time. - Silver analyst Ted Butler: 20 September 2014

I must admit that I wasn't at all surprised by what I saw in the Kitco precious metal charts when I got out of bed late yesterday morning.  JPMorgan et al capped---and then beat the rallies down in the same old way as they've always done it.

Here are the 6-month charts for both gold and silver with yesterday's trading price/volume data added.

Yesterday's volume wasn't overly heavy in either metal, but it was more than enough to turn back the price spikes in morning trading in London.

And as I write this paragraph, the London open is 15 minutes away---and there's not much going on as far as the gold price is concerned.  Silver, after it's usual down tick at the open, has now rallied back to unchanged.  Platinum has rallied more or less quietly during the Far East trading session---and is now up 11 bucks.  Palladium is also up at the moment---and its tiny rally attempt to the $820 spot mark, ran into the usual sellers of last resort.

Gold volume is only 16,000 contracts net---and silver volume is pretty decent at 6,000 contracts.  The dollar index is chopping a few basis points around unchanged.

Yesterday was the cut-off from this Friday's Commitment of Traders Report.  Without doubt there was some deterioration in the Commercial net short positions of JPMorgan et al after yesterday's price action, but the report should still be one for the record books when it gets posted on the CFTC's website at 3:30 p.m. EDT.

And as I hit the send button on today's efforts, I note that the tiny rallies in all four precious metals appeared to end shortly after London trading began---and only palladium is up on the day but, it too, is obviously running into resistance.  Gold volume is just over 25,000 contracts, which is close to 'normal'---whatever that means these days---and silver's volume is 11,000 contracts, which is pretty heavy for such tiny price action.  The dollar index continues to chop around either side of unchanged.

I highly suspect that we've seen the price bottom in all four precious metals.  Of course I've hinted at that before and look what has happened in the interim.  But there is a limit to how much shorting the technical funds/Managed Money traders are prepared to do, or can afford, once they've pitched all their long positions.  That is the limiting factor to the downside---and once that point is reached, the bottom is in.

They went massively short during the engineered price declines both on Friday and early Monday morning in Far East trading---and I would guess that they're pretty 'full up' on the short side.

Now it's only a matter, as I've also said on numerous occasions, as to how da boyz react when the Managed Money traders attempt to cover their short positions in all four precious metals---plus copper and crude oil.  That, and only that, will determine how high we go in price---and how fast we get there. 

Before heading off to bed, here's an offer from Casey Research that you should seriously consider.  The San Antonio conference entitled " Thriving in a Crisis Economy" is soon to become available in audio form---all 26 hours of it.  Also included is a bonus CD that shows all the charts and graphs of each speaker, including mine.

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That's all I have for today---and I'll see you here tomorrow.

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