Tuesday, November 25: Today in Gold and Silver

NEW YORK ( TheStreet) -- I wouldn't read too much into yesterday's gold price action if I were you.  The only thing that was noteworthy was that gold's thin toe-hold on the $1,200 spot price mark disappeared before the London trading day began---and even the feeblest attempt to get back above that price was turned away.

With Thursday being Thanksgiving in the U.S., we are now in the midst of the final three roll-over days out of the December contract and, not surprisingly, volumes are pretty heavy---with most of it being of the roll-over variety.

With gold trading within a ten dollar price range, the high and low ticks aren't worth the effort of looking up.

Gold finished the Monday session at $1,198.30 spot, down $3.80 from Friday's close.  Gross volume was close to a quarter of a million contracts, but once the roll-overs were subtracted out, the volume crashed to only 74,000 contracts---which is a familiar occurrence as we approach every first notice day which, for December, is Friday.

The silver price action had a bit more shape to it---initially down, of course, with the low tick coming shortly before 1 p.m. GMT in London---and about twenty-five minutes before the Comex open.  The subsequent rally lasted until around 8:20 a.m. EST---and the was pretty much it for the remainder of the New York session.

The low and high ticks were reported by the CME Group as $16.245 and $16.47 in the December contract.

Silver closed in New York yesterday at $16.465 spot, up 1.5 cents on the day.  Gross volume was well north of 90,000 contracts, but the lion's share of that was roll-overs---and it all netted out to 18,500 contracts, which is very light.

The platinum price chopped around unchanged up until shortly before 11 a.m. EST in New York---and on the news that the metal was going to be in a 1.33 million ounce deficit for the 2015 calendar year, some kind soul peeled 20 bucks off the price by noon in New York.  The low tick of $1,193 spot came moments before the 5:15 p.m. close of electronic trading, but it got bid back above the $1,200 spot price mark right at the close.  It finished the Monday session at $1,202 spot, down twenty bucks from Friday.

The palladium price did nothing until shortly before 2 p.m. Zurich time---and then began to rally, but got stopped short of the $800 spot price mark in late morning trading in New York.  It got sold down to a three dollar loss until around 3 p.m. EST in New York, but managed to rally a bit, closing up a buck.  The structural deficit in palladium for 2015 is just as bad as platinum, if not worse.

The dollar index closed late on Friday afternoon in New York at 88.265---and didn't do much during the entire Monday trading session, closing at 99.154---which was down 11 basis points.  Nothing to see here.

The gold stocks opened down a bit, but rallied back into positive territory, albeit briefly, with their highs of the day coming just before 10:30 a.m. EST.  It was all down hill from there until shortly after 2 p.m.---and from there they chopped sideways, as the HUI closed down 1.33%.

Despite the fact that silver didn't do all that badly yesterday, the silver equities never got a sniff of positive territory---and were down over 3 percent at one point.  By the end of the Monday trading session, Nick Laird's Intraday Silver Sentiment Index had shaved its loses to 'only' 2.13%.

The CME Daily Delivery Report showed that 7 gold and 28 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  Scotiabank was the only long/stopper in both metals---and the only short/issuer in silver was Jefferies.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that gold open interest in the November contract dropped from 20 to 9 contracts---and silver's o.i. for the same month dropped from 88 down to 30 contracts.  Once you subtract out the deliveries in the previous paragraphs, only 2 gold and 2 silver contracts are left in the month.

There were no reported changes in GLD on Monday---and as of 7:53 p.m. EST yesterday evening, there were no reported changes in SLV, either.  But when I checked the iShares.com Internet site at 3:06 a.m. EST this morning, I noted that an authorized participant withdrew 1,341,418 troy ounces.

There was a decent sales report from the U.S. Mint yesterday.  They sold 3,500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---an another 426,500 silver eagles.

There wasn't much activity in gold over at the COMEX-approved depositories on Friday.   No gold was reported received---and only 6,028 troy ounces were shipped out.

In silver, there was 96,672 troy ounces reported received---and 387,118 troy ounces shipped out.  The link to that activity is here.

I have a lot of stories today---and I hope you find some that you like.

¤ The Wrap

At current prices, there is $6.6 trillion worth of gold in the world and a little over $16 billion worth of silver. In other words, on a dollar (or any other currency) basis, there is more than 400 times more gold in the world than silver. Expressed differently, all the silver in the world is worth only one-quarter of one percent (0.25%) of what all the world’s gold is worth. Even by doubling the amount of silver by including coins and small bars (most of which will never be converted into 1,000 oz bars), one would still end up with the gold being worth 200 times what the silver is worth or silver being worth 0.5% of what the gold is worth. These are the most extreme valuation differences ever.

Like investors in everything else, precious metals investors seek out the best relative value available. Investors everywhere want the best value, lowest risk and biggest bang for their buck. Due to an increasingly obvious price manipulation on the COMEX, silver has reached a degree of undervaluation relative to gold that is so extreme as to be almost unbelievable, even when expressed in simple arithmetic terms. And because gold is so cheap compared to other asset classes, that automatically means silver is even cheaper compared to every other asset. - Silver analyst Ted Butler: 22 November 2014

As I mentioned in my gold commentary at the top of the column, there wasn't much in the way of price activity now that we're in the throes of options and futures expiry.  The last day to be out of December is Thursday---and with that day being Thanksgiving in the U.S., I expect that the rest of the big volume will come today and tomorrow, as New York will be closed on that day, although I get the impression that the gold market may still be open.

Here are the 6-month charts for five key commodities, plus natural gas.

As I said on Saturday, gold touched its 50-day moving average in Friday trading---and hasn't been anywhere near it since, as every rally attempt above the $1,200 spot price mark has been turned back.  If you carefully note the gold chart above, you'll see that we had what was most likely an engineered price failure at the 50-day moving average back in the third week of October---and I'm wondering out loud if we could be looking at a similar set-up right here.

Time will tell---and not too much time, either.

And as I write this paragraph, the London open is thirty minutes away.  There wasn't much activity in gold as far as price was concerned in Far East trading on their Tuesday, although it should be noted that both times gold broke through, or came close to the $1,200 spot price mark, there was a willing seller there to make sure that those rally attempts got no further---the last time coming at 3 p.m. Hong Kong time.  Gold's gross volume is 19,000 contracts at the moment, with about 30 percent of that amount consisting of roll-overs out of December and into the new front month, which is February.

Here's the Kitco silver chart as of 5:28 a.m. EST---and gross volume is now over 17,000 contracts.

Both spike rallies in silver, which occurred at the same time as gold's, met the same fate.  Silver's gross volume is 8,000 contracts, with almost half of that being roll-overs out of December and into March, the new front month once December goes off the board.

Platinum is up a few dollars---and the palladium price is flat.  The dollar index is chopping sideways in a very tight range.

As Ted Butler said on the phone yesterday, we're still 'locked and loaded' for a big up-move in the 'Big 6' commodities.  If this move is in the cards, only the 'when' is still unknown---as is how far JPMorgan et al will let prices run this time around.  If the central banks of the world are looking for inflation---commodity inflation is a sure-fire way of doing the job, as making up money out of thin air [QE] is now a spent force.

And as I send this out the door at 5:15 a.m. EST this morning, all four precious metals are jumping around a bit.  Another attempt by gold to rally above $1,200 spot got sold down immediately---as did the respective rallies in the the other three precious metals, but all are rallying anew as I hit the send button.  All four are above their respective closing prices in New York yesterday---and platinum is doing particularly well after its vicious sell-off in New York late Monday morning, as is silver at the moment.

Gross gold volume is 45,000 contracts, with 50 percent of that being roll-overs, so net volume isn't overly heavy.  Silver's gross volume is 16,000 contracts with 60 percent of that being roll-overs out of the December contract as well.  The dollar index isn't doing a lot---and is basically unchanged from yesterday's New York close.

I'm not expecting much in the way of fireworks for the remainder of the week, but with the supply/demand fundamentals in all four precious metals so far out of whack, you just never know.

That's all I have for today's column, which is more than enough---and I'll certainly be interested in what the charts show when I power up my computer later this morning.

See you tomorrow.

Ed Steer

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