Wednesday, December 3: Today in Gold and Silver

NEW YORK ( TheStreet) -- After getting sold down five bucks or so in the first hour of trading in New York on Monday evening, the price did nothing until the early afternoon in Far East trading.  The tiny rally that developed at that point didn't last long---and minutes after 9 a.m. GMT in London, the gold price was back under the $1,200 per ounce price mark.  That's where it stayed for the most of the remainder of the Tuesday trading session.

The high tick was the Monday close in New York---and the CME Group recorded that as $1,212.60 in the February contract.  The low was reported as $1,191.40.

Gold finished the day at $1,198.50 spot, down $14.30 from Monday's close---and safely back below it's 50-day moving average.  Net volume was  pretty heavy at 176,000 contracts.

The silver price action had a lot more shape to it, but followed a very similar path to gold.  From its Far East high, which came shortly after 2 p.m. Hong Kong time, the silver price bottomed out shortly before 1 p.m. in New York.  From there it rallied [with some resistance] until 11 a.m. EST, which corresponded with the 4 p.m. GMT close of trading in London.  After that it traded more or less sideways until the 5:15 p.m. EST close of electronic trading.

The low and high ticks were reported as $16.07 and $16.535 in the March contract.

Silver finished the Tuesday session in New York at $16.465 spot, up a half a cent from Monday's close.  Net volume was up there at 66,000 contracts.

Platinum had a very similar pattern to gold---and most of the day's losses were in by the London p.m. gold fix, which was 10 a.m. in New York.   Platinum was closed down $22 on the day.

The palladium chart was somewhat similar to the price action in silver, with all the major price inflection points coming at the same times. Palladium was closed at $801 spot, down 4 bucks from Monday.

The dollar index closed late on Monday afternoon in New York at 87.98---and the rally that had begun at the London p.m. gold fix on that day, continued unabated until its 88.67 high tick, which came around 2:40 p.m. EST on Tuesday.  From there it gave up a few basis points into the close.  The index finished the trading day at 88.63---up 65 basis points.

Considering the rally in the dollar index, gold and silver prices held up pretty well.

Here's the 3-day dollar index chart, so you can see the 10 a.m. EST low tick at the London p.m. gold fix on Monday morning in New York---and how the rally off that low has progressed over the last couple of days.

The gold stocks, which gapped down about 3 percent at the open, began to rally at the 10 a.m. EST London p.m. gold fix.  But once the highs of the day were in for all four precious metals at 11 a.m. EST an hour later, the gold stocks topped out---and from there they got sold back down to their 9:55 a.m. low tick, but rallied a bit in the close from there.  The HUI finished the Tuesday session down 3.21%.

The silver equities started off the trading day with the same price pattern as the gold stocks.  The high tick [in positive territory] also came minutes after 11 a.m. EST---and it was all down hill from there---and after 2 p.m. EST, the index traded sideways.  The silver equities came close to finishing on their low ticks---and Nick Laird's Intraday Silver Sentiment Index closed down a chunky 4.51%---giving up well over half of their Monday gains, even though the metal itself closed in positive territory, if only by a hair.

As I've said on many occasions, I've always felt like that there were times when the precious metals shares were being actively managed.  Yesterday was one of those days.

The CME Daily Delivery Report for Day 4 of the December delivery month showed that 8 gold and 110 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  In silver, the two largest short/issuers were Jefferies with 76 contracts---and JPMorgan with 31 contracts out of its client account.  The only long/stopper of note was HSBC USA with 89 contracts.  Jefferies was a distant second with 11 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday session showed that December open interest in gold fell by 1,359 contracts---and now sits at 2,250 contracts---minus the deliveries mentioned in the previous paragraph.  Silver's December open interest declined by 190 contracts, leaving 736 contracts still open---minus the 110 posted for delivery tomorrow.

An authorized participant added 76,869 troy ounces of gold to GLD on Tuesday---and there was a huge withdrawal from SLV, as an a.p. took out 2,730,965 troy ounces.  I'm sure that Ted Butler will have something to say about the activity in SLV during the last two trading days when he posts his mid-week commentary to his paying subscribers this afternoon.

The good folks over at Switzerland's Zürcher Kantonalbank updated their website with the activity in their gold and silver ETFs for the week ending on Friday, November 28---and this is what they had to report.  Their gold ETF dropped 8,741 troy ounces; but their silver ETF actually took in some metal---17,324 troy ounces to be exact.  Not a lot, to be sure, but better than the alternative.

The U.S. Mint had a smallish sales report.  They didn't sell any gold yesterday, but they did sell another 139,500 silver eagles.

Retail bullion sales continue to be as slow as molasses in January, so it's a lead-pipe cinch that almost all the silver eagles sold are being purchase by 'Mr. Big'.

There wasn't must in/out activity in gold over at the COMEX-approved depositories on Monday, as only 100 kilobars were reported received---and 1 lonely kilobar was shipped out.  The link to that activity is here.  In silver, there was 600,072 troy ounces received---and 615,470 troy ounces were shipped out.  The link to that action is here.

I don't have all that many stories for you today---and I hope there's the odd one that you'll find interesting.

¤ The Wrap

It remains to be seen if [Friday’s] high volume sell-off in shares of SLV, the big silver ETF, will result in any liquidation of metal holdings, or if the sell-off was used by short sellers to buy back previously shorted shares. Along with the relative disparity of Silver Eagle sales compared to sales of Gold Eagles, the disparity between the metal holdings in the big gold ETF, GLD, and the holdings in SLV continue to amaze. The holdings in GLD slid to another new low not seen since late 2008, while the holdings in SLV remain close to the all-time highs and nearly 150 million oz above the levels of late 2008.

Some might suggest that relative sales of Silver Eagles and holdings in SLV are so much stronger than their gold counterparts because silver is so much cheaper than gold and that’s hard to argue with; but I would add a slightly different twist. It seems to me that these relative measures of comparison has more to do with the deliberate effort of JPMorgan to manipulate silver prices lower on the COMEX for the express intent of acquiring as much physical silver as possible through any means available. The alternative explanation, I suppose, is that the physical silver fell magically into JPMorgan’s lap. - Silver analyst Ted Butler: 29 November 2014

Well, there was absolutely no follow-through to Monday's giant rally in London and New York on Tuesday---and it was as I feared, another one-day wonder---a painted key reversal to the upside that 'failed' once again.

But, in all fairness, I suppose that I should give this rally more time to materialize, but with half of Wednesday's trading session already done, with zero price movement in any of the precious metals, its hard to get get enthusiastic about a rally continuation at this point.

It should be noted that gold was closed back below its 50-day moving average---and the other three precious metals were stopped cold at their respective 50 and 200-day moving averages as well.

Here are their 6-month charts.

And as I write this paragraph, the London open is about 25 minutes away.  Precious metal prices, as I said already, are doing precisely nothing---and all, except for silver of course, are up a bit from their closing prices in New York yesterday afternoon.  Gold and silver volumes---21,000 and 6,700 contracts respectively---are very light, at least compared to what we've seen since Friday at this time of day, but their still a little chunkier than I'd like to see.  The dollar index hasn't done much of anything so far in the Wednesday trading session, but is up 7 basis points during the last hour or so.

With so little price action in any of the precious metals yesterday, we'll get an excellent read on what happened last Friday, and on Monday of this week, when the new Commitment of Traders Report hits the street at 3:30 p.m. EST this coming Friday---and I'll be very interested in what this report shows, especially in the Managed Money category.  And as I said in this space yesterday, we also get the December Bank Participation Report---and the data in that will be extremely helpful as well.

And as I send this out the door at 5:30 a.m. EST, I see that all four precious metals rallied by tiny amounts starting just before the London open.  None were allowed above their respective 50-day moving averages---and palladium was turn back at its 200-day moving average once again.

Net gold volume is approaching 39,000 contracts---and silver's net volume is around 10,500 contracts.  The dollar index is now up 18 basis points, so considering the fact that dollar index is up a bit over 100 basis points since the Monday p.m. gold fix in London, the precious metals aren't doing all that badly.

I'll be more than interested in the price action when I check the charts later this morning.

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

Ed Steer

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