Tuesday, December 9: Today in Gold and Silver

NEW YORK ( TheStreet) -- It was a very quiet trading day in gold on Monday---and even the the price spike that came minutes after the close of COMEX trading yesterday, didn't have a lot of volume associated with it.  But it did improve moral a bit, as the gold price managed to close above $1,200 spot.

The low and high tick were reported by the CME Group as $1,187.30 and $1,209.30 in the February contract.

Gold finished the Monday session in New York at $1,204.20 spot, up $11.10 from Friday's close.  Net volume was 117,000 contracts.

Here's the 5-minute tick chart courtesy of Brad Robertson---and it shows the volume associated with the post-COMEX close price spike---and it was only around 9,000 contracts in total.

Silver didn't do much of anything yesterday either and, including the price spike, traded within about a two bit range for the entire session.  It was just another day where silver was kept on a very tight price leash.

The low and high ticks were recorded as $16.165 and $16.44 in the March contract.  Volume, net of December and January, was only 27,000 contracts.

Platinum rallied until around 10:30 a.m. in Zurich on their Monday morning---and then chopped sideways into the New York close.  Platinum finished the day at $1,228.00 spot, up ten bucks on from Friday's close.

Palladium spent most of the Monday session above the $800 spot price mark.  The high tick came shortly before 10 a.m. in Zurich---and once the London gold fix was in, the price was taken back below the $800 spot price mark.  It closed at $798 spot, down 3 bucks.

The dollar index closed late on Friday afternoon at 89.36---and didn't do much until 2 a.m. Hong Kong time.  At the point it rallied to its 89.54 high, before slowly rolling over.  The decline got more serious as the New York session progressed---and it appeared that 'gentle hands' were there to catch a falling knife as the index broke through the 89 level, hitting its 88.92 low tick shortly after 2 p.m. EST.  It rallied unsteadily from there---and the dollar index closed at 89.12---down 24 basis points from Friday.

It would have obviously closed much lower if allowed to continue trading freely, which it obviously wasn't after 2:10 p.m. EST.  Here's the 3-day chart.

The gold stocks opened in positive territory, but began to sell off almost immediately, hitting their low ticks [and down over 2 percent] just minutes before noon EST.  From that point they chopped sideways until the surprise rally in gold just minutes after the COMEX close.  They were up almost 2 percent at one point, but sold off in the last hour of trading.  The HUI closed up 0.85%.

The silver equities followed a very similar pattern, but since they were sold down much harder during the early going in New York, they had a much bigger hole to dig themselves out of.  Even though they managed to make it into positive territory, they finished basically unchanged, as Nick Laird's Intraday Silver Sentiment Index closed down a tiny 0.06%.

The CME Daily Delivery Report showed that 753 gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  In gold, the two short/issuers of note were Scotiabank and JPMorgan out of its client account with 160 and 592 contracts respectively.  HSBC USA stopped 264 contracts---and JPMorgan out of its in-house [proprietary] trading account was the long/stopper on 486 contracts, sticking it to its clients for the benefit of the company once again.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in December dropped by 28 contracts, down to 1,935 contract---also minus the 753 contracts posted for delivery in the previous paragraph.  Silver's December o.i. declined by 29 contracts down to 587 contracts still open---minus the 5 contracts mentioned above.

There was another withdrawal from GLD by an authorized participant yesterday.  This time 57,648 troy ounces were taken out.  And as of 9:22 p.m. EST yesterday evening, there were no reported changes in SLV.

There was another silver eagles sales report from the U.S. Mint on Monday.  They sold 495,500 of them.  No gold eagles or gold buffaloes were sold.  It's another record year for silver eagles sales, as 42,864,000 have been sold so far in 2014---compared to 42,675,000 reported sold in 2013.

BIG GOLD editor Jeff Clark sent me this silver eagle story posted on the silvercoinstoday.com Internet site on Sunday.  It's headlined " 2015 American Eagle Silver Bullion Coins Available January 12"---and it's very much worth reading.  It's also posted in the Critical Reads section further down.

It was another whopper in/out day in both gold and silver over at the COMEX-approved depositories on Friday.  In gold---186,465 troy ounces were reported received, with the lion's share going into JPMorgan and Scotiabank.  There were 10,383 troy ounces shipped out the door.  The link to that activity is here.

In silver---600,325 troy ounces were reported received---and 1,064,019 troy ounces were shipped out the door.  The 600,325 troy ounces were received at the CNT Depository---and the withdrawals were spread around between four of the six depositories.  The link to that action is here.

Although the 'unofficial' China gold imports through Hong Kong figures for October were reported about ten days ago in stories from Reuters and Bloomberg, the 'official' numbers weren't released until yesterday.  They show that 77.626 tonnes imported.

As you may be aware, I had written off the chart below many months ago, as it was becoming obvious that it was no longer a proxy for gold being imported into China.  The last three months have shown that I may have been premature in my opinion, as it's obvious China is buying gold from all sources now, even to the point of resurrecting imports through Hong Kong.  Here's Nick Laird's most excellent chart---and it has returned to moving from lower left to upper right with a new vigor.

I have an embarrassingly large number of stories for you today---and since I refused to edit them further, I'll leave the final edit up to you.

¤ The Wrap

Following a  recent pattern of uneven, but still heavy overall movement of metal coming into and moving out from the COMEX-approved silver warehouses, [last] week’s physical turnover of silver surged to 7.3 million oz, the highest weekly turnover since September. Total COMEX silver inventories rose by 700,000 oz to 177.7 million oz.  Stated differently, this week’s physical silver turnover in the COMEX warehouses was ten times greater than the net increase in total inventories.

Remarkably, this has been the pattern for the full year (and longer) in that there has been a frantic and consistent turnover or churn in COMEX silver inventories while the total level of inventories remains mostly flat. It’s a pattern that has never occurred previously in other COMEX metals and is strongly suggestive of overall supply/demand tightness; but the most peculiar aspect of the turnover is that it is hardly mentioned, even though the data are published daily and easily retrieved. Very recently, there has been a pickup in COMEX gold warehouse movements but more in the way of steady withdrawals than in the frantic turnover seen in the COMEX silver warehouses. - Silver analyst Ted Butler: 06 December 2014

Despite the rather dramatic spike in gold and silver prices just after the COMEX close yesterday, Monday really wasn't much to look at from a price perspective.  Yes, I was happy to see it, but in the overall scheme of things, it doesn't matter, as we're still sitting around the 50-day moving averages in both gold and silver---platinum as well.  A resolution up or down is yet to be seen, although I'm not overly happy about the prospects considering the deterioration in the Commercial net short positions in both metals over the last month.  But as I said on Saturday, it may not matter.  Only time will tell---and all we can do is watch and wait.

But the table is set if 'da boyz' want to smash silver and gold again.  But there's nothing to say that we couldn't blast higher from here as well.

Here are the charts for the four precious metals, plus crude oil, which hit an ugly new low yesterday.

As I type this paragraph, the London open is about twenty minutes away.  After selling off a few dollars to the $1,200 spot mark, the gold price has rallied back to unchanged.  Silver hit its Far East low shortly before 2 p.m. Hong Kong time---and rallied sharply back above unchanged, but got capped [at least for the moment] at exactly 3 p.m. Hong Kong time.  Platinum and palladium are a dollar or so above unchanged as well.

Gold volume is a bit over 22,000 contracts at the moment---and silver's volume is just above 3,600 contracts.  The dollar index, which peaked out around the 89.26 level around 11:30 a.m. in Hong Kong trading, dipped back below the 89.00 level, where it appeared that 'gentle hands' showed up for the second time in twelve hours.  At the moment, the index is down 10 basis points.

I continue to be amazed by the record silver eagle/silver maple leaf sales in the face of absolutely awful retail demand.  And as Ted Butler said in his quote above, the frantic churn in COMEX silver stocks for about the last two years continues unabated, to which you can add Friday's big in/out movements that I reported at the top of this column.  Even the recent in/out action in gold at the COMEX-approved depositories is raising eyebrows.

Also the continuing slow-but-steady increase in SLV physical inventories, especially in the face of continued---and at the moment, non-ending---declines in GLD.  This rise in SLV also flies in the face of the enormous amounts of silver being withdrawn at the same time.  Ted feels, and I agree, that one or more large entities are removing physical silver by converting shares so that they don't have to report a holding of more than 5 percent of that ETF to the SEC.

And not to be forgotten in all of this is the internal structure of the Commitment of Traders Report.  As Ted has said, the raptors [the Commercial traders other than the 'Big 8'] have had their heads handed to them for the first time in history in both silver and gold over the last month.  I'll steal part of a paragraph he wrote about this is in his Saturday column---" What matters more is that a certain significant, but unquantifiable, level of liquidity and market making may have just been removed from silver (and gold) with the financial demise of what were formerly important players. Not only does this suggest increased price volatility going forward, it also sharpens what was already the prime price determinant ahead – whether JPMorgan and the other big silver (and gold) shorts will add aggressively to short positions on the next rally to cap and control the price. The forced liquidation of 19,000 raptor long contracts increases, by at least that amount, to what the big silver shorts must sell short on the next rally."

Along with all these extreme conditions in the precious metals, similar conditions exist in copper and crude oil---along with an extreme long position in the U.S. dollar index.  Then there's the nose-bleed stock market valuations in both the U.S. and world wide, combined with a bond market priced to absolute perfection.

These extremes can't last forever---and I can't shake the feeling that all this will resolve itself sooner rather than later.

Of course I, along with others, have been saying more or less the same thing for the last few years---and so far, nothing---as conditions continue to get more extreme.  But Jim Rickards snowflake/avalanche scenario awaits at some point---and it's not a question of if or when either, as it's now only a matter of when.

So we wait some more.

And as I hit the 'send' button on today's efforts at 5:20 a.m. EST, I note that all four precious metals had tiny rallies going into the London/Zurich open, but all are below their opening highs as the rallies got sold down before they got very far.

Gold volume is just north of 34,000 contracts---and silver's volume is at 5,700 contracts.  The dollar index hit its current low just before the 9:00 a.m. GMT in London, but has rallied a hair since then---and is currently down 18 basis points at 88.94.

Today, at the close of COMEX trading, is the cut-off for this Friday's COT Report---and I have no clue as to how today's price action may unfold.  I vote for up---but with JPMorgan et al still very much in control of all four precious metals, plus a few other key commodities, it's a crap shoot as to how the Tuesday trading session will turn out.

That's all I have for today, which was way too much---and I'll see you here tomorrow.

Ed Steer

More from Gold

Market Bears Have Devoured Gold Prices

Market Bears Have Devoured Gold Prices

Gold to Skyrocket as Italian Rebellion Unfolds

Gold to Skyrocket as Italian Rebellion Unfolds

2010-Style Crisis Approaches: Prepare For Flight To Safety

2010-Style Crisis Approaches: Prepare For Flight To Safety

Gold Prices Look 'Rich' at Current Levels - Here's What Could Change That

Gold Prices Look 'Rich' at Current Levels - Here's What Could Change That

Watch This If You're Wondering How Much Gold to Have and When to Sell

Watch This If You're Wondering How Much Gold to Have and When to Sell