¤ The WrapThe price of gold and silver surged on Tuesday---and held those gains through Wednesday’s trading. In silver, it was the first upside penetration of the important 50-day moving average in six months. I would imagine there was further technical fund buying, including both additional short covering and most likely new buying as well. The key question, of course, is who were the sellers---and more specifically, how much additional short selling occurred by the 4 and 8 largest commercial shorts in both silver and gold? Because yesterday was the cutoff for the reporting week, this Friday’s COT should go a long way to answering that question. While I’m resigned to some disappointment in increased concentrated short selling by the big commercials, I am still more interested in what has occurred over the past five reporting weeks, namely, the unprecedented outcome of the technical funds cashing in massive profit chips on the short side of silver and a good number of commercial longs (raptors) tapping out. Nothing close to this has occurred previously and I’m still convinced that this shocking turnabout portends important changes ahead, including a potential loss of trading liquidity. A loss of liquidity generally translates into bigger price moves and yesterday’s large price moves in gold and silver would tend to support my conclusion. - Silver analyst Ted Butler: 10 December 2014 Yesterday was another day where the price got sold down after a big advance the prior day. The four 'orphan' out-of-the-blue rallies that gold and silver have staged during the past five weeks have all ended the same way, with down days following each one---with significant portions of the gains in precious metal stocks vanishing as well. As you already know, yesterday's action was no exception. Here's the 3-month gold chart so you can see this for yourself. The first rally of the current sequence came on Friday, November 7, with the big down day coming the following Monday on the 10th. The other three 'orphan' rallies are equally as obvious. Here are the 6-month charts for the four precious metals, plus natural gas and West Texas Intermediate. As the world already knows, the price of crude oil set a new low for this move down yesterday---and as to where the bottom might be, nobody knows. In natural gas, we're back to the lows we haven't seen since late October---and prior to that, a bit over a year ago. My ISP was down for about ninety minutes in the wee hours of this morning---and London had been open for a while by the time Internet service had been restored. The gold price rose about five bucks in the first hour or so after trading began in New York yesterday evening, but got sold down the same amount shortly after 1 p.m Hong Kong time---and at the moment [4:08 a.m. EST] the gold price is down a couple of bucks. Silver's price path was similar---and it's price is down a couple of pennies. Gold volume is a bit over 31,000 contracts at the moment---and silver's volume is just north of 6,300 contracts. The dollar index fell off a cliff in early Far East trading, but the moment it broke through the 88.00 mark to the downside, it appeared that 'gentle hands' showed up. Right now the index is up a hair. After Tuesday's big 'orphan' run-up in precious metal prices, it appears that we're back to twiddling our collective thumbs until the next out-of-the-blue rally puts in an appearance. And as Ted mentioned in his quote further up, we await the Commitment of Traders numbers on Friday to see what the big 4 and 8 short holder in gold and silver did during that rally. I'd be happy if it was just the technical funds in the Managed Money covering the remainder of their short positions while the raptors [the Commercial traders other than the Big 8] sold what was left of their long positions at a big loss once again. That's my Christmas wish, but JPMorgan et al would hardly pass as Santa and his elves---and Christmas is still a long way away. And as I hit the send button on today's effort at 5:30 a.m. EST, I note that the gold and silver prices are continuing to slide. Gold is down five bucks, with silver down a nickel. Platinum, which had been up about 15 bucks on the day at 1 p.m. Hong Kong time, is now down two dollars on the day. Palladium is up 3 bucks. Gold volume is around 44,000 contracts---and silver's volume is a hair above the 8,300 contract mark. These numbers are bigger than I'd like to see this time of day, but they haven't increased by much since I reported on them about 90 minutes ago. The dollar index which, once again, came close to sliding back below the
88.00 mark minutes before the London open, is now rallying a bit. At the moment it's up 12 basis points at 88.345. As for what might happen during the remainder of the Thursday session, I haven't a clue, nor does anyone else. I'd be happy with another 'orphan' rally---but I'm always on the lookout for "in your ear." See you tomorrow.