Friday, December 12: Today in Gold and Silver

NEW YORK ( TheStreet) -- The high tick for gold on Thursday came at 9 a.m. Hong Kong time---and the low was at the London p.m. gold fix---3 p.m. GMT/10 a.m. EST.  The subsequent rally ran into resistance at three different points, but was capped for good at 12:15 p.m. in New York.  From that high, the price sold off until 2 p.m. EST, before trading unsteadily sideways into the 5:15 p.m. close of electronic trading.

The high and low ticks were reported by the CME Group as $1,233.40 and $1,216.40 in the February contract.

Gold closed in New York yesterday at $1,227.40 spot, up $1.30 from Wednesday's close.  Volume, net of December and January, was 150,000 contracts---the same as Wednesday's volume.

Here's the New York Spot Gold [Bid] chart on its own, so you can see the COMEX price action in more detail.

The price chart for silver is very similar to gold's, but since silver traded within a two bit price range all day long on Thursday, the high and low ticks don't mean much.

Silver finished the Thursday session at $17.095 spot, up 4 cents from Wednesday.  Volume, net of December and January, was 36,000 contracts---compared to the 50,000 contracts on Wednesday.

Platinum was in rally mode right from the 6 p.m. open in New York on Wednesday evening, with the high tick coming around 12:30 p.m. Hong Kong time.  It was all down hill from there, with the low coming shortly after 9:30 a.m. in New York.  The subsequent rally got capped about 12:20 p.m. EST---and from there it got sold down a bit into the close.  Platinum finished the Thursday session at $1,237 spot, up a buck on the day.

Palladium continues to crawl higher, but is never allowed to close on its high tick and, like gold and platinum, its high tick came around 12:20 p.m. EST.  Palladium closed at $817 spot, up five bucks from Wednesday's close.

The dollar index closed late on Wednesday afternoon at 88.22---and promptly fell off the proverbial cliff shortly after trading began in New York on Wednesday evening.  As I said in The Wrap yesterday, it appeared that 'gentle hands' were at the ready---and from there the index chopped higher, printing its 88.77 high tick at 2 p.m. EST.  By 5 p.m. it had given up a bunch of its earlier gains---and then rallied a handful of basis points into the close.  The index finished the Thursday session at 88.55---up 33 basis points on the day.

The gold stocks opened down---and then slid a bit lower until the London p.m. gold fix was out of the way.  The high of the day came minutes after 11:30 a.m. EST---and then the shares headed lower until 2 p.m.  They rallied back into positive territory by 3:30 p.m., but then sold down into the close.  The HUI closed down 1.29%.

The silver equities followed a similar chart pattern---and Nick Laird's Intraday Silver Sentiment Index closed down 1.85%.

Although gold and silver prices haven't changed much in the last couple of trading days, almost all the gains in the silver and gold equities since the 'orphan' rallies on Tuesday have vanished over the same period of time.

The CME Daily Delivery Report was almost a bust, as it showed that one gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  Nothing to see here.

The CME Preliminary Report for the Thursday trading session showed that December open interest in gold slid 10 contracts yesterday---and the o.i. outstanding is now 1,044 contracts.  Silver's December o.i. declined by 120 contracts---and the report shows that there are still 397 contracts open.

I don't know if my heart will stand it or not, but an authorized participant added more gold to GLD for the third consecutive day.  It was only 30,502 troy ounces, but it's better than the alternative.  And as of 9:33 p.m. yesterday evening, there were no reported changes in SLV.

Since yesterday was Thursday, Joshua Gibbons, the " Guru of the SLV Bar List" updated his website with what happened within the SLV ETF during the reporting week ending at the close of trading on Wednesday---and this is what he had to say.  " Analysis of the 10 December 2014 bar list, and comparison to the previous week's list:  4,789,802.2 troy ounces were removed (all from Brinks London), no bars were added or had serial number changes."

"The bars removed were from Russian State Refineries (1.7M oz), Britannia (0.7M oz), Australian Gold (0.4M oz) and 34 others.  As of the time that the bar list was produced, it was overallocated 312.3 oz."

"There was a withdrawal of 2,873,718.0 oz on Wednesday that is not yet reflected on the bar list.
Over 99% of the bars removed were old bars, that had been in SLV for many years.

In case you missed it, dear reader, what Joshua's report shows is that 7.8 million ounces of silver were withdrawn from SLV since December 1---and nothing was added during that period!  During the same time period, about 260,000 troy ounces of gold has added to GLD.

Why isn't anyone except Ted Butler screaming about this dichotomy from the rooftops, as this is real silver news---and has been going on for years!  Ted says that these are the one or two big buyers removing silver from the SLV before they exceed the 5 percent ownership that requires them to report their holdings to the SEC.  Ted is still open to any alternative suggestion as to what explains this dichotomy---and so am I.

It's also also a virtual certainty that the big buyers in SLV are the same as the big buyers of silver eagles and silver maple leafs, as the retail market in these bullion coins is virtually nonexistent at the moment.

Rarely have I seen the 'lunatic fringe' mention either of these highly unusual activities---and if they do, they have no explanation as to why these events are occurring.  But they sure are great at making up stuff that isn't true, or doesn't matter even if it is.  It's the 21st century equivalent of selling snake oil out of the back of a covered wagon.

Another bunch of silver eagles were reported sold by the U.S. Mint yesterday.  This time it was 118,500 of them.  There were no reported gold sales once again.

Over at the COMEX-approved depositories on Wednesday there was no in/out activity in gold whatsoever.  But, as is almost always the case, the in/out activity in silver continues to be manic.  This time 1,180,422 troy ounces were reported received---and 445,505 troy ounces were shipped out.  The link to that action is here.

Since it's Friday, the data is out for the weekly withdrawals from the Shanghai Gold Exchange.  This week it was 'only' 38.361 tonnes---and here's Nick Laird's most excellent chart.

I'm happy to report that I don't have all that many stories for you today, but there should be two or three that hopefully float your boat.

¤ The Wrap

Based upon deposit/withdrawal patterns in the world’s largest silver ETF, SLV, a pattern of physical silver accumulation emerges. In the big silver price take down beginning in May 2011, some 60 million ounces of silver were redeemed from the trust as investors reacted to sharply falling prices by selling shares. The silver sold at this time was, obviously, bought by someone else; as there must be a buyer for every ounce sold. Who better a buyer than the world’s largest short holder at that time, JPMorgan? And over the past three and a half years, JPMorgan, by continuing to hold, albeit at a declining rate, the largest short silver holder becomes the de facto logical buying candidate.

Additionally, over the past 4 years, an unusually large amount of Silver Eagles have been produced and sold by the U.S. Mint, some 160 million ounces, in a steadily declining price environment. Nearly as many Silver Eagles were sold by the U.S. Mint over the past 5 years as were sold in the previous 23 years of the program. For the past four years, the Mint struggled to keep up with demand for Silver Eagles and frequently resorted to rationing coins. However, consistent reports from the retail dealer community indicated a fall off in broad retail demand for Silver Eagles.

The only plausible answer to this conundrum of record Silver Eagle sales and tepid retail demand was that a large entity, or entities, were behind the buying demand. Based upon the above, JPMorgan appears to me to the big buyer, accounting for 60-75 million coins over the past four years. All told, based upon SLV transaction, Silver Eagles and other forms of silver that could have been purchased, it is my guesstimate that JPMorgan could have accumulated 300 million oz of physical silver over the past four years; or three times what the Hunt Brothers were said to have bought by 1980. And please remember – there was a heck of a lot more silver in the world in 1980 than exists today; approximately 3 billion oz back then versus close to a billion oz today. - Silver analyst Ted Butler: 10 December 2014

There wasn't much action in the gold price yesterday---and what action there was during the New York session wasn't allowed to develop into anything, as the New York Spot Gold [Bid] chart at the top of this column indicates.

Here are the 6-month charts for all four precious metals once again---along with West Texas Intermediate, which closed below $60 the barrel yesterday.

And as I write this paragraph, the London open is about twenty minutes away.  The gold price has been drifting quietly lower during Far East trading on their Friday---and is down 8 bucks or so a the moment.  Silver actually rallied a bit at the 6 p.m. open of trading in New York on Thursday evening, but is now trading down a nickel or so from yesterday's close.  Gold volume is just over 18,000 contracts---and silver's volume is around 3,200 contracts.  Both platinum and palladium are down a few dollars apiece.  The dollar index is chopping sideways---and is up 5 basis points at the moment.

I'm certainly intrigued by these 'circuit breakers' in gold and silver that the NYMEX/COMEX has put into place, but as I've said before, I'll wait for Ted's take on this, as any meaning I would put on them would be strictly "amateur hour" stuff.  Ted traded commodities for a couple of decades for two different Wall Street firms---and his opinion over any other is what I would consider credible.  I'll keep you posted.

Today at 3:30 p.m. EST we get the new Commitment of Traders Report for positions held at the close of trading on Tuesday, December 9---and hopefully all the volume/price action from Tuesday's 'orphan' rallies in both gold and silver will be in it.  Whatever the numbers tell us, will be in my Saturday column.

And as I fire today's column off into cyberspace at 5:30 a.m. EST, I note that gold is barely off its earlier low---and is still down a couple of bucks on the day, but silver has managed to rally a bit above unchanged.  Gold volume is just over 33,000 contracts---and silver's volume is now up to 6,100 contracts.

Platinum and palladium are both hovering around unchanged, where they've been for most of the Friday session up until now.  The dollar index, which had been up 5 basis points earlier, began to roll over at 3 p.m.

Hong Kong time---and it hit its current 88.31 low shortly after 9 a.m.
in London.  It's only down 12 basis points at the moment.

As to what might happen for the remainder of the Friday session, I haven't a clue.  But having listened to the Jim Rickards interview, I'm comforted by the thought that this whole price management scheme will end sooner rather than later.  That feeling is buoyed up by the internal goings-on in the silver market over the last three years or so that Ted Butler has been writing about in great detail---and another data point on that timeline are the new and about-to-be-implemented 'circuit breakers' in the precious metal markets that appeared out of the blue yesterday.

All this should lead to the conclusion that something is definitely up. 

But until that time, we must wait some more---and make our final preparations.

When that day does arrive, it will be as Ted Butler has always said, as we won't have to ask if this it is or not, as the precious metal price charts will tell us all we need to know.

Enjoy your weekend, or what's left of it if you live west of the International Dateline---and I'll see you here tomorrow.

Ed Steer

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