Thursday, December 18: Today in Gold and Silver

NEW YORK ( TheStreet) -- Every attempt by gold to break above the $1,200 spot price mark during the Wednesday trading session was quickly sold off---and even the sharp rally after the FOMC meeting wasn't allowed to infringe on that price point.  After that attempt, the price got sold down to its low of the day, which came a minute or so after 3:00 p.m. EST in electronic trading.  The price rallied a bit after that, but still closed down on the day.

The high and low ticks were reported by the CME Group as $1,203.10 and $1,182.00 in the February contract.

Gold closed in New York on Wednesday at $1,188.90 spot, down $6.10 from Tuesday's close.  Volume, net of December and January, was 180,000 contracts.

It was more or less the same type of price activity in silver as well, but its attempt to break above the $16 spot price mark on the FOMC news wasn't allowed to get anywhere, either---and silver got sold down to just above Tuesday's closing price.

The high and low ticks were recorded as $16.06 and $15.615 in the March contract.

Silver was closed at $15.75 spot, up 3 whole cents from Tuesday.  Volume, net of December and January, was an even 50,000 contracts.

Platinum hugged the $1,200 spot price mark for most of the Wednesday trading session, before succumbing to the same post-FOMC meeting selling pressure that gold and silver went through.  Platinum closed at $1,186 spot, down 6 bucks from Tuesday.

Palladium rallied to its high of the day around 10 a.m. Zurich time---and then it gold sold down to its low just before lunch in New York.  It recovered a few dollars from there---and the FOMC news barely affected this metal.  Palladium was closed down 4 dollars on the day at $776 spot.

The dollar index closed late on Tuesday afternoon at 87.97---and never looked back in what was one of its most volatile trading sessions in my memory.  After initially selling off at 2 p.m. EST on the FOMC news, there was obviously someone there to run the dollar index up, as it closed at 89.075---up an eye-watering 107 basis points.

And while I'm at it, here's the 6-month intraday.

The gold stocks gapped up a bit at the open---and then proceeded to chop higher in a very wide range.  The HUI came to close to finishing on its high tick---up 5.27% on the day.

The silver equities opened down slightly, but finally broke into positive territory to stay shortly before 11 a.m. EST.  But they didn't do that with much conviction---and they chopped sideways until a late-day rally began shortly after 3 p.m. that took the shares up to their highs of the day---and that's where they closed, as Nick Laird's Intraday Silver Sentiment Index finished up 3.70%.

The CME Daily Delivery Report was a bust, as no gold or silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The only metal posted for delivery was 35 copper contracts.

The CME Preliminary Report for the Wednesday trading session showed that December gold open interest declined by 6 contracts, leaving the December o.i. balance at 765 contracts.  Glancing at the silver numbers, December open interest declined by 79 contracts, most of which was the 72 deliveries posted for today that were reported in yesterday's column.  The December o.i. in silver is now down to 101 contracts.

There were no reported changes in GLD yesterday---but there was a big withdrawal from SLV, as an authorized participant took out 2,011,401 troy ounces.

There was no sales report from the U.S. Mint yesterday.

Over at the COMEX-approved depositories on Tuesday, there was 20,736 troy ounces of gold reported received, but only 908 troy ounces shipped out.  The link to that activity is here.  In silver, only 963 troy ounces were received---and only 151,592 ounces were shipped out the door.  The link to that activity is here.

I have a decent number of stories again today, so I hope you find some in the list below that you like.  A lot of these news items have to do with Russia, oil, the U.S. dollar, etc---and with Putin's press conference at noon Moscow time today [4 a.m. EST this morning]---some, or all, what's in these stories may no longer hold true.

¤ The Wrap

A standout feature to the gold and silver market on the COMEX has always been the concentrated short position of the 4 and 8 largest traders which are invariably in the commercial category. The concentrated short position is more pronounced and manipulative in silver, but both markets are characterized by the fact that the 8 largest shorts in each market usually comprise a larger net short position than the total commercial net short position. In other words, if the 8 largest shorts in COMEX silver and gold didn’t exist, there would be no total commercial net short position at all – there would be no headline number as we know it. Stated differently, without the 8 largest shorts in COMEX gold and silver, there would be a commercial net long position in each market.

What’s interesting in COMEX gold (as I remarked about last week) is that the 8 largest shorts have not added to their dominant short position either this week or over the past 4 weeks even as the total commercial net short position has grown by 27,220 contracts and 66,600 contracts respectively. In fact, despite the pronounced increase in the headline number, the concentrated short position of the eight largest traders is lower than it has been in 4 or 5 years or longer. I admit that this could be a temporary aberration and the big 8 in gold may resume shorting gold on higher prices, but usually all the commercial categories trade in unison and if the new pattern of commercial discord is more than temporary, it might signal change is afoot. - Silver analyst Ted Butler:  13 December 2014

The lack of price action around the FOMC news was a bit of a surprise, but it is what it is---and I was quite amazed to see that the powers-that-be managed to keep gold under the $1,200 spot price mark, all things considered in the world today.  And, with the exception of silver, the other precious metals were all closed below their Tuesday closing prices in new York as well.

Here are the 6-month charts for all four precious metals, along with crude oil.  Just eye-balling the charts, you can see from the RSI trace that WTIC is grossly oversold---and none of the four precious metals are anywhere near that condition.

I was happy to the precious metals equities do well yesterday---in spite of the lousy price action of the underlying metals.  But with the counterintuitive price action that we've seen so much of in these shares lately, I'm not prepared to read too much into yesterday's positive closes.

I guess my main concern is still the Commercial net short positions in both gold and silver.  Even though we've certainly had improvement after Monday and Tuesday's price action, I doubt very much from looking at the charts that we're done to the downside, although I'll reserve judgement on that until I see tomorrow's Commitment of Traders Report.

As I write this paragraph, the London open is about twenty-five minutes away.  All four precious metals rallied starting right at the 6 p.m. EST New York open yesterday evening but, once again, gold wasn't allowed to get far above $1,200 before getting swatted down---and silver has been hugging the $16 spot price for about the past five hours.  Platinum is up $19---and palladium is up $9 bucks.  Net gold volume is just under 20,000 contracts---and silver's net volume is around 6,700 contracts.  The dollar index, which had been down 5 basis points at one time, has really soared---and is now up 23 basis points in the last half hour or so.

And as I hit the 'send' button on today's column at 5:30 a.m. EST, I see that all four precious metals have rallied starting about twenty minutes ago, which may have been an early London a.m. gold fix. Gold has now blasted up to $1,213 spot---and silver is at $16.195. Gold volume is now over 34,000 contracts---and climbing rapidly---as is silver's volume, which is just north of 10,000 contracts. Platinum and palladium are on the rise again as well.  The dollar spike I reported on earlier, has now been whittled down to a 7 basis point loss.  Crude oil is up $1.22.

I have no idea as to what might happen for the remainder of the Thursday session, but considering the price action I can see at the moment, nothing will surprise me when I check the charts after I roll out of bed later this morning.

See you tomorrow.

Ed Steer

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