Tuesday, December 23: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price began to rally quietly right from the 6 p.m. EST open in New York on Sunday evening, with the high tick---a few bucks over the $1,200 spot mark---occurring around 3:20 p.m. Hong Kong time.  From that point, the gold price began to sell off equally as quietly until it began bouncing off its Friday closing price in New York starting at the open of COMEX trading in New York.  That continued until 10:40 a.m. EST---and at that point the HFT boyz and their algorithms put in an appearance.

The low tick came minutes before 4 p.m. EST in electronic trading---and from there it rallied seven or so dollars into the 5:15 p.m. EST close.

The CME Group recorded the high and low ticks as $1,203.60 and $1,170.70 in the February contract.

Gold closed in New York on Monday at $1,176.70 spot, down $17.50 from Friday's close.  Volume, net of December and January, was around 138,000 contracts.

Brad Robertson sent us the 5-minute gold chart.  Volume up until 10:40 a.m. EST had been very quiet, but blew out as sell stops were triggered---and the rest, as they say, is history.  The 'click to enlarge' feature helps here---and don't forget to add two hours for EST.

The chart pattern in silver was similar, with the real hammering coming after the London close, which occurred at 11 a.m. EST.  The last low tick came at 12:45 p.m. in New York---and rallied about 15 cents off its low, before chopping quietly sideways for the remainder of the day.

The high and lows were reported as $16.175 and $15.53 in the March contract.

Silver finished the trading day yesterday at $15.68 spot, down 38.5 cents from Friday.  Net volume was about 34,000 contracts.

The platinum chart was similar, with virtually all the price damage coming by 2 p.m. EST.  After that it traded more or less flat into the close.  Platinum closed at $1,175 spot, down $21 from Friday.

Palladium, which has mostly followed a different drummer, did so again yesterday, as it chopped around the $805 price mark---and began to rally shortly before the COMEX open---and closed at $809 spot, up five bucks from Friday.

The dollar index finished the Friday session at 89.60.  From there it got sold off to its 89.38 low minutes before London opened.  From there, it was up, up and away, with the 89.79 high tick printed at 3:30 p.m. in New York.  From there it didn't do much, as the index closed on its high---up 19 basis points on the day.

The gold stocks opened down a bit---and continued falling slowly but steadily for most of the day.  The big engineered price decline that began at 10:40 a.m. EST had no visible impact on share prices.  The low tick came about 2:45 p.m.---and they rallied a bit from there.  Not that it mattered, as the HUI gold clubbed for 6.07%.

The silver equities fared somewhat better, with their chart pattern being very similar to gold's.  Nick Laird's Intraday Silver Sentiment Index closed down 'only' 4.60%.

The CME Daily Delivery Report showed that 41 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  The only short/issuer was HSBC USA out of its in-house [proprietary] trading account---and the only long/stopper was JPMorgan, also out of its in-house [proprietary] trading account.

The CME Preliminary Report for the Monday trading session showed that December gold open interest added two contracts---and it now stands at 586 contracts still open.  Silver's December o.i. dropped by 66 contracts---and there are now only 35 contracts left.

There were no reported changes in GLD yesterday---and as of 7:15 p.m. EST yesterday evening, there were no reported changes in SLV, either.

There was another sales report from the U.S. Mint.  They finally sold some gold, but only 500 troy ounces of gold eagles---and 1,000 one-ounce 24K gold buffaloes.  But they sold another huge pile of silver eagles---370,500 of them!

So far this month, the mint has sold 20,500 troy ounces of gold---and 2,328,500 silver eagles---producing a silver/gold sales ratio of 113 to 1.  This is astounding---and as Ted Butler has been pointing out for years now---and I can confirm from the retail trade---it ain't John Q. Public buying these silver eagles.

Over at the COMEX-approved depositories, there wasn't much activity in gold on Friday.  All there was, was a transfer of 683 troy ounces from one depository to another.  It was quite a bit different in silver, as 643,401 troy ounces were received---and 184,000 were shipped out---with virtually all of the activity occurring at Scotiabank.  The link to the silver activity is here.

I forgot to report on the withdrawals from the Shanghai Gold Exchange last Friday.  Their latest report for the week ending Friday, December 12 shows that they withdrew 50.028 tonnes during that reporting week.  The two charts below show the weekly and monthly withdrawals.

Despite my editing attempts, I have a lot of stories for you today---and I'll happily leave the final edit up to you,

¤ The Wrap

Because it controlled the price of silver, JPMorgan profited handsomely on its COMEX manipulation thru 2010---and not even an ongoing CFTC investigation interfered with JPM’s control on silver prices. However, in late 2010, investor demand for physical silver caused silver prices to break above the highs of early 2008 and JPMorgan could no longer control the price of silver through excessive paper short selling on the COMEX. Physical silver conditions tightened so much by the end of April 2011 that the price reached nearly $50 and, quite literally, JPMorgan (along with other collusive CME traders) were staring into a financial catastrophe, the same as undid Bear Stearns three years earlier.

But no bailout of JPMorgan was possible---and instead, the bank along with interested parties at the CME Group, arranged for a disorderly take-down of silver prices, almost assuredly with the approval of U.S. regulatory officials. The disorderly take-down proved successful and the big shorts, particularly JPMorgan, escaped what would have been an epic financial catastrophe had they been forced to cover their massive silver short positions.

It is said that one learns more from failure, especially near disaster, than from success. It is my belief that at the time of JPMorgan’s near catastrophe in being short silver into April 2011 that the bank realized just how limited and critical the supply of silver in the world was and decided to use that near-death experience to their advantage. It was at that time that the bank decided to buy as much physical silver as it could in order to profit even more to the upside than it did previously to the downside. - Silver analyst Ted Butler: 20 December 2014

Well, it doesn't look like JPMorgan is in the Christmas spirit this year, or any other year for that matter, as only palladium was spared the engineered price decline.  I didn't see any news that would have precipitated such moves, but it had all the hallmarks of 'da boyz'---news, or no news---and anyone who has been around the precious metals market with an open mind knows that yesterday's price action was as far away from a free market as you can get.

As GATA's Chris Powell said, " There are no markets anymore, only interventions."

Here are the 6-month charts for the precious metals, plus natural gas and WTIC.  If you were following the news, or read the story in the Critical Reads section further up, you couldn't help but know that natural gas got hammered yesterday---as the chart shows.

All of yesterday's price/volume action will be in the next Commitment of Traders Report---but that's not due out until Monday the 29th.  Even with the improvements we had yesterday, plus any spillover from last week's COT Report, the Commercial net short positions in both gold and silver are still very much on the ugly side---and since JPMorgan et al don't appear to be in a holiday mood, they could really lay the lumber to the prices of both metals during the thinly-traded holiday season.  The question is---will they---and if they do, how bad will it get?  It wouldn't be the first year where that has happened, either.

However, neither I nor anyone else knows for sure what the future brings.  We could blow sky-high tomorrow if something comes out of left field, but the odds are that prices aren't going anywhere until they're allowed to.

One interesting thing I noticed about platinum yesterday, was that although it didn't close at a new low, it had an intraday low [by a dollar] that goes all the way back to mid 2009.  I asked Nick for a 10-year platinum chart---and here it is.

And as I type this paragraph, the London open is about fifteen minutes away.  All four precious metals are currently above their closing prices in New York as the trading day in Hong Kong comes to a close on their Tuesday, but like yesterday, it will be interesting to see if they're allowed to keep those gains, let alone add to them.  At the moment, gold volume is 24,000 contracts, which isn't exactly light---and silver's volume is 3,300 contracts, with all but a small handful in the current front month, which is March.  The dollar index has been chopping quietly lower---and is currently down 12 basis points.

With the holiday season upon us, I must admit that I have no idea about how what's left of 2014 will turn out, but I'm not encouraged by yesterday's events in the precious metal market.

And as I send this out the door to Stowe, Vermont at 4:45 a.m. EST, not much has changed in any of the four precious metals, as they're all pretty much trading at the same prices they were a couple of hours ago.  Gold volume is just under 30,000 contracts---and silver's volume is 3,900 contracts.  The dollar index is down 10 basis points.

I will have a column tomorrow---and on Saturday for sure, and both will be posted on the Saturday time schedule.  I may have one on Friday, but IF there is one, and it's a pretty big IF at the moment, it will be posted on the Saturday time schedule as well---and it will be as brief as I can get away with.

See you tomorrow.

Ed Steer

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