Wednesday, December 24: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price started out the Tuesday session the same as it did on Monday, with the high tick coming just before the London open---and then drifted lower.  There was no surprise in New York trading yesterday---and the low tick came at 3:15 p.m. EST.  from there it rallied about $5 into the close.

The high and low ticks are barely worth the effort to look, but the CME recorded them as $1,184.90 and $1,172.40 in the February contract.

Gold closed in New York yesterday at $1,176.90 spot, up a whole 20 cents from Monday.  Volume, net of December and January was 111,000 contracts.

Except for a dime's worth of up/down action in the early going in Far East trading on their Tuesday morning, the silver price didn't do a lot until 1 p.m. in London.  At that point there was a vicious 2% down/up move that got hammered flat almost immediately---and just minutes before the Comex open.  After that, the price didn't do a lot, but did rally into positive territory in the last 30 minutes of trading before the 5:15 p.m. EST close of electronic trading.

The low and high ticks were reported as $15.895 and $15.56 in the March contract.

Silver finished the Tuesday session at $15.79 spot, up 11 cents from Monday's close.

Platinum was in rally mode almost from the moment that trading began at the 6 p.m. New York open on Monday evening, hitting its interim high minutes after Zurich opened.  From there it got sold down until about 20 minutes before the Comex open---and then away it went to the upside once again, hitting its high tick about 10:45 a.m. EST.  After that it chopped sideways into the close.  Platinum finished the Tuesday session at $1,187 spot, up $12 from Monday's close.

Palladium didn't do much, chopping higher in a five dollar range---and closed at $812---up $3 on the day.

The dollar index finished the Monday trading session at 89.79---and when it opened on Monday evening, it began to slide a bit, with the 89.65 low coming a minute or two after 9 a.m. GMT on their Tuesday morning.  The rally that commenced at the point, ended at its 90.14 high a minute or so before the London p.m. gold fix.  After that it chopped sideways in a very tight range---and finished the Tuesday session at 90.07---up another 28 basis points.

Here's the six-month U.S. dollar index to put this week's movements into some sort of perspective.

The gold stocks opened unchanged---and then rallied strongly, hitting their highs around 12:20 p.m. EST---and up over 3%.  From that point they began to slide, but starting shortly after 2:15 p.m. relentless and continuous selling pressure appeared---and by 3:00 p.m. all the gold stocks were down on the day---and from there they chopped sideways into the close.  The HUI finished the Tuesday session down 1.18%.

The silver equities put in a carbon-copy performance, except for the fact that at their high tick, they were up over 4%.  The downside from there was the same, complete with the mystery not-for-profit seller between 2:20 and 3:00 p.m. EST.  Nick Laird's Intraday Silver Sentiment Index closed down 0.99%.

We've seen many instances in the last several months where big intraday gains have all but disappeared by the close or, like yesterday, down on the day.  It doesn't look like free-market trading to me---but you're entitled to your own opinion on that.

The CME Daily Delivery Report showed that 246 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The big short/issuer was HSBC USA with 234 contracts---and the only long/stopper of note was JPMorgan out of its in-house (proprietary) trading account with 242 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that December gold open interest declined by 41 contracts---and is now down to 545 contracts minus, of course, the 246 contracts due to be delivery on Friday.  Silver open interest for December dropped by 4 contracts---and is now down to 31 contracts, minus the two in the previous paragraph.

After a 96,000 troy ounce deposit in GLD last Friday, an authorized participant removed a very chunky 374,652 troy ounces yesterday---almost 12 metric tonnes.  That's a lot.  To go along with that big withdrawal in GLD, there was even more gargantuan withdrawal from SLV.  This time an authorized participant removed 5,842,153 troy ounces.  There has been no price activity during the last five trading days that would warrant withdrawals of this size in either GLD or SLV.  Withdrawals maybe, but nothing that would justify these amounts.  I would guess that that the metal withdrawn was more desperately needed elsewhere.

The good folks over at Switzerland's Zürcher Kantonalbank updated their Web site with the changes in their gold and silver ETFs as of the close of trading on Friday, December 19---and here is what they had to report:  Their gold ETF sold 39,647 troy ounces, which is a pretty decent amount for this ETF.  In silver, that ETF declined by 65,418 troy ounces.

There was a small sales report from the U.S. Mint yesterday.  They sold 1,000 troy ounces of gold eagles---1,000 one-ounce 24k Gold Buffaloes---and another 55,000 Silver Eagles.

Monday was a real yawner over at the Comex-approved depositories.  In gold, only 21,379 troy ounces were reported received---all at Canada's Scotiabank---and nothing was shipped out.  In silver, nothing was reported received---and only 25,001 troy ounces were shipped out---all out of Brink's, Inc.

I have the usual number of stories for a midweek column---and I hope you have time over the next few days to read the ones that interest you.

¤ The Wrap

There is the matter of extraordinary sales of Silver Eagles from the U.S. Mint. Since April 2011, the U.S. Mint has produced and sold 140 million Silver Eagles, more than in any similar period of time, in a price environment that can only be termed putrid and in which sales of Gold Eagles were notably lower. I would estimate that JPMorgan purchased close to half of the 140 million Silver Eagles sold since April 2011. According to very reliable sources on the retail front, investment demand has been lower over this time, as retail buyers do not buy strongly into a declining price environment in any investment asset. Yet we know for a fact that there has been extraordinary buying of Silver Eagles, even while Gold Eagle sales cooled off notably, so someone had to be buying [them].

If there is one thing that JPMorgan is expert at, given that it commands an army of lobbyists and has more government officials in its back pocket than any other entity on the face of the earth, it is the exploitation of U.S. law and regulations. JPMorgan knew that [the] law dictated that the Mint must produce enough Silver (and Gold) Eagles to meet demand. That law was never intended to allow a single big buyer to demand the extraordinary amount of Silver Eagles that JPMorgan desired to buy, but that’s the purpose behind the exploitation of the law.

The Mint sells Silver Eagles at the prevailing price of silver on the day of the sale. In essence, the Comex price of silver is the price of silver. By controlling the price of COMEX silver, JPMorgan sets the price at which it will buy Silver Eagles. It’s the perfect crime - JPMorgan sets the price of Comex silver and then demands as many coins as the Mint and its suppliers can produce, even if that means producing the coins on a 24/7 basis. Hey, that’s the law. And remember when JPMorgan increased its Comex short position in the summer, assuring that prices were about to drop and what occurred as a result? Sales of Silver Eagles nosedived temporarily and only resumed after prices were brought lower by this crooked bank. - Silver analyst Ted Butler:  20 December 2014

Not much happened yesterday in the precious metal markets---even though I was ready for any possible scenario.  And as I mentioned at the top of this column, all the excellent gains [and then some] in the silver and gold equities vanished before the trading day was done, which is a scenario we've seen on more occasions that I care to remember during the last few months.

The only six-month chart I have is the one for natural gas, as it set a new intraday low for this move down.

As I type this paragraph, the London open is five minutes away.  Precious metal prices are doing precisely nothing.  Gold volume isn't quite 10,000 contracts as of yet---and silver's volume is barely at 2,000 contracts.  The dollar index is down 10 basis points.  Absolutely nothing to see here.

And as I send this out the door at 5:11 a.m. EST, I see that not much has changed since I reported a couple of hours ago.  Volumes are a bit higher, but inconsequential---and the dollar index is now down 18 basis points and back below the 90.00 mark.

I'm not expecting much to happen between now and the weekend, as most traders will be on holidays---and I expect New York to close early today.

Before stepping out the door myself, I thought I'd leave you with this very traditional 16th century English Christmas carol.  Here's the Lithuanian male vocal group " Quorum" singing the " Coventry Carol" a cappella style, which is the way it was originally performed.  The link is here---and you'll never hear a better recording of it than this. Enjoy!

Season's Greetings---and have a wonderful Christmas.

I'll see you on Saturday---and Friday maybe.

Ed Steer

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