Tuesday, December 30: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do much in Far East and early London trading on their respective Mondays---and volume was exceedingly light.  But that all changed ten minutes after the COMEX open in New York.  At that time a seller with an agenda of some sort took the opportunity to sell into a very thin and illiquid market in order to get the worst possible price---a cute way of saying a not-for-profit seller showed up.  By 11:30 a.m. EST, the low was in---and the price recovered a few bucks before quietly chopping sideways for the remainder of the Monday session.

The high and low tick were reported by the CME Group as $1,197.50 and $1,178.60 in the February contract.

Gold closed the Monday session in New York at $1,182.60 spot, down $13.20 from Friday's close.  Net volume was only 79,000 contracts, with the lion's share of that coming during the COMEX trading session.

Silver rallied to its high of the day at the London open---and then got sold down into the noon London silver fix.. The subsequent rally got cut off a the knees right at the COMEX open---and after that the not-for-profit seller's selling pattern was similar to what happened in gold, except the low tick appeared to occur about twenty minutes before the COMEX close, rather than the 11:30 low tick for gold.  Then, also like gold, it recovered a bit before chopping sideways in a tight range into the 5:15 p.m. EST close of electronic trading.

The high and low tick were recorded as $16.255 and $15.72 in the March contract.

Silver closed yesterday at $15.805 spot, down 28.5 cents from Friday.  Net volume was 27,000 contracts, or thereabouts.

Here's the New York Spot Silver [Bid] chart from yesterday, so you can see the price shenanigans in more detail, as the 24-hour chart above doesn't catch every tick.

The platinum chart looks the same as the gold and silver charts in most respects, except the low tick came minutes after the Zurich close---and the subsequent rally got capped at the COMEX close.  From that peak, it got sold lower for the remainder of the electronic session.  Platinum finished the day at $1,192 spot, down an even twenty bucks from Friday.

Once again palladium's attempt to rally about the $817 mark was foiled in early Far East trading on their Monday morning---and after that, it's chart pattern looked somewhat similar to the other three precious metals.  Palladium was closed at $808 spot, down 7 dollars on the day.

The dollar index closed late on Friday afternoon in New York at 90.04---and then chopped around in a fairly wide range, hitting its 89.825 low tick shortly before 9:30 a.m. GMT in London.  After that it was rally time once again, with the 90.25 high tick occurring around 1:15 p.m. EST---and fifteen minutes before the COMEX close.  It gave up a handful of basis points after that, before trading sideways for the remainder of the New York session.  The index finished the day up another 16 basis points at 90.20.

The gold stocks sold off about two percent at the open---and proceeded to chop lower from there---and the HUI gave up 2.74%.  The chart is courtesy of Nick Laird.

It was similar for the silver equities as well---and most of their losses were in by it's interim low, which came around 11:30 a.m. EST.  After that, they didn't do much---and Nick Laird's Intraday Silver Sentiment Index closed down 3.44%.

The CME Daily Delivery Report showed that 161 gold and 11 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  The two largest short/issuers in gold were JPMorgan with 139 contracts out of its client account---and Canada's Scotiabank with 22 contracts.  The big stopper was---drum roll, please---JPMorgan with 159 contracts for it's in-house [proprietary] trading account.  Another case of JPM screwing its customers for the benefit of the company.  In silver, Jefferies issued---and Scotiabank stopped. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that the December open interest in gold declined by 16 contracts, down to 270 contracts minus, of course, the 161 posted above.  In silver, December o.i. went the other way, as 19 contracts were added---and current December open interest is now 39 contracts, of which 11 were posted for delivery tomorrow, as per the previous paragraph.

There were no reported changes in GLD yesterday, but an authorized participant withdrew another 1,005,565 troy ounces from SLV.

Here is what  silver analyst Ted Butler had to say in his weekend commentary about the big withdrawals from SLV and GLD last week---and I would assume that he would say the same about the withdrawal from SLV yesterday.

" Not coincidentally, about the only other instance of inventory churn in the commodity world that comes to mind is the turnover in the big silver ETF, SLV; which has also recorded an unusually active inventory pattern with the counterintuitive twist of deposits and withdrawals contrary to normal price and volume characteristics. I’m not sure I would include this [past] week’s nearly 8 million oz reduction in SLV holdings in the same category of counterintuitive movements I have previously attributed to a large buyer (JPM) converting shares to metal in order to avoid SEC reporting requirements. Coupled with an extremely large reduction of nearly 400,000 oz of gold in the big gold ETF, GLD, both reductions look related to year end index and portfolio balancing. Such adjustments, both withdrawals and deposits, could continue into the New Year.

The folks over at Switzerland's  Zürcher Kantonalbank updated their website as of the close of trading on December 23---which only includes data for two days, as they reported on sales up to the close of trading on Friday, December 19 already.  But during those two days, their gold ETF declined by 17,970 troy ounces---and their silver ETF shed a rather chunky 318,966 troy ounces.

There was no sales report from the U.S. Mint yesterday---and I'll be amazed if there are any more reported in what's left of this year.

There was a decent withdrawal of gold from the COMEX-approved depositories on Friday.  Nothing was reported received, but 64,492 troy ounces were shipped out.  Of that amount---64,300.000 troy ounces [2,000 kilobars] were from Canada's Scotiabank---and obviously China bound.

It was a very quiet day in silver, as nothing was received---and only 13,695 troy ounces were shipped out.

I checked the CFTC website for the Commitment of Traders Report for the week ending Tuesday, December 23---and noted that it hadn't been posted, so it should be out later today, hopefully---and I'll have it for you tomorrow.

I'm still on the road so, once again, I've done a hard edit on the list---and the rest is up to you.

¤ The Wrap

2014 marked the most active year in history for the physical turnover of silver in the COMEX warehouses, a trend that commenced in April 2011 , a time of record high silver prices amid signs of physical shortage. For the year, close to 250 million oz of metal were either physically moved into or were taken out from the six COMEX silver warehouses. This is an amount of silver twice as large as what the world’s leading mining country (Mexico) produces annually and greater than any one country (India, China or the US) consumes or uses in a year. 

In other words, there was a turnover of more than 140% of total COMEX silver inventories, while the level of those inventories remained largely unchanged. This “churn” is an inventory pattern unprecedented in any other commodity or even in COMEX silver prior to 2011. When the working inventory of any physical item is turned over this frequently, it would seem impossible for that item not to be considered to be in great demand.Silver analyst Ted Butler: 27 December 2014 

With most traders still away for the Christmas/New Year break, volumes were low---and it wasn't hard for anyone with an agenda to influence prices in either direction---and JPMorgan et al didn't pass it up, as they took back almost all of Friday's gains in all four precious metals.  The only thing that we can thank our lucky star for, is that it wasn't worse that it was.

Three of the four precious metals were closed well down from their respective 50-day moving averages---and as I mentioned in my Saturday missive, with 'da boyz' preventing the precious metals from taking out these key moving averages to the upside on Friday, it remained to be seen whether they were going to be allowed to break above those averages, or were these rallies going to be turned aside.  We got part of our answer yesterday---and the next one and half trading days might tell us a lot.

Here are the 6-month moving averages for all of the key 'Big 6' commodities.

As I mentioned above, three of the precious metals got turned lower at their respective 50-day moving averages---and palladium was stopped at its 200-day moving average once again.  Copper set a new intraday low---and WTIC closed at new low for this move down.

And as I type this paragraph, the London open is an hour away.  Gold is currently up 4 bucks, silver a nickel, platinum 14 dollars---and palladium is unchanged.  Gold volume is surprisingly high at 22,500 contracts, but silver's volume is only around the 2,600 contract mark.  The dollar index is up 9 basis points.

I'm becoming more intrigued each passing day with the amount of gold that China appears to be importing---and I'll be more than interested in seeing what they show for withdrawals off the Shanghai Gold Exchange for the final week of the year when that numbers come out on Friday morning Beijing time.  I'm sure Nick will send me the charts as soon as he has them updated---and they'll be in my column later that morning. 

I'm filing much earlier than usual, as I have a nine hour/800 kilometer drive ahead of me when I get up---and I don't want to get a late start.

London has only been open thirty-five minutes---and gold is now up 7 bucks, silver is up 15 cents, platinum is now only up 10 dollars---and palladium is up 3 bucks.  The dollar index, which had been up 9 basis points earlier, began heading south with a vengeance starting at precisely 3 p.m. Hong Kong time on their Tuesday afternoon, which was 7 a.m. GMT---an hour before the London open. At the moment, it's down 29 basis points.

I have no idea what to expect during the next 36 hours of trading, but I'll be very surprised if there's big movement in either direction.  But all of last Friday's gains in all four precious metals more or less vanished during the Monday trading session, so I guess we could get a surprise.

That's all I have for today---and I'll see you here tomorrow.

Ed Steer

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