Tuesday, February 17: Today in Gold and Silver

NEW YORK ( TheStreet) -- With the U.S. markets closed for President's Day on Monday, there wasn't much activity in the precious metal market anywhere on Planet Earth---and the only reason for my column today is the plethora of stories that I've been accumulating all weekend.

The gold price rallied in fits and starts right from the open of trading at 6:00 p.m. EST on Sunday evening---and the rally ended, as it usually does, shortly before London opened on their Monday morning.  From there the price chopped lower, with trading ending minutes after 5:00 p.m. GMT in London.

The low and high ticks were reported as $1,227.00 and $1,236.70 in the April contract.

The gold price closed at $1,230.80 spot, up $2.90 from Friday's close.  Net volume was basically nonexistent at 35,000 contracts.

The silver price wasn't allowed to get far---and its tiny gain vanished in London trading---and it was closed down on the day.  The highs and lows aren't worth the effort to look up.

Silver finished the Monday session at $17.30 spot, down 2 cents from Friday.  Volume, net of roll-overs out of March, was only 7,600 contracts, the lowest net number I can recall.

Platinum and palladium's tiny rallies in early Far East trading on their Monday morning also went the way of the Dodo bird once Zurich opened.  Platinum was closed unchanged---and palladium was closed down a buck.  Here are the charts.

The dollar index closed in New York late on Friday afternoon at 94.16---and after bouncing off the 93.91 level a couple of times in the last hour or so before the London open, the index began to crawl slowly higher---and about 5:10 p.m. GMT--11:10 a.m. EST---the index really began to sail to the upside---and hit its 94.53 high tick around 1:25 p.m. EST, shortly after the precious metals were through trading for the day.  From there the index gave up a bit of those gains, closing at 94.43---which was up 27 basis points from Friday's close.

With the U.S. shut tight for the holiday, there were no reports from the CME Group, GLD, the U.S. Mint or the COMEX-approved depositories.  And as of 8:29 p.m. EST yesterday evening, there were no reported changes in SLV.

I have a very decent number of stories---and some of the ones I do have certainly fall into the absolute must read category.  I know that if I don't post them today, I'll be buried in stories in tomorrow's column.

¤ The Wrap

Sales of Silver Eagles from the U.S. Mint are still very strong relative to sales of Gold Eagles or Buffaloes, but may be abating a bit. Sales of Silver Eagles on a daily basis have dropped below 110,000 coins on a calendar day basis this month, suggesting the Mint has caught up with pent up demand and no longer has to ration coins. It’s too soon to know if we are entering a period of softer relative demand for Silver Eagles, but it has been months since the Mint has not been forced to sell at maximum production/blank supply capacity. More pronounced is the sharp drop off this month in gold coin sales compared to January.

While sales of coins from the U.S. Mint are followed and reported on widely, such sales don’t appear to have any obvious impact on price. For instance, the last four years have seen absolutely phenomenal sales of Silver Eagles by any objective measure, by far the most in history, and yet those same four years were the worst in history for silver pricewise. I would contend that the only rational explanation lies in the manipulation premise, but whatever the reason, the disconnect between record sales of Silver Eagles and rotten price performance is plain to see. - Silver analyst Ted Butler: 14 February 2015

Because of the U.S. holiday, there's not much to talk about regarding Monday's price "action" in any of the precious metals.  Like I said, this column is mainly about the number of stories I had for you---and as you've already noted, there were quite a few, with a lot of time consuming ones as well.

I was amazed to see the CEO of Rosneft mention the rigging of the gold market in his comments in the Financial Times article on Monday.  But as I've said on countless occasions, the Russian government has known all about the precious metal price management scheme---and GATA---for over a decade when they mentioned it and us at an LBMA meeting in Moscow a long time ago.

And as I've also said they, along with China, could play the gold card any time they wish if it suits them---and if push really becomes shove, it wouldn't surprise me in the slightest if they did.  Jim Rickard's " Currency Wars" could easily end up being a war in the precious metal market as well, as gold is still money---and Greenspan reminded all and sundry of that fact in New Orleans last October, which is certainly something that hasn't been forgotten by the financial powers-that-be everywhere on Planet Earth.

And as I type this paragraph, the London open is about twenty-five minutes away.  All four precious metals rallied weakly once trading began at 6 p.m. in New York on Monday evening, but all got sold down a bit as trading in the Far East moved along on their Tuesday---and all are down from Monday's close, for what that's worth considering the volumes involved.

At the moment, gold's net volume is only 17,000 contracts---and silver's net volume is only 4,000 contracts, so nothing much should be read into the current price action, either down or up.  The dollar index is currently down 10 basis points.

And I fire this off to Stowe, Vermont at 4:50 a.m. EST---it looks like "da boyz" and their HFT algorithms are back at it, especially in silver.  But, having said that, gold's net volume is only up to 27,500 contracts---and silver's net volume is a surprising 8,700 contracts---and that's with Monday's volume stripped out as well.  With that kind of price pressure, particularly in silver, I was expecting more---a  lot more.  The dollar index is now down 22 basis points.

Here's the Kitco silver chart as I hit the 'send' button.  All of silver's paper gains after the noon silver fix in London on Friday, vanished in two hours in the thinly-traded overseas market on Monday---and silver is back at its 50-day moving average once again.  I just love those free markets, don't you?

As Ted Butler said in a quote I used from his February 7 commentary in this column last week---

"Let me make it easy for those who refuse to acknowledge the silver manipulation. Simply explain why 8 traders, mostly domestic and foreign banks, would hold short the equivalent of 40% of the world's annual production---and a third of all the silver bullion that exists---at prices below the average primary cost of production and nearly 70% below the price levels of four years ago."

"How could such a concentrated short position be explained in legitimate terms and what would be its purpose? What effect would such a large short position have on the price of any commodity---and how do you see it being resolved if it wasn’t permanent?"

"I don’t expect any serious answers to such questions, as it appears to be easier to malign the questioner as a conspiracy theorist instead, but I know these questions have never been addressed in a straightforward manner by anyone who denies the silver manipulation."

Today, at the close of COMEX trading, is the cut-off for Friday's Commitment of Traders Report.  As far as what should be expected as the Tuesday trading session unfolds in New York, I haven't a clue.  However, I'm not overly happy to see the current price action, but it comes as no surprise to me, nor should it you.

See you tomorrow.

Ed Steer

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