Wednesday, February 18: Today in Gold and Silver

NEW YORK ( TheStreet) -- Well, dear reader, you don't need me to explain what happened in the precious metal market yesterday, as we've seen it all before.  It's just "da boyz" and their HFT buddies running the stops for fun, profit and price management purposes.

In gold, the price was under some sort of pressure starting around 9 a.m. Hong Kong time---and by 1 p.m. in London, the price was down about twelve bucks.  There was a tiny rally during the next hour of trading, but at 9 a.m. in New York, the HFT spun their algorithms---and that was that, with the low coming minutes after 12 o'clock noon EST.  The gold price rallied quietly higher from there into the close of electronic trading.

The high and low tick were reported by the CME Group as $1,236.70 and $1,203.30 in the April contract.

Gold closed in New York yesterday at $1,209.80 spot, down $18.10 from Friday's close---and it was down about twenty bucks from Monday's close.  Net volume was only 140,000 contracts---and that doesn't include Monday's volume, which I've already subtracted from that figure.

Reader Brad Robertson sent me the 5-minute tick chart for gold yesterday.  It starts around 7:25 p.m. MST/9:25 p.m. EST on Monday evening, which was early morning in Far East trading---and runs through until the COMEX close in New York yesterday.  Note the huge volume spike once the HFT traders spun their algorithms---and the technical funds puked their long positions.  They probably added to their short positions as well.  Don't forget the ' click to enlarge' feature!

Not surprisingly, it was silver that got hit the worst---and the chart below tells you all you need to know.  You don't need the play-by-play on this, as you've heard it all before---and are probably just as tired of reading about it, as I am writing about it.

The high and lows were reported as $16.26 and $17.40 in the March contract---an intraday move of 6.5 percent.

Silver finished well off its low at $16.47 spot, down 85 cents from Friday's close---and 83 cents from Monday's close.  Net volume on Tuesday was 49,000 contracts---that's net of Monday's volume and Tuesday's roll-overs.  And considering the severity of the engineered price decline, that's not a lot of volume.  I'll have more on this volume issue in The Wrap.

Ditto for platinum, except its low tick came just before 10:30 a.m. EST.  It bounced off its low by five bucks or so---and then traded ruler flat into the close, finishing the day at $1,173 spot, down 32 dollars from Monday's close.

The palladium price chart was a very mini version of the platinum chart.  Palladium was closed at $781 spot, down only six bucks from Monday.

The dollar index closed late on Monday afternoon at 94.43---and after a down/up move of about 15 basis points in Far East trading on their Tuesday, the index hit its 94.45 high about 8:20 a.m. GMT in London.  By noon in London, it was at its 93.85 low---and at that juncture it was 'rescued' once again---and then chopped sideways, closing at 94.13---down 30 basis points on the day.

Once again the currency moves had zero to do with what was happening in the precious metals, as their price action there was 100 percent engineered in the COMEX futures market.

The gold stocks gapped down a bit more than 2 percent at the open---and continued to slide a bit as the trading day wore on.  Not even the gold rally that began at noon EST---and continued for the rest of the day---helped the equities, as the HUI close virtually on its low tick, down 3.32 percent.

The silver equities followed a similar price pattern and, once again, the silver rally off its price low that began at noon EST made no difference, as the silver shares continued to slide.  Nick Laird's Intraday Silver Sentiment Index closed down a chunky 4.51 percent.

The CME Daily Delivery Report showed that 50 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  Jefferies was the short/issuer on all of them---and JPMorgan stopped 48 of them in its client account. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in February increased by one lonely contract---and now stands at 602 contracts, minus the 50 mentioned in the previous paragraph.  The February o.i. in silver was unchanged at 56 contracts.

There were no reported changes in GLD yesterday---and as of 9:12 p.m. EST yesterday evening, there were no reported changes in SLV.

The U.S. Mint didn't have a sales report, either.

Over at the COMEX-approved depositories on Friday, there were 32,150.000 troy ounces of gold reported received---and that works out to exactly 1,000 kilobars of the stuff---and 16,075.000 troy ounces were shipped out.  That amount works out to exactly 500 kilobars.  All of the in/out activity was at Canada's Scotiabank---and the link to that is here.

Although gold kilobars of four nines fineness are not classified as "good delivery" by the LBMA or the COMEX just yet, the day will come when they will be---and that will probably occur the day that gold gets repriced.

In silver, nothing was reported received, but a very chunky 1,222,866 troy ounces were reported shipped out.  Three different depositories were involved---and the link to that action is here.

I'm happy to say that I don't have all that many stories for you today, so that should give you more time to read the ones you didn't get around to in the Critical Reads section of yesterday's column.

¤ The Wrap

That the unusually frantic pace of physical inventory movement has been unique to COMEX silver of all commodities, it warrants attention and analysis (speculation). Or at least, that’s what I contend. But another thought occurred to me as a result of the subscriber’s question that strikes a familiar theme of mine. As you know, I contend (as do many others) that paper (futures) COMEX silver trading artificially and illegally dictates prices to the world of physical silver, particularly the concentrated short position by the eight largest COMEX traders.

The weekly movement of physical silver into and out from the COMEX has had no discernible effect on price---and is quantified at an average weekly turnover of 5 million oz (less recently). While this level of physical movement is very large  when compared to other commodities and past silver movement, it is miniscule when compared to COMEX weekly futures trading volume (around 750 million oz equivalent) or typical changes in the weekly COT report on open positions (25 million oz equivalent). I realize that futures trading volume exceeds physical movement in all commodities, but not to the extent seen in silver. Certainly, in terms of relative world production, no commodity has a larger concentrated short position. My point is simple – because COMEX futures trading volume and concentrated positioning is so much larger than the quantities of silver in the physical world, it shouldn’t be hard to see which is setting the price. - Silver analyst Ted Butler: 14 February 2015

I'm not going to dwell on what happened in the precious metal market on Tuesday.  It's at time like this I like to point out that even Stevie Wonder could see what happened yesterday, as it was that obvious.

Here are the 6-month charts for all four precious metals, so you can see the "lay of the land" as of the close of trading yesterday.

In my daily conversation with Ted, we both expressed the same concern---and that was that despite the huge engineered price declines in both gold and silver [also platinum] yesterday, the volumes weren't anywhere near what they would have to be to indicate that a final low is in, in either gold or silver.  Not even close.

I figure the JPMorgan et al could hit gold for another $50 or $60 without breaking into a sweat---and silver close to a buck, if not a bit more.  But can they or will they?  Beats the hell out of me.  But if I had to bet $10---I'd say they're going to do precisely that.

The only thing that Ted and I were trying to divine was how they were going to "slice the salami" to the downside this time around---in one single thrust, or will it be death by a thousand cuts once again?  I suppose that all depends on how big a hurry they're in.

Hopefully all of yesterday's price/volume action will be included in this Friday's Commitment of Traders Report, because yesterday at the close of COMEX trading was the cut-off for it.

And as I write this paragraph, the London open is forty minutes away.  All four precious metals are back to unchanged after being down a hair in early Far East trading on their Wednesday.   I think the church mouse died, as net volumes are literally microscopic; with gold at 8,100 contracts---and silver at 2,400 contracts.  The dollar index hasn't been doing much of anything all night long, but happens to be up 7 basis points at the moment.

And as I put the finishing touches on today's effort at 4:45 a.m. EST, I see that there's still nothing going on in any of the four precious metals, as all are still virtually unchanged from Tuesday's close in New York.  Gold's net volume is just now approaching 12,000 contracts---and silver's net volume is barely 3,500 contracts, with few roll-overs.  The dollar index is back to unchanged as well.

Hello---is anyone out there???

I doubt very much that that this current slumberfest will last the remainder of the Wednesday trading session.  There's an old saying that one should "never short a quiet market".  I suppose there was a lot of truth to that statement when the markets were free and fair.  But with the precious metal prices rigged seven ways to heaven, going long this market under the current circumstances is not the safest bet in town either.

And nothing will surprise me when I check the charts later this morning.

Enjoy your day---and I'll see you here tomorrow.

Ed Steer

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