Wednesday, May 13: Today in Gold and Silver

NEW YORK ( TheStreet) -- After not doing much of anything from a price perspective in Far East and early London trading on their Tuesday, gold and silver both rallied sharply sharply starting just before 11 a.m. in London.  Within minutes, gold was up 13 dollars, but that was pretty much it for the day.  The price dipped a bit during COMEX trading, but then rallied until 11:45 a.m. EDT, before trading sideways for the remainder of the Tuesday session.

The low and high ticks were reported by the CME Group as $1,179.70 and $1,196.30 in the June contract.

Gold finished the trading session in New York yesterday at $1,193.00 spot, up $9.50 from Monday's close.  Net volume was light at only 107,000 contracts.

Here's the 5-minute gold tick chart---and you can see that virtually all of the big volume came at the 11 a.m. BST price spike in London, which is 4 a.m. Denver time on this chart---and by 9:45 a.m. MST, most of the price/volume action was done for the day.  Midnight EDT is the vertical dark gray line.  Add two hours for EDT---and use the ' click to enlarge' feature.

Silver had the same price action as gold on Wednesday, almost to the tick, so nothing more has to be said, except that silver's secondary rally took silver to its high tick of the day, which was 11:45 a.m. in New York, the same as gold.

The low and high ticks in the metal were reported as $16.12 and $16.595 in the July contract.

Silver closed on Tuesday at $16.48 spot, up 20.5 cents on the day.  Net volume was 33,500 contracts.

Platinum's price action was the same as gold and silver's price action.  The palladium price action was but a shadow the the platinum price activity.  Platinum finished the Wednesday session at $1,131 spot, up 7 bucks on the day.  Palladium closed at $783---up four dollars.

The dollar index closed late on Monday afternoon in New York at 95.04---and then rallied to its 95.15 high in mid-morning trading in Hong Kong on their Tuesday.  From there it began to roll over---and really began to head south with a vengeance starting at the 8:00 a.m. BST London open. The 94.25 low tick came minutes after 11 a.m. in London.  From there it chopped unsteadily higher, finishing the Tuesday session at 94.56---down 48 basis points on the day.

And as I said in The Wrap section of Tuesday's column---all the while the dollar index was falling, JPMorgan et al had the precious metals in a vice grip.  But the moment that the dollar index turned at 11 a.m. BST, they relaxed their death grip on the precious metals---and it's my guess they all popped in price when they did for that reason.

Here's the 3-day U.S. Dollar index chart showing all of Tuesday's action.

Here's the 6-month USD index chart---and as you can tell, we've had a fairly serious decline in the index since mid-March.  Although both crude oil and copper have been allowed to rally substantially during that period, that certainly hasn't been the case for the precious metals---and I'll have more about that in today's edition of The Wrap.

The gold stocks opened in the black---and rallied to their highs of the day about the same time as the gold price peaked out just before noon EDT.  After that, they didn't do a lot---and the HUI closed up 1.44 percent.

The silver equities traded on the weaker side---and after a slide into negative territory shortly after the open, they rallied to their highs by around 1:15 p.m. EDT.  They chopped a bit lower from there into the close, as Nick Laird's Intraday Silver Sentiment Index closed up only 0.55 percent.

The CME Daily Delivery Report showed that 1 gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  JPMorgan stopped 3 of the silver contracts.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest for May dropped by one contract to 148 still left.  Silver's o.i. in May declined by 163 contracts, leaving 411 still open.

There were no changes in GLD yesterday---and as of 9:10 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

There was no sales report from the U.S. Mint.

There was a decent amount of gold received at the COMEX-approved depositories on Monday, as 80,802 troy ounces were taken in---and only 6 kilobars were shipped out.  The big 'in' activity was at Canada's Scotiabank and HSBC USA.  The link to that action is here.

It was the second big 'in' day in a row for silver, as 1,489,490 troy ounces were reported received---but only 76,176 troy ounces were shipped out.  The link to that activity is here---and it's worth a quick look.  JPMorgan took in another 600,000 troy ounces.

There was no in/out activity at all over at the gold kilobar depositories in Hong Kong on their Monday.

From feast to famine.  I had a lot of stories in my Tuesday column, but I'm happy to report that I have very few today.  I'll leave the final edit up to you once again.

¤ The Wrap

I still feel that one shouldn’t interpret the flat trading range of either the relative price of silver to gold, or the absolute price of each metal, as an indication that we are anywhere near a free market equilibrium price, particularly for silver.

Current prices are solely and exclusively explained by activities on the COMEX, as will future prices be so explained. That’s the reason, although I live and breathe thinking about silver that I spend less time on silver’s actual supply/demand fundamentals.

For the time being, the actual metal fundamentals don’t matter a whit; price is a function of what happens on the COMEX, particularly when it comes to JPMorgan. - Silver analyst Ted Butler: 09 May 2015

It was more than obvious that "da boyz" were at battle stations in Far East and early London trading on their Tuesday when the dollar index did its 90+ basis point face plant---as the precious metals had their prices frozen in place for the entire length of time that the dollar index was heading south.  And as I said further up, they only released their grip when the dollar index began to head higher around 11 a.m. in London trading.

So despite the very bullish internal structure of the Commitment of Traders Report, JPMorgan et al were not about to let the precious metals out to play yesterday---and when they finally did, they weren't allowed to get far.  Gold broke above---and closed above its 50-day moving average, but not by a material amount.

Here are the 6-month charts for all four precious metals, plus the dollar index and WTIC.

Even though the dollar index is down about 600 basis points from its mid-March high tick---and with the bond market getting killed recently, it's certainly not being allowed to show up in precious metal prices, as gold is only up about 50 bucks from its mid-March low.  During the same time period crude oil is up 50 percent.

As I write this paragraph, the London open is about 20 minutes away---and gold and silver prices have done almost nothing from a price perspective during the Far East trading session on their Wednesday.   But all four precious metals are up a hair from their respective closes in New York yesterday.

Net volume in gold is pretty light at just over 10,000 contracts, with a decent amount of roll-over activity---and silver's net volume is around 4,500 contracts, which is quite a bit, considering the quiet price action.   The dollar index is chopping quietly lower---and is currently down 19 basis points.

Yesterday at the close of COMEX trading was the cut-off for this Friday's Commitment of Traders Report.  Just eye-balling the five trading days that will be in that report, it looks like it will be a neutral report in both gold and silver.  My guess for last week's COT Report wasn't even close, so I'll reserve the right to be wrong once again.

And as I fire today's column out the door to Stowe, Vermont at 5:15 a.m. EDT, I note that with the exception of silver, which is up about 15 cents at the moment, the other three precious metals are trading back at unchanged after being up a few dollars just before the London open.

Net gold volume is around 21,000 contracts, which isn't overly heavy, but it's not exactly light either.  Silver's net volume is now over 10,000 contracts, so it's obvious that even this tiny rally is being contained with whatever selling is necessary by the HFT boyz and their algorithms.  The dollar index isn't doing much---and is currently down 13 basis points.

I'm sure that the rest of the Wednesday trading session will prove to be just as interesting as Tuesday's---and nothing will surprise me when I check the charts later this morning.

I'm off to bed---and I'll see you here tomorrow.

Ed Steer

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