Wednesday, June 3: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do much in Far East or early London trading on their Tuesday.  The low came at, or close to, the 10:30 a.m. BST London a.m. gold fix---and it rallied quietly and unsteadily until the 1:30 p.m. COMEX close.  From that point, it sold off a hair into the close of electronic trading at 5:15 p.m. EDT.

The low and high ticks are barely worth looking up, but the CME Group recorded them as $1,185.80 and $1,196.40 in the August contract.

Gold finished the trading day in New York yesterday at $1,192.70 spot, up only $3.90, which was a disappointment, because the dollar got taken out to the woodshed and had the hell beat out of it.  I'll have more on that later.

The silver price action was pretty much the same as gold's, with the only real difference being that silver's low came either around 11 a.m. in London, or shortly before 9 a.m. in New York.  You can decide for yourself from the Kitco chart below, but in the grand scheme of things, it doesn't really matter.

Silver traded in a 20 cent range all day Tuesday---and the highs and lows definitely aren't worth my effort to look up.

Silver closed yesterday at $16.745 spot, up 4 cents from Monday---and Monday's gain was only 0.5 cents after "da boyz" were through with it.  In the face of a crashing dollar index, I'm underwhelmed.

The platinum price traded flat until shortly after 1 p.m. Hong Kong time---and then began to chop unsteadily higher from there.  Like gold and silver, the rally---such as it was---came to an end at the 1:30 p.m. EDT COMEX close.  Platinum finished the Tuesday session at $1,110 spot, up 9 bucks on the day---gaining back everything it 'lost' on Monday.

After trading down about four bucks by the noon Hong Kong time, the palladium price also began to chop unsteadily higher.  It's high tick came shortly after 1 p.m. in Zurich---and the New York traders stepped in shortly before 11 a.m. EDT---and took the price down to its $764 low.  It rallied a few dollars higher before trading flat into the close.  The metal closed at $766 spot, down 8 dollars from Monday's close.

The dollar index closed late on Monday afternoon at 97.43---and began to slide almost immediately when Far East trading began on their Tuesday morning.  It bounced off the 97.00 low just once---and the next time it rolled over a couple of hours after that, the 'gentle hands' I spoke of yesterday were nowhere to be seen.  The 95.68 low tick came moments after 1 p.m. in New York---and it rallied a bit into the close, finishing the day at 95.95---down an eye-watering  147 basis points.

And not a thing out of the precious metals.  After the out-of-left-field-for-no-reason rallies on Monday, the precious metals had a bona fide reason to rally yesterday, but did nothing.

Here's the 6-month U.S. dollar index chart so you can see how yesterday's trading action fits into the grand scheme of things---and as you can tell, it took out its 50-day moving average to the downside with some authority.  I'm careful not to read too much into this for moment, as I'm always cognizant of Chris Powell's infamous quote---" There are no market anymore, only interventions."  So we'll see how this shakes out in the days ahead, but I'd guess there are still 'gentle hands' out there that will show up at some point if things really start to get out of hand---and they may have put in a brief appearance minutes after 1 p.m. EDT yesterday.

The gold stocks opened up a bit---and rallied fairly strongly until shortly before 10:30 a.m. EDT.  They didn't do much of anything after that, as the HUI closed up 1.57 percent.

The silver equities had a similar shape to their rallies on Tuesday as the gold shares---and Nick Laird's Intraday Silver Sentiment Index closed up 1.61 percent.

The CME Daily Delivery Report for the Tuesday session showed that 74 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  The only stand-out number, which is barely worth mentioning, was that HSBC USA stopped 49 contracts 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 June's open interest in gold declined a very chunky 3,026 contracts, but most of that was the 2,500-odd that are being delivery today that were posted yesterday.  There are 2,062 gold contracts still open.  Silver's June o.i. was unchanged at 33 contracts.

Another day---and another withdrawal from GLD.  This time it was 134,254 troy ounces, which is a pretty decent amount considering the fact that the gold price hasn't been allowed to go anywhere from a price perspective for the last five trading days in a row.  Then to add to that mystery, there was a deposit into SLV yesterday, as as authorized participant added 1,104,807 troy ounces.  Go figure!

There was another sales report from the U.S. Mint yesterday.  They sold 2,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and another 375,000 silver eagles.  In the last three business days the mint has sold 1,152,000 silver eagles---and only a small portion of that was buying by the retail public.  Could Ted Butler's big buyer---JPMorgan---still be around?  He has his mid-week column today---and I'm expecting he'll have something to say about it.

It was a decent in/out day for gold over at the COMEX-approved depositories on Monday, as 32,001 troy ounces were reported received---and 16,075 troy ounces were shipped out the door.  The link to that activity is here.

It was pretty quiet in silver, as only 22,054 troy ounces were received---and 145,748 troy ounces shipped out.  The link to that action is here.

There was a decent amount of activity at the gold kilobar COMEX-approved depositories in Hong Kong on their Monday, as 3,132 kilobars were received---and 5,262 kilobars were sent out the door.  The link to that activity, in troy ounces, is here.

I don't have all that many stories today, so I hope you can find a couple you like from the limited selection below.

¤ The Wrap

The single biggest key to the silver manipulation has always been if the concentrated short position increases on any price rally and that is exactly what occurred on the latest (snuffed out) rally. The concentrated short position of the 8 largest traders in COMEX silver is now 75,529 contracts, or 377,645,000 million oz, the most in six years. Eight traders, not one of them a miner or representing miners is short almost 50% of what the CPM Group claims is world annual silver mine production (790 million oz). No other commodity has such a concentrated short position and this is why silver miners everywhere should be complaining and screaming with the loudest voices possible.

I haven’t done so in a while, but let me point out something I used to bring up in the past that is more relevant today. As crazy as it is that COMEX silver has the largest concentrated short position of any commodity traded in terms of actual world production, it’s even crazier than that. Not only is the concentrated short position in COMEX silver so large as to be impossible to justify economically, the concentrated short position is almost double the size of the concentrated long position, a situation not witnessed in any other metal and few other commodities in general. -- Silver analyst Ted Butler: 30 May 2015

As I mentioned further up, I was very surprised that the precious metals prices didn't do better in the face of the U.S. dollar index face plant yesterday.  The precious metals blasted off [and got squashed] for no good reason on Monday, but the moment there was a reason to blast skyward, they didn't.  Volumes in gold and silver weren't particularly heavy yesterday, so the lack of a rally can't be blamed on " all the usual suspects" this time.  Ted was surprised as well.

Here are the 6-month charts for all four precious metals as of the close of trading yesterday---and it certainly appears that gold and silver are being held in a trading range.  However, for Commitment of Trader reasons, I'm afraid that they're going to follow the current price trends of both platinum and palladium at some point.

And as I write this paragraph, the London open is less than five minutes away.  Gold has been trading, or forced to trade, in a very narrow range through all of Far East trading on their Wednesday---and has a negative bias at the moment, and is currently down two bucks from Tuesday's close in New York.  Ditto for silver, which is down a nickel.  Nothing to see here, at least for the moment.  Platinum and palladium have been chopping around unchanged as well.

Gold volume is around 12,200 contracts, with 99.9 percent of that amount trading in the August contract, so it's certainly of the HFT variety---and has zero to do with supply and demand.  Silver's net volume is only 2,500 contracts, with only a handful of contracts due to roll-over activity out of June.

The dollar index, which peaked at 96.06 at 8:30 a.m. Hong Kong time, has been heading lower since then---and is currently down 21 basis points.

As I mentioned in yesterday's column, the cut-off for Friday's COT Report was at the end of COMEX trading yesterday---and based on the price action, it's a reasonably safe bet that this week's report should contain all the pertinent data.  As to what that report might show, both gold and silver have been forced to trade in a very tight price range during the reporting period---and as Ted Butler pointed out, the shenanigans on Monday will most likely determine the overall content of the report.

But all eyes should be on silver, as the short position of the Big 8 traders sits at 6-months of world silver production according to Nick Laird's chart---and Ted's comments in today's quote.

And as I send today's effort off to Stowe at 5:25 a.m. EDT, I see that both silver and gold are continuing their downwards price decent.  Gold is now down 5 bucks---and silver is down 15 cents.  Platinum is unchanged---and palladium is trading 6 dollars lower.

Gold's net volume is a hair under 20,000 contracts---and all of the HFT variety in the current front month.  Exactly the same can be said about silver, whose net volume is now up to 4,700 contracts.  The dollar index is back in rally mode---and is now up 32 basis points vs. down 21 basis points about two and a half hours ago.

As for today's expected price action, I haven't a clue.  But the COT structure, especially in silver, is still as ugly as sin---so there's still lots of pain left to go the downside.  It's just a matter of 'when' before JPMorgan et al pull the trigger on it.

See you tomorrow.

Ed Steer

If you liked this article you might like

Best of Kass: Why I Bought Gold (and Think It Could Hit a Record High in 2018)

Best of Kass: Why I Bought Gold (and Think It Could Hit a Record High in 2018)

Why I Bought Gold (and Think It Could Hit a Record High in 2018)

Why I Bought Gold (and Think It Could Hit a Record High in 2018)

Time to Play Gold -- But Not the Way You're Thinking

Time to Play Gold -- But Not the Way You're Thinking

How to Tackle Investing: Cramer's 'Mad Money' Recap (Wednesday 2/14/18)

How to Tackle Investing: Cramer's 'Mad Money' Recap (Wednesday 2/14/18)

Bridgewater's Ray Dalio Gets More Bullish on Gold Amid Warnings of Recession

Bridgewater's Ray Dalio Gets More Bullish on Gold Amid Warnings of Recession