Only 2.2 million ounces has been deposited in SLV since January 21

The gold price ticked down at the 6:00 p.m. EST open on Sunday evening—and then traded flat until minutes after London opened.  At that point it began to sell off, with the low coming around 12:30 p.m. GMT in London.  The subsequent rally ran into a willing seller the moment the price turned positive on the day—which was around 3:15 p.m. EST in electronic trading in New York.

The low and high were reported by the CME Group as $1,266.50 and $1,283.90 in the April contract.

Gold close on Monday in New York at $1,273.80 spot, down $9.30 on the day.  Volume, net of February and March, was 124,000 contracts.

Silver's price was 'volatile' yesterday, with the low coming around 10 a.m. GMT in London—and the two attempts it made to launch skywards in price after that were met by a willing seller.  Like gold, silver was not allowed to close up on the day.

The low and high were recorded as $16.995 and $17.34 in the March contract.

Silver closed yesterday at $17.18 spot, down a nickel from Friday.  Net volume was puny at only 20,000 contracts.

Platinum traded with a negative price bias until around 11 a.m. Zurich time.  After that it chopped sideways in a tight range. The metal closed at $1,225—and down 13 bucks from Friday.

The palladium price chopped around in a ten dollar range until 9:30 a.m. in New York.  Then it rallied a decent amount until about noon EST—and didn't do much after that.  Palladium finished the Monday session at $785 spot, up 16 dollars.

The dollar index closed in New York late on Friday afternoon at 94.86—and then didn't do much until minutes before 8:30 a.m. EST yesterday.  Then it got sold down to its 94.40 low tick around 10:40 a.m. in New York.  It recovered about half that decline within thirty minutes, before chopping sideways into the close.  The index finished the Monday session at 94.56—down 20 basis points.

Not surprisingly, the gold stocks opened down a percent and change, before moving into positive territory in fits and starts.  The HUI closed up 1.27%.

It was more or less the same chart pattern for the silver equities, complete with the sell-off in the last 30 minutes of trading, as the willing seller showed up in both metals just before the close.  Nick Laird's Intraday Silver Sentiment Index finished nicely in the black as well, up 1.34 percent.  But it was up well over 2 percent at its high.

I forgot to mention this in my Saturday missive, but after making an inquiry from Nick Laird, I found out that the HUI was 23 percent in January—and his Silver Sentiment Index rose 18 percent.

The CME Daily Delivery Report for Day 3 of the February delivery month in gold showed that only 6 gold and 16 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  Nothing to see in gold once again.

The CME Preliminary Report for the Monday trading session showed that February gold open interest declined by 675 contracts, leaving 2,104 contracts still open.  In silver, the February o.i. dropped by 6 contracts, leaving 37 contracts left to deliver.  It will be interesting to see who the Issuers and Stoppers are on gold when the short/issuers finally step up to the plate and deliver.

Another day—and another big deposit in GLD.  This time an authorized participant[s] added 268,869 troy ounces.  And as of 7:07 p.m. EST yesterday evening, there were no reported changes in SLV.  But when I checked back at 12:19 a.m. EST this morning, I noted that an authorized participant had added 1,148,649 troy ounces.

The U.S. Mint started off the new month with a sales report.  They didn't sell any gold, but reported selling 391,000 silver eagles.

Friday was a slow in/out day for both gold and silver over at the COMEX-approved depositories.  In gold, only 16,075 troy ounces were reported received—all into Scotiabank's vault.  And in silver, nothing was received—and only 65,598 troy ounces were shipped out the door.  This level of activity isn't worth linking.

I have a very decent number of stories for you today—and I hope you have the time to wade through the ones that interest you the most.

In last Friday's COT Report, the CFTC reported that eight traders on the COMEX held 65,301 contracts of silver net short, close to the highest level in years. That is the equivalent of more than 326 million ounces of silver. It is also the equivalent of more than 40% of world annual mine production and 150 days of world mine production, an amount unequalled among all commodities. By comparison, the concentrated short position in COMEX copper is less than 10 days of world production. With silver priced close to the lowest level in years and below the average primary cost of production, it is hard, if not impossible, to explain the existence of the largest concentrated short position in terms of hedging by mining companies or other legitimate hedgers.

Moreover, the concentrated short position in COMEX silver is mostly held by U.S. and foreign banks, according to data in the Bank Participation Report. There are not many physical commodities where the banks control a larger share of market concentration than they do in COMEX silver futures and those few markets are run by the CME Group, the same self-regulatory organization that is supposed to be the front line regulator in silver.

Again, the issue is not that there are 326 million ounces held short in COMEX silver futures. The issue is that the 326 million oz are held short by only eight traders and there is good reason to believe that this position is responsible for an artificially low price. Certainly, no one would argue that silver prices appear artificially high based upon all the documented evidence, but if silver prices did move to extremely high levels and there was a documented concentrated long position, no one would need to petition the regulators for answers about that concentration. And you’ll notice that the few remaining deniers of the silver manipulation, never dare utter the word concentration (if they even grasp the meaning of the word) because it would expose the matter once and for all.Silver analyst Ted Butler: 31 January 2015

I'm not sure what to make of yesterday's price action, although it certainly appeared that the only sellers in silver on a couple of occasions on Monday were of the not-for-profit variety.

I was certainly happy to see the precious metal equities finish in positive territory again, but as I've been saying for many months, we're seeing a lot of counterintuitive price action in both gold and silver equities, both to the upside and downside—so I'm not prepared to read much into yesterday's share price action.

Here are the 6-month gold and silver charts updated with yesterday's price and volume numbers.

I note that Ted had something to say about the obscene and grotesque short position in the COMEX silver futures market in his Saturday commentary to his paying subscribers.  I did as well, but his explanation is so much better than mine that I thought I'd steal it as the quote in today's column—and you should go back and read it again before proceeding further.

Once again, here's Nick Laird's most excellent chart—“Days of World Production to Cover COMEX Short Positions“—in all the physically traded commodities on the COMEX—updated with the data from last week's COT Report.  It's the same chart that appeared in my Saturday column.  These are the Big 4 and Big 8 traders that Ted and I are always going on about.

And as I said on Saturday—-“What I had to say about the two biggest short holders in silver still stands—and that is that JPMorgan and most likely Canada’s Scotiabank combined, hold more than 50 percent of the COMEX short position in silver between them in the Big 8 category—and about 80 percent of the short position in the Big 4 category.

I also had this to say as well—“And, for the first time in about a decade, the four precious metals now occupy the four consecutive spots on the very far right of this chart.  These four precious metals continue to be the most manipulated commodities on Planet Earth, with silver holding top spot—a position it has held for most of the last 30 years.

Everybody else thinks that this is perfectly OK—and it's never mentioned when the so-called gold and silver “analysts” discuss future prices.  The COMEX short positions in the four precious metals is the big 800-pound gorilla in the living room, but nobody will admit it's there.

How stupid is that?

And as I write this paragraph, the London open is about an hour away.  After doing nothing for the first half of the Far East trading session on their Tuesday, gold and silver have popped a bit in price starting around 1 p.m Hong Kong time—and platinum followed an hour later.  Palladium is up a couple of bucks, but really hasn't done much up to this point.  Gold volume is only 16,000 contracts—and silver's net volume is pretty light as well, only 3,100 contracts.  The dollar index hasn't done much—and is currently up 5 basis points at the moment.

With the whole world firmly in the grip of a deflationary spiral that no amount of money printing will alleviate, there's still the gold card to be played.  Rising precious metal prices have been the inflation barometer for a century or more until it was silenced about thirty years ago.  If the powers-that-be want the world to wake up to real or imagined inflation, letting the precious metal prices run to the upside would be useful.

Of course that unleashes a whole new set of problems for the world's central banks, as precious metal ETFs would begin gobbling up prodigious amounts of the stuff—not to mention the physical market itself by newly-awakened retail demand in the West.

And although retail demand in North America continues to be very soft, that's not the case for the world's premier gold ETF, GLD—as 1.9 million ounces of gold have been deposited there since January 15.

Piling that kind of demand on top of what China, Russia and India are already reported to be consuming, is not a trend that can continue without drawing down central bank gold inventories even more.

Of course the biggest problem lies in silver, as the physical metal does not exist to meet the demand of the world's largest silver ETF—and that's SLV—let along the other silver ETFs out there.  Only 2.2 million ounces has been deposited in SLV since January 21—and much more is owed.

Not to be forgotten in silver is the fact that despite the 2.2 million ounces deposited in the last few weeks, there has been a net withdrawal of 29.5 million troy ounces from that ETF since December 1—and not a soul, except for Ted Butler, is asking what the hell that's all about.

Why not?—is the question that still goes begging an answer.

And as I hit the send button on today's column at 4:50 a.m. EST, I note that all four precious metals are now in rally mode, all with spikes up that began about ten minutes before London opened.  Gold is up nine bucks, but silver is up almost 50 cents.  Platinum is up 11 dollars—and palladium is up 8 dollars.

Gold volume is double what it was an hour before the London open—and is now at 32,000 contracts net.  Silver's net volume has tripled—and is now up to 9,500 contracts, so it's obvious that these rallies are not going unopposed, especially silver.

Here's the Kitco silver chart as of 4:45 a.m. EST—9:45 a.m. GMT in London

The dollar index still isn't doing much—and is now up 7 basis points, which is basically unchanged from three hours ago.  I also note that crude oil is up a bit over 3 percent at the moment.

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Today, at the close of COMEX trading, is the cut-off for this Friday's Commitment of Traders Report, along with the companion Bank Participation Report.  How much of today's price/volume action will be in these reports is open for debate, as there are times when not all the data appears in a timely manner, particularly when there's been a heavy price action/volume day on the day of the cut-off.  So we wait.

And I'll be more than interested in what the precious metal charts look like when I roll out of bed later this morning.

See you tomorrow.

Ed Steer

Cypress Development Corp. is a Canadian gold, silver and base metals exploration company developing projects in Red Lake, Ontario, Canada, and in Nevada, U.S.A.

Cypress holds a 100% interest in the approximately 1140 acre Gunman Zinc-Silver Project located in White Pine County, northeast of Eureka, Nevada. Three RC drill programs totaling approx. 38,000 feet have been completed by Cypress on the Gunman project with significant grades between 5% to 33% per ton zinc and 0.5 to 15.0 oz per ton silver over considerable widths encountered. Zinc could represent the next big base metal play due to ongoing demand growth and the closures of 3 major mines in Canada, Australia and Ireland and not enough supply coming on stream from new projects. Sentiment could shift towards zinc, with prices potentially rallying in anticipation of tightening supplies.

Ordinarily I wouldn't pick up my camera for an English house sparrow, but when this male landed on a leaf of this plant—how could I resist?  Except for some minor cropping, this photo is straight out of the camera.  It took it while eating lunch outside at the Desert Botanical Garden in Phoenix, Arizona last month.

This second photo is of wigeons, or widgeons—all males, except for one.  There are three types of wigeons/widgeons—this one is the American variety.  They breed in Canada and the northern U.S. in the summer, but this group, along with several hundred others I saw, were spending their winter at the large man-made lake in Fountain Hills, Arizona—which is on the northeast outskirts of Phoenix.