The overbought conditions still remain in place—and have to be resolved

It was another quiet day in gold trading.  The price traded flat, but rose about $5 in late London and early New York trading. But once the Comex closed, there was a seller there to take the price back down to almost unchanged on the day.

Once again the low and high ticks are worth the effort of looking up.

Silver closed on Wednesday in New York at $1,327.20 spot, up $1.10 from Tuesday's close.  Net volume was 103,000 contracts.

The silver price was more active, but it didn't do much in Far East or most of London trading, either.  Like gold, silver hit its low tick minutes before 9 a.m. in New York.  From there it rallied steadily, despite some resistance—and its high tick came about 10 minutes before the 1:30 p.m. Comex close.  And also like gold, a willing seller appeared—and the silver price was closed well of its high.

The low and high ticks were recorded by the CME Group as $20.96 and $21.335 in the September contract.

Silver closed yesterday at $21.15 spot, up 17.5 cents from Tuesday.  Volume, net of July and August, was very chunky once again at 44,500 contracts.

Platinum and palladium prices didn't do much of anything until the Zurich open—and as you can tell from the charts, every serious rally attempt in both metals found a seller of last resort at the ready.  Platinum was closed unchanged—and palladium was up $4.

The dollar index closed late on Tuesday afternoon in New York at 79.82—and then didn't do much until 8 a.m. EDT.  At that point the index popped up to just under the 80.00 mark, but couldn't break through—and it slid a bit as the trading day wore on.  The index closed at 79.94—up 12 basis points from Tuesday.

The gold stocks opened in positive territory–and then rallied a bit more until gold hit its high tick around the 1:30 p.m. Comex close.  They sagged a bit from there—and the HUI ended the day up 1.29%.

The silver equities followed a similar path, except their rally came to an end about 2 p.m.—40 minutes after silver hit its high tick. The stocks gave up about a percent of their gains after that—and Nick Laird's Intraday Silver Sentiment Index closed up only 0.69%.

The CME's Daily Delivery Report for Day 4 of the July delivery month showed that 8 gold and 16 silver contracts were posted for delivery on Monday within the Comex-approved depositories on Monday.  The link to yesterday's Issuers and Stoppers Report is here, but there's not much to see.

There were no reported changes in GLD yesterday—and as of 8:54 p.m. EDT yesterday evening, there were no reported changes in SLV, either.  But when I checked back a bit over an hour later, I noted that there was a tiny withdrawal which, undoubtedly, was a fee payment of some kind.  The amount in question was 127,074 troy ounces.

The good folks over at Switzerland's Zürcher Kantonalbank updated their Web site with the latest activity within their gold and silver ETFs as of Friday, June 27—and this is what they had to say since their last report on June 13.  Their GLD declined by a very decent 113,787 troy ounces, but their silver ETF only dropped by 33,598 troy ounces.

The U.S. Mint had another sales report yesterday, albeit a small one.  They sold 5,000 troy ounces of gold eagles—and 75,000 silver eagles.

There was little in/out movement in either silver or gold at the Comex-approved depositories on Tuesday.  In gold, only 466 troy ounces were reported shipped out—and in silver there was a tiny 4,911 troy ounces removed.  No gold or silver was reported received.  This level of activity is not worth linking.

Here's a chart that Nick Laird sent our way yesterday afternoon.  It's titled “US Mint Coin Sales: Gold vs. Silver“.  It shows the dollar value of gold eagles and buffaloes vs. silver eagles that have been sold each month by the U.S. Mint for about the last three years—and as you can tell at a glance that with the exception of just a few months, silver eagles sales in dollar terms are amazing compared to gold coin sales.  It's obvious that the investing public knows that silver is by far the most underpriced of the two.

I have a decent number of stories for you today—and I hope you can find the time to read the ones that you find interesting.

You’ll remember, of course, that 2013 was the most significant year for deposits/withdrawals in GLD and SLV.  As gold prices fell more than $400 from the start of 2013, around 40% of the total metal holdings in GLD came to be liquidated and withdrawn, as GLD investors did what investors typically do in a dramatic decline following a decade of advances—sell.
However, in SLV, the logical script wasn’t followed in 2013—and is not being followed very recently. Despite an even larger price decline in silver than experienced in gold, no net withdrawal occurred in SLV in 2013. I feel there probably was liquidation in SLV, but that selling was absorbed by new buying as metal changed hands and a good chunk ended up being owned by JPMorgan. Further, JPM was able to evade SEC reporting requirements which would have revealed its ownership by methodically converting shares into metal, where ownership reporting doesn’t exist.Silver analyst Ted Butler: 02 July 2014

The price action in gold yesterday barely rates a mention, but the price activity in silver was somewhat more substantial—especially the volume numbers.  Ted Butler thought that maybe the technical funds have been coming back on the long side, because volumes in both metals have been much higher than I wanted to see in the last 10 days or so.  Unfortunately, Wednesday's price action won't be in Monday's Commitment of Traders Report, or the companion Bank Participation Report.  However, even without yesterday's trading data included, Monday's COT Report will be bad enough as it is.

Here are the six-month gold and silver charts again, with Wednesday's price action included.  Nothing has changed in my opinion, as the overbought conditions still remain in place—and have to be resolved sooner or later.

Can we blast higher from here?  Absolutely—but if it did happen, it would be the first time in Comex history that prices have launched skyward from such an overbought condition.  And it would happen only if JPMorgan has either given the word to let prices rise or some “black swan” event occurred—scenarios I've discussed before.

As I write this paragraph, London has been open about 10 minutes—and it's obvious that all four precious metals came under selling pressure right from the New York open on Wednesday evening—and that continued through most of the day in the Far East as well.  Gold volume is about average, and once again, silver volume is higher than I would like to see at this time of day.  The dollar index, which made it about 1 basis point above the 80.00 mark, has now retreated a hair—and is basically unchanged from Wednesday's close.

And as I prepare to send this off to Stowe, Vermont at 4:30 a.m. EDT, I see that all four precious metals are still down on the day, but rallying a bit at the moment.  It's way too soon to read anything into this price activity, as there have been countless occasions where the precious metals started the day off in the hole from a price perspective—and then recovered most or all of it as the trading day wore on in both London and New York.  Obviously gold and silver volumes are up some more, but not by overly large amounts, but still higher than I want to see them.  The dollar index is now at 80.01.

I have no idea how trading will go as the Thursday session unfolds although, as I said in this space yesterday, I'm expecting the activity level to fall off dramatically in New York after the 10 a.m. EDT London p.m. gold fix.

I will definitely have a column tomorrow, but it will be posted on the weekend time schedule—and the jury is still out on whether there will be a column on Saturday or not.  I'll use any excuse possible to get out of writing one—and won't, unless something blows up or melts down in the interim.  I'll let you know for sure in my Friday column.

And with that out of the way, I'd like to take the opportunity to wish all my American readers a happy Independence Day holiday weekend—and I'll see you here tomorrow.

 

 

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