It appears that we’re back to twiddling our collective thumbs

After getting sold down a few dollars to the $1,230 level in early Far East trading on their Wednesday, gold rallied quietly to its high of the day, which came shortly before 3 p.m. Hong Kong time.  But by the 10:30 a.m. GMT London a.m. gold fix, the price had returned to the $1,230 level.  There was a tiny rally that began at the noon London silver fix, which got sold down the moment that COMEX trading began at 8:20 a.m. EST—and from there it gently sold off, closing on its low tick of the day.

The high and lows were reported by the CME Group as $1,238.90 and $1,225.20 in the February contract.

Gold finished the trading day at $1,226.10 spot, down $6.30 from Tuesday's close.  Volume, net of December and January, was not exactly light at 151,000 contracts.

The silver price had a little more shape to it.  It traded flat in the Far East until about 1:30 p.m. Hong Kong time—and then, like gold, began to rally.  That all ended at the London open—and from there price got sold down into the London silver fix.  The subsequent rally met the same fate as the gold price at the COMEX open—and it's low tick came minutes after 9:00 a.m. EST.  It rallied back a bit from there, but at precisely 2:00 p.m. EST in electronic trading, a willing seller pealed 17 cents off the price going into the 5:15 p.m. electronic close.  That turned a potentially positive close, into a negative one.

The low and high ticks were recorded as $16.95 and $17.355 in the March contract.

Silver finished the Wednesday trading session at $17.055 spot, down a nickel from Tuesday's close.  Volume, net of December and January, wasn't exactly light either at 50,000 contracts.

The platinum price rallied in fits and starts until shortly before the Zurich open—and it was pretty much all down hill from there, with platinum closing on its low tick of the day at $1,236 spot, down 6 bucks.

The palladium price rallied a few dollars in the early going in Far East trading on their Wednesday morning—and then didn't do much after that until around 1:30 p.m. Zurich time.  From there it rallied until 1 p.m. EST, before getting sold off into the 5:15 p.m. close of electronic trading.  Palladium closed at $812 spot—up five bucks on the day, but well of its high tick.

The dollar index closed late on Tuesday afternoon in New York at 88.67.  The 88.80 high tick came shortly before 10 a.m. in Hong Kong.  From that 'high,' the index drifted back to unchanged by shortly after the noon silver fix in London.  At that point, the index began to head south with more urgency, closing virtually on its low tick of the day at 88.22—down 45 basis points from Tuesday's close.

In many respects, the dollar index carved out an identical price path on Tuesday as it did on Wednesday, but this time it wasn't accompanied by a corresponding rally in the precious metals.  So it's safe to call the correlation between the dollar index and the precious metal prices so much bulls hit.  However, it does make for a good cover for JPMorgan et al when it becomes necessary—and it's obvious that yesterday wasn't one of those days.

Here's the 3-day chart, so you can see that the dollar index moves on Tuesday and Wednesday were almost mirror images of each other—but the 'reaction' of the precious metals obviously wasn't the same.

The gold stocks opened down a hair, but immediately rallied into positive territory, with the high coming just before 10:30 a.m. EST.  Despite the fact that the gold price was trending lower, the stocks managed to stay in positive territory until shortly before 2 p.m.  At that point the general sell off in the Dow, which began at the 1:30 p.m. COMEX close, infected the gold stocks—and by 3 p.m. were down a hair over 3 percent—and that's where they closed an hour later, as the HUI finished the day down 3.02 percent, giving up 60 percent of its Tuesday gains.

The silver equities followed a very similar pattern, but they only closed down 2.11 percent.  Here's Nick Laird's Silver Sentiment Index showing that.

The CME Daily Delivery Report showed that zero gold and 115 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The only short/issuer was Jefferies out of its client account—and the two largest long/stoppers were HSBC USA with 85 contracts—and Jefferies with 17 contracts for its client account.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that December open interest in gold declined by 23 contracts—and is now down to 1,054 contracts.  In silver, December o.i. stands at 518 contracts, down 57 contracts from Tuesday's report.

Let the bells ring out and the banners fly, because for the second day in a row there was a deposit in GLD.  This time it was 96,080 troy ounces.  It's been years since we've seen that!  Over at SLV, the opposite happened, as an authorized participant withdrew a monstrous 2,873,718 troy ounces.  I don't need Ted Butler standing over my left shoulder to figure out that this was a 'Mr. Big' withdrawing silver in order to circumvent SEC requirements of having to report more than a 5 percent share ownership in that ETF.

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

There wasn't big in/out movement in gold over at the COMEX-approved depositories on Tuesday.  Only 3,215 troy ounces were reported received—and 803 troy ounces were taken out.  But, of course, it was another big day in silver, as 551,073 troy ounces were reported received—and another 1,061,295 troy ounces were shipped out.  Canada's Scotiabank took in all the silver—and almost a million ounces was shipped out of Brink's, Inc.  The link to that activity is here.

I have a decent number of stories again today—and I hope you find something in the list below that you like.

The price of gold and silver surged on Tuesday—and held those gains through Wednesday’s trading. In silver, it was the first upside penetration of the important 50-day moving average in six months. I would imagine there was further technical fund buying, including both additional short covering and most likely new buying as well. The key question, of course, is who were the sellers—and more specifically, how much additional short selling occurred by the 4 and 8 largest commercial shorts in both silver and gold? Because yesterday was the cutoff for the reporting week, this Friday’s COT should go a long way to answering that question.

While I’m resigned to some disappointment in increased concentrated short selling by the big commercials, I am still more interested in what has occurred over the past five reporting weeks, namely, the unprecedented outcome of the technical funds cashing in massive profit chips on the short side of silver and a good number of commercial longs (raptors) tapping out. Nothing close to this has occurred previously and I’m still convinced that this shocking turnabout portends important changes ahead, including a potential loss of trading liquidity. A loss of liquidity generally translates into bigger price moves and yesterday’s large price moves in gold and silver would tend to support my conclusion.Silver analyst Ted Butler: 10 December 2014

Yesterday was another day where the price got sold down after a big advance the prior day.  The four 'orphan' out-of-the-blue rallies that gold and silver have staged during the past five weeks have all ended the same way, with down days following each one—with significant portions of the gains in precious metal stocks vanishing as well.  As you already know, yesterday's action was no exception.

Here's the 3-month gold chart so you can see this for yourself.  The first rally of the current sequence came on Friday, November 7, with the big down day coming the following Monday on the 10th.  The other three 'orphan' rallies are equally as obvious.

Here are the 6-month charts for the four precious metals, plus natural gas and West Texas Intermediate.  As the world already knows, the price of crude oil set a new low for this move down yesterday—and as to where the bottom might be, nobody knows.  In natural gas, we're back to the lows we haven't seen since late October—and prior to that, a bit over a year ago.

My ISP was down for about ninety minutes in the wee hours of this morning—and London had been open for a while by the time Internet service had been restored.

The gold price rose about five bucks in the first hour or so after trading began in New York yesterday evening, but got sold down the same amount shortly after 1 p.m Hong Kong time—and at the moment [4:08 a.m. EST] the gold price is down a couple of bucks.  Silver's price path was similar—and it's price is down a couple of pennies.  Gold volume is a bit over 31,000 contracts at the moment—and silver's volume is just north of 6,300 contracts.  The dollar index fell off a cliff in early Far East trading, but the moment it broke through the 88.00 mark to the downside, it appeared that 'gentle hands' showed up.  Right now the index is up a hair.

After Tuesday's big 'orphan' run-up in precious metal prices, it appears that we're back to twiddling our collective thumbs until the next out-of-the-blue rally puts in an appearance.  And as Ted mentioned in his quote further up, we await the Commitment of Traders numbers on Friday to see what the big 4 and 8 short holder in gold and silver did during that rally.

I'd be happy if it was just the technical funds in the Managed Money covering the remainder of their short positions while the raptors [the Commercial traders other than the Big 8] sold what was left of their long positions at a big loss once again.  That's my Christmas wish, but JPMorgan et al would hardly pass as Santa and his elves—and Christmas is still a long way away.

And as I hit the send button on today's effort at 5:30 a.m. EST, I note that the gold and silver prices are continuing to slide.  Gold is down five bucks, with silver down a nickel.  Platinum, which had been up about 15 bucks on the day at 1 p.m. Hong Kong time, is now down two dollars on the day.  Palladium is up 3 bucks.

Gold volume is around 44,000 contracts—and silver's volume is a hair above the 8,300 contract mark.  These numbers are bigger than I'd like to see this time of day, but they haven't increased by much since I reported on them about 90 minutes ago.

The dollar index which, once again, came close to sliding back below the
88.00 mark minutes before the London open, is now rallying a bit.  At the moment it's up 12 basis points at 88.345.

As for what might happen during the remainder of the Thursday session, I haven't a clue, nor does anyone else.  I'd be happy with another 'orphan' rally—but I'm always on the lookout for “in your ear.”

See you tomorrow.

Ed Steer

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