Both gold’s 50 and 200-day moving averages were taken out with real authority yesterday…and gold closed below its 200-day moving average as well.
Gold’s high tick of the day came minutes after 1:00 p.m. Hong Kong time during their Tuesday trading day. The price went into a slow decline from there…and by 8:30 a.m. in New York, the gold price was down about six bucks from Monday’s close.
Then, in the space of ten minutes, someone sliced ten bucks off the gold price. But by 11:45 a.m. Eastern time, gold had struggled back to break through the $1,700 mark. That was as high as the price got in New York…$1,702.70 spot…and from there it went into a very slow decline right up until 2:15 p.m. in the thinly-traded electronic market.
From that point, gold got sold off about fifteen dollars in the space of fifteen minutes or so. But the real damage came shortly before 3:30 p.m. when the bid disappeared entirely…and by 3:45 or so, the gold price got hit for another twenty-one bucks.
That was the low of the day…$1,660.90 spot…and from there, gold recovered about fourteen dollars going into the 5:15 p.m. New York close.
Gold finished Tuesday at $1,675.10 spot…down $25.70 on the day. With a price drop that size, there was massive speculative long liquidation once again…and net volume was pretty chunky at 180,000 contracts.
The silver price pretty much followed the same pattern as the gold price, which should not come as any big surprise. Like gold, silver rallied in the New York morning to move above Monday’s close…but that situation wasn’t allowed to stand either, and silver ran into the same not-for-profit selling sequence that gold did.
But once the low tick [$32.90 spot] was in shortly after 3:30 p.m. in New York yesterday afternoon, the price came roaring back. Silver closed at $33.37 spot…down only 20 cents on the day. Silver’s net volume was more than decent as well…around 48,000 contracts.
Of course both gold and silver wanted to take off to the upside in late-morning trading in New York…but there was clearly a seller lying in wait when both metals broke into positive price territory.
And, just in case you didn’t notice it…I didn’t either…platinum closed above the gold price yesterday for the first time since last year. I thank Washington state reader S.A. for pointing this out to me yesterday.
The dollar index rally, which began about 10:00 p.m. on Monday night, continued until precisely 9:00 a.m. Eastern time yesterday morning, which was the moment that the dollar index broke through the 80.30 mark. At that point, the index was up about 60 basis points…and at its high of the day.
Then, it spent just about three hours giving up about 35 basis points of that gain before rallying a bit into the close. The dollar index close up a bit over 40 basis points.
The dollar index pretty much mirrored the gold price action up until 2:15 p.m. in the thinly-traded electronic market. Then the not-for-profit sellers showed up…and that, as they say, was that.
The gold stocks spent most of the day just barely above unchanged, which is surprising considering that gold was down a percent earlier in the trading day. However, the stocks certainly succumbed to selling pressure the moment that gold got hit at 2:15 p.m. Eastern time. But even then, there were buyers for every dip…and the HUI closed down only 0.52%.
Why the gold stocks didn’t sell off harder is a mystery. After more than ten years of watching this sort of thing, I’m of two minds when I see counter-intuitive share price behavior on a big price decline: a] the bullish part of me says that someone is buying cheap shares because a huge rally in the gold price is just around the corner; b] the GATA/John Embry side of me sees ‘da boyz’ buying everything that’s obviously falling of the table so they can build up their reserves to keep the HUI in check on days when it want to blow skyward.
But, as I’ve said many times in the past, maybe I’m looking for black bears in dark rooms that aren’t there.
And despite the trashing that silver took, the silver stocks were a mixed bag as well yesterday…and Nick Laird’s Silver Sentiment Index closed up an impressive 1.04%.
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It was another quiet CME Daily Delivery Report, as only 12 gold and 20 silver contracts were posted for delivery on Thursday.
There was a minor decline in GLD’s stockpile yesterday…13,109 troy ounces in total…which was probably a fee payment. There was no reported change in SLV.
The U.S. Mint did not have a sales report.
There was something not right about yesterday’s report from the Comex-approved warehouses. They reported exactly the same withdrawal amount from the identical depository [Scotia Mocatta] on both Friday and Monday…with the total silver inventory remaining the same. There was an obvious error made…and hopefully they’ll have this straightened out in today’s report for Tuesday.
A couple of things from reader Scott Pluschau before I get into my list of stories today. The first deals with the 30-year Treasury note…and it’s two charts in one. The first is a daily chart from yesterday…and the second is a nine month chart. Scott’s covering sentence was short and to the point…”Long bond is potentially in a world of trouble.” Even I have to admit that it’s a pretty ugly looking chart.
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Scott’s second comment involved his blog yesterday in which he spoke about “Dr. Copper”. His covering e-mail read as follows…”Keep an eye on copper. Take a look at the chart in this article of copper coiling… this may lift silver on a breakout.” The link to Scott’s blog is here…and the chart is certainly worth a look.
I have the usual number of stories today…and the final edit is up to you.
A civil servant is sometimes like a broken cannon: it won’t work and you can’t fire it. – General George S. Patton
Well, I wasn’t happy…but then again I wasn’t entirely surprised by yesterday’s price action in both silver and gold. And if it hadn’t been for the late-day price shenanigans in the thinly-traded electronic market, platinum would have closed in the black. Palladium was the only precious metal that finished up on the day.
And I don’t believe for a second that anything Bernanke had to say was material to the precious metals,however that may have been the fig leaf used to blast them lower.
I guess the only surprise would be that JPMorgan et al didn’t beat the snot out of silver more than they did. Down 20 cents at the close wasn’t much of a drop, but then again, the rally off the lows could just has easily been a short covering rally as well. As a matter of fact, I’d be surprised if it wasn’t.
How much of this volume data shows up in Friday’s Commitment of Traders Report is anyone’s guess. Neither Ted Butler nor I are sure whether the cut-off for the report is at the close of Comex trading at 1:30 p.m. Eastern time, or whether it’s at the close of electronic trading at 5:15 p.m. Needless to say, if the cut-off is actually at the close of Comex trading…all the data surrounding the price smash-downs in the New York Access Market won’t show up until next Friday’s COT report…a trick that ‘day boyz’ have been using a lot lately when they’re trying to cover what they’re doing for as long as possible. I’ve mentioned this many times in this space…and I’m sure you’re familiar with the routine by now.
Just out of curiosity, I checked the preliminary volume numbers for yesterday’s trading day…and both gold and silvershowed increases in open interest…almost an impossibility in gold’s case, considering that the price smash caused huge tech fund long liquidation. Both gold’s 50 and 200-day moving averages were taken out with real authority yesterday…and gold closed below its 200-day moving average as well. But, as I’ve said before, there’s lots of ways that JPMorgan et al can hide what they’re doing in these daily open interest numbers, which is the primary reason why I stopped posting them in this column.
Here’s gold’s 6-month chart. Note how yesterday’s trading action took out both of the key moving averages.
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And here’s silver’s 6-month chart. The 200-day moving average fell on the first day…February 29th…and we have a bit to go to take out silver’s 50-day moving average.
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Now the question remains…are we going lower from here or not? Don’t know…but anything’s possible if you glance back at what happened to both these metals in December. If this sort of buying opportunity presents itself again, I hope you use it to acquire as much physical as you can afford.
Gold traded pretty flat during the morning session in the Far East…and was up a few bucks by shortly before 2:00 p.m. Hong Kong time…and then the selling pressure began…and as of 10:15 a.m. in London, the gold price was down about eight dollars from Monday’s close.
Silver pretty much followed the same price path as gold, setting a new low price for this move down…around the $32.85 spot price mark…about two hours after London opened. As I hit the ‘send’ button, silver is down about 40 cents.
Gold volume, as of 5:15 a.m. Eastern, is already sky high…with surprisingly few roll-overs…and silver’s volume is getting up there as well. The dollar index is up a tiny amount.
I haven’t a clue what today’s price action will be like in either metal when Comex trading begins at 8:20 a.m. in New York…but nothing will surprise me when I turn on my computer later this morning.
See you on Thursday.
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