Is Another Giant Precious Metals Bear Raid Coming This Morning?

Not much happened in the gold market on Thursday. The price topped out around $1,380 shortly before London opened and then declined gently to its low of the day [$1,363.90 spot] around 11:15 a.m. in New York. The gold price subsequently recovered and closed down about eight bucks on the day.

Silver’s high came shortly after trading commenced in the Far East yesterday and then declined very slowly and hit bottom [$28.79 spot] at the same moment as gold around 11:15 a.m. Eastern. Silver closed down twenty cents on the day.

The dollar continued to head north. Yesterday it closed up another 60 basis points. It’s amazing how the dollar, which was about to break down through its 50-day moving average on December 31st, all of a sudden developed some legs on the following Monday and has been on a tear ever since. Here’s the 6-month dollar chart.

Despite the fact that gold was only down a handful of dollars on the day, the gold stocks got sold off pretty hard for no reason that I could see, with the HUI down a surprising 2.39%. But, behind the scenes, most of the silver stocks got absolutely smoked right across the board. Considering the price action, there was absolutely no reason why this should have been the case and I’ve learned to be suspicious when I see such not-for-profit selling coming out of a clear blue sky.

Thursday’s CME Delivery Report showed that 5 gold and 85 silver contracts were posted for delivery on Monday. In silver, JPMorgan as the big issuer and Prudential was the big stopper, with the Bank of Nova Scotia coming in a distant second. The link is here.

There were no changes in GLD yesterday, but 781,672 ounces of silver were withdrawn from the SLV ETF.

The U.S. Mint reported selling another 9,000 ounces of gold eagles, plus 155,000 silver eagles. January gold eagles sales stand at 23,000 ounces and silver eagle sales total 2,140,000.

Over at the Comex-approved depositories on Wednesday, they reported receiving a net 552,841 troy ounces of silver. The link to that action is here.

It was no surprise to me to see that Sprott Asset Management in Toronto had to wait such a long time before receiving the 16 million ounces of silver it had purchased on the open market. I had know that they were having problems, but was sworn to secrecy. It took them ten weeks to get it all. They were given a delivery schedule of about 1.5 million ounces per week and that’s pretty much the way it came in the door. 1.5 million ounces per week is a hair over 11% of world silver production during that time period. One would have to conclude that large quantities of good delivery silver bars simply do not exist.

While we’re on the subject of silver, here’s Nick Laird’s updated “Silver 7” graph from sharelynx.com showing yesterday’s blood bath.

Click here to enlarge.