Thursday, October 2: Today in Gold and Silver


NEW YORK ( TheStreet) -- The gold price sold off a few dollars in early Far East trading on their Wednesday---and then proceeded to bounce off the $1,205 spot price market until the London a.m. gold fix was in around 10:20 a.m. BST.  At that point the gold price popped back to around unchanged.  It rallied anew at the Comex open---and obviously got capped at the London p.m. gold fix at 3 p.m BST---10 a.m. EDT.  Although gold hit its high tick about 11:40 a.m. in New York, the price basically did nothing from the London afternoon gold fix, until the 5:15 p.m. close of electronic trading.  Gold was closed well of its high of the day.

The low and high ticks were reported by the CME Group as $1,205.00 and $1,220.00 in the December contract.

Gold finished the Wednesday trading session at $1,213.00 spot, up only $4.30 on the day.  Net volume was decent at around 141,000 contracts.

Silver also headed lower in early Far East trading---and a new low for this move down was printed shortly after 9 a.m. Hong Kong time.  After that it rallied quietly back to unchanged---and it stayed at that price until the noon London silver fix was in.  The subsequent rally lasted until 11:50 a.m. EDT, the exact point at which gold got capped---and the not-for-profit sellers capped silver at that point as well, closing it well off its high tick.

The low and high in silver were recorded as $16.865 and $17.44 in the December contract.

Silver finished the Wednesday trading session at $17.175 spot, up 20.5 cents from Tuesday.  Net volume was pretty decent at 47,500 contracts.

Although platinum tried to rally short after trading began in New York on Tuesday evening, the HFT boyz and their algorithms made short work of that, before engineering a new low price, which also appeared to occur at, or just before, the London morning gold fix.  That shiny new low tick didn't last long, as platinum rallied about 30 bucks by shortly before the 1:30 p.m. Comex close---then it, too, got sold down into the close of electronic trading in New York.  Platinum finished the Wednesday session down 18 bucks, but as I mentioned in The Wrap section of yesterday's column, it was down, almost 40 dollars on the day at its low tick.

Palladium's fate was the same as platinum's---except it was the Reader's Digest version of it, as the chart patterns look the same.  Not only was a new low tick engineered at the same time as platinum's, but palladium actually finished up 6 bucks on the day.

The dollar index closed at 85.926 late on Tuesday afternoon in New York---and from there chopped unsteadily higher, to its 86.15 high tick.  That was printed shortly after 12 o'clock noon in London---and less than twenty minutes before the Comex open in New York.  From there it chopped unsteadily lower, closing the Wednesday trading session at 851.91, which was basically unchanged.

The gold stocks gapped up about a percent at the open---and then traded sideways until 11:30 a.m.  From they rallied to their high of the day just under the 200 mark on the HUI---and that came shortly after 1 p.m. in New York.  From there they got sold down---and the HUI only closed up 0.37% and very close to its low tick of the day.

It was a very similar chart pattern for the silver equities as well, but once they broke from their 1:15 p.m. high ticks, they gave up 2 percentage points of gains within a two hour period---as Nick Laird's Intraday Silver Sentiment Index close up only 0.63%.

The CME Daily Delivery Report for Day 3 of the October delivery month showed that no gold or silver contracts were posted for delivery within the Comex-approved depositories on Friday.

The Preliminary Report for the Wednesday trading session showed that there are 2,310 gold and 213 silver contracts still open in the October contract.  Of course with no changes reported in the previous paragraph, these numbers accurately reflect the open Comex contracts as of the close of trading yesterday.

There was another withdrawal from GLD yesterday.  This time an authorized participant took out 38,461 troy ounces---and as of 9:57 p.m. EDT yesterday evening, there were no reported changes in SLV.

The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs for the period ending September 29---and this is what they had to report.  Their gold ETFregistered another decline.  This time it was 35,349 troy ounces.  But their silver ETF went in the other direction, as it actually increased by 31,990 troy ounces.

The U.S. Mint started the new month off with a big sales report, as they sold 3,000 troy ounces of gold eagles---2,500 one-ounce 24K gold buffaloes---a very chunky 1,150,000 silver eagles---and 400 platinum eagles.

In the last two business days, Tuesday and Wednesday, the mint has sold 1,915,000 silver eagles, which was obviously sold from stock, as the mint's run rate in eagles is only about 110,000 a day.  It very much appears that Ted Butler 'mystery buyer' is back in town.  Ted has more to say about the return of JPMorgan to the buy side in silver eagles in today's quote, which is definitely worth reading.

There was a decent amount of gold shipped into the Comex-approved depositories on Tuesday, as there was 20,254 troy ounces received by Canada's Scotiabank---and only 160 troy ounces were shipped out.  The link to that activity is here.

It was another monster day in silver, as 719,478 troy ounces were reported received---and a chunky 1,362,714 troy ounces were shipped out the door.  The lion's share of the activity was at the CNT Depository and Brink's, Inc.  The link to that action is here.

Here's a chart that Nick Laird sent our way yesterday.  It shows the dollar amounts of gold eagles and buffaloes vs. the dollar amount of silver eagles sold during the previous month---and it goes all the way back to the beginning of 2009.  Once again the dollar value of silver sales came close to the dollar value of gold sales.  This has become the new norm, especially when you look at the earlier years on this chart---and I hope you're getting your share, dear reader.

Here's another chart that Nick slid into my in-box very late yesterday evening.  It's the " Global Indices" index---and you can tell from the sawtooth rallies, that these market want to roll over and die---and this is what da boyz are desperate to prevent.  Any time that they break below the key moving average, there's always a buyer of last resort in place to catch the proverbial falling knife.  But they can't keep it up forever.

I don't have all that many stories today---and I hope there are a few in here that catch your attention.

¤ The Wrap

On Tuesday, the U.S. Mint reported that Silver Eagle sales exploded on the last day of the month with more than 750,000 coins sold on one day. Aside from big reported sales when new coins are sold in January of each year, I don’t recall such a large sale of coins occurring on one day. What made it interesting was that the Mint had reported sales on September 29, so it was easy to conclude that it was a sale of more than 750,000 Silver Eagles on one day.

The mint had obviously built up an inventory of Silver Eagles as a result of the softening in sales starting in May; otherwise it wouldn’t have the quantity of coins to sell that it reported sold. The problem as I see it, is that the coins previously produced were manufactured with silver bought at much higher prices (around $3 higher) than the price of the coins sold yesterday and through the month of September. If someone (say JPMorgan) was the big buyer, that means not only is the price of silver being manipulated with tens of thousands of investors and producers being cheated, now the U.S. Government and its taxpayers are being played like a fiddle and cheated in its sales of Silver Eagles at prices manipulated lower than the Mint secured the silver. Do you think JPMorgan would do such a dastardly thing? Count on it. - Silver analyst Ted Butler: 01 October 2014

Ted posted his mid-week column on his Internet site on Wednesday, just before the U.S. Mint put up its October 1 sales figures where they reported selling another 1,150,000 silver eagles on top of the 750,000 they reported on September 30.  One can only imagine how pithy his comments might have been if he had to revisit them knowing that.  He might have more to say about this in his weekly review on Saturday.

Both gold and silver had double bottoms set yesterday---and it remains to be seen whether these will hold or not, as they didn't happen by accident.  Platinum, palladium---along with copper---all had their prices engineered to new lows for this move down.  Crude oil [WTI] set a triple bottom.  It's too bad that Wednesday's price action won't be in tomorrow's Commitment of Traders Report.

Here are the 6-month charts for all five metals mention in today's column.

I continue to be amazed by how the powers-that-be continue to kick the crap out of platinum and palladium.  Of course '3 or less' U.S. bullion banks [read JPMorgan] are massively short these two metals as well---and next week's Bank Participation Report should tell us a lot about how much of their short-side corners in these two metals they've managed to cover during these engineered price declines during September.  Yesterday's price action won't be included.

Here's what the Bank Participation Report charts looked like for these two metals at the end of August.  Click on the charts to enlarge them---and its Chart 4 and 5 in each metal that contains 'the juice'.  Note that the '3 or less' U.S. banks hold virtually no Comex long futures positions in either metal, so their short positions are for price management purposes only.

As I type this paragraph, the London open is less than twenty minutes away.  All the metals rallied in morning trading in the Far East, but once gold popped shortly after 11 a.m. Hong Kong time, it was obvious that da boyz were there to make sure that the price didn't get far.  Pretty much the same thing can be said for the other three precious metals, as they all topped out about then---and have been sliding slowly lower ever since.

But, having said that, gold and silver volumes have been pretty light, so it didn't take much of an effort to turn these rallies into declines.

The dollar index, which had been slowly sinking since shortly after 12 o'clock noon in London on their Wednesday, began to head south with a vengeance starting half an hour after New York opened last night.  The index bottomed out at 85.52 about 11:15 a.m. Hong Kong time on their Thursday morning, which is when the precious metal rallies ended.

The dollar index is now 20 basis points off its low tick, so it's possible that JPMorgan et al---in order to catch a falling dollar index knife, and prevent a spike in the precious metal prices---hit the "Buy the dollar index/Sell the precious metals" button to prevent both occurrences.  So far it has worked.  But as I mentioned in my comments under the story headlined " U.S. dollar rally 'has years to go' ", if I had to bet ten bucks, I'd be short the dollar at this point in time.

And as I send this out the door at 5:20 a.m. EDT, I see that the declines in all four precious metals are continuing, with only gold and palladium still up on the day---and those two only by a couple of bucks.  Gold volume is now north of 37,000 contracts---and silver's net volume is over 8,700 contracts---so it took a fair amount of Comex paper for da boyz to get these rallies under control.  The dollar index, which had rallied back to almost unchanged shortly after the London open, has now rolled over---and is down 24 basis points as of this writing.

JPMorgan et al are still firmly in control of the precious metal prices---and whatever happens from a price perspective going forward, either up or down, is still in their iron grip.

That's all I have for today, which is more than enough---and I'll see here tomorrow.