Friday, October 3: Today in Gold and Silver


NEW YORK ( TheStreet) -- The gold price rallied almost from time that New York opened on Wednesday evening, but shortly after 11 a.m. on their Thursday morning in Hong Kong, the price showed signs of getting carried away to the upside---and as I mentioned in The Wrap yesterday, it appeared that someone hit the "Buy the dollar index/sell the precious metals" button---and that was that.  The low of the day came shortly after 1 p.m. BST in London---and about fifteen minutes before the Comex open.  The price chopped higher from there---and was obviously running into resistance at just about every up tick, with the New York high comings shortly after 12 o'clock noon EDT.  That rally got sold down until shortly before 1 p.m. -----and the price traded pretty flat from there into the 5:15 p.m. electronic close.

The high and low were recorded by the CME Group as $1,224.00 and $1,209.10 in the December contract.

Gold finished the Thursday session at $1,214.30 spot, up only $1.30 on the day---and obviously well of its high.  Net volume was around 143,000 contracts, about the same volume as Wednesday.

After the down tick at the open in New York on Wednesday evening, silver's high of the day came at the same time as gold's, just minutes after 11 a.m. Hong Kong time, with the low of the day coming at, or just after, the London p.m. silver fix.  The subsequent rally didn't amount to much---and from there, the price traded sideways into the 5:15 p.m. close.

The high and low ticks were reported as $17.35 and $16.93 in the December contract.

Silver closed yesterday afternoon in New York at $17.095 spot, down 8 cents from Wednesday.  Net volume was 39,500 contracts.

The high in platinum also occurred minutes after 11 a.m. Hong Kong time---and it was all down hill into its low that came around 10:20 a.m. EDT.  After that, the price didn't do much.  Platinum was closed lower by 12 bucks.

It was the same for palladium, except the down hill slide ended at the 1:30 p.m. EDT Comex close---and it traded flat from there, down 8 dollars from Wednesday.

Thursday was the first day in many weeks that there hasn't been a new low tick set in any of the precious metals.

The dollar index closed late on Wednesday afternoon in New York at 85.91---and then headed sharply lower starting around 6:30 p.m. in New York Wednesday evening.  As I mentioned before, someone with deep pockets was there to catch the proverbial falling knife shortly after 11 a.m. in Hong Kong as the dollar index was about to take out 85.50 to the downside---and that's when the rallies in all four precious metals got capped---and their respective declines commenced.

From there, the dollar index rallied back to almost unchanged by the London open, but at that point it chopped lower for the remainder of the Thursday session, finishing the trading day at 85.61---down 30 basis points.

Despite the decent decline in the dollar index, JPMorgan et al made sure that all four precious metals closed lower on the day regardless of that fact.  Here's the 3-day chart that shows all the action, starting right at the 6 p.m. open on Thursday evening.

The gold stocks opened slightly in the black, but began to chop lower immediately, with their lows of the day coming at precisely 1:00 p.m. EDT.  From there they shot higher---and back into positive territory, but stopping just short of breaking through the 200 mark on the HUI for second time in as many days, as the rally topped out minutes after 2 p.m. EDT.  They chopped lower until 3:40 p.m.---and then rallied sharply into the close.  The HUI finished the day up 1.19%.

The silver equities barely opened in positive territory---but then headed lower with a vengeance.  By 1 p.m. EDT, they were down more than 2 percent, but rallied sharply back into positive territory, with the high of the day coming around 2:15 p.m.  They slid back into the red from there---and Nick Laird's Intraday Silver Sentiment Index closed down another 0.66%.

The CME Daily Delivery Report for Day 3 of the October delivery month showed that zero gold and 42 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  Jefferies was the short/issuer on all 42 contracts---and Canada's Scotiabank stopped 24 of them.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that there are 2,240 gold contracts still open in October, down 70 contracts from Wednesday.  In silver, there are 213 contracts [minus the 42 contract mentioned above] still left in October, unchanged from Wednesday's report.

There was another withdrawal from GLD yesterday.  This time it was 38,461 troy ounces.  There was a smallish withdrawal from SLV as well---151,464 troy ounces---which certainly looked like it could have been a fee payment of some type.

Joshua Gibbons, the " Guru of the SLV Bar List" updated his website with the weekly report from the Internet site for their week ending at the close of trading on Wednesday---and this is what he had to say: " Analysis of the 01 October 2014 bar list---and comparison to the previous week's list :: 3,164,464.4 troy ounces were added (all to Brinks London). No bars were removed or had a serial number change."

"The bars added were from: Solar Applied Materials (1.6M oz), Yunnan Copper (0.5M oz), Kazakhmys (0.4M oz)---and 5 others."

"As of the time that the bar list was produced, it was overallocated 78.9 oz."

"All daily changes are reflected on the bar list, except a 4,075,207.6 oz deposit on Tuesday night.  Again, about 2.8M oz of the deposits appear to be fresh bars (never in SLV before)."

The link to Joshua's website is here.

The U.S. Mint had another sales report yesterday.  They sold 2,000 troy ounces of gold eagles---and another 500,000 silver eagles.  During the last three business days, the U.S. Mint has sold 2,415,000 silver eagles---and as Ted Butler pointed it, it's pretty much a given that the 'big buyer' is back---and it remains to be seen how much more they purchase during the the remainder of the month.

It's also an excellent bet that they're vacuuming up every silver maple leaf that the Royal Canadian Mint has been producing for the last few months as well.  Third quarter Canadian mint sales won't be posted on their website until late this month, or early next month.

The Perth Mint also had a monster September in precious metal sales---and there's a story about that in the Critical Reads section below.

It was a pretty quiet day in both gold and silver over at the Comex-approved depositories on Wednesday.  In gold, there was 13,568 troy ounces reported received---and 16,135 troy ounces shipped out.  The link to that activity is here.

In silver, only 1,978 ounces were received---and 144,805 troy ounces shipped out the door.  The link to that activity is here.

Here's a photo that Australian reader Wesley Legrand sent my way last night.  It shows some of the gold items that were on display at the Gold Congress in Beijing about a month ago.  I stole the photo from a gold commentary that will appear in this column tomorrow.

Once again I don't have all that many stories for you today---and the final edit is yours.

¤ The Wrap

I always held that while as crooked as a June day is long, the COMEX commercials---and JPMorgan in particular---were smart crooks and would know in advance of a pending silver shortage and position themselves as advantageously as possible.  The final sell-off wasn’t likely to be a brutish affair in which silver prices were smashed lower too aggressively for the technical funds to jump aboard the short side. It had to be a sell-off of such precision and skill to assure the maximum technical fund and speculative selling that would enable the commercials to buy and position themselves as favorably as possible.

While I fully understand why many would assume the commercials would do again what they’ve already done twice this year so far, I still hold that the coming silver rally should be treated as if it’s the big one. For one thing, if this does turn out to be the big silver move that I have been expecting for decades, there will be no do-overs or second chances to get on board – one will either be on board for the big silver move from the bottom, or not be on board from the bottom. -Silver analyst Ted Butler: 01 October 2014

It should be obvious that JPMorgan et al stepped into the precious metal and currency markets shortly after 11 a.m. Hong Kong time on their Thursday morning---and although no new low prices were set in any of them yesterday, there's no question that da boyz are still very much running the show.

But the other two critical commodities that the powers-that-be are controlling, copper and crude oil, both set new lows for this move down.  Here are the 6-month charts for all six.

Could we go lower form here in any or all of these?  I suppose we could---but there is a limit at some point---and how close we are is only known by a handful of people.  As Ted mentioned in his quote, with the technical funds/managed money traders holding minimum long and maximum short positions in all six of the key commodities, the time is ripe to stand back and let them rip to the upside---and let the dollar crater, as the technical funds are mega long the dollar at the moment.

The only question is---will they allow that to happen or, as Ted pointed out, will it be a repeat of what's happened twice already this year, where the Commercial traders let the tech funds off lightly with minimum rallies.  I certainly don't know the answer to that---however, if this is the final sell-off before we blast higher, I can pretty much guarantee that it won't happen in an economic/political or monetary vacuum, as there will have to something that the powers-that-be can point at as an explanation as to why commodity prices blew sky high.

Whatever eventuality, the day of reckoning is probably not that far off.

And as I type this paragraph, the London open is twenty minutes away.  Gold is down four bucks---and silver is down a dime.  Once again the HFT boyz are really sticking it platinum and, to a lesser extent, palladium---and both are at new lows for this move down.  Platinum, at its 2:20 p.m. Hong Kong low on their Friday, was down another 27 bucks---but palladium was only down 6 dollars at its low.

Gold volume is extremely light at around 9,800 contracts---and silver's net volume is pretty light as well, with only 3,800 contracts traded.  Platinum's net volume is monstrous [considering the size of the market] at 6,200 contracts in the January 2015 contract, which is the current front month.  And just as an aside, that 6,200 contracts represents more than 10 percent of the total open interest in platinum at the moment---and the trading day is still young.  Palladium volume is only 1,050 contracts in December despite the best efforts of the HFT trader and their algorithms, so the cupboard is pretty bare in that metal.

The dollar index is up about 19 basis points as of this writing.

Today at 3:30 p.m. EDT we get the new Commitment of Traders Report for positions held at the close of Comex trading on Tuesday and, without doubt, we'll see more improvement in the Commercial net short positions in all four precious metals, along with copper and crude oil.  The only thing unknown at the moment is where the improvements will come from.  The long selling/short buying has to come from either the technical funds/Managed Money, or the Nonreportable [small trader] categories---because the Commercials are snapping up all the long contracts being offered by these other two groups of traders.

But whatever the numbers, I'll have them for you tomorrow.

And as I sent this off to Stowe, Vermont at 5:15 a.m. EDT, I see that both gold and silver got sold down a bit more at, or shortly after, the London open.  The HFT boyz managed to get platinum a bit lower as well---and their attempts to get palladium below $759 spot didn't work out so well.  However, there's still lots of time left in the Friday trading session---and it remains to be seen if they'll engineer new lows in both copper and WTI before the Comex trading session is over.

Gold volume is just under 24,000 contracts at the moment, which is about 'average' for this time of day---and silver's volume is now up to 7,600 contracts, which is reasonably light.  Platinum volume is now 8,000 contracts---and palladium's volume currently sits at 1,500 contracts.  The dollar index is now up 30 basis points.

Since today is the last trading day of the week, whatever happens to prices during the Comex trading session today shouldn't surprise us in either direction.  But if the dollar 'rally' continues, I expect JPMorgan et al to keep pounding away with their algorithms in all six of these commodities.

That's it for today---and I'll see you here tomorrow.