Saturday, October 4: Today in Gold and Silver


NEW YORK ( TheStreet) -- The gold price got sold down a few dollars as soon as trading began in the Far East on their Friday---and another five bucks or so got carved off the price shortly before the London open.  From there it traded unchanged until the release of the job numbers at 8:30 a.m. EDT in New York.  The HFT boyz used the opportunity to put the boots to gold once again---and the low tick came around 12:45 p.m. EDT.  After that, the price didn't do a lot.

The high and low ticks were reported by the CME Group as $1,215.70 and $1,190.30 in the December contract.

Gold finished the Friday session at $11,90.70 spot, down $23.60 from Thursday's close.  Net volume was 174,000 contracts.

Here's the 10-minute gold chart going all the way back before the Comex opened at 6 p.m. EDT in New York on Thursday evening---and you can see that the two small declines before the London open didn't have much volume associated with them---and JPMorgan et al saved the heavy lumber for the Comex trading session, as volume exploded when their HFT boyz worked their magic starting at 8:30 a.m. EDT.  Don't forget to add two hours to the Mountain Daylight Times shown on this chart.

It was more or less the same price pattern in silver, except the low tick came at 10:30 a.m. in New York---and the subsequent rally got capped around noon, and then sold down a bit.  Silver traded flat from the 1:30 p.m. close of Comex trading into the 5:15 p.m. electronic close.

The high and low prices were reported as $17.155 and $16.64 in the December contract.

Silver finished the trading day yesterday at $16.855 spot, down 24 cents.  Net volume was 45,000 contracts.

The pounding of platinum continued again yesterday, as the HFT boyz took two 20 buck slices out of the salami---once in early morning trading in the Far East---and again starting at, or just before, the London a.m. gold fix.  The beating stopped around 11 a.m. EDT---and the metal traded flat into the close, finishing down another 41 bucks.  Platinum has never been this oversold---ever.

It was similar for palladium, as da boyz peeled another 12 bucks off the price---and it finished off its low by around five dollars.

You'll note that the HFT boyz only went after gold and silver at the 8:30 a.m. EDT job numbers report.  Neither platinum or palladium even twitched during that time.

Of course it's almost superfluous to point out that all four precious metals set new lows for this move down.

The dollar index closed late on Thursday afternoon at 85.61---and rallied quietly starting almost immediately after the 6 p.m. EDT open---and was at the 86.00 level when the jobs numbers released.  The NASA space launch in the index that occurred at that point took the dollar to its 86.75 high shortly before 11 a.m. EDT---and it gave up 10 points of its gain by the close.  The index finished that up 103.4 basis points---and closed at 86.65.

The gold stocks got pounded---gaping down at the open---and hitting their lows around 1 p.m. EDT---and never moved off the floor from there.  The HUI got smacked for a breathtaking 4.47%---closing at 189.77.

And even though silver only closed down 24 cents, the shares got slammed even harder, as Nick Laird's Intraday Silver Sentiment Index closed down 5.36%.

The CME Daily Delivery Report showed that zero gold and 13 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.

The CME Preliminary Report for the Friday trading session showed that 327 contracts disappeared from the October delivery month, leaving 1,913 contracts still open.  The silver contracts still open in October rose by 78---and the contracts open now sits at 291.

There were no reported changes in GLD yesterday---and as of 6:24 p.m. EDT, there were no reported changes in SLV.

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

Over at the Comex-approved depositories on Thursday, they reported that 16,075 troy ounces of gold were received---and 22,364 troy ounces were shipped out.  The link to that activity is here.

There was much more activity in silver, of course, as they received 899,995 troy ounces---and 371,102 ounces were shipped out the door.  Most of the activity was at Brink's, Inc. and Canada's Scotiabank.  The link to that action is here.

The Commitment of Traders Report, for positions held at the close of Comex trading on Tuesday, was not quite what I was hoping to see---and I'm wondering out loud if all the data from the big down day on Tuesday made it into this report, which was something I mentioned as a possibility in my Wednesday column.  Anyway, the numbers are what they are.

In silver, the Commercial net short position declined by only 1,306 contracts---and the new Commercial net short position now stands at 77.3 million troy ounces.

Under the hood in the Disaggregated COT Report, the Managed Money category increased their short position by 3,924 contracts, which is understandable considering the price action during the reporting period.  But the non-technical traders on the long side of the Managed Money category actually increased their long position by an impressive 2,458 contracts.  Almost all the selling came out of the Nonreportable/small trader category.

The Managed Money on the short side is now at a new record---and it's a good bet that, as a group, they don't hold a single solitary Comex long position in silver between them.  So the question begs to be asked---who are the non-technical fund traders in the Managed Money category that are quietly adding to their positions on the long side---and why are they doing it and what do they know that we don't?

Ted Butler said the it appears that JPMorgan decreased their short position by around 500 contracts during the reporting week---and that brings their short-side corner in the Comex silver market down to 11,000 contracts, or 55 million troy ounces.  That amount represents about 70 percent of the total Commercial net short position.

In gold, the Commercial net short position only declined by 3,590 Comex contracts, or 359,000 troy ounces.  The Commercial net short position is now down to 6.07 million troy ounces.

The shorts in the Managed Money category only added 43 contracts to their combined short positions---and the non-technical traders in that category added another 837 contracts to their huge long position.  As in silver, all the selling came from the Nonreportable/small trader category---and the Commercial traders were buying everything they were selling.

Ted said that JPMorgan reduced their long-side corner in the Comex gold market by 2,000 contracts during the report week, and they're now down to 23,000 contracts, or 2.3 million troy ounces.

There was a big improvement in copper as well, as the Managed Money traders added another 9,324 Comex contracts to their collective short positions, while the non-technical traders in the Managed Money category added a small amount to their huge long position.

Platinum and palladium improved as well, but we won't see the full effect of what happened in those two precious metals until next Friday's COT Report, as most of the engineered price decline this week didn't start until Tuesday---and has continued for the last four trading days---and it's a good bet [looking at yesterday's COT Report] that not all the trading data from Tuesday for platinum and palladium made it into Friday's report, either.

The big revelation for me from this COT Report was the fact that monster long positions in all four precious metals, plus copper, are being held by these unblinking non-technical funds in the Managed Money category that have been increasing their long position regardless of whether prices are rising or falling.  Opposite them in the Manged Money category are short positions held by the technical funds, who will run for cover like scared rabbits on the next rally.

If the Managed Money non-technical funds longs---and the traders that are massively long in the Commercial category decide to put their hands in their pockets on the next rally, how high will the Managed Money shorts have to bid the price in order to get the long holders to sell so they can cover their short positions?

The last two times this year, the Commercial long holder have let the short-side holders in the Managed Money category off easily.  Will they do so this time???

The answer to that question is all that matters---and how high we go in price and how fast we get there will be 100 percent determined by how the long holders react when the short holders rush to cover.  That applies to copper and crude oil as well---plus the opposite in the dollar index, where the technical funds are massively long.

And, without doubt, the positions held by all parties, short or long, has become even more extreme since the cut-off on Tuesday.

So we wait.

Here's a chart Nick Laird sent our way yesterday.  It's the live spot gold price going back five years---and with the spot price close of $1,191.30 on Friday, JPMorgan et al have set a triple bottom.  But since they're capable of printing any chart pattern they want, you have to ask yourself if this really means anything.

I have a fair number of stories for you today---and I hope you can find enough time during what's left of your weekend to read the ones you like.

¤ The Wrap

Of course, I must be open to the possibility (some would say probability) that this might not be the final sell-off because the commercials could once again sell aggressively on the next rally and let the technical funds off the hook with minimal damage.

This year alone, in February and June, the commercials sold aggressively on sub-par silver rallies of around $3 when they could have extracted from the technical funds much, much more. Worse, I still don’t fully understand why the commercials let the technical funds off the hook so lightly on those two prior (and other) occasions. The best I can come up with is that the commercials knew they were in firm price control of the COMEX and knew that they could dictate what the technical funds would do in advance; that the commercials knew they could put the technical funds back on the short side whenever they wanted to. - Silver analyst Ted Butler: 01 October 2014

Today's pop 'blast from the past' is another iconic piece that needs no introduction---and neither does the American jazz rock band that performs it.  The link is here---and while I'm at it, here'sanother one of their big hits.

I'm going to watch/listen to the Edmonton Symphony Orchestra perform tonight---and today's classical 'blast from the past' is one of the reasons I'll be there.  It's my 66th birthday present to myself.  It's Edvard Grieg's Piano Concerto in A minor, Op. 16, which he composed in the summer of 1868---and is, without doubt, one of the most popular piano concertos ever written.  It's for a very good reason that audiences all over the world just eat this thing up every time its scheduled to be performed---and I know that for a fact, as I was on the programming committee of the ESO for 11 years.

Here's the Danish Radio Symphony Orchestra performing under the baton of Thomas Dausgaard---and world renowned pianist Alice Sara Ott does the honours.  The link is here.  Enjoy!

You don't need me to tell you what happened yesterday, as JPMorgan et al---along with their HFT buddies and their algorithms---used the jobs numbers and the dollar rally to do the dirty across the board.  They started quietly in Far East trading---and then really hammered gold and silver at the 8:30 a.m. EDT job numbers.  Then later they put the boots to platinum and palladium.  Much to my surprise, they didn't set new lows in either copper or crude oil.

Here's the carnage in the four precious metals---and it's ugly.

For the Friday trading session, gold got smacked for 1.94%---silver for 1.40%---platinum was creamed for 3.24%---and palladium 1.57%.  Nothing free market about this, as da boyz pulled out all the stops.

And, as always, not a word in protest from the precious metal miners or the two organizations that purport to represent their best interests---the World Gold Council and The Silver Institute.

So---are JPMorgan et al done to the downside yet?

It seems like I've asked that question every week for the last two or three weeks---and they keep surprising us to the downside.   Considering how 'in your face' and extreme these engineered price declines have been in all six key commodities this time around, it's hard to accept the fact that the ensuing rallies may be cut off at the knees before they really get anywhere.  But I suppose one should be prepared for any eventuality.

That's all I have for today, but before heading out the door I want to remind you one last time about the 40th Annual New Orleans Investment Conference from October 22-25, 2014.  That's less than three weeks away!  If you're interested, you can find out everything you need to know by clicking here.

That's it for the day---and the week.

I await the 6 p.m. open in New York on Sunday evening with great interest.

Enjoy what's left of your weekend---and I'll see you here on Tuesday.