Tuesday, October 7: Today in Gold and Silver


NEW YORK ( TheStreet) -- The gold price got sold down the second that trading began in New York at 6 p.m. EDT on Sunday evening---and new low tick for this move down came at, or minutes after 9:00 a.m. Tokyo time, which was 8:00 a.m. in Hong Kong on their Monday morning.  But once that engineered sell-off was out of the way, the price rallied in fits and starts for the remainder of the Monday session---culminating in a vertical spike at 1 p.m. EDT.  That got dealt with instantly---and the gold price traded mostly flat for the remainder of the New York session.

The low and high tick were posted by the CME Group as $1,183.30 and $1,209.90 in the December contract.

Gold closed on Monday at $1,206.80 spot, up $16.10 from Friday's close---and considering the fact that there was such a huge swing in prices, net volume was only 143,000 contracts, which I consider to be reasonably light considering the price action.  Well over 30,000 of those contracts were traded before London opened.

Silver, of course, got smacked in the usual way at the open in New York on Sunday evening---and da boyz also took silver to a new low minutes after 8 a.m. Hong Kong time as well.  The price recovered a bit from there, but traded mostly flat until around 2 p.m. Hong Kong time---and an hour before London opened.  Then away it went to the upside, hitting its high price tick of the day in the New York Access Market about an hour before the 5:15 p.m. close of electronic trading.

The low and high prices were recorded as $16.66 and $17.36 in the December contract.

Silver finished the Monday session in New York at $17.35 spot, up 49 cents on the day---and about 70 cents off its low.  Like gold, net volume wasn't overly heavy considering the price action, as only 38,000 contracts were traded---and about a third of that traded before London opened.

Of course, platinum and palladium weren't spared, as the HFT boyz and their algorithms set new lows in both metals at the exact same time as gold and silver, in the very thinly traded Far East market on their Monday morning as their trading day started.  Platinum traded in a $63 price range in the January 2015 contract yesterday, with volume north of 23,000 contracts---and palladium traded a dime short of $34 in the December contract in its low/high price swing.   Platinum closed up $18---and palladium was up $7---impressive closes considering the depths that JPMorgan et al drove them at 8 a.m. Hong Kong time.  Here are the charts.

The dollar index closed at 86.65 in New York late on their Friday afternoon---and didn't do much of anything all morning long in Far East trading on their Monday.  But late during the Hong Kong lunch hour the index began to fade---and this phenomenon continued right up until the decline became far more serious in mid-afternoon trading in New York.  And at around 3:40 p.m. EDT the 85.70 low tick was in---as someone was there to catch the proverbial falling knife.  After that the index rallied a small handful of basis points into the close, finished the day at 85.77.

You'll carefully note that the simultaneous engineered price declines in all four precious metals had zero to do with what was going on in the currency markets at the time.  But the main stream press uses this old canard anytime they can---and its all such bulls hit.  This was a hardball in-your-face "up yours" run-the-sell-stops-across-the-board in all four---and da boyz didn't give a flying %&$# what anyone thought, as there was nobody out there to stop them, or raise a finger in protest.

Here's the 3-day chart starting at 2 p.m. EDT on Sunday afternoon---and running until 3:00 a.m. EDT this morning.

The gold stocks opened up on the day---and then chopped higher in a rather uninspiring way for the remainder of the New York trading session---and the HUI closed up 1.96%.

The chart for the silver equities was very similar to the gold chart, except that the silver shares dipped into negative territory for a brief period just before lunch EDT.  Nick Laird's Intraday Silver Sentiment Index closed up an even 2.00%.

The CME Daily Delivery Report showed that 7 gold and 77 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.   In silver, the only short/issuer was Jefferies.  They also stopped 36 of their own contracts---and Canada's Scotiabank stopped another 32 contracts. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that gold open interest in October dropped by 321 contracts---and there are now only 1,592 contracts left often.  Silver's October open interest sits at 287 contracts, down 4 contracts from Friday.

There were no reported changes in GLD yesterday, but SLV had a withdrawal of 862,936 troy ounces.

The U.S. Mint had a sales report yesterday---which I triple checked to make sure that I wasn't seeing things.  Their gold eagles sales exploded from the 5,000 troy ounces reported last Thursday, up to 18,000 troy ounces---and their 1-ounce 24K gold buffalo sales jumped from 2,500 troy ounces, up to 7,000 troy ounces.

Since they don't make this many gold bullion coins in one day, they were obviously bought from existing inventory---and probably by one buyer, as retail sales in North America are lacklustre at the moment---and that's being generous.  Silver eagle sales were more modest, as they reported selling 125,000 of them.  With the return of the 'mystery buyer' in silver eagles, I am more than sensitive to the fact that this 'mystery buyer' has now shown up in the gold bullion coin sales as well.  What do they know that we don't----yet?

There was a decent amount of gold reported received at the Comex-approved depositorieson Friday, as 34,250 troy ounces were reported received by Canada's Scotiabank---and 4 kilobars were shipped out.  The link to that activity is here.

Of course it should come as no surprise that it was another huge day in silver, as 998,783 troy ounces were reported received---and 444,116 troy ounces were shipped out the door.  The big action was at Brink's, Inc. and HSBC USA.  The link to that is here.

I have quite a few charts for you today---and here are four of them---and I've posted two others inThe Wrap section as well.

The first two shows the intraday average price movements of both gold and silveraveraged out over all business days during the month of September---and as you can see, there's a definite pattern to the month.  The 'high' in gold---if you wish to dignify it with that name---came at noon in Hong Kong---and negative London bias began about 30 minutes before the London a.m. fix---with the engineered price decline continuing in New York after the 11 a.m. EDT London close---and with the bottom coming minutes after trading began in Hong Kong the following day.

The intraday silver chart for September looks almost identical to the intraday gold chart above, but the low tick in that metal came about an hour later.

The beauty of these charts is that it takes out all the daily 'noise'---and strips the background base price pattern bare for all to see.  With some exceptions, the 5-year intraday charts look very similar.  The negative 'London Bias' has become an almost permanent fixture on the gold scene for the last two generations, going all the way back to January 1975.  This is the real 'price fixing' mechanism.

The next chart shows the weekly withdrawals from the Shanghai Gold Exchange.  For the week ending September 26, it was 46.309 metric tonnes.  I have the Koos Jansen take on this in the Critical Reads section, but if you don't want to scroll down---it's linked here.

The last of the four charts, also courtesy of Nick Laird, shows just how rotten the sentiment is in the precious metals at the moment, as Central Fund of Canada, which has been around for 53 years, is currently selling at -7.74% NAV---and is back to the premium it was selling for in 2001.  Buy with both hands, dear reader!

Since today is Tuesday, I have a lot of stories today---and I'm sure there are a few in here that you'll find worth your while.

¤ The Wrap

It wasn’t just gold and silver that slid in price this [past] week, as substantial declines were seen in all COMEX/NYMEX metals, including copper, platinum and palladium. In addition, the most important market of all, crude oil, slid to year-and-a-half price lows. Important round number price levels were violated; gold ($1,200), silver ($17), copper ($3) and crude oil ($90). In platinum, not only was a round number ($1,300) level penetrated, the metal fell to five year lows and the weekly decline outdid silver’s decline on a percentage basis (thereby violating the unwritten COMEX law that silver always fall the most no matter what).

There is a common denominator behind the collective price declines [last] week and for the past few months; only it isn’t the dollar or any other reason being offered. In fact, considering how many truly smart people follow the markets in general, it is somewhat disturbing that no one has offered the one true explanation for why gold, silver, copper, platinum, palladium and crude oil (and related energies) all fell in price this week---and over the past few months. The one answer is staring us in the face---and easily verified in government data on futures positioning. - Silver analyst Ted Butler: 04 October 2014

You pretty much have had to have been born on another planet not to recognize the massive and blatant engineered price declines in all four precious metals that occurred at 9 a.m. Tokyo time, or 8:00 a.m. in Hong Kong on their respective Monday mornings.  It's possible that this was the last swing for the fences by JPMorgan et al for this move down.  They pulled this stunt off when China was closed for its second Golden Week of the year.

From a technical point of view, what 'da boyz' painted yesterday was a picture-perfect key reversal to the upside.  It was textbook in every way---and I'm sure they painted it for a very good reason, as they wished to leave no doubt in anyone's mind that the bottom was truly in.

But, since the HFT boyz and their algorithms can paint any chart pattern they so choose, I'll wait for further confirmation, fearing that this may turn out to be a Trojan Horse of some kind.  But, if I had to bet ten bucks at this juncture, I'd say that what we saw was the real deal---however one should never put anything past these crooks.

Here are the 6-month charts for all four precious metals---and all updated with yesterday's price/volume data.

Copper rallied back above the $3 mark---and WTI Crude is now back above $90 the barrel.

Here's the 6-month dollar index so you can see how it fared yesterday.  All of Friday's gains vanished.

And as I type this paragraph, the London open is about 85 minutes away.  With gold trading in China shut tight again today, I'm not reading too much into what's going on in the Far East markets at the moment on their Tuesday morning.  Gold is down a dollar or so, silver is back to unchanged---and both the other white metals are up 10 bucks each.  Gold volume is already over 15,000 contracts, which is pretty high for this time of day, but silver volume is in the 3,500 contract range, which isn't a lot.  The dollar index popped back over the 86.00 mark in morning trading in Hong Kong, but has since backed off---and is only up 12 basis points at the moment.

So, with the bottom for this move down safely behind us, touch wood, we'll have to wait and see what happens going forward.  Whatever transpires in the precious metals, plus copper and crude oil to the upside, will most certainly be hidden behind a rather vicious sell-off in the dollar index.

Here are the last two charts that Nick Laird sent our way yesterday.  They show the current levels of gold and silver inventories in all visible forms---and the striking dichotomy between what's happening in gold vs. what's happening in silver, is shown in all its mysterious detail.

And as I send today's column out the door at 4:55 a.m. EDT, I note that all four precious metals were rallying vigorously at the beginning of the London open as the dollar index rolled over to a new low, but all got capped to a certain extent just before 9 a.m. BST, as gentle hand lifted the dollar index from a 10 point loss to a 14 point gain as of this writing.  Gold volume is now a very chunky 38,000 contracts---and silver's volume is over 11,000 contracts, so it's obvious that even these tiny rallies are being met by waves of Comex paper by JPMorgan et al.

That's all I have for today, which is more than enough---and I'll be keenly interested in how the precious metal trading day unfolds in New York, because I'm underwhelmed with the current price action in London at the moment.

See you tomorrow.