Thursday, October 9: Today in Gold and Silver


NEW YORK ( TheStreet) -- The gold price opened quietly in Far East trading on their Wednesday morning.  Then it popped a few bucks at 9 a.m. Hong Kong time---before going back to sleep until about 1:20 p.m.   Then it rallied until the 10:30 a.m. BST London morning gold fix, before running out of gas.  Then at the London p.m. gold fix, the HFT boyz showed up---and had gold down on the day in short order---and from that point it drifted lower until the Fed minutes were released at 2 p.m. EDT.  Gold then ran up just over $15, before selling off a hair in the last hour of trading in the New York Access Market.

The low and high ticks were recorded by the CME Group as $1,205.10 and $1,224.50 in the December contract.

Gold finished the trading session on Wednesday at  $1,221.50 spot, up $13.20 on the day.  Not surprisingly, there was huge volume, as both the London and New York rallies were met with ferocious selling by the Commercial traders.  Net volume was 180,000 contracts.

Reader Brad Robertson sent me the 2-minute tick chart for gold that shows almost all of the Comex trading session that mattered yesterday.  He commented that " So far It looks like they did pound gold down before the Fed minutes because of fear of the rise in price that would inevitably follow."  I sure wouldn't put it past these crooks---and don't forget to add two hours to these times to get EDT.

The silver price action was similar to what happened in gold, except it was far more subdued.  But all the inflection points, including both London gold fixes---and the price action at the 2 p.m. EDT Fed's minute release---are all plainly visible on the silver chart as well.

The low and higher were reported as $17.055 and $17.465 in the December contract.

Silver finished the Wednesday session in New York at $17.38 spot, up 19 cents from Tuesday's close.  Volume was very decent at 44,500 contracts.

The price patterns for both platinum and palladium were more subdued versions of what happened in silver---and both metals posted decent gains once again, with platinum up another 18 dollars---and palladium up 16 bucks.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 85.66.  It rose as high as 85.92 just before London opened, before falling 30 basis points shortly before the London morning gold fix.  It managed to gain back a good chunk by the 1:30 p.m. EDT Comex close---and then got smacked for 60 basis points once the Fed minutes came out.  The index closed at 85.32 on Wednesday---which was down 34 basis points from it's Tuesday close.

The gold stocks opened in the black, but slid into negative territory around 11 a.m. EDT, with the low of the day coming about 11:45 a.m.  From there they developed a positive bias---and began to rally with a vengeance shortly before 2 p.m.---and stayed in rally mode until the last few minutes of trading.  The HUI finished up a very chunky 7.56%.

The silver equities turned in a very similar performance, as Nick Laird's Intraday Silver Sentiment Index closed up 7.10 percent.

I would guess that part of yesterday's rallies were short covering related, as the rallies were out of all proportion to the underlying metal's respective price gains.

The CME Daily Delivery Report showed that zero gold and 51 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  Once again it was Jefferies as the only short/issuer---and they, along with Scotiabank and R.J. O'Brien, were the three main stoppers.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that there are 1,315 gold contracts, almost unchanged from Tuesday's report---along with 224 silver contracts still open in the October delivery month, which is down 113 contracts from Tuesday.  Also subtract another 51 silver contracts for tomorrow's delivery.

There was a fairly big withdrawal from GLD yesterday.  This time it was 173,063 troy ounces, almost 6 metric tonnes.  And as of 9:49 p.m. EDT yesterday evening, there were no reported changes in SLV.

The U.S. Mint had another very decent sales report yesterday.  They sold 7,000 troy ounces of gold eagles---2,500 one-ounce 24K gold buffaloes---and 475,000 silver eagles.

Over at the Comex-approved depositories on Tuesday, they reported receiving 37,565 troy ounces of gold---and shipped out 3 kilobars.  All the gold received went into Scotiabank's vaults---and the link to that activity is here.

The in/out activity in silver was busier of course, as 140,752 troy ounces were reported received---and 519,791 troy ounces were shipped out the door.  The link to that action is here.

I received the " Monthly Chinese Gold Net Imports from Hong Kong" chart from Nick yesterday evening---and here are his comments on the chart below:  " Net gold imports into China via Hong Kong were 27 tonnes for the month of August."

" The Hong Kong route has gone from being the major source for Chinese imports to a minor one as can be seen in the second chart where Shanghai Gold Exchange withdrawals were almost 190 tonnes for the month of August."

" At this rate Hong Kong imports of gold are now only approx 14% of SGE withdrawals ."

I don't have anywhere near the number of stories today that I had yesterday---and I hope there are a few posted below that are of interest to you.

¤ The Wrap

At first glance, the Commitment of Traders Report (COT) looks marginally better today than it did back then from a conventional perspective. And that’s saying something since November 2008 proved to signal a price bottom that has held to this day. In other words, we have less of a commercial net short position and less of a non-commercial net long position in COMEX silver today than we had on November 18, 2008. Likewise, the concentrated short position of JPMorgan and the 4 largest traders is less in silver today than it was back then. But these marginal improvements are not what make the current set up so spectacular to me. Rather, the current set up is spectacular when you look at it in the manner I have gravitated to over the past couple of years – by looking closely at the managed money category.

In effect, the emergence of the technical funds on the short side of silver (and gold and other commodities) over the past two years has transformed a marginal improvement into something so spectacular that I can hardly believe it has occurred. Simply put, the headlong rush by the technical funds onto the short side of silver (and gold and copper) has created the opportunity for a price explosion that didn’t exist in 2008. - Silver analyst Ted Butler: 08 October 2014

I was happy to both gold and silver rally yesterday, but I was more than concerned about the associated volume, which was very heavy.  And as I said at the top of today's column, heavy volume is pretty much always associated with the Commercial traders selling longs and going short against all comers.  With the prices of both metals well below their respective 50-day moving averages, I can't say for sure that that is what happened but, using past as prologue, it has all the hallmarks of precisely that.

Gold closed slightly above its 20-day moving average---and palladium closed right at the intersection of its 20 and 200-day moving averages---and you'll note that the other two precious metals, plus copper, still have a ways to go to get to their 20-day moving averages---and miles to the 50-day.  Of the six key commodities that da boyz control, only West Texas Intermediate Crude set a now low price for this move down on Wednesday.

Here are the charts for all six of these key commodities.  All show their respective 20 and 50-day moving averages---with the exception of palladium, which shows its 20 and 200-day moving averages, as the 50-day in palladium is miles above its 200-day.

As I write this paragraph, the London open is fifteen minutes away.  All four precious metals are a tad higher than their respective closing prices in New York yesterday afternoon---and silver started the trading session in New York last night with its usual down tick.  Gold volume is around the 24,000 contract mark---and silver's volume is on the lighter side at around 5,900 contracts.  The dollar index is down about 10 basis points.

As I mentioned in yesterday's missive, we get the latest and greatest Commitment of Traders Report for positions held at the close of trading on Tuesday, at 3:30 p.m. tomorrow.  What I forgot to mention was that we also get the companion Bank Participation Report---and it will be interesting to see how the world's bullion banks have positioned themselves after the engineered price declines in all four precious metals that occurred during the last reporting period.  Especially the U.S. bullion banks.

And as I hit the send button at 4:55 a.m. EDT, I see that the tiny rallies that developed in all four precious metals at, or just before the London open, appear to have been capped in the same old way.  Gold volume is over 39,000 contracts at this point---and silver's volume is now over 12,000 contracts, so it took a decent amount of Comex paper to bring these 'rallies' to heel.  The dollar index is now down 30 basis points, the same amount as it lost yesterday, but it certainly isn't being allowed to have much impact on precious metal prices, at least not for the moment.