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Saturday, September 21: Today in Gold and Silver

Stocks in this article: GLD SLV

NEW YORK ( TheStreet) -- As I mentioned in The Wrap in Friday's column, the price action and volume in Far East trading on their Friday was dead right up until the London open.  That's when things changed and, in hindsight, for the worst.

The high-frequency traders spun prices lower on several occasions during the Europe and U.S. trading day, and bought up all the longs that the tech funds and small traders were prepared to puke up as sell stops were hit.  It was the same old, same old, and I'll have more on this later.

Anyway, by the time gold was done for the day, it closed at $1,325.60 spot, down $39.50 from Thursday's close.  Not surprisingly, net volume was immense at around 196,000 contracts.

But silver really got smashed, as the price got hammered for about 3% by the HFT boys in the space of about thirty minutes during mid-morning trading in New York.  The smallish rally from there ran into more high-frequency traders shortly after, and they kept up the price pressure until well after the 1:30 p.m. EDT Comex close.

Silver finished the Friday session at $21.80 spot, which was down $1.285 on the day.  Although silver didn't close precisely on its low tick, it came close.  Net volume was a monstrous 62,500 contracts.

It was more or less the same story in platinum and palladium as well, as their respective charts are almost identical to gold's.

For the day, the high-frequency traders closed gold down 2.89%, silver down 5.57%, platinum down 2.06%, and palladium 1.91%.  Not even rhodium was spared, as it was bid down 2.50%.

Of course the dollar index did zip.  It closed late Thursday afternoon in New York at 80.34, and then traded almost ruler flat until half-past lunchtime in London.  At that point it chopped a few basis points higher and closed on Friday afternoon at 80.44, up a whole ten basis points on the day.

The gold stocks got crushed, and barely finished off their lows.  The HUI closed down 6.28%, andand has now given back all of its gains from Wednesday.

The silver equities only did marginally better, as Nick Laird's Intraday Silver Sentiment Index closed down 5.04%.  The ISSI has given back a large chunk of its Wednesday gains as well.

The CME's Daily Delivery Report showed that 1 gold and ten silver contracts were posted for delivery on Tuesday within the Comex-approved depositories.  The link to yesterday's Issuers and Stoppers Report is here.

Hard on the heels of the Thursday deposit into GLD, was an even larger withdrawal by an authorized participant on Friday, as 57,932 troy ounces were removed.  And as of 10:32 p.m. EDT yesterday evening, there were no reported changes in SLV.

For the third day in a row, there was no sales report from the U.S. Mint.  Month-to-date the mint has sold 9,000 ounces of gold eagles; 5,500 one-ounce 24K gold buffaloes and 1,850,000 silver eagles.  Based on these figures, the silver/gold sales ratio works out to 127 to 1.

Once again there was almost no activity at the Comex-approved depositories in either gold or silver on Thursday.  In gold, they reported receiving 6,799 troy ounces, and didn't ship any out.  In silver, they didn't report receiving any either, but they did ship 41,506 troy ounces of the stuff out the door to parts unknown.

As expected, the Commitment of Traders Report showed improvements in the Commercial net short positions of both silver and gold, although I must admit that I was expecting a bigger improvement in silver than what was shown.  However, it is what it is.

In silver, the Commercial net short position declined by only 6.2 million ounces, and is now down to 111.3 million ounces. Ted Butler says that JPMorgan's short-side corner is a hair under 15% of the entire Comex futures market in silver on a net basis; which means that all the market-neutral spread trades have been subtracted from the total open interest; and in troy ounces, JPMorgan is short about 105 million ounces of the stuff.  On its own, this amount represents almost 100% of the entire Commercial net short position in that metal.  That's outrageous!

In gold, the improvement in the Commercial net short position, was 1.49 million ounces, which is a pretty big number, and substantially larger than the improvement we saw the week prior.  The Commercial net short position in gold is now down to 6.53 million ounces.

Ted says that JPMorgan Chase only added about 2,000 contracts to their long position, and their long-side corner in the gold market is a bit under 19% of the entire Comex futures market on a net basis.  In troy ounces, JPMorgan's long-side corner in gold works out to around 6 million troy ounces.

The other stand-out feature of this COT Report in gold was the fact that the lion's share of the improvement in the Commercial net short position were Ted Butler's raptors [some of the 53 small traders in the Commercial category other than the Big 8] buying every long contract that the traders in the Non-Commercial and Nonreportable category were dumping, or buying the long side of every contract that these same traders were going short.

And while on the subject of going short, the raptors tricked the Non-Commercial and Nonreportable [small] traders into piling in on the short side during the reporting week, and according to yesterday's COT Report, they added 12,400 contracts to their short positions, or 1.24 million ounces.  [Then they all got blown out of these same short positions during Wednesday's big rally, as the raptors rang the cash register again.]

I know that Ted will have much more about this in his weekly report to his paying subscribers later today, andand I'm looking forward to his comments.

Needless to say, the dramatic price action over the last three trading days has changed things a lot, andand we won't know by how much, or in which direction, until next Friday's COT Report.  All should be know to us by then, unless we have a big rally on either Monday or Tuesday that will mask whatever changes there were.

As I said in this space last week, it seems like I/we are always waiting for next week's report.

Since yesterday was the 20th of the month, and it fell on a weekday, The Central Bank of the Russian Federation updated its website with its August data.  It showed that they purchased 400,000 troy ounces of gold last month, and their total [official] holdings are now 32.6 million ounces, which is a hair over 1,000 tonnes.  Below is Nick Laird's most excellent chart that has been updated to show the change.

I took an axe to the list of stories I had for today's column, and I believe that I have them down to a manageable number.

¤ The Wrap

Invariably, JPMorgan has bombed the gold and silver market sure enough, but not by selling many thousands of contracts; but by first selling relatively few or pretending to sell many (spoofing) contracts in order to scare and induce others into selling many contracts so that the crooks at JPM can buy. Always, always, always, is it true that JPM and the commercials are net buyers on the big down days; and always is it true that the only reason for the big down days is to allow JPMorgan to buy at distressed prices. JPMorgan is perhaps the most crooked financial institution ever, but you must acknowledge that they are sophisticated crooks. They don’t stick up 7-Elevens; they conduct sophisticated financial fraud against other supposedly sophisticated market participants. - Silver analyst Ted Butler -- 14 September 2013

Today's "blast from the past" is by an American music icon, and it won a Grammy Award for Record of the Year when it was released in 1976.  I never get tired of listening to it, and  I hope you enjoy it.  The link is here.

Today's classical "blast from the past" is a Chopin waltz in the hands of the gifted Chinese virtuoso pianist Lang Lang.  People either love him or hate him.  I'm ambivalent, but I wouldn't pay to see him.  However, his mastery of the keyboard is undeniable.  The link is here.

To sum up yesterday's price action, I only need quote the last paragraph of The Wrap from yesterday:

" With today being Friday, I have no idea what price activity lies in store for us in New York this morning, but using the price "action" of the last two days as a guide, it will be far removed from what a free market would dictate, so be ready for anything."

And that's pretty much how it turned out.

The Ted Butler quote above is one that I posted in my Tuesday column, but I thought it worth resurrecting for today's missive, as it speaks to yesterday's price action perfectly as well.  The raptors [which now includes JPMorgan] set prices lower through high-frequency trading algorithms and force long holders puke up their long positions as sell stops are hit, or go short; and the Commercials wait with open arms to buy every long that shows up, and ringing the cash register each time they do it.

They don't even try to hide anymore, as there is no adult supervision in sight, either from within the CFTC or the CME Group.  And it's a certainty that the miners won't say a word in protest as their industry, their companies and their shareholders get raped once again.  There are no men of principle running any of them.

How did it come to this?

I'm done for the day, and the week.

See you on Tuesday.

This is an abbreviated version of Ed Steer's Gold & Silver Daily Sign-up to have to the complete market review delivered to your email inbox each morning for free.

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