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 30 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.