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Tuesday, October 8: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price did very little in Far East trading on their Monday; and the low of the day, such as it was, came shortly before 9 a.m. in London.  The rally from there ended with a sudden spike up shortly before the afternoon gold fix, then the rally got capped, or the buyer disappeared.  After that, the gold price chopped sideways into the 5:15 p.m. EDT close of electronic trading.

The CME recorded the low tick in London at 1,307.90, and the high tick in New York as $1,329.50.  Both prices are for the December contract.

Gold finished the New York session on Monday at $1,322.40 spot, which was up $11.20 from Friday.  Net volume was very light, around 99,000 contracts.

It was a similar story in silver, with chart pattern looking almost the same as gold's.  After the spike up around 9:45 a.m. in New York, the smallish rally that started at the 11 a.m. EDT London close, and ran until noon in New York, didn't get too far.

The low in London was reported by the CME as $21.65, and the high tick in New York was $22.495.

Silver closed on Monday at $22.35 spot, up 61 cents from Friday.  Net volume was 33,500 contracts.

Platinum and palladium both followed slightly different price paths than gold.  Their respective rallies didn't start until noon in New York, and both didn't get far.  Here are the charts.

The dollar index closed late on Friday afternoon in New York at 80.15, and from there chopped slowly lower for the entire Monday trading session, closing back under the 80.00 mark at 79.92.  Nothing much to see here.

The gold stocks gapped up a bit even before the 9:45 a.m. EDT price spike in gold, before selling off a bit.  From there, they chopped quietly higher all day long, as the lows on each dip got progressively higher as the trading day wore on.  From the chart action, I'd guess that someone was accumulating gold stocks as quietly as they possibly could.  The HUI finished on its high of the day, up 1.96%.

It was virtually the same chart action for silver, but the price spike in silver stocks at 9:45 a.m. stands out like the proverbial sore thumb, which can't be said for the gold stocks during that time period.  After the spike, the stocks traded sideways for the remainder of the day, and for a 61 cent gain in silver on the day, I was underwhelmed.  However, a lot of the junior producers turned in far better performances.  Nick's Intraday Silver Sentiment Index closed up 1.68%.

The CME's Daily Delivery Report showed that 55 gold and 12 silver contracts were posted for delivery tomorrow.  ABN Amro was by far the largest short/issuer in both metals, and HSBC USA and JPMorgan Chase were the biggest long/stoppers.  The link to Monday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday, and as of 10:18 p.m. EDT last evening there were no reported changes in SLV, either.  But when I checked the site at 3:55 a.m. EDT this morning, I see that an authorized participant withdrew 1,927,424 troy ounces.  Based on the lack of price action during the last 9 days of trading, I would guess that this silver was removed because it was desperately needed elsewhere, not because of "plain vanilla" investor selling, as Ted Butler is wont to say from time to time.

Since yesterday was Monday, the U.S. Mint had a sales report for us.  They sold 2,000 gold eagles; 1,000 one-ounce 24K gold buffaloes; and 672,000 silver eagles.

Over at the Comex-approved depositories on Friday, they reported receiving 34,549 troy ounces of gold, and shipped 8,659 troy ounces out the door.  The link to that activity is here.

As is always the case, there was much more activity in silver.  They received 506,910 troy ounces of the stuff on Friday, and shipped 114,310 troy ounces off for parts unknown.  The link to that action is here.

Since today is Tuesday, I have quite a few stories for you and, as always, the final edit is up to you.

¤ The Wrap

Silver is different, at least to me. The reason to invest in silver is to get rich, or to make an investment score. To be sure, because the current price is even lower than gold in terms of true production costs, silver should handily serve the role of preserving purchasing power and maintaining wealth in the long term. But those roles are almost beside the point; as silver should be bought to achieve a financial windfall. Buying silver is like buying a lottery ticket that never expires, and where the odds of winning are actually in your favor. I suppose one could look at silver as a way to make enough to then buy gold to protect what may be made. - Silver analyst Ted Butler -- 05 October 2013

I was happy to see the rally in both gold and silver yesterday, and I found the 9:45 a.m. EDT price spikes to be particularly interesting.  I'm not sure whether they were short covering rallies, or new long positions being placed, and the CME's preliminary volume and open interest report for the Monday trading day doesn't show a lot.  Open interest was up slightly in both metals, but not by meaningful amounts, and I expect even those small increases to disappear when the final report is posted on their Web site later this morning EDT.

If it was new longs, then the open interest should have increased by quite a bit more; but if it was short covering, JPMorgan et al could have easily covered their tracks by putting on spread trades to hide what they were doing.  That appeared to be the case here, but I wouldn't bet the ranch on it.

We won't know anything for sure until the next Commitment of Traders Report, and heaven only knows when that might be, and a lot can happen between now and then.

Also worth noting is the fact that silver finally broke out of its "trading range" just below $22 spot.  I was somewhat concerned that the price was going to break lower, but was glad to see the other outcome.  Here's the 6-month chart.

Where we go from here, or where prices are allowed to go from here, is the next big question now that the silver price is a decent amount above its 50-day moving average. I expect up, but it could be down.  If it's up, how high and how fast is entirely dependent on whether or not JPMorgan Chase goes short again on the next significant price rally in silver.  I don't have an answer for you on that one, and Blythe Masters isn't returning my calls.

There wasn't much in the way of price action in Tuesday trading in the Far East, or early trading in London.  But considering the lack of price action, the volumes are already pretty decent [as of 4:07 am. EDT] and I can tell that a large percentage of the volume is of the HFT variety.  I'll speculate that it's the high-frequency trading that is keeping prices in check at the moment.

And as I hit the send button on today's column at 5:25 a.m. EDT, there's still not much going on.  Volumes are still pretty decent, but have quieted down by quite a bit in the last 90 minutes of trading.  The dollar index is up 11 basis points.

I haven't a clue as to what the New York session will bring when trading begins in about 2 hours from now.

Before heading off to bed, I'd like to bug you one last time about the price saving on the pre-show promotion of the Casey Research 2013 Summit Audio Collection.  The Summit ended on Sunday, and I'd guess that the CDs will be ready to ship in the next couple of days.  The pre-show pricing will be valid until that day/time is reached, so if you're considering taking the plunge, then you better act soon.  All you need to know about this offer is linked here, and there's no cost to you just to check it out, which I urge you to do.

I'm done for the day.

See you tomorrow.

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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