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Wednesday, October 9: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price chopped sideways in a tight range during Far East trading, but once London opened, the high-frequency traders swung into action and the low tick of the day came shortly after the 8:20 a.m. EDT Comex open.  From that point the price rallied to its high at the London p.m. gold fix.

The price got capped at that point, and then got sold down to its afternoon low just minutes after 3 p.m. in electronic trading.  After that it traded sideways into the close.

The CME recorded  the low and high price ticks in the December contract as $1,315.40 and $1,330.80 respectively.

Gold closed in New York at $1,318.90 spot, down $3.50 on the day, which was obviously well off its high.  Volume was about a third higher on Tuesday than it was on Wednesday at 132,000 contracts vs. 99,000 contracts.

It was pretty much the same for silver, with the low tick coming at, or minutes after, the 8:20 a.m. Comex open in New York.  The subsequent rally ran into a not-for-profit seller at 9 a.m. as the price went vertical.  The high came just minutes before the London close and, like gold, it was all down hill from there.

The CME lows and highs for the December contract were $22.11 and $22.525 respectively.

Silver closed at $22.29 spot, down 6 cents from Monday's close.  Net volume was around 34,000 contracts, and only a hair higher than Monday's volume.

Here's the New York Spot Silver [Bid] chart on its own, so you can see the price action in more detail.

Platinum didn't do much yesterday, but palladium went on a bit of tear, but it was as equally obvious that the price was being capped at the $715.00 spot price point.  Here are the charts.

The dollar index closed late Monday afternoon at 79.92, and spent the day trying to get above, and stay above, the 80.00 mark.  It just about made it, closing the Tuesday session at 79.99, up a whole 7 basis points.  Once again there no relationship between the currency moves and the price action in both gold and silver.

The gold stocks opened unchanged, and then began a long, slow slide that gathered steam after 2:30 p.m. in New York.  The stocks finished the Tuesday trading session just off their lows.  The HUI closed lower by 2.97%, giving back all of Monday's gains, plus another percent on top of that.

The silver stocks got crushed, as Nick Laird's Intraday Silver Sentiment Index closed down a whopping 3.88%, giving up all of Monday's gains, plus another 2.2 percentage points on top of that.

The CME's Daily Delivery Report for Tuesday is hardly worth mentioning, as only 2 gold and 1 silver contract were posted for delivery on Thursday.  Nothing to see here.

There was another withdrawal from GLD yesterday.  This time it was 57,920 troy ounces.  And as of 10:02 p.m. EDT yesterday evening, there were no reported changes in SLV.

The U.S. Mint had another sales report yesterday.  They sold 1,000 ounces of gold eagles and another 194,500 silver eagles.

There wasn't much in/out activity in gold over at the Comex-approved depositories on Monday.  They reported receiving 7,417 troy ounces, and shipped 780 troy ounces out the door.  The link to that activity is here.

And there was more big activity in silver on Monday, as these same depositories received 742,722 troy ounces and shipped out 898,202 troy ounces.  The link to that action is here.

The big news yesterday were the August gold import numbers for China.  Here are the updated charts courtesy of Nick Laird over at sharelynx.com.  The first one shows the monthly import data, and the second one is the yearly import data, with the bar for 2013 representing year-to-date imports.

If they keep up this pace, China will import around 1,200 tonnes of gold through Hong Kong in 2013, which represents about half of all the gold that will be mined this year.  And those are the gold imports we know about, plus they absorb the 400+ tonnes a year of their own mine production on top of that.

Along with Indian imports, these two countries on their own will absorb about 90% of world mine production this year.  This prima facie data begs the question:  What central bank vaults are providing the physical gold demanded by every other country on Planet Earth this year?

I have somewhat fewer stories for you today, but a lot of must read precious metal stories, so I hope you can find the time to read the ones that interest you.

¤ The Wrap

When the goals conflict and it comes to calling for tough trade-offs, to me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target. - Janet Yellen, 1995 -- as quoted on CNBC yesterday evening.

It was just another day off the calendar where neither gold nor silver were allowed to get far, and there was no follow-through allowed from Monday's jump in prices during the morning trading session in New York.  The "Do Not Pass Go" line was the London p.m. gold fix once again.

There were decent increases in the CME's preliminary open interest numbers for the Tuesday trading session, as it was obvious from the volume figures that the rally in gold was met by a short seller of last resort once again.

But the gold and silver import figures, both current and future, for China and India should offer some comfort in the face of these artificially low prices.  I would guess that this situation is being allowed to persist until China has all the gold they want/need.  At that point, whenever it comes, we'll get that radical revaluation in all precious metals.  Only the time line is unknown.

If you read the above story about the "production cliff" for gold and silver, it's obvious this current situation can't, or won't, exist indefinitely, as it's a sure path to bankruptcy for a lot of precious metal companies at these prices, particularly in silver.

And as I said further up in today's column; "One can only fantasize about the true economic impact of both gold and silver mining on the world's economy if these metals were allowed to trade at their free-market prices, instead of their current "Made in the U.S.A. by JPMorgan Chase et al" prices they're selling for right now.  Gold would be priced out of reach of all but the super rich, and silver would be the new gold.

Not much happened in all four precious metals in Far East trading on their Wednesday, and the same can be said now that London has been open for about 45 minutes.  Volumes are pretty light, at least compared to yesterday at this time.  The dollar index is in rally mode, as it's up 28 basis points at the moment.

And as I hit the send button on today's column at 5:25 a.m., I see that all four precious metals got smacked at 10 a.m. in London trading.  Gold and silver volumes have really blown out, and are now much higher than they were this time yesterday, and it's all of the HFT variety.  The dollar index is now up 38 basis points.

The rest of the Wednesday trading session could prove to be interesting, and nothing will surprise me when I power up my computer later this morning.

That's everything for today, and I'll see you here 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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