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Saturday, October 12: Today in Gold and Silver

Stocks in this article: GLDSLV

NEW YORK ( TheStreet) -- Once again the gold price did nothing in Far East and early London trading.  But as you are already keenly aware, that all changed about 20 minutes after the Comex open, as the not-for-profit sellers  took out the bid stack, and the gold price cratered more than fifteen bucks in less than two minutes, tripping trading circuit breakers.

After that, the price traded more or less flat in a tight range until minutes after 2:30 p.m. EDT, when it rallied slowly but steadily into the close.

The CME recorded the high in the December contracts as $1,294.80, and the low was recorded as $1,259.60.

Gold closed at $1,273.20 spot, which was down $13.20 from its Thursday close.  Gold volume, net of October and November, was pretty chunky at 196,000 contracts.

It was more or less the same chart pattern in silver.  The smack down took a bit over 2% off the silver price in less than two minutes.  After that it gained back a percent in short order, and then traded almost ruler flat until 2:30 p.m.

The highs and lows recorded by the CME in the December delivery month were $21.86 and $20.95, which was an intraday move of over 4%.

Silver closed at $21.34 spot, down 34 cents on the day.  Volume, net of October and November, was pretty high at 53,000 contracts.

It was the same story in platinum, but the HFT boys gave palladium a pass.  Here are the charts.

The dollar index closed at 80.43 late Thursday afternoon in New York.  It rallied up to 80.51 in early Far East trading before rolling over and hitting its 80.26 low at precisely 11 a.m. BST in London.  From that low, it rallied in fits and starts to its 80.52 high at half-past lunchtime in New York.  After that it sagged a bit into the close, finishing the Friday session at 80.38, which was down 5 whole basis points.

Needless to say, the violent price move in gold, silver and platinum at 8:40 a.m. EDT had nothing to do with the currencies.  With the odd exception, this is almost always the case.

The gold stocks gapped down, and stayed down.  The HUI closed down 2.40%.

It was somewhat different for the silver stocks, as they opened only down a bit, before heading lower, with the low tick coming at 10:30 a.m. in New York.  After that, they shows some strength, gaining back almost a percent of their losses.  Nick Laird's Intraday Silver Sentiment Index closed down only 1.34%.

The CME's Daily Delivery Report showed that 28 gold and 36 silver contracts were posted for delivery on Tuesday within the Comex-approved depositories.  In gold, Jefferies and Canada's Bank of Nova Scotia were the short/issuers, with JPMorgan Chase stopping 22 of those contracts.  In silver, the biggest short/issuer was Jefferies with 34 contracts, and JPMorgan Chase stood for delivery on 31 of them.  The link to yesterday's Issuers and Stoppers Report is here.

There was a fairly decent withdrawal from GLD yesterday, as an authorized participant shipped out 173,749 troy ounces.  And as 9:10 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I checked the Web site again at 5:13 a.m. EDT this morning, I see that there's been an update.  An authorized participant withdrew 1,927,268 troy ounces of silver.  That amount is within 150 troy ounces of the size of the withdrawal reported on October 7.  It seems like too much of a coincidence, but maybe I'm imagining things.

I was surprised to see another small sales report from the U.S. Mint yesterday.  They sold 4,000 ounces of gold eagles.

There wasn't a lot of activity in gold over at the Comex-approved depositories on Thursday.  They reported receiving 4,201 troy ounces, and shipped out 13,839 troy ounces.  The link to that activity is here.

For a change, it wasn't overly busy in silver, either.  Nothing was reported received, and a smallish 81,576 troy ounces were shipped out the door.  The link to that action is here.

With no Commitment of Traders Report to discuss, it's going to be a short report for a Saturday.

In my conversations with Ted yesterday, he said that even though though there is no COT Report, it's a dead certainty that the Commercials were buying every long that the technical funds and small traders were puking up, and taking the long side of any short trade that these same two groups of traders were putting on.

Along with no COT Report, I don't have much in the way of stories for you today, either.

¤ The Wrap

There are no markets anymore, only interventions. - Chris Powell; April 2008

Today's pop 'blast from the past' is an R&B/soul number by an American group from the early 1970s, and it still gets air time to this day, and rightly so.  It's hard to believe that this hit is 40 years old this year.  For a trip far back down memory lane, click here.  They don't make music like this anymore.

Today's classical 'blast from the past' was something I was listening to on CBC FM on the way to work at the bullion store yesterday.  It's the symphonic tone poem Don Juan [Op. 20] by Richard Strauss, which he composed in 1888 at the tender age of 24 years.  This recording dates from 1984 and was performed in Osaka, Japan.  It requires a big orchestra to do justice to the monstrous orchestration prevalent in the classical music of the Romantic era of the late 19th and early 20th centuries.  The extreme difficulty and virtuosity of nearly every part has made the piece a staple of orchestral audition lists for most instruments.  The world renown Herbert von Karajan does the honours from the podium, and the link is here.

Everything that happened at 8:40 a.m. EDT in the Comex futures market in gold, silver and platinum has already been adequately described by others, so I won't bother going through it again.

But I would certainly give a day's pay to know what the Commitment of Traders looking like at the close of trading yesterday.

I took a quick look at the preliminary volume/open interest numbers for Friday's trading that the CME posted on their Internet site in the wee hours of this morning, and it shows that open interest blew out by over 13,000 contracts in gold and 4,400 contracts in silver.  The bulk of it in gold was put on in the December delivery month, and in silver it was split up between December and March.  It's possible that a technical fund put on a big short position yesterday, and if that's the case, then JPMorgan et al definitely took the other side of that trade.

There's also the possibility that it was the usual HFT games, and they hid their tracks with big spread trades.

Of course neither of these possible options will be known to us until the next COT Report, and that won't be forthcoming until after the government employees responsible for producing it go back to work.  Maybe we'll get some idea of when that might be as events unfold next week.

In the meantime, there's not a damn thing we can do about it.  We already know that the CFTC and the CME, along with the precious metal miners, aren't going to do a thing about it either, so we just have to suffer in silence.  This is just another sign of how corrupted the entire process has become, and it should be obvious to all that the system is rotten to its very core.

That's all I have for the day and for the week, and I'll see you here 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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