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Thursday, October 24: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price didn't do a thing in early Far East trading on their Wednesday, and began to develop a negative bias shortly after 10 a.m. Hong Kong time.  The low of the day came at the noon silver fix in London, and the subsequent rally [such as it was] got capped at 11:45 a.m. EDT.  Gold then got sold down until the 1:30 p.m. Comex close, then traded flat into the electronic close at 5:15 p.m. in New York.

The CME recorded Wednesday's low and high as $1,328.50 and $1,342.20 for the December contract.

Gold closed in New York at $1,333.70 spot, which was down $7.50 from Tuesday.  Volume, net of October and November, was very light at only 103,000 contracts.

Here's the New York Spot Gold [Bid] chart on its own.  Despite the low volume, you can tell from the sawtooth price pattern, there was an active seller capping every rally attempt, no matter how tiny.

It was more or less the same chart pattern in silver.  The low was at the London silver fix, and the high was at 9 a.m. EDT when the price got capped and then sold down 20 minutes after the Comex open.  The tiny rally after that peaked out at 11:30 a.m. EDT, and from there developed a slightly negative bias into the close of electronic trading.

The CME recorded the low and high as $22.50 and $22.82 in the December contract.

Silver closed at $22.56 spot, which was down 14.5 cents from Tuesday.  Volume, net of October and November, was a smallish 28,500 contracts.

As a long-time observer of the daily price activity, both on a micro and macro level, it was obvious that a seller of last resort was at work shaping the price curve in both gold and silver, particularly during the Comex session.

Both platinum and palladium had similar chart patterns.  The lows came at 11 a.m. in Zurich, and the highs were at noon in New York. After that, both got sold down not only below their Tuesday closing prices, but below their respective Monday closing prices as well.  Here are the charts.

The dollar index wandered in a 20 basis point range around it's Tuesday afternoon close in New York, which was 79.26.  The index closed late Wednesday EDT at 79.28.  Nothing to see here.

The gold stocks opened down about a percent, but then rallied back to just above unchanged.  That state of affairs lasted until 11:45 a.m. EDT.  At that point the gold price had reached its New York high, and had begun to fade.  The gold stocks faded even faster, and by the close of trading, the HUI had given up a large percentage of Tuesday's gains, as it finished down 2.98%.

The silver shares followed almost the same price path as the gold stocks, but gave up all of Tuesday's gains and a lot more by the time trading ended on Wednesday.  Nick Laird's Intraday Silver Sentiment Index closed down 3.79%.

The CME's Daily Delivery Report showed that zero gold and six silver contracts were posted for delivery on Friday.  The link to  yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday, but I'm happy to report that an authorized participant added 2,408,695 troy ounces of silver to SLV, and it's probably owed a lot more.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 500 ounces of gold eagles and 500 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Tuesday, they reported receiving 32,150 troy ounces of gold, which is precisely 1.000 tonnes of the stuff.  All of it went into JPMorgan's warehouse.  Only 199 troy ounces were reported shipped out.  The link to that activity is here.

As usual, the big movement was in silver.  These same depositories reported receiving 839,438 troy ounces, and shipped 35,636 ounces out the door.  Of the amount received, JPMorgan took in 539,048 troy ounces.  The link to that action is here.

I received an update from Switzerland's Zürcher Kantonalbank about an hour before I hit the send button today's column.  They updated their gold and silver ETFs as of the close of business on Friday, October 18.  During that reporting week, they added a smallish 6,006 troy ounces to their gold ETF, but 216,310 troy ounces were removed from their silver ETF.

Just as point of interest, JPMorgan Chase is now the second largest holder of physical silver within the Comex-approved warehouse system.  As of Tuesday, they held 38,147,044 troy ounces of the stuff.  Only HSBC USA holds more.  They have 46,566,359 troy ounces.  Canada's Bank of Nova Scotia [Scotia Mocatta], the other big silver short on the Comex, holds 21,082,648 troy ounces of the stuff.

It's my opinion that these banking entities shown above represent three of the "Big 4" Commercial traders holding short positions in the Comex futures market in silver, with JPMorgan's short-side corner by far the largest position of the three.

And another point of interest: On May 1, 2011 which was the day of the drive-by shooting in silver that we remember all too well, JPMorgan Chase had zero ounces of silver stored on the Comex.  They began accumulating the metal immediately after that event.  That can't be a coincidence.   Here's the chart courtesy of Nick Laird over at sharelynx.com.

I have very few stories for you today, so it shouldn't take too much time to read the ones that strike your fancy.

¤ The Wrap

Economic theory would suggest that gold will find its own level in terms of price, supply and demand, and if Sprott is right then the gold price will rise sharply once the market understands this.  But in today’s financial environment when everything seems to be manipulatable by big money, with or without government collusion, perhaps gold, as a hybrid between money and commodity, is very much a unique animal.  There are just too many vested interests for it to simply follow the usual economic rules. - Lawrence Williams in commentary over at the mineweb.com Internet site yesterday.

There's not much to talk about regarding yesterday's price action.  As I commented on Tuesday and again today, and as Peter Grandich so eloquently put it in his thoughts in the Critical Reads section further up in today's column, there was absolutely no follow-through to Tuesday's price action in New York anywhere on Planet Earth yesterday, and even the tiniest rally attempts on Wednesday were dealt with in the usual manner.

The only news tidbit I have for you here is something that Ted Butler posted in his mid-week commentary to his paying subscribers yesterday.  He mentioned that "The CFTC announced the schedule for catching up on Commitment of Trader and Bank Participation Report data.  There will be reports on Friday, but it will take some time before reports are current."  You can read all about it in the short CFTC press release linked here.

Silver analyst Ted Butler doesn't stray too far from his normal topic, which are the on-going price shenanigans in silver and gold in the Comex futures market.  But as a long-time commodities trader on Wall Street, he had a few comments about crude oil that I thought worth stealing.  Here, in part, is what he had to say.

Back in July, I commented on the high price of crude oil and gasoline at the time being due to the record net long position of speculators and counter party record net short position of the commercials in crude oil futures on the NYMEX. I also inferred that it was likely that the commercials would rig prices lower eventually.

It took a couple of months, but it appears clear to me that the recent sell-off in crude oil and gasoline was due to the same speculative forces that caused prices to run up in the summer. Just as it is the case in Comex gold and silver, petroleum prices are often moved by paper trading games on the NYMEX. The trading games are the same in that real world fundamentals have little to do with price moves; this is all about technical trading funds being lured into and out from positions by the commercials (JPMorgan) and not actual oil production or consumption.

Here's the two-year West Texas Intermediate Crude Oil chart so you can see the point that Ted is making.

Based on this chart, I would guess that a rally, technical or otherwise, is in the cards in the not-too-distant future.  Hopefully this will favourably impact the precious metal prices as well.  We'll find out soon enough, I would think.

In Far East trading on their Thursday, gold and silver prices chopped around until 2 p.m. Hong Kong time, and then rallied into the London open, which is four minutes away as I write this paragraph.  All four precious metals are trading above their Wednesday closes in New York at the moment, and it only remains to be seen if they survive the usual sell-off by the short sellers of last resort at the London open.  Volumes are pretty light, and virtually all of it is of the HFT variety in both metals.  The dollar index, which hadn't been doing much all day in the Far East, took a bit of a dive around 1:45 p.m. in Hong Kong, and is currently sitting at the 79.10 mark.

And as I hit the send button on today's efforts at 5:15 a.m. EDT, I note that the tiny rallies I spoke of in the last paragraph got sold off moments after London opened.  Volumes in both silver and gold blew out by about 50 percent in less than an hour, so it was obvious that the HFT boyz were on duty, just as I suspected they would be.  The dollar index is back to unchanged.

I'll be very much interested in the price action of both metals at the London a.m. gold fix, the noon silver fix, and the Comex open later this morning.

Once again Casey Research is offering its Casey OnePass subscription service.  The deal includes subscriptions to nine of CR's subscriptions all rolled into one [very] cheap price.  If you have any interest, you find out more by clicking here, and it doesn't cost a thing to check it out.  Naturally, Casey Research's 90-day risk-free policy applies in full.

That's all I have for today, and I'll see you here on Friday; or Saturday if you live west of the International Date Line.

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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