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TheStreet Open House

Friday, October 25: Today in Gold and Silver

NEW YORK ( TheStreet) -- As has been the case for what seems like forever now, there was no price activity worthy of the name during the Far East trading session on their Thursday.  But a rally commenced at 11 a.m. BST in London which ran into the obligatory not-for-profit seller at the Comex open in New York, and this sliced ten bucks off the price in about 30 minutes.  But the rally continued shortly before 9 a.m. EDT, and topped out a few minutes after 12 o'clock noon.  After that it traded more or less sideways until the 1:30 p.m. Comex close.  Then it got sold down a bit into the close of electronic trading.

The CME reported the low and high price ticks at $1,330.20 and $1,352.30 in the December contract.

Gold closed in New York at $1,347.30 spot, which was up $13.60 from Wednesday's close.  Volume, net of October and November, was decent at 148,000 contracts.

The price pattern in silver was pretty much the same as the price pattern in gold.  The only two differences were the fact that the high tick came shortly after 11:30 a.m. in New York, and the sell-off in electronic trading was a little more pronounced than it was in gold.

The CME recorded the low and high ticks as $22.51 and $22.91 in the December contract.

Silver closed at $22.72 spot, which was well off its high, and up only 16 cents from Thursday's close in New York.  Volume, net of October and November, was on the lighter side at 34,000 contracts.

Platinum closed back above its Tuesday close, and palladium finished the day flat.  Here are the charts.

It was the second day in a row where the dollar index didn't do much, as it traded sideways in a very tight range once again.  It closed in New York at 79.21, which was down 7 basis points from Wednesday's close.

The gold stocks gapped up about 3% at the open, and then climbed to their high of the day shortly after 12 o'clock noon in New York, which was gold's high tick. After that they chopped sideways for the remainder of the New York trading session.  The HUI finished up 4.11%.

As has been the case all week, the silver shares have underperformed their golden cousins.  Nick Laird's Intraday Silver Sentiment Index closed up only 3.33%, and it didn't even gain back all of Tuesday's losses.

The CME's Daily Delivery Report showed that 29 gold and 11 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  JPMorgan was the only long/stopper of note in both.  The link to yesterday's Issuers and Stoppers Report is here.

For whatever reason there was another withdrawal from GLD yesterday.  This time it was 57,909 troy ounces.  And as of 9:21 p.m. EDT yesterday evening, there were no reported changes in SLV.

Joshua Gibbons, the "Guru of the SLV Bar List" posted his weekly commentary on the in/out action for the week that was in SLV.  Here's what he had to say.  " Analysis of the 23 October 2013 bar list, and comparison to the previous week's list.  3,661,880.2 troy ounces was removed (all from Brinks London), and none had a serial number change.  The bars removed were from: Solar Applied Materials (1.3M oz), Aurubis AG (0.6M oz), Nordeutsche (0.6M oz), Inner Mongolia Qiankun (0.2M oz), and 17 others.

As of the time that the bar list was produced, it was over-allocated 68.6 troy oz.  There was a withdrawal of 770,883.6 oz on Tuesday and deposit of 2,408,785.0 oz on Wednesday (that nets to +1,637,901.4 oz) that have not yet been reflected on the bar list, that should appear on the next bar list (as it normally takes a day or two for the bar list to get updated)."  The link to his Web site is here.

I also noted that the folks over at the shortsqueeze.com Internet site updated their Web site with the latest changes in the short positions for both GLD and SLV for mid-October.  The short position in SLV rose by 7.19%, and the total number of shares/ounces sold short now stands at 17,775,400.  GLD's short position increased by 8.90%, and it's short position is up to 2.40 million troy ounces.  In tonnes, that's 553 tonnes of silver and 74.5 tonnes of gold.  One can only imagine what the prices of gold and silver would be if those holding short positions in both these ETFs were required to purchase the metal on the open market to cover them.

The U.S. Mint had a tiny sales report yesterday.  They sold 500 ounce of gold eagles, and that was it.

Over at the Comex-approved depositories on Wednesday, they reported receiving 32,075 troy ounces of gold, and shipped 64,009 troy ounces out the door.  The link to that activity is here.

As is always the case, it was much busier in silver, as 639,533 troy ounces were shipped in and 235,623 troy ounces were shipped out.  The link to that action is here

It was another slow news day again yesterday, and I hope you find something of interest in what I did manage to cobble together.

¤ The Wrap

In a nutshell, the coming influence of monetary expansion on gold and silver prices will be due to the great inflation already witnessed in other asset classes. At some point, it is inevitable that there will be some switching of funds from bonds, stocks and real estate to precious metals. There always is such switching as asset classes come in and go out of favor on a recurring basis. Someday, something will spook the bond, stock or currency markets and there will be some rush to precious metals. Because the growth of other asset classes has been so monumental, even the smallest amount of switching to precious metals will have a profound impact on gold and, especially, on silver prices. - Silver analyst Ted Butler: 23 October 2013

There's not much to add to my comments at the top of this column regarding yesterday's price action in both gold and silver.  It was nice to see the rallies in both metals, along with the commensurate rallies in their associated equities.  One can only hope that this trend will continue.

As of yesterday's close, both gold and silver are slightly above their respective 50-day moving averages.  It will be interesting to see whether prices power higher from here as the technical funds move to cover their short positions, or will prices "fail" at this point, as they have done in the past at this juncture?

Today we get the October Bank Participation Report, along with some sort of Commitment of Traders Report.  The only thing I know for sure is that the COT Report won't contain data up to the last cut-off date, which was Tuesday, October 22.  Even before I check the numbers, I'll be looking for the cut-off date at the top of the web page.  And in some respects, without the data being current, it won't mean a lot.  The Bank Participation Report data will also be a month out of date as well, and in some ways what it contains will be of more importance than the COT Report itself.

But whatever they show, I'll be commenting on it at length in Saturday's missive.

All four precious metals were under a little selling pressure during Far East trading on their Friday, but it was silver that really got clubbed going into the 8 a.m. BST London open.  The CME low print was $22.325, which was down 40 cents from yesterday's New York close.  Obviously there was nothing free market about that.  Gold volume [as of 3:56 a.m. EDT] was pretty light, but silver's volume was [not surprisingly] very decent.  And also not surprisingly, it was mostly of the HFT variety.

The dollar index took a 20 basis point nose dive around lunchtime in Hong Kong, but there was a buyer in the wings waiting to catch that particular falling knife at the 79.02 mark.  There was no sign of that currency move in any of the precious metal prices at the time.

And as I hit the send button on today's column at 5:15 a.m. EDT, three of the four precious metals have recovered off their lows at the London open, and are rallying unsteadily higher, but none are back above their New York closes from yesterday.  Volumes are about average in gold, and still slightly elevated in silver.  The dollar index is down about 11 basis points.

Since today is Friday, I'm wide open to any price scenario that presents itself when I power up my computer later this morning.

Enjoy your weekend, or what's left of it, 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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