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Thursday, November 21: Today in Gold and Silver

NEW YORK (TheStreet) -- The gold price traded flat until 3 p.m. Hong Kong time, and then developed a negative bias from there.  But a few minutes before 11:30 a.m. in London, and I was watching the screen at the time, the HFT boyz shaved ten bucks off the price in just a few seconds.  Here's the Kitco chart of that event that I saved about 15 minutes after it occurred.

Here's the Nanex two-minute chart of the same event.  Note that the event was over in seconds, as the stops got run, and trading was halted for twenty seconds to restore "liquidity".  I thank Casey Research's own Bud Conrad for sending that chart around yesterday morning, and I have a Zero Hedge piece in my Critical Reads section further down that's worth your while.  But it's linked here if you just can't wait.

Once the "new and improved" lower price was set, it triggered more sell stops and the brain dead technical funds and small traders followed the script to a "T"; selling long positions and going short even more than they already were.  On the other side of that trade, both JPMorgan and the raptors were happily doing the opposite.  This is the price fixing scenario that Ted Butler has been talking about for more than a decade.

This lasted until the London p.m. gold fix.  The subsequent rally got cut off an the knees at precisely 10:30 a.m. EST, and the price decline more or less continued uninterrupted until the Fed news was released at 2 p.m.  At precisely that moment the HFT traders showed up again, and you know the drill from there, dear reader.

The low of the day came shortly before 3 p.m. in electronic trading, and the price didn't do much after that.

The CME recorded the high and low ticks at $1,275.70 and $1,240.20 in December.

Gold close in New York at $1,24.80 spot, down $32.40 from Tuesday.  Gross volume was over the moon at way over 200,00 contracts.  The net volume  was 187,000 contracts, an increase of 115,000 contracts from Tuesday.

Here's the New York Spot Gold [Bid] chart on its own.  Note the precise 10 a.m. and 2 p.m. hits on the gold price.

The silver price action was virtually identical to gold's, and the chart's are exactly the same.  In a free market, these sort of correlation are just not possible.

The CME reported the high and low in the December delivery month as $20.49 and $19.78; which is another new low close for this move down.

Silver finished the Wednesday session at $19.85 spot, which was down 49 cents from Tuesday's close.  Silver's gross volume was a hair under 81,000 contracts, but roll-overs were very heavy, and by the time the smoke cleared, net volume was down to 42,000 contracts, which is almost double the net volume posted on Tuesday.

Since I included the New York sport price chart for gold, here it is for silver as well.  And as I said, they are almost tick for tick identical.

The platinum and palladium charts turned out to be [very] mini versions of what the gold and silver charts looked like, and both these precious metals finished down on the day as well.  Here are their respective charts.

Kitco recorded the losses as follows:  gold down 2.54%, silver down 2.41%, platinum down 1.63%, and palladium down 1.11%.

The dollar index closed at 80.54 late on Tuesday afternoon in New York.  Once trading began in the Far East, there was a tiny rally that lasted until shortly before 10 a.m. GMT in London, but by 10:15 a.m. EST in New York, it was back to its Tuesday close.  Then the index blasted skyward, and by the end of the trading day on the U.S. East Coast, the index closed at 81.06; up 52 basis points on the day.

If you check all four precious metal charts, you'll note that the simultaneous 2 p.m. "sell offs" began about 15 minutes before the dollar index headed north.

Not surprisingly, the gold shares gapped down about a percent at the open, and they proceeded to trade sideways until the big 2 p.m. smash down.  The equities bottomed shortly after 3 p.m. in New York trading, and then rallied a hair in the close.  The HUI finished down 3.29%.

The silver equities got it in the neck as well, and Nick Laird's Intraday Silver Sentiment Index finished lower by 3.46%.

The CME Daily Delivery Report showed that zero gold and 15 silver contracts were posted for delivery on Friday, and the link to yesterday's Issuers and Stoppers Report is here.

Another day, and another withdrawal from GLD, as an authorized participant withdrew 86,836 troy ounces.  And as of 9:25 p.m. EST yesterday evening, there were no reported changes in SLV.

The U.S. Mint had another smallish sales report yesterday, as they sold 3,500 troy ounces of gold eagles and 500 one-ounce 24K gold buffaloes.  Having already sold their weekly allotment of 500,000 silver eagles, there won't be another update sales report on these until next Monday.

It was another quiet day in gold on Tuesday at the Comex-approved depositories.  They reported receiving 771 troy ounces, and shipped out exactly the same amount.  The link to that activity is here.

There was heavier activity in silver, though.  These same depositories didn't receive any on Tuesday, but did ship out 333,869 troy ounces for parts unknown.  The link to that action is here.

Since yesterday was the 20th of the month, The Central Bank of the Russian Federation updated their website with their October numbers, and for the third month in a row they didn't report buying any gold for their reserves.  Their visible gold holdings still sit at 32.6 million troy ounces.  There's a good chance that they may be pulling a "China"; buying the stuff hand over fist, but not reporting it until the time is right, whenever that might be.

Here's Nick Laird's most excellent chart, for which I thank him.

I have the usual number of stories for a weekday column, and I hope there are some in here that will interest you.

¤ The Wrap

I see little serious debate about position limits and exemptions for hedging and market making discussed anywhere else in the general media, or in the gold and silver blogosphere – just on these pages and, according to news reports, at the highest levels of government and commerce. Instead, I see endless debate about the level of Comex gold warehouse inventories and deliveries, and the latest GOFO rates (still goofy), and whether all the statistics from the Comex are invalid because of a disclaimer. This baffles me. What baffles me the most is that most Internet commentators fully accept that COMEX gold and silver prices are manipulated; it’s just that they all seem to want to come up with their own version for why gold and silver prices are manipulated, and what the signs will be for when it ends.

There is only one possible cause for a market manipulation – a market dominance brought about by a concentrated position or market share. Add in total trading control brought about by predatory computer trading and willing victims (the tech funds) and the manipulation picture is complete. JPMorgan has held a market corner on the short side of Comex silver for going on six years and has managed to flip a short market corner in Comex gold to a long market corner. The enforcement of legitimate position limits uncompromised by phony hedging or market making exemptions would make a market corner impossible. That’s the promise behind the proposals for position limits and the Volker Rule. - Silver analyst Ted Butler: 20 November 2013

Well, JPMorgan Chase et al took another big slice out of the gold and silver salamis again on Wednesday.  All four precious metals are now at new lows for this move down.  I said in The Wrap in yesterday's column that: "I don't expect much price action, except to the downside, between now and next Thursday."  I was right, but must admit that I wasn't expecting "da boyz" to hit their respective prices so hard.  You have to wonder how many long positions in silver and gold the technical funds and small trader have left to sell, and how many more short positions they're prepared to put on.  But based on the price activity and volume, they did it with abandon yesterday.

Of course, I should have expected prices to get hit, as it's the day after the cut-off for tomorrow's Commitment of Traders Report, and what happened yesterday won't be visible until the COT Report on 29 November.  This is a trick they've used for more than a decade, and I wasn't expecting it this time.

In my daily telephone conversation with Ted, I asked "Could this be JPMorgan et al's last swing for the fences?"  He thought it entirely possible, but we've both felt that way in the past, and on more than one occasion as well, only to have the prospect vanish as they showed up as sellers of last resort on each ensuing rally.

Will it be different this time?  I'm not sure, but their behavior over the last week or so indicates that they're in a bit of a hurry.  As I said, I've seen this movie before, so until it actually ends, this is speculation on our parts.  But the stars are certainly lined up for such an event.  And if not now, when?

I took a peek at the CME's preliminary volume/open interest numbers for the Wednesday trading session, and gold o.i. blew out by 10,000 contracts, but silver's o.i. was only up a few hundred.  What this dichotomy means won't be known until next Friday, which is a lifetime away in markets as dynamic as these.

One other thing I noticed while looking at these CME numbers was that there is still a monstrous amount of open interest left in both gold and silver in the current front month, which is December.  All of this has to disappear by next Thursday.  The next six or seven business days could get pretty wild.

In Far East trading, there was a tiny rally in both gold and silver that lasted until 9 a.m. Hong Kong time, and both metals traded pretty flat heading into the London open.  London has been open about 15 minutes as I write this paragraph, and still not much is happening.  Volume is "normal" in both metals, with very little in the way of roll-over activity, so the HFT boyz are obviously out and about.  The dollar index is up about 21 basis points.

And as I hit the send button on today's missive at 5:10 a.m. EST, I note that all four precious metals have rallied a bit in the early going in London, but I'm sure you'll forgive me if I don't get overly excited about it.  Gold volume [in December] is already over 40,000 contracts and only 10% of that is roll-overs.  And in silver, December volume is fast approaching 10,000 contracts, with less that 20 percent of that amount being roll-overs, so the high-frequency traders are still there.  The dollar index is only up about 9 basis points at the moment.

After yesterday's pounding, I don't want to hazard a guess as to what JPMorgan et al will have in store for us during the New York session either today, or for the rest of the month.  However, using Wednesday's events as prologue, I'd be on the lookout for "in your ear" at some point in the days ahead.

See you on Friday; but if you live west of the International Date Line, it's already the start of the weekend, and I hope it's a good one for you.

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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