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Friday, August 22: Today in Gold and Silver

NEW YORK ( TheStreet) -- Well, JPMorgan et al, backed by their HFT specialists, were a force to be reckoned with right from the 6:00 p.m. EDT open on Wednesday evening in New York.  The low tick came about twenty minutes before the Comex close on Thursday afternoon---and the subsequent rally made it until 3:40 p.m. EDT before running into the algorithms once again.

The high and lows ticks were reported by the CME Group as $1,292.00 and $1,273.40 in the December contract.

Gold finished the Thursday trading session at $1,276.30 spot, down $15.10 from Wednesday's close.  Net volume was pretty decent at 136,000 contracts.

Here's the 10-minute tick gold chart courtesy of reader Brad Robertson---and the 'click to enlarge' feature works wonders here.  Note the monster volume at 2 a.m. EDT [midnight MDT on this chart] when the HFT boyz showed up with their algorithms.

Silver set a new low price for this move down just before 10 a.m. BST in London on their Thursday morning.  From there it rallied into the London p.m. gold fix where it ran into JPMorgan et al---and that was pretty much it for the day, although it did manage to poke its nose into positive territory just before 4 p.m. EDT.  That's when the gold price got sold down off its rally as well.  Ditto for silver.

The low and high ticks were reported as $19.285 and $19.48 in the September contract.

The silver price closed yesterday at $19.415 spot, down 3.5 cents from Wednesday's close.  Net volume wasn't overly heavy at 23,500 contracts.

Platinum was under a bit of selling pressure during Far East trading---and that continued until the Comex open, where the low tick was set for the day.  It recovered about five bucks off its low---and then traded flat for the rest of the day and closed down about 8 bucks.

Palladium didn't do much until Zurich opened.  At that point it dipped a few dollars before heading higher until about noon in New York.  After that it traded flat as well---and finished the Thursday session up 12 bucks.

The dollar index closed at 82.25 late on Wednesday afternoon in New York.  It rose to its 82.36 high at noon Hong Kong time.  From there it chopped quietly lower until around 11 a.m. EDT---and after that it pretty much traded ruler flat, finishing the day at 82.16---down 9 basis points on the day.  Here's the 2-day dollar index chart.  Note the noon high tick in Hong Kong on their Thursday.

Here's the 6-month dollar index with Thursday's data added.  Using the past as prologue, I'd say this dollar rally is getting a little long in the tooth---and if I were long this index, I'd be hitting the bid about now.

The gold stocks gapped down almost 2 percent at the open---and from there they sank to their low of the day around 12:10 p.m. EDT.  Then they traded flat before catching a bit of a bid in the last hour of trading.  The HUI finished down 1.99%---but well off its low.

The chart pattern in the silver equities was almost a carbon copy of the gold shares.  At one point the shares were down over 3 percent but, like gold, rallied a bit in the last hour of trading---and Nick Laird's Intraday Silver Sentiment Index closed down 'only' 2.37%.

The CME Daily Delivery Report showed that 233 gold and 6 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  In gold, the two big short/issuers were Morgan Stanley with 150 contracts---and Barclays with 77 contracts---and both out of their in-house [proprietary] trading accounts.  The two long/stoppers of note were Canada's Scotiabank with 133 contracts---and JPMorgan with 82 contracts in its client account once again.  The link to yesterday's Issuers and Stoppers Report is here.

The CME's Preliminary Report for Thursday shows that there are 372 gold contracts still open in August.  From that number you can subtract the 233 contracts mentioned in the above paragraph, so there are about 140 contracts left to deliver sometime before first notice day for September, which is next Friday.

There were no reported changes in GLD yesterday---and as of 10:15 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

Joshua Gibbons, the " Guru of the SLV Bar List" updated his website with what happened in SLV for their reporting week ending on Wednesday---and here's what he had to say.  " Analysis of the 20 August 2014 bar list---and comparison to the previous week's list:  4,078,051.2 oz were added---and no bars were added or had a serial number change."

" The bars added were from: Inner Mongolia Qiankun (0.9M oz), Solar Applied Materials (0.6M oz), Nippon Mining (0.6M oz), Henan Yuguang (0.6M oz), and 19 others."

" As of the time that the bar list was produced, it was overallocated 194.5 oz. All daily changes are reflected on the bar list, except for a 1,439,175.0 oz deposit Wednesday night."  The link to Joshua's website is here.

The U.S. Mint had a tiny sales report yesterday.  They sold 1,500 troy ounces of gold eagles---and 500 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Wednesday, the didn't report receiving any gold, but 46,279 troy ounces were shipped out---and all out of Manfra, Tordella & Brookes, Inc.  The link to that activity is here.

It was quite a bit busier in silver, as it normally is.  394,615 troy ounces were reported received---and 650,056 troy ounces were shipped out.  All the activity was at HSBC USA and Canada's Scotiabank.  The link to that action is here.

I have a lot fewer stories for you today---and that suits me just fine.

¤ The Wrap

The stage is set for something the world has never experienced previously - an asset bubble accompanied by an industrial shortage. The two greatest upward price forces known to man, an asset bubble and a genuine commodity shortage, appear set to combine in silver. Either one alone would have a profound impact on the price, but the combination seems both inevitable---and almost impossible to contemplate in terms of how high the price of silver could be driven. It’s hard to see how intense investment buying wouldn’t trip off industrial user attempted inventory stockpiling, or vice versa---and it doesn’t matter which comes first. - Silver analyst Ted Butler: 20 August 2014

"Da Boyz" took another big slice out of the gold salami yesterday, plus they set a new low in silver for this move down as well.  Volume was decent, but not overly heavy in gold---and pretty light in silver.  But there should be no doubt in your mind dear reader of what happened on Thursday---and who was the cause of it.  First the HFT traders in the Commercial category used their algorithms to set prices lower---and then the technical funds sold as sell stops and moving averages were hit.  This, with no exceptions, is the way these engineered price declines always work.

Without doubt a large chunk of yesterday's volume in both metals was the technical funds in the 'Managed Money' category puking up longs---and probably going short as well, now that the 200-day moving average in gold was smashed to the downside---and that silver hit a new low.  It was their actions that caused prices to fall.  Of course JPMorgan et al were buying whatever longs the technical funds were selling---and happily taking the long side of any short position that these same funds wanted to place.

Here are the 6-month charts for both gold and silver with yesterday's price action included.

Are we done the downside?  Probably not.  And although I'm not happy to say that, there's still a ways to go yet in both metals.  The bottom will be in when JPMorgan et al can't entice any more technical funds to sell longs, or put on further short positions---and whatever price that is when that event occurs, will be the bottom.

Unfortunately, as Ted Butler rightly says, we won't know exactly when that happens until after the fact.

As I write this paragraph, the London open is less than 20 minutes away.  At the moment, all four precious metals are slightly above their Thursday closing prices in New York---having traded quietly all day long on Friday in the Far East.  Gold's net volume is a bit over 11,000 contracts, which isn't a lot---and silver's net volume is a microscopic 2,400 contracts.  Nothing to see here.  The dollar index has been creeping lower since mid-morning trading Hong Kong time---and is currently down 8 basis points.

Today we get the Commitment of Traders Report for positions held at the close of Comex trading on Tuesday and, unfortunately, it won't include any data from Thursday or Wednesday, which were both big down days in gold, but we'll see decent improvement in the Commercial net short position in both metals nonetheless.  I'll have all that for you tomorrow.

Including today, there are five trading days left in August---and by the close of Comex trading next Thursday everyone has to have rolled or sold their September futures contracts, except those standing for delivery.  It's also a pretty safe bet that these five trading days should be a sight to see from a price perspective.

We may hit the lows for this move down in both silver and gold before the end of the month, although I wouldn't bet the ranch on that.

So we wait to see what 'da boyz' do between now and then.

And as I sent this off to Stowe, Vermont at 4:55 a.m. EDT, nothing much has changed since I reported on things over two hours ago.  Prices are still about the same---and volumes are only slightly higher and still very much on the lighter side.  The dollar index is still down a bit.

I await the New York open with great interest.  I hope you have a good weekend, or what remains of it if you live west of the International Date Line---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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