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Thursday, September 4: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price was up a few dollars by the time that the London open rolled around on their Wednesday morning.  But as I said in The Wrap in yesterday's column, the HFT boyz showed up shortly after 9:00 a.m. BST---and in a few seconds sold gold to a new low for this move down.  From that point, the price rallied back to just above unchanged---and never got more than five bucks above it's Tuesday closing price in New York.

The low and high ticks in the December contract were reported by the CME Group as $1,261.90 and $1,272.40.

Gold finished the Wednesday session at $1,269.30 spot, up $3.50 from Tuesday's close.  Net volume was 102,000 contracts, with 40% of that coming well before the morning gold fix in London.

Brad Robertson sent us the 10-minute tick gold chart---and you can see the big volume activity when the HFT traders showed up minutes after 9 a.m. BST, which shows as 2 a.m. Mountain Daylight Time on this chart.  There was also big volume at the London p.m. gold fix as well.

The sell-off in silver wasn't as well pronounced---and the actual low of the day came at the noon silver fix in London.  The price recovered back to unchanged right after that event---and didn't do a thing for the remainder of the day.

The low and highs, which really weren't worth the trouble of looking up, were reported as $19.135 and $19.280 in the December contract.  The spot low was about a dime lower than than the December contract low.

Silver closed in New York on Wednesday at $19.165 spot, up 2 cents on the day.  Net volume was only 28,000 contracts, with more than a third of that occurring before 10 a.m. BST in London.

Platinum and palladium certainly weren't spared either.  Platinum closed up $3---and palladium was closed down $9.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 82.97---and by a few minutes before lunch Hong Kong time on their Wednesday morning, had hit its 83.05 high of the day.  From there the index sank to its 82.83 low by around 12:20 p.m. BST in London---and didn't do much for the rest of the Wednesday trading session.  It closed at 82.85, which was down 12 basis points on the day.

The gold stocks opened in positive territory, but developed a negative bias almost from the outset---and finally dipped into negative territory shortly before 3 p.m. EDT.  The HUI closed down 0.39%.

The silver equities follow a more or less similar path---and they closed down 0.55%.

The CME Daily Delivery Report for "Day 3" of the September delivery month showed that 103 gold and 136 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  In gold, the big short/issuer with 100 contracts, was Morgan Stanley---and Canada's Scotiabank and FC Stone were the two long/stoppers of note.  In silver, ABN Amro was the short/issuer with 120 contracts---and ten separate long/stoppers were involved.  The biggest was Barclays with 38 contracts. The link to yesterday's Issuers and Stoppers Report is here.

The CME's Preliminary Report for the Wednesday trading session showed that there are 181 gold along with 1,477 silver contracts still open in the September delivery month.  Subtracting the Friday deliveries in the previous paragraph gives you a more accurate idea of where the delivery month stands at this juncture.

Once again there was a withdrawal from GLD.  This time it was 86,566 troy ounces---and as of 9:32 p.m. EDT yesterday evening, there were no reported changes in SLV.  But when I was editing this column at 4:30 a.m. EDT, I noted that there was a withdrawal of 179,269 troy ounces, which may or may not have been a fee payment of some kind.

The good folks over at Switzerland's Zürcher Kantonalbank updated their website with their gold and silver ETF activity for the week ending on August 29---and this is what they reported.  Their gold ETF declined by 11,506 troy ounces---and their silver ETF shed a further 16,043 troy ounces.

For the second day in a row, there was no sales report from the U.S. Mint.

There was no activity in gold worthy of the name over at the Comex-approved depositories on Tuesday, as only three kilobars were shipped out of the Manfra, Tordella and Brookes, Inc. depository.  It was much busier in silver, as 599,899 troy ounces were reported shipped in---and 675,175 troy ounces shipped out.  The link to the silver action is here.

Nick Laird sent me the intraday price charts for both gold and silver for the month of August and not surprisingly, they look very similar, but it's the shapes of the trends that are noteworthy, as there's nothing free market about them.

In gold, the average high tick came moments after 9 a.m. BST in London---and then got sold down continuously from there until its low tick at 8 a.m. Hong Kong time the following morning.

The average high tick in silver in August also came shortly after 9 a.m. BST, but the low tick, on average, came right at the 5:15 p.m. EDT close of electronic trading in New York.

The fixes in both gold and silver, played almost no part in price movements during the reporting month, so I'd guess that 'da boyz' are staying miles away from these times of day while they are under investigation for rigging the London afternoon gold fix.  The same can be said for the intraday silver and gold charts for July.

I have a lot of stories again today---and I'll happily leave the final edit up to you.

¤ The Wrap

There is only one way in which these Chinese gold loans would appear to make sense. Unfortunately, there is nothing legitimate about that one way. Having each gold loan fully backed by specific collateral would virtually eliminate any chance of profit to the lending bank, given the costs associated with buying and storing the gold. But there would be potentially great profit if the same collateral could be used to make many loans. That, in essence, is what I believe these Chinese gold loans are all about – unsecured loans intended to evade local bank restrictions on lending by banks pretending they are collateralized.

I haven’t reached this opinion in a vacuum. As the Bloomberg article concludes, there may be a connection between gold loans and other Chinese loans collateralized by copper and aluminum which are being investigated due to fears the same collateral was pledged for many loans. I would point out that gold and commodity loans in which the same collateral backs many loans seems to be unique to China at this time. After all, at least in the U.S., we’ve been there and done that more than 50 years ago in the great salad oil scandal run by Tino De Angelis. I guess these are lessons that must be learned by direct experience and not from history. - Silver analyst Ted Butler: 03 September 2014

Except for the appearance of the HFT boyz shortly after 9 a.m. BST yesterday, there wasn't much price action during the rest of the Wednesday trading session.  No doubt there was further improvement in the Commercial net short positions of all four precious metals, especially gold, as they all got sold down to news lows for this move down.  However, none of it will be in Friday's Commitment of Traders Report, or the companion Bank Participation Report.

Here are the 6-month charts for both gold and silver---and as you can tell, the slicing of the salami to the downside in both metals is still a work in progress.

As I just said in other words in the previous paragraph, I doubt very much that we've seen the final lows yet---and as to when they might put in an appearance is entirely up to JPMorgan et al.---and the central banks.  They are running the precious metal commodity show, along with copper---along with any other Comex futures market they wish to dabble in.

And as I type this paragraph, the London open is fifteen minutes away---and there certainly isn't much happening, or being allowed to happen, in any of the precious metals.  Net gold volume is barely over 10,000 contracts---and silver's volume is a hair above 2,500 contracts.  The dollar index is flat as well.  Nothing to see here.

We also get the jobs number tomorrow at 8:30 a.m. EDT---and it will be interesting to see how silver and gold will react, or will be allowed to react, at that point in time.

And as I send this off to Stowe, Vermont at 4:57 a.m. EDT, gold is up a few bucks, silver is down a few pennies---and the other two precious metals are also up, palladium by $10.  Volume in both gold and silver is up 50%, which is still basically fumes and vapours for this time of the trading day.

I doubt very much that the powers-that-be will want too much excitement in the precious metals while NATO is having its Welsh pow-wow---but you just never know.

That's more than enough for today---and I'm off to bed.

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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