Tuesday, September 17: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price spiked up at the New York open on Sunday night/Monday morning in the Far East, and that was the high for the day.  There was big volume up until noon Hong Kong time, so it was obvious that someone was throwing a lot of paper contracts at the market to keep the price from moving high, or maybe it was just the high-frequency traders doing their thing.  I suspect the latter.

Then the gold price got sold down into the Comex open in New York, rallied into the London p.m. gold fix, and that was pretty much all she wrote, as gold got sold down to its low of the day [$1,302.70 spot] around 4:15 p.m. EDT in electronic trading.  From that low, gold rallied a bit into the 5:15 p.m. close.

Gold finished the Monday session at $1,313.90 spot, down an even 14 bucks from Friday.  Net volume was around 16,000 contracts, with about a quarter of that amount coming before the London open.

It was more or less the same chart pattern for silver as well.  Silver closed on Monday at $21.82 spot, down 44.5 cents from Friday.  Net volume was around 44,000 contracts, with a bit more than a quarter of that coming before the London open.

A cursory glance at the platinum and palladium charts below shows that their chart patterns were derivatives of the chart patterns for gold and silver as well.  Palladium was the only one of the four precious metals that was allowed to finish up on the day.

The dollar index fell out of bed to the tune of about 20 basis points right at the 6 p.m. New York open on Sunday night.  From there it traded sideways, hitting its low of 80.98 a hair before 9 a.m. EDT in New York.  Someone was there to catch a falling knife, and the index rallied back to 81.31 before trading more or less sideways in the close.  The index closed at 81.28, which was down 22 basis points from Friday.

Despite the fact that gold spent the entire New York session in the red, the gold stocks struggled valiantly to stay in positive territory.  But once the gold price began to head south at 2 p.m. EDT, it was just to much, and they slid into the red for the final time going into the close.  The HUI finished down 0.68%.  It could have been far worse.

However, the silver stocks got hit pretty hard, and Nick Laird's Intraday Silver Sentiment Index closed down 2.29%.  The silver stocks are down a bit more than 20% since their late-August highs.

The CME's Daily Delivery Report showed that two gold and 109 silver contracts were posted for delivery within the Comex-approved depositories tomorrow.  Jefferies was the short/issuer of note with 105 contracts.  The three largest long/stoppers were Canada's Bank of Nova Scotia, JPMorgan Chase out of its client account, and Merrill.  They will take delivery of 61, 27 and 12 contracts respectively.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes GLD; and as of 9:29 p.m. EDT, there were no reported changes in SLV, either.

Since yesterday was Monday, the U.S. Mint had a sales report.  They sold 1,500 ounces of gold eagles, 500 one-ounce 24K gold buffaloes, and 675,000 silver eagles.  I'm underwhelmed.

There was virtually no movement in gold over at the Comex-approved depositories on Friday.  They didn't report receiving any, and only 128.600 troy ounces was shipped out.  That's exactly four kilobars of the stuff, and it was all out of Brink's, Inc.

As usual, it was pretty busy as far as silver was concerned, as 224,291 troy ounces were reported received, and 649,045 troy ounces were shipped out the door.  The link to that activity is here.

Here's a new chart that Nick Laird has been working on for some time, and I asked him to write up an introductory paragraph, and here it is:

"The Gold Events Calendar developed by Nick Laird of www.sharelynx.com showcases all the major events that impact the gold price from Government reports (FOMC, NFP, IJC, ADP reports) to gold trading events (futures, options, GLD & COTs) to cultural holidays around the world to Indian auspicious & inauspicious days to buy gold. Also included are some gold metrics i.e. volatility, volumes, open interest plus the US Dollar Index vs the Euro & Copper vs Oil. The concept behind the chart is to see the effects of past events & therefore to see events coming months & weeks ahead."

It's divided into two different charts.  The first is the "Gold Events Calendar 2013" and the second is titled "Gold Events Calendar Menu". If you have any questions, they should be directed to Nick and not to me!

I was picking my way through some commentary that Miles Franklin dropped into my in-box yesterday, and I found this wonderful quote that he ripped from Ted Butler's column on Saturday, and since it's now in the public domain, here it is!

I know that some have questioned how it could be possible for gold to decline so much in price if JPMorgan held a long market corner. The answer is clear, once you remember that prices only fall sharply in order to enable JPMorgan to buy. Near the bottom in gold prices at $1,200, JPMorgan was long 85,000 contracts. On the subsequent $250 rally, JPM sold off and closed out nearly 30,000 contracts of their long gold market corner, booking and realizing $350 million in profits. Now JPMorgan has decided to buy more and has cratered gold prices by more than $100 in order to re-buy as many new gold contracts as they can.

JPMorgan is not concerned that the market may have temporarily gone against their existing gold corner as they continue to buy as many contracts as possible. JPM wouldn't have any problem in meeting margin calls as it is presently structured; because it rests upon unlimited funding. When you look back at this year, it is crystal clear that JPMorgan made $3 billion in buying back big short positions in gold and silver and actually flipping their short corner in COMEX gold to a long corner that they've already milked for a $350 million profit recently, and so far. - Ted Butler, September 14, 2013

I also got a charge out of something that Barry Ritholtz wrote on Sunday afternoon about the fact that Larry Summers had withdrawn his name as a candidate for Fed Chairman, and I thought it was right on the money.  I thank readers "Jim and Elena" for sending it our way.

Here’s what President Barack Obama‘s statement on Lawrence Summers‘s decision to withdraw his name from consideration to be the next chairman of the Federal Reserve would have looked like after 40 milligrams of Sodium thiopental:

“Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve.

Larry was a critical contributor to the radical deregulation that was one of many causes of the worst economic crisis since the Great Depression. It was in no small part because of his lack of expertise, false wisdom, and inept leadership that the economy crashed and burned and even today is still failing to be to back to its full growth potential.

As Treasury Secretary, he helped to pass the Commodity Futures Modernization Act. This turned derivatives into a unique financial instrument with no oversight, reserve requirements, mandated disclosures, or listing minimums. The CFMA all but guaranteed that Derivatives would eventually implode. Summers further contributed to the crisis by Summers by overseeing the repeal of Glass Steagall. With this firebreak between Wall Street and Main Street effectively removed, the financial conflagration of 2008 spread from Wall Street to every corner of the economy.

Further, his terrible advice and lack of insight is in large part the reason we see so little progress being made today — the lack of economic growth, the concentrated bank power, the still dangerous financial system and of course, the sub-par job creation.

I will always blame Larry for the way he damaged my presidency. To anyone who  to seek his guidance and counsel in the future, please don’t make the same naïve errors I did.

"I think is quite a bit more truthful than the nonsense we heard earlier today." - Barry Ritholtz

I have very few stories for you today; but the final edit, as always, is up to you.

¤ The Wrap

Invariably, JPMorgan has bombed the gold and silver market sure enough, but not by selling many thousands of contracts; but by first selling relatively few or pretending to sell many (spoofing) contracts in order to scare and induce others into selling many contracts so that the crooks at JPM can buy. Always, always, always, is it true that JPM and the commercials are net buyers on the big down days; and always is it true that the only reason for the big down days is to allow JPMorgan to buy at distressed prices. JPMorgan is perhaps the most crooked financial institution ever, but you must acknowledge that they are sophisticated crooks. They don’t stick up 7-Elevens; they conduct sophisticated financial fraud against other supposedly sophisticated market participants. - Silver analyst Ted Butler -- 14 September 2013

Because of the enormous volume during the Far East trading session on their Monday, it was obvious [at least to me] that a lot of effort was expended in keeping the precious metal prices under control.  That effort extended into the rest of the trading sessions in both Europe and North America, but at reduced volumes.

As we head into the FOMC meeting, and the "tapering" that may or may not accompany it; we're all interested in seeing how the metals "react" when the "news" is released on Wednesday afternoon.  In the meantime, all we can do is watch and wait.

If we manage to get through the rest of the Tuesday trading session without a major rally, this Friday's Commitment of Traders Report will clearly show the results of the big engineered price decline that we experienced on Thursday of last week.  I'm expecting the data to show another increase in JPMorgan's long-side corner in the Comex gold market, along with a decline in their short-side corner in the silver market.

In Far East trading on their Tuesday, there wasn't much price activity worth noting, but with all the high-frequency trading going on, it's really impossible to tell what's really happening under the hood.  I see that all four precious metals have spiked up a bit at the London open this morning.  However, the same thing happened on Monday, and those gains were wiped out if just an hour or so.  It remains to be seen if that happens again today.  But if I had to bet ten bucks, I'd guess that today's price action may end up looking a lot like yesterday's price action.  Time will tell.

Volumes are already pretty decent now that London has been open about thirty-five minutes, although it isn't as heavy as it was this time on Monday.  Not that it matters, but the dollar index, which had been up a handful of basis points in morning trading in the Far East, is now down about the same amount.

That's all I have for today, which wasn't a lot, and I'll see you here tomorrow.

This is an abbreviated version of Ed Steer's Gold & Silver DailySign-up to have to the complete market review delivered to your email inbox each morning for free.


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