Saturday, September 28: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price did precisely nothing for most of the day in Far East trading on their Friday, and the tiny rally that did develop heading into the London open got turned aside easily.  The low tick of the day came at the 10:30 a.m. BST morning gold fix, andand from there it rallied back to unchanged by the noon London silver fix.

Then away it went to the upside, and the price was up about twenty-three bucks by the time Comex trading began at 8:20 a.m. in New York.  The usual seller of last resort put in an appearance at that point, and drove the price down to its N.Y. low by the time the equity markets opened at 9:30 a.m. EDT.  The subsequent rally got cut off at the knees after the London p.m. gold "fix" was in, and except for a brief rally in the electronic market in mid-afternoon, the gold price didn't do much for the remainder of the New York trading session.

Gold closed at $1,336.20 spot, up $12.40 from Thursday.  Net volume wasn't overly heavy at 140,000 contracts.

Silver got sold down a bit in morning trading in Hong Kong, and then traded flat in a very choppy manner until its spike low of the day, which came shortly after 10 a.m. in London.  After that it was up, up, and away with hardly a pause until the Comex open.  Then the not-for-profit seller[s] showed up, and the rest as they say, is history.  The silver price was back below $22 spot in no time flat once again.

The low in London was around $21.40 spot, and Kitco recorded the high at the Comex open as $22.25 spot, which is an intraday move of 85 cents, over 3 percent.

Silver finished the New York session at $21.78 spot, up 5.5 cents from Thursday, which was 47 cents off its high.  Net volume was pretty light at around 36,000 contracts.

The platinum price appeared to have been held in check as well.  Every little rally, no matter how tiny, just got nowhere.  Palladium's price fireworks came shortly after the London p.m. gold fix at 10 a.m. in New York, and it was fairly obvious that a not-for-profit seller was lurking about to knock the price back going into the Comex close.  Here are the charts, and you can decide for yourself.

The dollar index closed at 80.53 in New York on Thursday afternoon, and hit its "high" of the Friday session [80.59] during the first couple of hours of trading in the Far East.  It wandered lower from there up until 11 a.m. in London, and from there the down trend accelerated, hitting its low tick of 80.12 at the London p.m. gold fix.

At that moment there was obviously someone standing by to catch the proverbial falling knife before the index collapsed below the 80.00 mark, the second time that has happened in the last ten days.  The time before was on September 18 on the FOMC news.  The index closed at 80.26, which was down 27 basis points from Thursday.

The gold stocks opened on their highs and began to slide immediately, with the low coming shortly after 1 p.m. EDT. From there the stocks moved back into positive territory on the smallish gold price rally in electronic trading I spoke of earlier, but then rolled over immediately once the price got knocked back down again.  The HUI finished down 0.18%.

The silver stocks suffered precisely the same fate, and Nick Laird's Intraday Silver Sentiment Index closed down 0.24%.

I forgot all about the fact that Monday is First Day Notice for the October delivery month, so when I checked the CME's website, I got a big surprise.  There were 2,008 gold; 1,000 platinum and 3 silver contracts posted for delivery on Tuesday.

In gold, the surprise short/issuer was JPMorgan Chase with 1,000 contracts out of its client account and 962 contracts from its in-house [proprietary] trading account.  Not surprisingly, HSBC USA was the largest long/stopper with 1,478 contracts.  Barclays and JPM [for its client account] were a distant second and third with 192 and 172 contracts respectively.  There were about a dozen long/stoppers in total, but as is always the case, it's "da boyz" that are involved with the lion's share of the deliveries.

The only short/issuer in platinum was Barclays out of their client account; and they, along with JPM and HSBC USA were the biggest long/stoppers, and both for their proprietary trading accounts.

The link to yesterday's Issuers and Stoppers Report is here, and it's definitely worth a minute of your time.

I was surprised to see that an authorized participant made a withdrawal from GLD yesterday.  This time it was 115,854 troy ounces.  There were no reported changes in SLV.

There was a tiny sales "report" from the U.S. Mint yesterday.  They sold another 1,000 one-ounce 24K gold buffaloes.  And they also revised their silver eagles sales downwards by about 35,000 or so.  The revised total silver eagle sales for September now stand at 2,525,000.

Based on the sales figures for September so far; 13,000 ounces of gold eagles, and 10,000 one-ounce 24K gold buffaloes; the silver/gold ratio is sitting at 109 to 1.  Since the last day of the reporting month falls on Monday, the mint should have one more sales report for September, and I'll report on that in my Tuesday column.

There were no reported in/out movements for gold within the Comex-approved depositories on Thursday.  But, like Wednesday, it was a totally different story in silver, as 800,380 troy ounces were reported received by Brink's, Inc., and 32,147 troy ounces were shipped out.  The link to that action is here.

The Commitment of Traders Report for positions held at the close of trading on Tuesday showed a decrease in the Commercial net short position in silver, along with a slight increase in gold's.

In silver, the Commercial net short position declined by 13.2 million troy ounces, and is down to 98.1 million troy ounces.  Ted Butlers says that it was mostly the small commercials [the raptors]  increasing their long positions that accounted for the change.  The Big 4 shorts [read JPMorgan] covered about 500 contracts, and Ted says that puts JPM's short position just under the 70 million troy ounce mark.  That's amazing when you think about it.  JPM is short 70 million ounces of the total Commercial net short position of 98.1 million ounces.   The four biggest short holders in silver are short 182 million troy ounces between them, with JPM holding almost half of that amount all by itself.  In percentage terms, Ted says that JPMorgan's short position is now down to 14.9% of the entire futures market in silver on a net basis.

But as you found out on Wednesday, the CFTC says that this situation doesn't exist, even though their own report shows that to be the case, and it's the same, except worse in gold.

In gold, the Commercial net short position increased by 619,000 troy ounces, which now sits at 7.15 million ounces.  Ted says that the Big 4 traders on the short side increased their short position by 430,000 ounces.  Ted puts JPMorgan's long position in gold at 6.4 million ounces, which represents 20.3% of the entire futures market on a net basis.

Here's a chart from Nick that I haven't posted in many months.  It's the "Days of World Production to Cover Short Positions" of all the commodities traded on the Comex.  The only thing that has changed much is that the days of world production of palladium has now overtaken silver in the #1 position for the first time.  Of the sixteen physical commodities show in this chart, the four precious metals hold four of the five top spots, andand it's been that way for years.  Only recently has gold fallen below cocoa, and that's because JPMorgan is no longer short gold.  They are long the gold market now.

I got an e-mail last night that was rather interesting.  It's an open letter and petition to the CFTC's Bart Chilton to resign and become a whistleblower.  There's no question that Bart knows where all the bodies are buried, and could read us chapter and verse on what's really going on in the precious metal markets.  I certainly got the impression that he wanted to tell all on this, but Gensler told him to button it.  You can read all about it here, and signing it won't do any harm, as the World Gold Council, The Silver Institute and the mining companies aren't interested in helping.  Now it's up to us to help ourselves.  How did it come to this?

Despite the fact that it's a Saturday column, I don't have all that many stories for you today, and a few of them I've been saving all week.

¤ The Wrap

This looks like stonewalling of some kind.  But it’s like the State Department investigating Benghazi.  It’s a review by the CFTC that, on the surface, doesn’t have any credibility.  I would expect that an outside inspection of the same data the CFTC had access to, would show something very different. - John Hathaway commenting on the CFTC's findings in the silver market on Wednesday

Today's pop "blast from the past" needs no introduction, but this is the first time I've heard it played with a full orchestra. Former Supertramp lead singer and co-founder Roger Hodgson wrote and composed this song by himself. He has talked about how and when he composed it, and he always saw it being played with an orchestra. So, seeing it with an orchestra, we are seeing it the way the composer originally intended it. This epic is on the album " Even in the Quietest Moments."  The link to the video is here.

Today's classical "blast from the past" dates from the "Roaring 20s".  Joseph-Maurice Ravel was a French composer known especially for his melodies, orchestral and instrumental textures, and effects. Along with Claude Debussy, he was one of the most prominent figures associated with Impressionist music. Much of his piano music, chamber music, vocal music and orchestral music has entered the standard concert repertoire. Ravel is known best for his orchestral work Boléro, which he considered trivial, and once described as " a piece for orchestra that contained no music" and also predicted " that most orchestras would refuse to play it."

Of course the public the world over has decided otherwise, as the composition was a sensational success when it was premiered at the Paris Opéra on November 22, 1928.  You haven't lived until you heard this live and in concert with a large orchestra.  Here is the Wiener Philharmoniker doing the honours under the baton of maestro Gustavo Dudamel.  Put it on full screen, and turn the sound way up.  The link is here.

You don't need me to paint you another picture of what happened in gold and silver yesterday, as the charts at the top of this column tell all.

Here's the 1-month silver chart, and you can see, that except for breakout on the FOMC news last week, silver has been contained below the $22 spot price mark all this week, and most of the prior week.  How long "da boyz" intend on keeping this up is unknown, but it can't last forever, as there's only so much downside blood left in this particular stone.

I was happy to see John Hathaway's comment above as it appeared on the King World News interview posted further up in today's column.  John is about as conservative main-stream as you're going to get, and I was frankly quite surprised to see him speak so forcefully/truthfully on this issue.  We need more like him.  Maybe the miners will get the message, but the subject was never broached at the Denver gold show, at least not in public.  But there's no doubt that every mining executive out there knows what the true situation is.  We need one of them to come in out of the cold like Hathaway just did, andand Eric Sprott and John Embry before him.

As John Kenneth Galbraith so eloquently put it, " All successful revolutions are the kicking in of a rotten door. The violence of revolutions is the violence of men who charge into a vacuum," and this price management scheme certainly qualifies.  Maybe we should put out a "Want Ad" for men of principle in the precious metal mining industry.  But from what I've seen so far, none would qualify.

That's all I have for today, and for the week.  A new month is now in front of us, and hopefully it will prove to more positive than the one that JPMorgan et al has just provided for us.

See you on Tuesday.

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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