The precious metal stocks survived yesterday's HFT price take-downs. There were no reported changes in either GLD or SLV, and no sales report from the U.S. Mint. SLV's short position up 5.84%, and GLD's short position declined by 12.79%. Comex silver stocks declined by 900,000 troy ounces.
NEW YORK ( TheStreet) -- As you're already aware, the gold price didn't do much during the Far East trading session on their Wednesday, and volumes weren't overly heavy. This pattern continued in London until shortly after 9 a.m. BST. At that point, gold spiked up a bit, and you can tell from chart that it ran into "resistance." Then at 10 a.m. BST right on the button, the high-frequency traders arrived, and they worked the gold price lower until the London p.m. gold fix, which occurred minutes after 10 a.m. EDT in New York. The subsequent rally developed some real legs around the 1:30 p.m. Comex close, and gold was up twelve bucks in no time until the usual seller of last resort put in an appearance, and from 2:30 p.m. EDT onwards, the gold price chopped sideways into the close of electronic trading. According to the CME Group, December's high and low price ticks were $1,294.60 and $1,323.30. Gold closed at $1,307.00 spot, down $11.90 on the day. Net volume, mostly of the HFT variety, was pretty decent at 164,000 contracts. The silver price action was very similar to gold's, so I shan't dwell on it much. The low of the day came at 10:15 a.m. in New York, and the rally that began moments before the Comex close also met the same fate as gold's rally that occurred at that point. The CME's high and low ticks in silver for the December contract were $22.41 and $21.75, which was a 3% intraday move, a nearly daily occurrence in this metal. Silver closed at $21.89 spot, down 40 cents from Tuesday's close, and comfortably back under the $22 spot price once again. Net volume was pretty decent as well, around 41,500 contracts. It was the same chart pattern for platinum, and the palladium price had a mini version of it as well. Here are the charts. The dollar index closed at 79.99 on Tuesday afternoon in New York, fell to its low tick [79.88] in very early Far East trading yesterday. From there, it rallied up until 9:30 a.m. EDT, before selling off a hair into the close. The index finished the Wednesday session at 80.37, up 38 basis points. It's a real stretch to associate yesterday's price action in the precious metals to what happen in the currencies, as the dollar index rally was pretty long in the tooth before gold and silver "reacted" to that fact. The gold stocks gapped down a bit at the open, before selling off to their lows of the day at the London p.m. gold fix. The rally after that was rather lackluster, but the gold equities popped into positive territory on the back of gold's rally that began shortly after the Comex close. The HUI almost closed in positive territory, but finished down 0.01%. The sell off into the silver's 10:15 a.m. EDT low tick was far more severe, as the silver stocks were down about 3.5% at their lows. The stocks popped into positive territory very briefly, but couldn't hold those gains, and Nick Laird's Intraday Silver Sentiment Index closed down 0.87%. I'm not sure whether it was the good guys or bad guys buying the shares yesterday. The CME's Daily Delivery Report showed that 21 gold and 2 silver contracts were posted for delivery on Friday within the Comex-approved depositories. The link to yesterday's Issuers and Stoppers Report is here. There were no reported changes in GLD yesterday, and as of 9:35 p.m. EDT last evening, there were no reported changes in SLV, either. The folks over at the shortsqueeze.com updated their Web site with the data for the last couple of weeks of August. In GLD, the short position declined from 2.53 million ounces down to 2.20 million ounces, a drop of 12.79% from the mid-August report. The short position in GLD declined by 30% over the entire month. But the short report for silver was the big surprise. It actually increased by 5.84%. Based on the price action since the middle of August, along with the fact that 4.1 million ounces of silver were deposited during the reporting period, I was expecting a rather decent decline in SLV's short position, and it didn't happen. I don't know what to make of it. I'm sure that Ted Butler will have something to say about it when I talk to him tomorrow, and I'll borrow what I can from the conversation and stick it in Friday's column. There was no sales report from the U.S. Mint. Over at the Comex-approved depositories on Tuesday, they reported that 31,953 troy ounces of gold were deposited, all of it into HSBC USA. The link to that activity is here. As per usual, there was big activity in silver. A smallish 15,070 troy ounces were deposited, but a very chunky 911,616 troy ounces were shipped out of the Bank of Nova Scotia's vault for parts unknown. The link to that action is here. From feast to famine, as I don't have very many stories for you today, and I hope you like some of the articles in the few presented below.
¤ The Wrap
Fine art is a good investment these days because it behaves the way gold would behave if central banks didn't intervene. - Jim Rickards, 07 October 2013, on CBC TV It was just another day off the calendar where the high-frequency traders were having their way with the precious metal market, as most of yesterday's volume was of that variety once again. As silver analyst Ted Butler said in his mid-week commentary to his paying subscribers yesterday: I’ve come to view the HFT-dominated pricing control on the COMEX as a form of video gaming by a select number of firms (led by JPMorgan) which possess the computer capability to wage a private financial battle against one another and other market participants where those on the outside are excluded (but affected). It is this daily and around the clock electronic battle on the COMEX which sets the price of silver. For instance, prices jumped by 60 cents (2.8%) on Monday, only to fall 60 cents early [on Wednesday] on no news anyone could point to. This is the typical pattern, although it is preposterous and absurd. The price of a world commodity should not be set by private electronic gamesmanship. It's unfortunate that we are without Commitment of Traders Reports until the situation within the U.S. government gets resolved. But what happened yesterday wouldn't have been in this Friday's report anyhow, and there's no guarantee that there will be a report next Friday, either. As I noted further up in today's missive, silver is now safely back below the $22 spot price mark, and it will be interesting to see if it is kept there. I was hoping the break above silver's 50-day moving average on Monday was a sign of better things to come, but it's obvious at this point that JPMorgan et al had other ideas. Here's the 3-month chart. I have no idea when this situation will change in any of the precious metals. I suppose that the metals could get taken to the cleaners from here, but any down-side price smash wouldn't last long, as the recovery times off these spike lows are now measured in hours, and not in days, weeks, or even months like they used to be ten years ago. The break to the upside will come only when JPMorgan et al are told to cease and desist by their "clients", as they can play this game until the laws of supply and demand take over, and in silver that can't be too far off. Needless to say, our mining companies won't say a word in protest, and too see how badly the senior mining company executives have sold out to the powers that be, all one has to do is listen to the drivel coming out of the mouth of Pierre Lassonde in that mineweb.com interview posted above, and here. With the notable exception of First Majestic Silver Corp., every other silver mining company in Nick Laird's Intraday Silver Sentiment Index sold out to the dark side of The Force ages ago. As has been the case for a while now, there wasn't must price activity in any of the precious metals during the Far East trading session on their Thursday, and the same can be said for London, which has been open about 25 minutes as I write this paragraph. Volumes are pretty light and the dollar index is up about 12 basis points. And as I send off today's column to Stowe, Vermont, I see that gold is now down ten bucks and silver is off about 20 cents. Gold volume is nothing out of the ordinary, whatever that means these days, and silver's volume is on the lighter side. The dollar index is still up 12 basis points. The only thing remains to be seen is if the high-frequency traders show up again today to take prices down, or stop any rally in its tracks as sellers of last resort. That's all I have for today, which wasn't a lot, and I'll see you here on Friday, which will be Saturday west of the International Date Line.