Tuesday, October 15: Today in Gold and Silver

NEW YORK ( TheStreet) -- Gold did nothing during the first half of the Monday trading session in the Far East.  But starting at 1 p.m. Hong Kong time, a rally began that ended with a spike up at precisely 1 p.m. BST in London, which was 20 minutes before the 8:20 a.m. EDT Comex open.

And that, as they say, was that.

A not-for-profit seller disguised as high-frequency trader showed up at that point, and by about 4:30 p.m.  EDT, all the gains of the day had vanished, and the gold price barely rallied off its New York low by the 5:15 p.m. electronic close.

The CME recorded the high and low ticks as $1,291.60 and $1,268.40.  Both prices were for the December contract.

Gold closed the Monday session at $1,273.30 spot, up a thin dime from Friday's close.  Volume, net of October and November, was only 112,000 contracts, which was pretty light.

Silver, JPMorgan's bête noire, got taken down pretty good during Far East trading on their Monday, and was down about 30 cents by the time the 1 p.m. Hong Kong rally got under way.  You don't need me to paint you a picture from here, as the Kitco silver chart does a superb job of that.

Silver's low and high ticks in the December contract were $21.11 and $21.68 respectively.

Silver closed at $21.27 spot, which was down 7 cents from Friday's close.  Volume, net of October and November, was an anemic 29,000 contracts.

The platinum chart looks similar to the gold and silver chart, with the only real difference was that the seller of last resort didn't show up until 11 a.m. EDT in New York.  Palladium was kept on a very short leash.  Here are the charts.

The dollar index closed at 80.38 on Friday afternoon in New York, and didn't do much until about 45 minutes after London open, then down it went.  A double low at 80.15 in early to mid-morning trading in New York was followed by smallish rally back to virtually unchanged on the day at 80.34.  It was another example where the currency moves, such as they were, played no part in yesterday's precious metal price action.

The gold stocks opened up about a percent and then, not surprisingly, couldn't hold that gain.  The HUI did manage to finish in positive territory, up 0.43%.

The silver shares traded about the same as the gold shares, and Nick's Intraday Silver Sentiment Index closed up 0.89%.

The CME's Daily Delivery Report showed that 39 gold and 18 silver contracts were posted for delivery on Wednesday within the Comex-approved depositories.  JPMorgan was the stopper on most of the silver contracts issued.  The link to yesterday's Issuers and Stoppers Report is here.

Not surprisingly, there was another decline in GLD, as an authorized participant withdrew 59,363 troy ounces of the stuff.  There was another big withdrawal from SLV as well.  This time it was 1,927,232 troy ounces.

Last Friday, SLV reported a withdrawal of 1,927,268 troy ounces, and the prior Monday it was 1,927,424 troy ounces.  To see three large withdrawals within well under 0.001% of each other is quite amazing.  I pointed this out on Saturday when we had two in a row that close.  Now we have three in a row.  But does it mean anything?  Who knows.  Maybe it was just three full trucks of silver on each day, with exactly the same number of bars on each truck, and the bar weights just worked out that way.

Joshua Gibbons, the "Guru of the SLV Bar List" had this report from last week that I forgot to post until today:  " Analysis of the 09 October 2013 SLV bar list, and comparison to the previous week's list: 2,120,572.4 troy ounces were removed (all from Brinks London), no bars were added or had a serial number change.  The bars removed were from: Aurubis AG (0.8M oz.), Solar Applied Materials (0.5M oz.), Russian State Refineries (0.2M oz.), and 11 others.  As of the time that the bar list was produced, it was over allocated by 754.7 oz.  All daily changes for the week are reflected on the bar list."

Much to my surprise, there was no sales report from the U.S. Mint yesterday.

There was almost no movement in Comex gold stocks on Friday.  They reported receiving 780 troy ounces, and shipped out nothing.

As is almost always the case, it was an entirely different story in silver, as 616,919 troy ounces were shipped in, and 134,514 troy ounces were shipped out.  The link to that activity is here.

Being a Tuesday, I have a lot of stories for you today, so I hope you have some time on your hands.

¤ The Wrap

The stupidity of the average man will permit the oligarch, whether economic or political, to hide his real purposes from the scrutiny of his fellows and to withdraw his activities from effective control.  Since it is impossible to count on enough moral goodwill among those who possess irresponsible power to sacrifice it for the good of the whole, it must be destroyed by coercive methods. - Reinhold Niebuhr

Even though volume was pretty light on Monday because of the Columbus Day holiday in the U.S., it was obvious that the powers that be weren't going to allow the precious metal market to get away on them, even if it was only a small rally.  The price spikes in both gold and silver at exactly 1 p.m. BST in London, were met with heavy selling.  Without question, they're riding shotgun on this market 24/7.

When will it change?  I don't know.  Maybe a U.S. debt default will do the trick, and maybe it's this particular event that "da boyz" have been holding prices in check for.  I'm just speculating, of course, but the fact of the matter remains that they can't keep this up forever, and I really don't think that's their intent.  Whatever it is they're waiting for, we'll just have to wait it out as well.

We're below the 50-day moving averages in all four precious metals, and in some cases, well below them.  There can't be that many more speculative longs in the market, and as Ted Butler has mentioned on several occasions, unless they can force the tech funds and small traders back on the short side, price can't go much lower.

But that won't deter JPMorgan et al from continuing to keep up the price pressure, as the did in early Far East trading on their Tuesday morning.

Speaking of Tuesday, today is the cut-off for the next COT report, which would be due out on Friday if the government employees actually got back to work.  And at the moment, the legislation to enable that looks like it's a long way down the road, as does an agreement on the debt ceiling impasse.

As I alluded to two paragraphs ago, all four precious metals came under a bit of price pressure in Far East trading on their Tuesday morning, and that's continuing in early London trading.  Here's the Kitco gold chart as of 4:08 a.m. EDT, which is minutes after 9 a.m. BST, and a bit over an hour after the London open.  The silver chart looks identical.

Volume in gold is about average, and very decent in silver already, with most of the volume in both metals being of the HFT variety, especially silver.  I note that silver got knocked down to $21.91 in the December contract, so I'd guess that some sell stops got hit.  Now we just have to wait for the selling that follows, and like I said on Saturday, when the tech funds sell [or put on short positions] at times like these, its always the Commercial traders that are taking the long side of every trade, or covering their own short positions.

This is what Ted Butler has been going on about for at least a decade now, and I see that Lawrence Williams "borrowed" some of these ideas in the last item posted in today's column.

And as I get ready to hit the send button on today's effort, I see that the high-frequency traders are at it once again, as minutes before 10 a.m. BST, down went the prices once more in all four precious metals.  Here's the Kitco gold chart as of 5:01 a.m. EDT.  The charts of the other three precious metals are pretty much carbon copies of this one.  At one point, silver was down more than 70 cents in the spot month from Monday's New York close.  How's that for free markets, dear reader?

Gold volumes are now way up there at a bit over 48,000 contracts, and almost double what it was when I spoke of them an hour or so ago.  Silver volumes are up over 60%, and now almost at the 15,000 contract mark.  The dollar index is basically flat.

JPMorgan et al are gorging themselves as I fire this column out the door.

The rest of the trading day could prove interesting, and nothing will surprise when I check the charts when I roll out of bed later this morning.

That's all I have for today which, if you're reading a lot of the stories, is more than enough, 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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