Wednesday, October 16: Today in Gold and Silver

NEW YORK ( TheStreet) -- All was calm in the gold market in Far East trading on their Tuesday, but as I commented at length on in The Wrap yesterday, that all ended just before 9 a.m. BST in London.

At that point the high-frequency traders put in an appearance, and by the time the engineered price decline was done for the day, gold was down over twenty bucks from its Monday close in New York.

The low came at the noon silver fix in London.  From there it chopped higher into the afternoon gold fix, which came at 10 a.m. EDT.  After that, the gold price chopped sideways into the 1:30 p.m. Comex close.

About 30 minutes later, a new rally erupted in electronic trading, and it was obvious from the choppy price action that this rally ran into resistance as well.  The high of the day was set at this point, and then the gold price got sold down about five bucks into the 5:15 p.m. close.

According to the CME, gold's high tick in the December contract was $1,287.70, and the low tick was posted as $1,251.00.

Gold closed the Tuesday session at $1,281.00 spot, which was up $7.70 from Monday's close. Volume, net of October and November, was a very large 214,000 contracts.

The chart for silver was almost identical to gold's chart, except the price was more "volatile," which means that the high-frequency traders kicked the living snot out of the price, which allowed JPMorgan et al to more buy longs and/or cover short positions.

The CME recorded the low and high of the day as $20.495 and $21.525 in the December contract.

Silver closed at $21.30 spot, up three whole cents from Monday's close, after an intraday move of a hair over 5%.  Volume, net of October and November, was a very chunky 65,000 contracts.

Platinum's price moves followed gold and silver's moves closely.  The HFT boys tried to break palladium below the $700 spot price mark, but couldn't.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 80.34, but didn't do much until 9:30 a.m. BST in London when it took off to the upside.  The high of the day [80.68] came two hours later, and the index chopped sideways before heading south at 2 p.m. in New York, about the time that gold and silver began rallying in electronic trading.

But the decline didn't amount to much, as the 'low' of 80.41 came around 4:45 p.m. EDT before rallying a handful of basis points into the close.  The index finished at 80.42, which was up a stunning 8 basis points from Monday's close.

It would take a real stretch of any person's imagination to fit the precious metal price action into what the dollar index was doing yesterday.

The gold stocks traded in a tight range either side of unchanged until about 1:30 p.m. EDT. Then a rally developed in conjunction with the tiny rally in the metal itself in electronic trading, and the HUI managed to finish on its high tick of the day, up a healthy 3.03%.

The trading pattern in the silver stocks was similar, except for the fact that the rally started sooner, and then got sold off a bit during the last hour of trading.  Nick Laird's Intraday Silver Sentiment Index closed up only 1.09%.

The CME Daily Delivery Report was a non-event, as only one gold and six silver contracts were posted for delivery on Thursday.  There's very little October open interest left in either gold or silver, so unless a surprise buyer shows up wanting immediate delivery of huge amount of either metal, the remainder of the delivery month should be very uneventful.  Yesterday's delivery action was certainly a precursor to that.

There were no reported changes in GLD yesterday, but an authorized participant withdrew another big chunk of silver from SLV.  This time it was 1,734,441 troy ounces.  About 7.5 million ounces of silver have been withdrawn from SLV since the beginning of October.

The reason the U.S. Mint didn't have a sales report on Monday was because of the Columbus Day holiday, and they made amends for that yesterday.  They sold 10,000 troy ounces of gold eagles; 5,000 one-ounce 24K gold buffaloes; and 749,500 silver eagles.

The U.S. Mint has already sold 70% more ounce of gold eagles in October than they did in all of September, and gold buffalo sales in October are already equal to all of gold buffalo sales in September.  Silver eagles sales continue to sail along at record high levels.  I sure hope you're getting your share, dear reader.

It was another nothing day for gold over at the Comex-approved depositories on Monday.  They reported receiving 289 troy ounces, and shipped 577 troy ounces out the door.  It was hardly worth their while showing up for work for that amount.  Here's the link if you wish to check it out yourself.

It was a little more active in silver, but one of the slower days as well.  They didn't report receiving any, and shipped 306,089 troy ounces of the stuff out the door for parts unknown.  Here's the link to that action, such as it was.

I have the usual number of stories for a mid-week column, and the final edit is yours.

¤ The Wrap

Why the heck are gold and silver joined at the hip 99% of the time in price at the COMEX? There is no good or legitimate reason. The only possible explanation is hardly legitimate – the HFT computer cowboys and the big gold and silver price manipulator, JPMorgan, are dictating prices down to the millisecond. This identical and simultaneous price behavior between gold and silver is just another manifestation of the absolute and illegitimate price control by the COMEX. And just as this price control dominates short term prices, it also accounts for the long term suppression of prices. Silver prices did not fall below the cost of production because the miners produced too much metal; prices fell below production costs because of price engineering on the COMEX. - Silver analyst Ted Butler: 12 October 2013

There's not much to add to what I've already said at the top of today's column, and in The Wrap in yesterday's column.  As Ted Butler has been saying for years, prices were set lower to trigger technical fund sell stops on their long positions, and JPMorgan et al feasted on them.  They also took the long side of any short trade placed by the Non-commercial and small traders as well.

I haven't the foggiest idea if "Da boyz" are done to the downside or not.  Ted feels that if we're not there, we're very close.  Considering yesterday's huge volume, I would have to agree, but only up to a points, as you can't trust these crooks for a second.  If we are done, then all that matter is what JPMorgan et al do on the next price rally.  That's all that has ever mattered, as they are, and always have been, in total control of the precious metal market to the upside, and the downside.

Yesterday's price action occurred on the cut-off day for this Friday's Commitment of Traders Report, and it's really too bad that we're not going to get one, as it would certainly show the lay of the land after yesterday's engineered price decline, as those volume numbers would be included.

Not much happened in Far East trading on their Wednesday, although the smallish rallies that developed in three of the four precious metals during the Hong Kong session, ran into not-for-profit sellers at the London open.  Gold and silver volumes going into the London open were pretty light.  Gold's volume was a bit under 19,000 contracts, and silver's volume was around 4,500 contracts.  Those numbers have increased sharply during the first hour of trading over there, and it's mostly of the price-controlling HFT variety.  The dollar index isn't doing much of anything.

All we can do is sit here and watch what JPMorgan et al have in story for us as the Wednesday trading day progresses in New York.

And as I hit the send button on today's column at 5:15 a.m. EDT, all four precious metals are now back at, or below, their closing prices in New York on Tuesday.  Volumes are still climbing a bit, but it has obviously required little effort to keep precious metal prices in check so far today.  And if another engineered price decline is in the cards, it hasn't manifested itself at this point.  The dollar index is unchanged.

That's all I have for today, which is plenty, and I'll 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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