Tuesday, October 29: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price did nothing in Far East or morning trading in London on their respective Mondays, but once the London p.m. fix was in at 10 a.m. EDT, the gold price rallied smartly.  But it all came to and end just minutes after London trading ended, as the usual not-for-profit sellers put in an appearance.  By noon in New York the gold price was back to unchanged from Friday's close, and didn't do much after that.

Gold's low was printed at the 8 a.m. GMT London open, and the high was a very few minutes after 11 a.m. in New York.  The CME recorded those two prices as $1,346.10 and $1,361.80 in the December contract.

Gold finished the Monday trading session at $1,353.20 spot, which was up a whole 30 cents from Friday's close.  Volume, which had been pretty light for most of the day, jumped quite a bit as the trading day wore on in New York, so it was obvious that JPMorgan et al had to throw a fair number of contracts at the gold price to keep it from taking off.  Volume, net of October and November, ended up at a pretty decent 130,000 contracts.

Silver didn't do much at all.  It traded mostly in a 25 cent range the entire day.  The high tick [$22.715] in the December contract was printed sometime after 9:30 a.m. GMT in London yesterday morning.

Silver finished the Monday trading day at $22.51 spot, down 8.5 cents from Friday.  Volume, net of October and November, was pretty light at only 28,500 contracts.

Platinum rallied from the open in London until just before 11 a.m. in New York, and then it chopped sideways into the close.  Palladium rallied a bit in New York, but got sold off after 1 p.m. EDT.  Here are the charts.

The dollar index closed on Friday afternoon in New York at 79.21, and then traded sideways until noon in London.  From there it rallied about 15 basis points by 9:30 a.m. EDT, before chopping sideways into the close.  The index closed at 79.34; up 13 basis points from the previous Friday.  Here's the chart from the 6 p.m. start of trading in New York on Sunday evening.

The gold stocks spent the first 30 minutes of the Monday session in the red, before vaulting higher with the gold price at the p.m. fix.  This rally ran out of gas shortly before 11:30 EDT, and at that point, some of the gains disappeared.  But, despite that, the stocks somehow managed to close in the black, as the HUI finished up 1.17%.

The price pattern in silver stocks was about the same, but they couldn't hold their gains.  Nick Laird's Intraday Silver Sentiment Index closed down 0.67%.

The CME's Daily Delivery Report for Monday showed that 19 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The link to that activity is here.

There were no reported changes in GLD yesterday, but a decent chunk of silver was deposited in SLV.  This time it was 1,926,884 troy ounces.  In less than a week there have been 4.34 million ounces of silver deposited in SLV.  However, during the first three weeks of October, 8.52 million ounces were reported withdrawn.  All of this will be accounted for when Joshua Gibbons updates the SLV bar list on his Web site on Thursday.

Since yesterday was a Monday, the U.S. Mint had a sales report.  They sold 2,000 troy ounces of gold eagles; 2,000 one-ounce 24K gold buffaloes; and 506,500 silver eagles.

Over at the Comex-approved depositories on Friday, there was little activity in gold, as only 499 troy ounces were reported shipped out.  The link to that tiny activity is here.

Of course it was much busier in silver, as 600,207 troy ounces were received, and 721,390 troy ounces were shipped out the door.  The link to that action is here.

I noted that the CFTC has issued another Commitment of Traders Report, the second in as many days as they get caught up from the government shut down, this one for the week ending Tuesday, October 8.  During that reporting week, gold surged by about fifty bucks, and silver rallied by about $1.50.  The tech funds and small traders bought longs and sold short positions, which is what caused the rally; and JPMorgan et al as sellers of last resort did the opposite, and capped it before it could get very far.

In silver, the Commercial net short position increased by a chunky 4,621 contracts, or 23.1 million ounces, and in gold the Commercial net short position blew out by 12,288 contracts, or 1.23 million ounces.

It was the same old, same old trading pattern during that reporting week.  Nothing has changed.

Since today is Tuesday, I have a fairly decent number of stories for you, so I hope you can find the time for the ones that interest you.

¤ The Wrap

Of some interest is that the concentrated long position of the four largest Comex silver traders is higher and closer in size to the concentrated short position of the four biggest shorts (obviously different traders) than any time in my memory. I’m not sure what this means, but I am always sensitive to anomalies and changes in Comex silver as it might signal an end to the manipulation. The four big longs in Comex silver hold 29,040 contracts long and the 4 big short traders are short 35,378 contracts. Never have these respective concentrated positions been so evenly matched.

Over the years, the big 4 shorts’ position was anywhere from 2 to 4 times larger than what the 4 big longs held in Comex silver. To see them this evenly matched is a very big change, along the lines of seeing JPMorgan holding an unprecedented long market corner in Comex gold – something way out of the ordinary. It would seem the big 4 longs in silver are in the commercial swap dealers category (with perhaps a managed money long thrown in). One thing that comes to mind is that either someone big may be taking JPMorgan on, or that JPMorgan is the buyer in a different reporting name. Is there anyone remaining who doesn’t assume the worst when JPMorgan is involved? -- Silver analyst Ted Butler:  26 October 2013

With reasonably light volume in gold on Monday, I wouldn't read much into the trading day except for the obvious fact that gold's smallish gain in the hour between the London p.m. gold fix and the London close, got sold down by what I would think would be the "usual suspects".

The comments regarding the Commercial long position in silver by Ted posted above, coupled with the story in The New York Times on Saturday and John Dizard's commentary in the Financial Times on Friday, coupled with the price smash in gold and silver that is ongoing as I write this, have me wondering out loud what might happen with the FOMC meeting that starts today.  I'm already curious as to what the news might be on Wednesday.  All the stars are aligned for a massive move to the upside in gold and silver, and it remains to be seen what happens on Wednesday afternoon when the smoke goes up the chimney.  If the precious metals do take off, will JPMorgan Chase et al be selling longs and/or going short against all comers on that rally?  The answer to that question is all that matters.

As I said about the newest Commitment of Traders Report that showed up on the CFTC's Web site yesterday, it's the same old story.  The technical funds cover shorts and go long, and JPMorgan et al do the opposite.  Will it be different this time?  I don't know, but we'll find out soon enough.

In an e-mail exchange I had with Jim Rickards yesterday, he made this comment: " We'll just have to get used to this method until inflation spirals out of control, takes gold higher and the game is up."  This is pretty exactly what Egon von Greyerz had to say in his commentary in the Critical Reads section as well. So we wait.

While we're waiting, I see that the high-frequency traders put in an appearance shortly before the London open at 8 a.m. GMT, as the U.K. is now back on standard time after being on summer time up until this past weekend.  As I write this paragraph at 4:27 a.m. EDT, gold volumes have exploded, and silver volumes are pretty elevated.  The dollar index isn't doing a thing.  Here are the charts which I saved just minutes before 8 a.m. London time.

Is there more of this to come today, and throughout the FOMC meeting?  Beats me, but nothing should come as surprise to you by now, dear reader.

Today, at the 1:30 p.m. EDT close of Comex trading, is the cut-off for this Friday's COT Report.  Based on the way they're churning them out, what happens today won't be known until next week sometime, if then.  Maybe on November 4.  But that's a lifetime away in these markets, and anything can happen between now and then, and probably will.

And as I hit the send button today's efforts at 5:30 a.m. EDT, all four precious metals are still below yesterday's closes in New York.  Gross volumes are even higher, of course; a bit over 33,000 contracts in gold, and a hair over 9,000 contracts in silver.  The dollar index is now up about 10 basis points.

And as is usually the case, nothing will surprise me when I power up my computer later this morning.

I'm off to bed, 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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