Tuesday, November 5: Today in Gold and Silver

NEW YORK ( TheStreet) -- It was a very quiet trading day in gold, and not much happened until shortly after 11 a.m. in London.  The smallish rally that developed at that point ended at exactly 1 p.m. GMT, which was 20 minutes before the 8:20 a.m. EST Comex open.  From there, gold got sold down a bit going into the 1:30 p.m. Comex close, and then traded sideways from there.

The low and high, such as they were, were recorded by the CME as $1,310.80 and $1,322.40 in the December contract.

Gold closed the Monday session at $1,314.60 spot, down $1.20 from Friday.  Net volume was fumes and vapours at only 71,000 contracts.

Silver got sold down about 20 cents during Morning trading in the Far East, recovered a bit, and then got sold down to its low of the day about 15 minutes before the London open.  Silver also had a bit of a rally between 11 a.m. and 1 p.m in London, making it back to just above the unchanged mark, and just under the $22 spot price mark.

The silver price didn't do much until 1 p.m. EST, and at that point a thoughtful seller peeled another 20 cents off the price.  After that, the price chopped sideways into the close.

The CME recorded the low and high ticks at $21.58 and $21.935 in the December contract.  Silver closed yesterday at $21.655 spot, which was down 21 cents from Friday.  Net volume was an anemic 19,500 contracts.

Platinum and palladium chopped around until just before lunch in Zurich, and then both rallied.  Platinum barely closed in positive territory, and palladium had the best gains of the day.  Here are the charts.

The dollar index closed on Friday afternoon in New York at 80.72, and then did very little during the first few hours of trading in the Far East on their Monday morning.  Then shortly before 10 a.m. Hong Kong time, the index spiked up to its high of the day which was 80.90.  The spike only lasted a few minutes, and it was all down hill from that point.  The index closed at 80.57, down 15 basis points from Friday's close.   Here's the three-day chart.

The gold stocks were up 2% during the first 30 minutes of the Monday trading session, before backing off a hair and then chopping sideways until about 2:30 p.m. EST.  Then a very impressive rally developed into the close, as the HUI finished on its absolute high tick, up 2.90%.

I was impressed, and was wondering if someone knows something we don't.

It was almost the same story in the silver equities as well, but they didn't close up as much.  Nick Laird's Intraday Silver Sentiment Index finished up 1.28%.

The CME's Daily Delivery Report for gold and silver was almost a bust, as zero gold and one lonely silver contracts were posted for delivery on Wednesday.  The link to that "action" is here.

There were no reported changes in GLD yesterday, but there was a tiny withdrawal from SLV, as 144,158 troy ounces were shipped out.  I would guess that this was a fee payment of some kind.

Since yesterday was Monday, the U.S. Mint had a sales report, but it was certainly on the skinny side.  They sold 5,500 troy ounces of gold eagles; 500 one-ounce 24K gold buffaloes; and zero silver eagles.  That's the first Monday that I can ever remember the mint not showing a decent number of silver eagles sales.  Maybe they'll make up for it as the week progresses.

There wasn't much activity in gold on Friday over at the Comex-approved depositories, as only 1,607 troy ounces were reported received, and nothing shipped out.  The link to that activity is here.

Just about the same can be said for Comex silver stocks, as nothing was reported received, and a smallish 155,292 troy ounces were reported shipped out.  The link to that action is here.

I was half expecting another Commitment of Traders Report yesterday afternoon, but there wasn't one posted, so it will be out either today or Wednesday I would think.  I was actually very happy that there wasn't one, as I'm sick of writing about them, as we've had four in six business day prior to yesterday.  This one, when it finally does put in an appearance, will be for the reporting week ending October 29, so the data in that will be a week out of date.  The CFTC will be caught up entirely with their report on Friday, which will be for positions held at the 1:30 p.m. EST close of Comex trading today.

Below are two charts that Nick Laird sent me out of the blue yesterday evening.  They are the intraday average prices for both gold and silver for the month just past.  The data in the charts is simplicity itself.  They are the 1-minute price ticks for every day averaged out over the whole month for each metal.  What it shows is that prices were flat in October in both metals, and it also shows the the times of day of the major price inflection points for each metal.

In gold, any rally in Far East trading came to an end at exactly 3 p.m. Hong Kong time, which was an hour before the London open.  The gold price got sold down until 15 minutes before the London open, and then got hit again right at the 8 a.m. GMT London open.  Then there's the low into the morning gold fix, and the subsequent rally off that low gets killed 15 minutes after the Comex open, and the New York low is in by 9 a.m. right on the button.  Then there are the inflection points at the London close [11 a.m. in New York] and the 1:30 p.m. Comex close, followed by the Hong Kong low at at 8:30 a.m. local time.  This was the rhythm of the gold market in October once the daily "fluff" is averaged out.

Silver was the same, but different.  In October, the Far East high tick came, on average, shortly before 3 p.m. in Hong Kong, then after getting sold down, rallies again into the 8 a.m. London open starting about 15 minutes before that [exactly like it did yesterday in Hong Kong trading just before the London open].  From there it get sold off into the London a.m. gold fix.  The low of the day is now set at 1 p.m. GMT in London, about 20 minutes before the Comex open.  The rally off that low got hit about 20 minutes after Comex trading began and, like gold the New York low was in at 9 a.m. EST.  In silver, the high of the day was at the Comex close, and then it was all down hill into the Hong Kong lunch hour.  Then the cycle repeats.  This was the rhythm of the silver market in October.

Except for the willfully blind, these are charts of the price management scheme in both metals as they were transacted in the month of October.  It changes slightly from month to month, but it's always variations on a theme.

I don't have that many stories for you today, and I hope you can find a few that you like.

¤ The Wrap

More and more, the manipulative and disruptive HFT and computer algorithms seem to be concentrated in Comex gold and silver. The otherwise inexplicable daily price volatility infecting Comex gold and silver would not be tolerated in any other market, especially stocks and bonds. I’ve come to consider HFT in gold and silver as existing solely for purpose of price manipulation.

Claims that HFT enhances liquidity are nonsensical. True liquidity involves positions being transacted with the least amount of price change and volatility; HFT in gold and silver is designed to cause maximum price change first to then force position change. Gold and silver prices, even though they are severely depressed from the highs are more volatile and counterintuitive now on a daily basis than ever before. And the only reason for the depressed prices, high volatility and the counterintuitive nature is HFT. If someone wanted to create a more disruptive (to real producers, consumers and investors) market environment than HFT, it would be impossible. - Silver analyst Ted Butler, 02 November 2013

Except for the obvious price cap put on both silver and gold at 1 p.m. GMT in London, which was 8 a.m. in New York, I wouldn't read much into yesterday's price action.  Volumes were extremely light, and anyone with an agenda could push prices around to suit themselves, which they obviously did.  But you have to wonder why they make themselves so conspicuous when they're doing it.

Today, at the close of Comex trading, is the cut-off for this Friday's Commitment of Traders Report.  When that one is posted on the CFTC's Web site at 3:30 p.m. EST, then we'll be up to date.  But as I mentioned further up in this column, we're still once COT short of a full load, so we'll see if we get it today or tomorrow.

We're still below the 50-day moving averages in both gold and silver, and I'm not sure if there's more downside price pressure to come or not.  Only the HFT boyz know that for sure, and they're not going to tell us in advance.  As Ted said in the quote above, they're only there to influence prices to the downside, and you certainly know when they show up.  Of course with prices this low, the law of diminishing returns sets in rather quickly, as the technical funds and small traders don't have that many long positions left to dump, and there's a limit to how short they're prepared to go when prices are this far below their respective 50- and 200-day moving averages.  Here are the six-month charts for both.

There wasn't much price activity in Far East trading on their Tuesday, but there was a little HFT selling pressure going into the London open.  Volumes at the London open were 10,000 contracts in gold and about 3,700 in silver, which are microscopic.  But, in the hour that London has been open as I write this paragraph, these volumes have doubled in gold, and are up about 50% in silver, and it's all of the HFT variety as I'm sure you've already figured out on your own.  The dollar index is up a handful of basis points.

And as I hit the send button on today's efforts at 5:15 a.m. EST, the precious metal prices aren't doing much after their initial sell-offs going into the London open.  Prices are all down from yesterday's close in New York, and would obviously be higher if the HFT guys hadn't shown up when they did.  Volumes have really died down, and has changed little in the last hour or so.  Gold volume is a bit more than double, and silver's volume is up about 60% from the open.   The dollar index is comatose.

I haven't the foggiest how prices will be allowed to perform today in New York, but once we get past the noon London silver fix, we should find out in pretty short order.

I'm done for the day, 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.


More from Gold

Gold Prices Look 'Rich' at Current Levels - Here's What Could Change That

Gold Prices Look 'Rich' at Current Levels - Here's What Could Change That

Watch This If You're Wondering How Much Gold to Have and When to Sell

Watch This If You're Wondering How Much Gold to Have and When to Sell

How Can Gold Continue This Upward Momentum?

How Can Gold Continue This Upward Momentum?

The Outlook for Gold Prices Looks Awful Even With 10-Year Yields Above 3%

The Outlook for Gold Prices Looks Awful Even With 10-Year Yields Above 3%

Gold Owes Everything to Investor Interest

Gold Owes Everything to Investor Interest