Wednesday, November 6: Today in Gold and Silver

NEW YORK ( TheStreet) -- It was another very low volume day in gold on Tuesday, and except for the obvious price shenanigans that started at 1 p.m. GMT in London [8 a.m. in New York] and ended shortly after the London p.m. gold fix, I wouldn't read much into yesterday's price action.

The CME reported the high and low as $1,320.60 and $1,305.20 for December.

Gold closed in New York on Tuesday at $1,311.90 spot, which was down $2.70 from Monday.  Net volume, although a tad higher than Monday's, was only 79,000 contracts.

Here's the New York Spot Gold [Bid] chart.  It shows the high tick, which came a minute or so after 8 a.m. in New York, and also the low after the London p.m. gold fix.

Silver "traded" within a very tight price range everywhere on Planet Earth yesterday, but the HFT boys spiked the price to a new low tick for this move down about 30 minutes before the London open.  The subsequent recovery didn't amount to much.   The highs and lows aren't worth mentioning.

Silver closed at $21.71 spot, up 5.5 cents from Monday.  Like gold, silver volume was a bit higher on Tuesday than it was on Monday.  Yesterday's net volume was 22,000 contracts, which was very light.

Platinum rallied a bit in Far East trading on their Tuesday, but also ran into the HFT crowd going into the London open.  Platinum rallied right at the London open and manged to close in positive territory by a few dollars.  Palladium didn't do much until the 9:30 a.m. EST open of the equity markets in New York, and shortly before lunch the price spiked, but it took the "da boyz" less than an hour to get it back under control, and it closed flat.  Here are the charts.

The dollar index didn't do much yesterday.  It opened on Tuesday morning in Tokyo at 80.57, and by the London open it was higher by a whole 10 basis points.  An hour later it was down by 15 basis point to its 80.52 low of the day.  It's high [80.78] came at 3 p.m. GMT, which was 10 a.m. in New York, the time of the London p.m. gold fix.  After the "fix" was in, the index shed a handful of basis points and closed the trading day at 80.68, up 11 basis points from Monday's close.

The gold stocks gapped down about a percent at the open, and never came close to unchanged during the entire New York trading session, but the gold equities managed to finish well of their lows.  The HUI closed down 1.34%, giving back almost half of Monday's gain.

Nick Laird's Intraday Silver Sentiment Index looks the same as the HUI chart, and the silver stocks closed down 0.80%.

The CME's Daily Delivery Report for Tuesday was another yawner, as only one lonely gold contract was posted for delivery on Thursday.

There were no reported changes in GLD yesterday, and as of 9:52 p.m. EST yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had another sales report yesterday.  They sold 500,000 silver eagles, and that was all.

There was virtually no in/out action in gold and the Comex-approved depositories on Monday.  They received nothing, and 96 ounces was shipped out of Brink's, Inc.

Of course it was a lot busier in silver, as 890,762 troy ounces were shipped in, and a smallish 51,436 troy ounces were shipped out the door.  The link to that activity is here.

There was no Commitment of Traders Report posted on the CFTC's Web site yesterday.  Maybe today.

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

¤ The Wrap

It is not possible for a single trading entity to hold fully one quarter of any large regulated futures market and for that not to constitute an obvious market corner and manipulation. Please remember, U.S. regulated futures markets are supposed to be open and diverse marts with many hundreds and thousands of participants. It is the wide diversity of many participants meeting in an openly competitive environment that underscores the purpose of futures trading.

In essence, and simply put, the whole thrust of U.S. commodity law is to prevent any one entity from holding more than 3% to 5% of any large futures market. This is what the CFTC staff proposal for position limits advanced. Yet JPMorgan held 25% of the Comex gold futures market on Oct 15. And if anyone suspects that the bank was hedging for clients, please be aware that roughly a year ago, JPMorgan held more than 20% of the Comex gold market on the short side. It is not possible for JPMorgan (alone) to have clients that needed to short hedge that much a year ago and to buy hedge that much today. - Silver analyst Ted Butler:  02 November 2013

It was just another day off the calendar on Tuesday, as nothing much happened in the precious metals, with the exception of the obvious intervention in gold at 1 p.m. GMT in London, which was 8 a.m. in New York.  As I said in this space yesterday, the markets are easy for any entity to move around when volumes are basically fumes and vapours like they were yesterday, and on Monday.

As we sit here twiddling our thumbs waiting for JPMorgan et al to get this current down-move in all four precious metals over and done with, there are a couple of other things that I've been watching for the last little while.  One is the dollar index, and the other is crude oil.

I've been following the antics within the crude oil market ever since Ted mentioned the fact that the Commercial traders [read JPMorgan et al] were skinning the technical fund and small trader longs [for fun and profit] just like they're doing in silver and gold.  Here's the three-year WTIC chart.

As you can see, the overbought condition in WTIC which Ted pointed out over a month ago, has now turned into an oversold situation.  And using the past as prologue on this chart, it's easy to see that this sell-off in crude oil has pretty much run its course, and a reversal is imminent.

In some ways, the same can be said for the dollar index as well, except in reverse.  Here's the three-year chart for that.

As I pointed out in this column a few weeks back, there was some entity with very deep pockets showing up to prevent the dollar index from crashing through the 79.00 level for three days in a row [and almost exactly 24 hours apart] during the thinly-traded afternoon market in the Far East, and that has resulted in a rally back to its 50-day moving average, which is where we're situated right now.

From a technical point of view, it's easy to see that if the dollar index 'failed' at the 50-day moving average, and then broke below the 79.00 mark, there's nothing to stop it from falling all the way down to the 73 to 75 mark in very short order.

But as you may also notice from the chart, the dollar index has been "saved" from that fate many times during the past 18 months.  Will that someone show up to catch a falling knife one more time if it happens again?  Beats me.

The result of a rapidly falling dollar coupled with an equally rapid rise in crude oil prices is a recipe for a major up-move in precious metal prices.  Whether or not it happens is still unknown, but the stars are all aligned for just such an event if the powers that be wish it.  And don't forget the new position limits structure discussed by Gary Gensler and Bart Chilton, as it may play into the mix as well.

Remember, there are no markets anymore, only interventions.

I note now that I've checked back on the precious metals at 4:10 a.m. EST, there have been some spikes in the prices of all four that began about 30 minutes into the London trading day.  Up until the London open, volumes had been very light but, for a change, although volumes have increased, they haven't increased by much.  Gold volume is about "average," and silver volume is still pretty light, so the possibility exists that there is a fair amount of short covering going on at the moment.

Here are the charts as of the above-mentioned time.

Since yesterday was the cut-off for this Friday's Commitment of Traders Report, whatever price action occurs today won't show up until the COT Report on November 15.

And as I hit the send button on today's column at 5:20 a.m. EST, I note that the rallies in all four precious metals weren't allowed to get far, and silver is safely back under the $22 spot price mark once again.  Volumes are up a bit since I last reported, but not by a lot; about average for gold for this time of day, and well below average for silver.  The dollar index, which had shed about 20 basis points between 10 a.m. and 12:30 p.m. in Hong Kong trading, dropped a bit more during the early going in London, and is down 16 basis points at the moment.  These price spikes in the precious metals obviously had nothing to do with the moves in the currency market.

That's all I have for today, and if the action in early London trading is any indication, the Comex trading session could prove interesting.  I'll also be checking on the price action at 1 p.m. GMT, which is 8 a.m. in New York, as JPMorgan et al showed up at that time on both Monday and Tuesday.  Will they put in an appearance at that time again today? We'll find out soon enough.

See you 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.