Tuesday, December 3: Today in Gold and Silver

NEW YORK ( TheStreet) -- JPMorgan et al started off the December Christmas season with another bear raid in all four precious metal starting right at the New York open on Sunday evening EST.

In gold, half the day's losses were in by the 10 a.m. EST London p.m. gold fix.  Then the HFT boyz hit the bid stack again, and the sell of continued, with the low tick coming a hair before 3 p.m. in electronic trading.  After that gold traded flat into the close.

The CME recorded the high and low at $1,251.20 and $1,217.10 in the February contract.

Gold closed the Monday trading session at $1,219.30 spot, down $32.80 from Friday's close.  Ted Butler mentioned that the volume was very heavy for a Monday after a U.S. long weekend, and would have been considerably less than the 151,000 [net] contracts posted, if JPMorgan et al hadn't engineered yesterday's price rout.

The silver chart looks similar, so I shall spare you the play-by-play.

The CME recorded the high and low as $20.01 and $19.115 in the March contract.

Silver closed yesterday at $19.205 spot, which was down 73.5 cents from Friday.  Like gold, net volume was very high for a Monday at 53,500 contracts.

And as you already know, "da boyz" didn't spare the other two precious metal, either.  Here are the charts.

The dollar index closed on Friday at 80.64 and then sold off a bit in Far East trading, bottoming out around 80.51 about 20 minutes before the 8 a.m. GMT London open.  Then away the index went to the upside, peaking out at 80.93 before trading more or less sideways into the close.  The index finished at 80.90, which was up 36 basis points from Friday.  Here's the 3-day chart.

All the nice gains the gold stocks put in on Friday got crushed under the heel of the Jamie Dimon-lead bear raid on the gold price, and the HUI finished down big, and below the 200 mark for the first time since way back in the 3rd quarter of 2008, more than five years ago according to Nick Laird's charts.  It closed at 196.91, which was down 5.75% from Friday.

As bad as the gold stocks performed, the silver stocks got hit worse, as Nick Laird's Intraday Silver Sentiment Index got slammed for 6.18%.

The CME's Daily Delivery Report for Day 3 of the December delivery month showed that 658 gold and 80 silver contracts were posted for delivery tomorrow.  The only short/issuer of note in gold was Canada's Bank of Nova Scotia with 609 contracts, and it nearly goes without saying that the only long/stopper worth mentioning was JPMorgan in its in-house [proprietary] trading account, with 620 contracts.

Of the 80 silver contracts issued for delivery, 60 of them were stopped by JPMorgan in both its client and in-house trading account.  The link to yesterday's Issuers and Stoppers Report is here, so you can check out all the details for yourself.

There were no reported changes in GLD yesterday, and as of 9:40 a.m. EST yesterday evening, there were no reported changes in SLV, either.  But based on yesterday's price action, it's a good bet that there will be major withdrawals in both ETFs as the week progresses.

The U.S. Mint did not report any further sales for November, but they did have a small sales report for the first day of December, and that was 239,000 silver eagles.

Over at the Comex-approved depositories on Friday, they reported receiving 31,772 troy ounces of gold, and none was reported shipped out.  The receipt was at the HSBC USA vault, and the link to that activity is here.

It was busier in silver, of course, as 300,938 ounces were reported received, and 501,010 ounces were shipped out.  Virtually all of the in/out activity was at Brink's, Inc.  The link to that action is here.

The Commitment of Traders numbers were very impressive in both gold and silver.

The headline number in silver showed that the Commercial net short position only declined by 1,036 contracts, or 5.18 million ounces.  But Ted Butler said that " Under the hood, it looked even better, as the technical funds added almost 4,000 new gross short contracts and, with it, more future buying power."  The Commercial net short position in silver is now down to 82.14 million ounces, almost back at its lows of July.  And after yesterday's price "action," it's a good bet that we've already beaten that.

Ted also said that JPMorgan didn't lower their short position by much, if anything, during the reporting week, and their short-side corner in the Comex silver futures market still stands at around 11,500 contracts, or 57.5 million ounces.  That amount represents 70% of the entire Commercial net short position.

In gold, the Commercial net short position declined by a chunky 23,279 contracts, or 2.33 million troy ounces.  The Commercial net short position is down to 1.32 million troy ounces, a number I thought I'd never live to see.  And it's a good bet that as of yesterday's Comex close, there is no Commercial short position at all, as they would now be net long the Comex futures market.

Ted pegs JPMorgan's long-side gold corner in the Comex futures at 8 million troy ounces.  Ted also said that, as of the last Tuesday's cut-off, "JPMorgan controlled 24.5% of the entire net open interest in Comex gold futures after spreads are deducted."

There is one more comment about this past week's Commitment of Traders Report, and it's posted as the quote of the day in The Wrap section.

Here are the Intraday Average Gold/Silver Price Movements charts for the month of November courtesy of Nick Laird over at sharelynx.com.  If you add up every minute of every trading day in November and average them all out, these are the charts you get.

As you can see, it's what happens on the Comex that matters as, on average, the engineered price declines begin at the 8:20 a.m. Comex open, and in silver, the downward price pressure ended at the 1:30 p.m. EST Comex close.   And the other thing to note is the sudden downdraft in the silver price at 11 a.m. EST, the moment that London closes for the day.  The same feature exists in gold, but it's not as obvious.

The only real difference in gold's chart is that its low comes at 2:45 p.m. in electronic trading.

There's nothing free market in either of these charts.

It's a Tuesday column, so I have a very decent number of stories for you today and, as always, the final edit is all yours.

¤ The Wrap

I’d peg JPMorgan at 80,000 contracts net long, based upon big net buying in the producer/merchant category of the disaggregated report, which flipped to net long for the first time in my memory.  At 80,000 contracts net long, JPMorgan controlled 24.5% of the entire net open interest in Comex gold futures after spreads are deducted from open interest.

Even more shocking is that JPMorgan holds 51.5% of all long gold commercial contracts on the Comex, the largest precious metals exchange in the world. It is not possible that these market shares do not constitute price manipulation. And as extreme as JPMorgan’s gold market corner is, I still get the sense that the bank is holding back a bit in buying more because its market share is so unprecedented. I’d like to see anyone try to defend it in legitimate free market terms. - Silver analyst Ted Butler: 02 December 2013

There's not too much that I can add to what I said at the top of this column regarding yesterday's price activity, as I'm sure you have the routine down pat by now.  Here are the six-month charts for both gold and silver showing yesterday's hammering by JPMorgan et al.

None of the four precious metals have taken out their lows of late July from a price perspective, but the shares are certainly at new lows.  And as Chris Powell so eloquently put it, the miners would rather go out of business, taking our companies that we own with them, rather than putting up a fight on our behalf.  I never thought that we would be betrayed in such a fashion.

How did it come to this?

Can we go lower in price from here?  I suppose.  It all depends on how much more shorting the technical funds and small traders are prepared to do as "da boyz" engineer prices lower.  But as Ted Butler pointed out to his paying subscribers yesterday, there is a limit, it's just that its both unknown and unknowable.  But we have to be very close.

However, after yesterday's pounding, it's a good bet that we're either at, or below the numbers posted in the June lows.  If we get through today's activity without too much up-side price movement, then we'll have a look at an even more wildly bullish Commitment of Traders Report on Friday, as the cut-off is today at the 1:30 p.m. Comex close.

Not only do we get a COT Report on Friday, we also get the latest Bank Participation Report which strips out the Comex futures positions held by the banks, and for that one day a month JPMorgan stands naked before the world for all but the willfully blind.

The other thing coming down the pipe at 8:30 a.m. EST this Friday is the latest jobs report. Using past history as prologue, it will come as no surprise to anyone if "da boyz" take full advantage of that situation.

And, as always, the question becomes:  What do JPMorgan et al do on the next rally, whenever that moment arrives.  Of course, with the precious metal prices literally miles below their respective 200-day moving averages, except for palladium, the technical funds and small traders on the short side will not be under much pressure to cover, but there could always be a surprise or two in store.

Very little happened from a price perspective in Far East trading on their Tuesday, and the same can be said now that London has been open for about 35 minutes.  Volume is on the lighter side in both metals, and the dollar index is down a hair.

And as I hit the send button on today's efforts at 5:05 a.m. EST, both gold and silver are up a bit from yesterday's New York close.  Volumes are still on the lighter side, and the dollar index, which came within an eyelash of the 81.00 mark shortly before 1 p.m. Hong Kong time on their Tuesday, has rolled over a bit, and is now down 14 basis points.

After yesterday's down-side surprise, nothing will shock me too much when I power up my computer later this morning.  And as the two Intraday Average Gold/Silver Price Movements charts posted further up make abundantly clear, it's what happens from the Comex open going forward that matters the most, with yesterday's price action being an obvious exception to that rule.

So, we wait.

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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