Wednesday, December 4: Today in Gold and Silver

NEW YORK ( TheStreet) -- It was a lot quieter on Tuesday as far as price action was concerned, but I'm sure you've already noted gold made a new low for this move down, and as is usually the case, it came at the London p.m. gold fix.  The subsequent rally didn't get far, or wasn't allowed to get far.  From there the gold price traded flat into the close.

The high and low ticks recorded by the CME were $1,225.80 and $1,214.60 in the February contract.

Gold closed at $1,224.30 spot, up and even $5.00 from Monday's close.  Net volume, although not heavy, wasn't exactly light either at 124,000 contracts.

The silver price didn't do much either, and it's a coin toss as to whether the low tick came at 11 a.m. in London, or at the London p.m. gold fix.  Not that it mattered when it happened, I suppose, but it was another new low for this move down.  The tiny rally off the low at the p.m. fix met the same fate at the precise same time as the gold rally did.

The highs and lows, such as they were, were $19.335 and $18.975 in the March contract as posted on the CME's website.

Silver finished the Tuesday trading session at $19.175 spot, down 3 cents from Monday.  Considering the lack of price movement, net volume was pretty chunky at 46,000 contracts.

Platinum had a tiny rally in early morning trading in the Far East that didn't last.  But the next rally attempt that began at the Comex open, lasted until noon before trading sideways into the close.  Palladium finished in the black as well, but platinum was the star of the day.  Here are the charts.

The dollar index closed on Monday afternoon in New York at 80.90.  It rallied to its 80.99 high shortly before 1 p.m. in Far East trading, and then began to decline steadily until it hit its low of 80.51 around 11:45 a.m. in New York.  The index rallied slowly and unsteadily into the close from that low, finishing the Tuesday session at 80.61, down 29 basis points from Monday.

The gold stocks attempted to rally at the start of trading in New York, but quickly fell into negative territory as gold hit its low at the London p.m. fix, which came shortly after 3 p.m. GMT, or 10 a.m. in New York.  The attempted rally off that low got nowhere, and the gold stocks slid some more into the close.  The HUI finished down another 1.55%.  The HUI is already down 7.5% in the first two trading days of December.

The chart pattern for the silver equities looked similar, but Nick Laird's Intraday Silver Sentiment Index only closed down 0.10%.

The CME Daily Delivery Report showed that 328 gold and 126 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  The shocking thing about the gold deliveries was not that the big short/issuer was JPMorgan out of its client account with 300 contracts,  but that the big long/stopper [drum roll, please!] was JPMorgan out of it's in-house [proprietary] trading account with 336 contracts.  How's that for insider trading!!!  You either trick or lie to your clients into going short, and then the company itself scoops up their positions by standing for delivery against them.  You couldn't make this stuff up!!!  The Volcker Rule can't get enacted soon enough for either Ted Butler, or for me.

In silver, the largest short/issuer was Jefferies with 103 contracts.  And it should come as no surprise that JPMorgan was by far the biggest long/stopper with 98 contracts; 84 for its in-house account, and the balance for its client account.  In distant second was Canada's Bank of Nova Scotia with 19 contracts stopped.

The link to yesterday's Issuers and Stoppers Report is here, and it's worth a quick look for obvious reasons.

It was no surprise to find that an authorized participant had made another withdrawal from GLD yesterday.  This time it was 57,881 troy ounces.  There was a withdrawal from SLV as well, but only 145,587 troy ounces.  That's too small an amount for a 'plain vanilla' withdrawal because of price, and also too small to be a fee payment, so I'd guess that the owner of that silver needed it elsewhere.

Over at Switzerland's Zürcher Kantonalbank for the week ending on November 29, they reported smallish declines in both their gold and silver ETFs.  Their gold ETF dropped by 22,122 troy ounces, and their silver ETF fell by 256,081 troy ounces.

The U.S. Mint had another sales report yesterday.  They sold 9,000 troy ounces of gold eagles and 110,500 silver eagles.

Gold movement inside the Comex-approved depositories on Monday is hardly worth writing about, as only 314 troy ounces were reported received, and nothing was shipped out.  Here's the link to that 'activity'.

In silver, nothing was reported received, but 642,141 troy ounces were reported shipped out of HSBC USA's vault on Monday.  The link to that action is here.

I have the usual number of stories for a mid-week column, and I hope you find something of interest in today's selection.

¤ The Wrap

By knowing that gold and silver prices only fall sharply when the commercials are looking to buy, one does not need to know much more. JPMorgan and the other collusive commercials are not rigging prices lower and buying more gold and silver contracts in order to sell at still lower prices. That’s not something you do when you control a market. I can’t tell you the ultimate bottom; but I can tell you JPMorgan and the commercials are not buying to sell those contracts lower still. Even if you guess that prices will fall lower as JPMorgan rigs prices lower in order to buy, there is a terminal point. That point is closer than ever before. - Silver analyst Ted Butler: 02 December 2013

Besides the fact that another new low for this move down in both gold and silver was set, not much else happened during the trading day on Tuesday, and Ted Butler's quote above tells you all you need to know about the who is doing it and why.

Since yesterday's data will be in this Friday's Commitment of Traders Report, and the accompanying Bank Participation Report, we'll get a real good look at how much more the Commercial net short position in both gold and silver have improved during the reporting week that ended at the Comex close on Tuesday.

In the Critical Reads section further up, I posted a ZH story entitled " Top 4 U.S. Banks Holding $217 Trillion in Derivatives".  In my commentary on that piece, I mentioned Table 9 in the latest derivatives report from the Office of the Comptroller of the Currency.  Here's the table in question posted below, and the "click to enlarge" feature is a must here.

Forget the Total Assets and Total Derivatives numbers and just concentrate on the "Gold Maturity" and other "Precious Metals Maturity" numbers on the right.  In gold, JPMorgan and Citigroup hold $90.874 billion dollars in gold derivatives between them, out of a total of $121.328 billion dollars held by all U.S. banks.  I'm prepared to bet serious money that the more than 95% of the remaining $30.454 billion is held by HSBC USA, a U.S. bullion bank that doesn't show up in the "Top 4" shown here, because they are listed by "Total Derivatives", and would be #5 or #6 on the list if it were to include them.

Before the financial crisis rearranged the big derivatives players in this report, HSBC USA was always in the top five banks, and they held major quantities of precious metal derivatives at that time, and I doubt very much that that has changed much since then.

In other "Precious Metals Maturity", JPMorgan and Citi hold $21.941 billion in derivatives between them out of the total of $28.234 billion.  Most of those amounts would be silver derivatives, because platinum and palladium are tiny markets by comparison.  I'd also bet serious money that HSBC USA holds the lion's share of the $6.293 billion dollar balance as well.

You should also note that Goldman Sachs and BofA hold zero derivatives in any precious metal.

Based on these numbers, it's pretty easy to see who runs the show in the precious metals.  It's JPMorgan Chase by a country mile, with Citi and HSBC USA playing supporting rolls; along with [in my opinion] Canada's Scotiabank giving it an "international flavour".

As Ted Butler said in the quote in The Wrap yesterday, JPMorgan Chase holds a bit more than 50% of all the long positions in the Commercial category of the latest Commitment of Traders Report.  That report shows that there are 58 traders holding long positions in the Commercial category in gold, and just one trader, JPMorgan Chase, holds 50+% of those long positions all by itself.

I'm running very late today, and London has been open about an hour and a half at this point, and I see that JPMorgan et al are still at it, as their high-frequency trader set new lows going into the London open this morning.  Volumes for this time of day in both metals are not overly heavy, so one has to wonder just how effective these new lows are.  As Ted Butler said in the quote above: "there is a limit."  And, not that it matters, but the dollar index is up about 11 basis points.

And as I hit the send button at 5:20 a.m. EST, gold is hitting another new low once again, silver is off its low by a bit, and platinum and palladium aren't doing much.  Volumes have changed very little since I wrote the above paragraph about 45 minutes ago, so all this price action, such as it is, is occurring on fumes and vapours from a volume standpoint, so I wouldn't read much into it.  However, the trading day has miles to go, and anything can happen between now and the 5:15 p.m. electronic close in New York this afternoon.

It wouldn't surprise me in the slightest if "da boyz" set another new low at the London p.m. gold fix today.  We're really in terra incognita from hereon in, as JPMorgan et al shake the tree one last time.  To say that everyone is demoralized would be an understatement at this point, but it only matter what happens on the next rally, and based on the pounding the precious metals have taken this year so far, I'd be prepared to be that JPMorgan et al will [initially] be M.I.A. when it does.

I'm off to bed.  See you 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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