Wednesday, April 16: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price drifted quietly lower in Far East trading on their Tuesday until around 2 p.m. Hong Kong time---and it was about then that the HFT boyz showed up, with the final kick in the pants coming at 8:27 a.m. EDT---seven minutes after the New York trading session began.  Gold futures traded was halted, as gold gapped down $12 in an instant, as 4,000 contracts were dumped in seconds.  In less that three minutes it was all over, with the low tick coming a precisely 8:30 a.m.

From there, the price recovered a bit until noon---and then traded pretty flat for the remainder of the day.

The CME Group recorded the high and low price ticks as $1,328.40 and $1,284.40 in the June contract.

Gold finished on Tuesday at $1,302.40 spot, down $24.20 from Monday's close.  Volume, net of April and May, was very heavy at 198,000 contracts.

The silver price traded flat until about 9 a.m. Hong Kong time---and then it, too, came under selling pressure.  There was a tiny rally beginning at the London a.m. gold fix, but that was dealt with in short order---and that's when JPMorgan et al. really went to work.  Like gold, the big selloff began at, or minutes before, the Comex open---and silver was down 40 cents in less than fifteen minutes as the their HFT traders worked their magic.  The low was also at precisely 8:30 a.m. EDT as well.

The subsequent rally worked its way higher in fits and starts until shortly after 4 p.m. in electronic trading---and from there it sold off a bit into the 5:15 p.m. close.

The high and low ticks were recorded at $19.995 and $19.22 in the May contract---and intraday move of almost 4%.

Silver finished the Tuesday session at $19.56 spot, down 40.5 cents from Monday's close.  Net volume was very high at 54,500 contracts.

Platinum and palladium weren't spared by "da boyz" either, although the timing of the engineered price declines varied with each metal, as most of their attention was taken up in silver and gold.  Here are the charts.

The dollar index finished late on Monday afternoon in New York at 79.76---and then chopped and flopped around a bit during the Tuesday session. It got as high as 79.87---but sold off a bit into the close finishing the day almost unchanged at 79.79.

Not surprisingly, the gold stocks gapped down a hair over 3% at the open, rallied a bit---and then headed to their low of the day which came shortly before 11:30 a.m. EDT in New York.  From there, the stock rallied a respectable amount [all things considered] and the HUI closed down only 2.11%.

The silver equities followed a very similar chart pattern---and Nick Laird's Intraday Silver Sentiment Index only closed down 1.79% when all was said and done.

The CME's Daily Delivery Report showed that 97 gold and five silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  Jefferies was the big short/issuer with 86 contracts---and JPMorgan and Canada's Scotiabank stopped 77 contracts combined.  Scotiabank accepted delivery on all five silver contracts as well. The link to yesterday's Issuers and Stoppers Report is here.

Just as a matter of interest, there are still about 700 gold contracts open [net of the above 97 gold contracts just issued for delivery] in the April delivery month at the moment---and it will be interesting to see who the short/issuer is when they finally decide to crawl out from under their rock.

There was a smallish deposit in GLD again yesterday.  This time an authorized participant deposited 19,267 troy ounces.  And as of 9:41 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was another sales report from the U.S. Mint again yesterday.  The 2,500 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---100 platinum eagles---and 282,500 silver eagles.

There were no reported in/out movements in gold over at the Comex-approved depositories on Monday---but it was another busy day in silver, as 743,338 troy ounces were reported received---and 140,350 troy ounces were shipped out.  The link to that action is here.

In this space yesterday I posted the six-month chart for the Ukrainian Hryvnia---their not-quite-eight-year-old national currency.  Nick decided to up the ante and whipped up this chart that shows the entirety of this currency's young life, whose longevity is being threatened at the moment.  It sure makes gold look good.

Here's a two-minute tick chart of the gold price action on the Comex yesterday---a price pattern that JPMorgan et al. have presented to us before on numerous occasions.  The times on the chart are Mountain Daylight Time [BST-7].  I thank reader Brad Robertson for sending it our way.

I have a decent number of stories today---and I hope that there are few in the list below that interest you.

¤ The Wrap

If silver prices rally enough from here in the short run (always a 50-50 proposition), the technical funds can be expected to buy and the raptors can be expected to sell and take profits. Usually the raptors need a rally of a dollar or more to begin to sell. Where does that leave JPMorgan and the other big shorts? Normally, the big commercial shorts sell on rallies, but since they just, effectively, sold on the way down, will they just keep adding silver shorts regardless of price direction? - Silver analyst Ted Butler: 12 April 2014

As the Zero Hedge commentary in the Critical Reads section so succinctly put it, these HFT price smashes were for one purpose only---and that was to get all four precious metal prices as low as possible, and as quickly as possible.  It was not-for-profit selling, pure and simple.  Supply and demand, the world's financial and monetary system, along with the Ukraine/Russia situation mean nothing.  Prices are set by JPMorgan et al. in the Comex futures market irrespective of anything else.  Why a large portion of the gold and silver commentators won't go there is impossible to fathom, but any other explanation they may come up with is pure bulls hit.

We have options and futures expiry coming up next week---and I'm sure that JPMorgan et al. wanted as many of these contracts to finish out of the money as they could.  And as both Ted Butler and I have warned, the Commitment of Traders Report has been configured for a down-side engineered price decline for quite some time---and "da boyz" did not disappoint yesterday.

Here are the six-month charts for both gold and silver showing yesterday's price declines in all their ugliness.

Ted feels that we are pretty much done to the downside in silver.  There may be more price pain to go, but it now becomes a question of how many more long contracts JPMorgan et al. can get the technical funds to puke up---and how many possible short positions they can get these same funds to put on.  And as Ted also said, the raptors [the Commercial traders other than the Big 8] were buying every long contract that came their way yesterday.  One would like to assume that the Big 8 short holders were doing likewise---and covering part of their grotesque short positions---but as Ted pointed out in the quote just above, that hasn't been the case lately.

As for gold, there's still a lot of room to go.  Ted mentioned that the Commercial net short position in gold improved by as much as 20,000 contracts yesterday---and looking at the gold chart, I'd guess that "da boyz" could hit gold for another $50 easily if they choose to do so, as the technical funds still have a very large net long position, despite the pounding they took yesterday.  But can they, or will they, is always the question---and we got part of that answer yesterday.

Yesterday at the close of Comex trading was also the cutoff for this Friday's Commitment of Trader Report---and the question that always arises on big price moves the day of the cutoff is whether or not all of yesterday's price/volume action will be reported in a timely manner.  They weren't two weeks ago when this same set of circumstances occurred---and we won't know for sure until the report comes out at 3:30 p.m. EDT on Friday.

And as I mentioned in The Wrap yesterday, the "Managed Money" category in the Disaggregated COT Report, which is usually net short at this point of any engineered price decline, is currently net long 8,400 contracts---and it will be interesting to see how much has changed in this category when the new COT Report comes out on Friday.

So we wait.

As I type this paragraph, the London open is about 15 minutes away.  All four precious metal got sold down a bit more in Far East trading, but now are rallying a bit as the London open approaches.  Gold volume is already north of 28,000 contracts---and silver, net of rollovers, is around 7,000 contracts.  Not exactly light volume, but most of it is of the HFT variety anyway.  And not that it matters, but the dollar index is down a small handful of basis points.

And as I send this down to Stowe, Vermont at 5:05 a.m. EDT, all four precious metals are back at, or just above their Tuesday closing prices in New York.  Gold volume is at 43,000 contracts---and silver's net volume is at 10,000 contracts---and almost all of it, especially in gold, is still of the HFT variety.  The dollar index has rolled over a bit and is now down 14 basis points.

I have no idea what to expect when I check in later this morning---but nothing will surprise me, nor should it you.

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.

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