Thursday, September 11: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do much of anything for most of the Far East trading session on their Wednesday, but the selling pressure appeared shortly before the 8 a.m. BST open in London and, not surprisingly the HFT boyz printed a new low tick for this move down, with the low coming at 12:30 p.m. in New York.  From that low, the gold price gained back half a dozen dollars by 3:35 p.m. EDT---and then sold off a hair into the 5:15 p.m. electronic close.

The high and low ticks were recorded by the CME Group as $1,258.50 and $1,244.50 in the December contract.

Gold finished the Wednesday session at $1,249.00 spot, down another $6.80 on the day.  Net volume was pretty decent at 130,000 contracts.

Here's Brad Robertson's 5-minute gold daily price/volume chart.  The 'click to enlarge' feature works wonders---and don't forget to add 2 hours to get EDT.

Silver, as always, opened on a down tick at 6 p.m. on Tuesday evening in New---and stayed down for the remainder of the trading session.  But the decline quickened shortly after London opened, with the low of the day like gold, coming at 12:30 p.m. in New York.  It rallied a few pennies until shortly after 2 p.m. EDT---and then traded flat for the remainder of the day.  Silver did not set a new low price tick yesterday.

The high and low ticks are barely worth looking up, but they were recorded as $19.125 and $18.90 in the December contract.

Silver closed on Wednesday at $18.94 spot, down 11.5 cents from Tuesday.  Net volume was 30,500 contracts.

And, not surprisingly, both platinum and palladium were under slight price pressure yesterday as well---and both finished at new lows for this engineered price decline.  Both were closed down 6 bucks.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 84.17.  From there it chopped quietly higher, hitting its 84.42 high tick minutes before 12:30 p.m. EDT in New York on Wednesday, which just happened to be when the low was hit in all four precious metals.  From there it slid down to---and closed at---84.20, up only 3 basis points from Tuesday.

The gold stocks gapped down over a percent at the open yesterday morning, hitting their lows at 12:30 p.m., which was the low for the metal itself.  The stock barely recovered from there---and the HUI closed down another 1.96%.

The silver equities opened down as well, but rallied into positive territory briefly just minutes before 10 a.m. in New York.  From there it was all pretty much down hill into the low tick which came very shortly after 1 p.m. EDT.  Then the shares rallied just under a percent from there---and Nick Laird's Intraday Silver Sentiment Index closed down 'only' 0.63%.

The CME Daily Delivery Report showed that 87 gold and 34 silver contracts were posted for delivery within the Comex-approved depositories  on Friday.  Morgan Stanley issued all 87 gold contracts and Canada's Scotiabank stopped 81 of them.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that 84 gold contracts were added to the September total---and there are now 108 gold contracts still open in the September delivery month.  In silver, the number of contracts still open in September dropped by 214 contracts---and the revised total outstanding is down to 753 contracts.  The deliveries mentioned in the previous paragraph have to be subtracted from these numbers to show the true picture of what's left to deliver in September at this point in time.

I was expecting another decline in GLD yesterday---and got a big surprise, as 96,177 troy ounces were deposited by an authorized participant.  I suppose it's logical to assume that it was deposited to cover an existing short position, but if that was the case, it's certainly the only time that I can remember it happening, especially considering the fact that the gold price has been declining almost nonstop for the past 30 days.

And as of 9:42 p.m. yesterday evening, there were no reported changes in SLV.

Yesterday evening, the good folks over at the shortsqueeze.com Internet site updated their short positions for both GLD and SLV as of the end of August.  It showed that the short position in SLV declined by 9.57 percent, from 15.81 million shares/troy ounces, down to 14.30 million shares/troy ounces---an improvement of 1.51 million shares/ounces.

With about 5.8 million ounces of silver deposited during the reporting period---from mid August to the end of August---I was expecting much more of a decline that this.  This is the second consecutive disappointing decline in the SLV short position.  For the entire month of August, about 9.6 million ounces of silver were deposited in SLV---but the last two reports from the folks over at shortsqueeze.com shows that less than 3 million shares/ounces of the short position have been covered---and all this silver wasn't deposited because prices were rising.  It was quite the opposite, as  the silver price was down all through August.

The question that springs from 'all of the above' is that if the 9.6 million ounces that was deposited in SLV in August wasn't being used to cover an existing short position---and John Q. Public were net sellers of SLV shares during the August time period---why was all that silver being deposited, and by whom?

There wasn't much change in GLD, as the short position declined by only 0.64 percent---from 1.35 million troy ounces, down to 1.34 million troy ounces.

The good folks over at Switzerland's Zürcher Kantonalbank updated their website with the changes in both their gold and silver ETFs for the week ending September 5.  Both ETFs showed declines, as their gold ETF shed another 12,881 troy ounces---and their silver ETF dropped by 66,134 troy ounces.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 1,500 troy ounces of gold eagles---and 500 one-ounce 24K gold buffaloes.

It was another very busy day for gold over at the Comex-approved depositories on Tuesday---and virtually all of the in/out activity was at Canada's Scotiabank.  In total, 96,461 troy ounces were reported received---and 64,318 troy ounces were shipped out the door.  The link to that activity is here.

And I was bowled over by the silver activity on Tuesday, as 2,153,409 troy ounces were reported received---and 922,562 troy ounces were reported shipped out.  Five of the six silver depositories saw action, with a large chunk of the activity centered around the CNT Depository.  The link to that action is here---and it's definitely worth checking out.

I don't have a lot of stories again today and, like yesterday, that suits me just fine.

¤ The Wrap

I had remarked that I saw the light at the end of the tunnel (no, not of an oncoming train) in terms of the price decline over the past two months, due to my perception that technical fund short selling was drawing to an end in COMEX silver and gold. I concluded that, as a result, I would be topping off long term positions (SLV) and purchasing call options, although I did expect a continuation of the new price lows for a short while as the commercials lured more technical fund shorts into their lair. Since we got the new lows as I hoped, I topped off and bought the calls.

Since the silver and gold price salami was sliced to the downside during virtually every day of the reporting week ending on Tuesday (and continuing on Wednesday), there should be significant further increases in the managed money gross short positions in silver and gold (and perhaps in copper, given Tuesday’s big chunk to the downside). I would think the changes in Friday’s COT Report will parallel the last report in significance. This will, undoubtedly, put us closer to the ultimate extreme in technical fund short selling. I would define a bottom in price for silver and gold as the point of maximum technical fund short selling. - Silver analyst Ted Butler: 10 September 2014

Well, it was just another salami slicing day on the Comex on Wednesday, as three of the four precious metals got taken to new lows for this move down.  They weren't large dollar amounts in any of them, but it was still more technical fund/Managed Money long selling/short buying---as JPMorgan et al happily covered short positions and went long themselves.

Here are the 6-month charts for both gold and silver updated with yesterday's price/volume data.  As I've already mentioned, gold hit a new low, but silver didn't.

As I write this paragraph, the London open is about 25 minutes away.  All four precious metals are currently trading below their respective closes in New York on Wednesday---and the HFT boyz have both silver and platinum at new lows for this move down.  Net volume in gold is just under 12,000 contracts---and silver's net volume is 2,700 contracts.  The dollar index is up 10 basis points.

I, along with Ted, continue to be amazed at the amount of silver being moved around in both the Comex-approved depositories---and deposited in SLV.  Topping that off was the surprise deposit in GLD, a phenomenon that I don't recall ever seeing, especially during an engineered price decline.  Physical gold, at least that much, is readily at hand---and I'm still wondering why it was deposited, and by whom.  This frantic state of affairs can't continue forever---and I'm still expecting a dénouement of some sort in the not-to-distant future.

And as I prepare to hit the 'send' button on today's effort at 4:50 a.m. EDT, I note that the HFT boyz have knocked silver down to another new low since I wrote the previous paragraph before the London open.  Gold rallied a tad, but got sold down the moment it broke above Wednesday's closing price in New York.  Palladium is trading as flat as the proverbial pancake---and platinum continues to bounce off its new low tick.  Gold's net volume is just over 20,000 contracts---and silver's net volume just broke through 7,000 contracts.  These volumes are on the lighter side of 'normal'---whatever that means these days.  The dollar index is now flat on the day, after being down about 5 basis points at 9:30 a.m. BST in London.

I'd guess that we're in the final throes of this engineered price decline in all four precious metals---particularly silver.  Could we still get lower price from here?  Sure, a final slam down wouldn't surprise me in the slightest.  The only thing I'm not overly happy about is the fact that Wednesday's and Thursday's trading data won't be in tomorrow's Commitment of Traders Report, but it's a safe bet that we're now back to the record COT Report we had on June 3---and it's now time to look ahead as to how the upcoming rally will be allowed to unfold.

It could be an interesting Comex trading session today---and I look forward to powering up my computer later this morning to see what JPMorgan et al have been up to.

That's all I have for today---and I'll 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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