Friday, September 12: Today in Gold and Silver

NEW YORK ( TheStreet) -- It was a pretty quiet trading day in gold up until the 10:30 a.m. BST London morning gold fix---and after that the HFT boyz swung into action. Once that was over with around the noon BST silver fix, the gold price rallied until precisely 9 a.m. EDT when 'da boyz' went to work once again---and gold's low tick around 10:25 a.m. EDT was another slice off the salami, along with another new low for this move down.  After that, the gold price chopped quietly higher until precisely 4 p.m. EDT when it got sold down a few bucks into the 5:15 p.m. electronic close.

The highs and lows were recorded by the CME Group as $1,251.00 and $1,235.30 in the December contract.

Gold finished the Thursday session at $1,240.20 spot, down $8.80 from Wednesday's close.  Net volume was very impressive at around 149,000 contracts.

Here's the New York Spot Gold [Bid] chart on its own, so you can see the Comex action in more detail.

After the obligatory down-tick at the 6 p.m. open on Wednesday evening, silver traded more or less flat until noon Hong Kong time on their Thursday.  Then down it went as well.  There was a secondary low at the noon London silver fix, with the final low coming at either 12:15 or 12:30 p.m. EDT if you check the NY Spot Silver [Bid] chart a bit further down.  The silver price didn't do much after that, although it did rally a few pennies starting just before 3 p.m. EDT.

The high and low ticks were posted as $18.895 and $18.57 in the December contract.

Silver closed yesterday at $18.67 spot, down 27 cents from Wednesday's close---and another low for this move down.  Net volume was very hefty at 52,500 contracts.

Here's the New York Spot Silver [Bid] chart

Platinum and palladium continue to get pounded by the HFT boyz as well, with the sharp spike down in palladium around 12:30 p.m. EDT being particularly egregious sign of that.   Platinum got closed down 11 dollars---and palladium another 22 bucks.  Platinum is now monstrously oversold---and it won't be long before palladium is in oversold territory as well.  Here are the charts.

The dollar index closed late on Wednesday afternoon at 84.20---and spent all of Thursday chopping around in a very tight range either side of that number.  The index closed up 7 basis points at 84.27.

It should be obvious that the actions inside the currency markets had no influence on the precious metal prices.  They are, as always, controlled by JPMorgan et al in the futures market on the Comex.

The gold stocks gapped down a percent at the open---and then chopped sideways until the gold price began to rally shortly after 2 p.m. in electronic trading in New York.  The stock popped into positive territory and closed up 0.81%.  No doubt some bottom fishing going on.

The silver shares got sold down by 2 percent at their lows during mid-day trading in New York yesterday but, like the gold equities, came roaring back when silver rallied in electronic trading---and they, too, managed to finish in positive territory, as Nick Laird's Intraday Silver Sentiment Index closed up 0.45%.  More bottom fishing, I presume.

The CME Daily Delivery Report showed that 1 gold and 141 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  The big short/issuer was ABN Amro with 124 contracts---and there were about a dozen long/stoppers once again.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that we're down to only 21 gold contracts open in the September delivery month, but that can change at any moment if someone shows up out of the blue demanding physical metal.  And there are still 745 silver contracts open in September, down only 8 contracts from Wednesday.

There was a small withdrawal from GLD yesterday, as an authorized participant took out 10,015 troy ounces, which was probably a fee payment of some type.  And as of 9:20 p.m. EDT yesterday evening, there were no reported changes in SLV.  However, when I checked the iShares.com Internet site at 3:40 a.m. EDT this morning, I was amazed to see that another 1,486,686 troy ounces had been added.

Since its low of 317.7 million troy ounces on June 26, 2014---there has been, net of withdrawals, 18.42 million ounces of silver added to SLV.  During that time period, silver has risen from about $19.70 the ounce, up to about $21.70 the ounce on July 10.  Now silver is down to $18.71 the ounce as of Thursday's close.

I mentioned my surprise yesterday that not all of this silver was being used to pay down the short position in SLV---and I couldn't figure out why that was the case.  After discussing this with Ted yesterday, he concluded that despite the net price decline in silver over that period, there were still buyers of the metal via SLV---depositing the metal and taking shares in exchange---which certainly isn't how you and I would do it.

It would be my guess that whoever is "doing it" has a more intimate knowledge about the future direction of silver prices than we do at the moment.

Joshua Gibbons, the " Guru of the SLV Bar List," updated his website with the goings-on inside SLV for the week ending at the close of trading on Wednesday---and here's what he had to say.  " Analysis of the 10 September 2014 bar list, and comparison to the previous week's list:  238,916.3 troy ounces were removed (all from Brinks London), 1,438,586.7 troy ounces were added (all to Brinks London). No bars had a serial number change."

" The bars removed were from: Aurubis AG (0.1M oz), Degussa, Australian Gold Refineries, and Handy Harman (all bars were in there many years).  The bars added were from: Solar Applied Materials (1.0M oz), Jiangxi Copper (0.4M oz), Kazakhmys and Tonling Nonferrours Metals."

" As of the time that the bar list was produced, it was overallocated 245.7 oz.  All daily changes are reflected on the bar list."  The link to Joshua's website is here.

There was no sales report from the U.S. Mint.

There wasn't much movement in gold at the Comex-approved depositories on Wednesday, as only 16,075 troy ounces were reported received---and nothing was shipped out.  The receipt was at Canada's Scotiabank.  The link to that activity is here.

Of course, it was another big day for silver, as 624, 561 troy ounces were received---and 708,162 troy ounces shipped out.  Scotiabank, CNT and Brink's, Inc. were involved.  The link to that action is here.

I have a decent number of stories today---and I'll leave the final edit up to you.

¤ The Wrap

Let me overuse my salami-slicing analogy. The slicing must cease once all the salami is cut; otherwise a hand gets sliced. That’s how I view the price slicing in silver and gold, with the only difference being once the technical funds are maximum short, the slicing must stop or a hand will get sliced. The collusive commercials are slicing the technical funds (collectively) and once the commercials succeed in drawing in the maximum number of technical fund shorts, any further lower prices will benefit the technical funds and hurt the commercials who just bought heavily. Since I’m convinced that the collusive commercials are leading the technical funds by the nose into and out from positions (and not the other way around), the price will stop going down and start going up when it is in the best interest of the commercials. Prices will only continue to fall if the commercials can buy more. Otherwise, the commercials will slice their own hands.

What it comes down to in picking a bottom for me is calculating the point of maximum technical fund short sales. Based upon previous record extremes in technical fund short sales and the extent of current salami price slicing, it appears to me that we are close enough to expect the bottom may be here. Otherwise, I wouldn’t have topped off and bought calls. That’s not a guarantee that my expectations will prove to be accurate, but I hope I have been clear in suggesting why I think the price decline is over or nearly over. - Silver analyst Ted Butler: 10 September 2014

[I took Ted's advice and bought some more physical silver yesterday. - Ed]

Well, JPMorgan et al, along with their associated HFT buddies---and their algorithms---took decent slices out of the four precious metal salamis again yesterday, with palladium getting the living snot kicked out of it once again, as it had been hanging around overbought territory since the beginning of February, but no more.

As you can tell from all four 6-month precious metal charts below, we're getting near the end of the engineered price declines in all four metals, as there's a limit to how low 'da boyz' can, or will, take these prices---and if you've already forgotten why that's the case, please reread Ted Butler's quote just above.

Based on yesterday's price action, I will make the assumption that we're at new record low short positions for the Managed Money crowd in silver.  Of course I'm guessing here, as the last three trading days price/volume action won't show up until next Friday's Commitment of Traders Report---and there's the possibility that the price management scheme may blow up before Tuesday's cut-off, as this sell-off appears to have some sort of urgency attached to it.

Maybe the powers-that-be know something we don't, but as I said in yesterday's column, the increasingly bizarre goings-on inside the precious metal futures market---especially in silver---appear to be heading for some sort of dénouement.  And not to be forgotten in all of this is the wild in/out physical movement of silver at the Comex-approved depositories for the last three and half years---and the amount of silver pouring into SLV as the silver price continues to get engineered lower.

And as I write this paragraph, the London open is 30 minutes away.  The HFT boyz and their algorithms have done their jobs once again, as all four precious metals declined to new lows for this move down, as the technical funds sold longs and bought more short positions, with JPMorgan et al doing the opposite in all of them.

The current low ticks came just before 1 p.m. Hong Kong time and, with the exception of palladium, all are in rally mode at the moment.  I'm just speculating here, but using the past as prologue, these rallies won't make it past the London open.  Net gold volume is a hair over 20,000 contracts---and 9,000 contracts in silver, which is pretty heavy for this time of day.  And not that it matters, but the dollar index is currently up a handful of basis points.

Today, at 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday, September 9.  Both Ted and I are expecting great things from this report, but we'd both give a day's pay to see what the COT Report would look like if it had been issued as of 1 p.m. Hong Kong time on their Friday, which are the current low ticks for these moves down.

And as I send this out the door at 5:15 a.m. EDT, I note that, as expected, the smallish rallies in all four precious metals ended at the London open---and all four are still down on the day from Thursday's close in New York.  There's a problem over at the CME Group's website, as my attempts to get the updated volume figures got nowhere, as a message on the page read "A Technical error has occurred. Please try again in a few minutes."  I gave it more than half an hour---and nothing had changed.  I would expect that volumes are considerably higher in both gold and silver, if the previous numbers I reported at 2:30 a.m. EDT are any guide.  The dollar index is up a couple of basis points.

Are we done to the downside yet?  I still don't know, but as I said in The Wrap in Thursday's column, it wouldn't surprise me in the slightest if 'da boyz' give us one more quick spike to the downside---and with today being Friday, I might still get my 'wish'.  Their efforts yesterday were certainly a decent start to that process.

So we wait once again.

Friday's Comex trading session in New York will be another day where nothing will surprise me when I look at the charts later this morning, as I'm ready for any eventuality.

Enjoy your weekend, or what's left of it if you live west of the International Date Line---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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