Friday, September 26: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do much of anything in Far East trading until after 1 p.m. on their Thursday afternoon.  At that point the HFT boyz showed up---and by shortly after the London open, had gold at a new low for this move down.  From there the gold price rallied a few bucks until 9:30 a.m. in New York---and the away it went to the upside---running into resistance at the p.m. gold fix---and then getting capped at 10:45 a.m. EDT.  At that point it rallied in a much more subdued manner, hitting its high tick shortly before 2:30 p.m. in electronic trading.  The price didn't do much after that.

The low and high ticks were recorded by the CME Group as $1,206.60 and $1,225.30 in the December contract.

Gold finished the Thursday session in New York at $1,221.90 spot, up $5.30 from Wednesday's close.  Net volume was enormous at 172,000 contracts, with a third of that amount occurring before the 10:30 a.m. BST London a.m. gold fix---5:30 a.m. EDT.

Here's the 5-minute gold chart courtesy of reader Brad Robertson---and you can see that there was a lot of volume around the 9:30 a.m. to 10:45 a.m. rally in New York.  Add 2 hours to this chart for EDT.

Silver opened on the usual down tick at 6 p.m. on Wednesday evening in New York---and continued down from there, helped along by the HFT algos starting an hour before London opened.  They did push silver to a new low for this moved down, but it was only by a few pennies.  Silver made lot of attempts to rally after that, but you can tell by the sawtooth pattern in the Kitco chart below that the not-for-profit sellers were out and about.  The high tick in New York trading came at 10:45 a.m. EDT---and that was it for the day.

The low and high ticks were reported as $17.27 and $17.69 in the December contract.

Silver closed yesterday at $17.50 spot, down 17.5 cents from Wednesday's close.  Net volume was pretty hefty at 53,000 contracts, with just over 70 percent of that amount coming after the morning gold fix in London.

The price pattern in platinum was far more subdued, but the low tick, like the other precious metals, came moments after the Zurich open.  The subsequent rally to its high tick of the day also ran into a willing seller at the magic 10:45 a.m. EDT mark, just like for gold and silver.  The price bias was quietly lower for the remainder of the Thursday session.  Platinum closed lower by 13 dollars, but would have finished much higher if 'da boyz' hadn't show up at 10:45 a.m. EDT.  Ditto for the other three precious metals.

Palladium traded lower right from the get go on Thursday morning Tokyo time---and was sitting at $806 spot just minutes after the Zurich open.  Then it got its lights punched out by JPMorgan et al---and within an hour, the price was down to $792---and also a new low tick for this move down.  It rallied back above $800 the ounce within ninety minutes, but then drifted quietly lower for the rest of the day, closing down 18 bucks.

The dollar index closed late on Wednesday afternoon in New York at 85.06---and when it opened on Thursday in the Far East, it moved quietly higher, but began to rally with more conviction starting at 2 p.m. Hong Kong time, an hour before the London open.  It reached it 85.47 high just after 9 a.m. BST in London---and hung in there until around 9:30 a.m. EDT before selling off a bit.  The dollar index closed at 85.18, up another 12 basis points.

The gold stocks opened down a bit, but quickly rallied into positive territory, only to get cut off at the knees at 10:45 a.m. EDT when 'da boyz' showed up to cap the rallies in all four precious metals.  The stocks got sold down a bit, but rallied back as the day wore on---and the HUI closed up 0.31%, which is better than the alternative.

The silver equities followed a similar pattern, as Nick Laird's Intraday Silver Sentiment Index closed up 0.36%.

The CME Daily Delivery Report showed that 5 gold and 24 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that 6 gold and 41 silver contracts are still open in the September contract.  From that, you have to subtract the deliveries posted in the prior paragraph.

Monday and Tuesday are the last delivery days in the September contract, so what's left of these numbers should show up in tonight's preliminary report.  With luck, we may also get First Day Notice delivery numbers for October, but it's more likely that they'll show up in Monday's report---and I'll have them for you on Tuesday morning.  October isn't a big delivery month in either gold or silver, so I'm not expecting anything out of the ordinary as far as deliveries are concerned.

There were no reported changed in GLD yesterday---and I'm happy to say that the 2,397,570 troy ounces that were reported deposited in SLV on Wednesday, was not the Tuesday volume double counted---so that second deposit was legit.  Where is all this silver coming from---and who the heck is depositing it?  Questions with no answers at the moment---and we may never know the answers.

And as of 10:14 p.m. EDT yesterday evening, there were no reported changes in SLV yesterday.

Since yesterday was Thursday, Joshua Gibbons, the " Guru of the SLV Bar List" updated his website with what was going on inside SLV for the week ending Wednesday, September 24---and this is what he had to report:  " Analysis of the 24 September 2014 bar list, and comparison to the previous week's list---3,141,611.3 troy ounces were added (all to Brinks London). No bars were removed or had a serial number change."

" The bars added were from: Solar Applied Materials (1.5M oz), Valcambi (0.3M oz), Krasnoyarsk (0.3M oz), Kazakhmys (0.3M oz), and 13 others."

" As of the time that the bar list was produced, it was overallocated 181.7 oz.  All daily changes are reflected on the bar list, except the 2,397,420.0 oz deposit last night (24 September 2014)."

[I'm in discussions with Joshua about the contents of that last sentence---and I'll report back once we have settled things. - Ed]

" About 2.8M oz of the deposits appear to be fresh bars (never in SLV before)."  The link to Joshua's website is here.

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

There was no in/out movement in gold worth mentioning in the Comex-approved depositories on Wednesday.  In silver, there was nothing reported received---and 1,064,562 troy ounces were shipped out.  Most of the 'out' activity was at Canada's Scotiabank and Brink's, Inc.  The link to that action is here.

I have the usual number of stories for a weekday column---and I'm sure you'll find the odd one of interest.

¤ The Wrap

I’ve written about technical funds and the COT Report for ages, so this may seem to be old stuff. But I’m talking about a relatively new pattern, namely, the emergence of collective short positions in the managed money category on a scale never witnessed before, particularly in COMEX silver. Simply put (and I recognize this is not a simple subject) and over the past two years, the technical funds have come to establish at times far larger gross short positions than they did in previous years. This is especially true in COMEX silver, but also true in COMEX gold and copper, as well as in other commodities.

There is no question in my mind that the increased willingness of the technical funds to hold much larger short positions than they previously held is the reason we have witnessed a series of new price lows in silver and other commodities. In other words, the only reason we are at---and have seen the new price lows in silver---is because of the record amount of technical fund short selling on the COMEX. - Silver analyst Ted Butler: 24 September 2014

It was another salami-slicing day in all four precious metals, but especially for palladium, where the engineered price decline just after the Zurich open was embarrassingly obvious.   And as I mentioned earlier, new lows were set for this move down across the board.

Here are the 6-month charts once again.

And as I write this paragraph, the London open is about ten minutes away.  All four precious metals rallied in one form or another in early Far East trading on their Friday, but all ran into sellers of last resort shortly after 9 a.m. Hong Kong time---but all are trading up a fraction of a percent at the moment.

Net gold volume is a bit under 28,000 contracts---and silver's net volume is around 9,200 contracts.  Both volume numbers are pretty chunky for this time of day, so even these minor price rallies in Far East trading have been running into JPMorgan et al.  The dollar index is up 14 basis points.

I mentioned the negative "London Bias" in a gold-related story in the Critical Read section.  Here's the 5-year chart of that bias using the LBMA's own data.  It actually begins about 40 minutes before the London open, which is about 2:20 p.m. in the Hong Kong trading session---and the negative bias continues until the London p.m. fix at 3 p.m. BST, or 10 a.m. EDT.  After that, the price rallies until 2:45 p.m. Hong Kong time the following morning.  This is the 5-year average---and using a 2-minute tick and about 1,100 trading days, it removes all the 'noise'---and leaves the trend stripped naked for all to see.

And as I send this off into cyberspace at 5:00 a.m. EDT, I see that very little is happening from a price perspective.   The tiny gold spike moments before the London open got sold down in short order---and that's all the 'excitement' there was.  Net gold volume is just over 37,000 contracts---and silver's net volume is a hair over 12,000.  The dollar index is up 7 basis points at the moment.

Since today is Friday, nothing would surprise me during the New York trading session, but at the moment, all is quiet.

Enjoy your weekend, or what's left of it---and I'll see you here tomorrow.

If you liked this article you might like

Here's What Stocks You Want to Own in the Event of a War With North Korea

Gold, Google, SEC Hack - 5 Things You Must Know Before the Market Opens Thursday

Here's the Hottest New Way to Get Rich With Gold

How to Invest in Unstoppable Gold Prices

Novice Trade: Gold ETF