Thursday, November 6: Today in Gold and Silver

NEW YORK ( TheStreet) -- JPMorgan et al, along with their HFT buddies, laid another licking on the precious metals again yesterday, with most of the damage---not unexpectedly---coming in gold and silver.

Gold was under some selling pressure early in Far East trading, but the HFT boyz and their algorithms showed up at 1:30 p.m. Hong Kong time, with the new record low tick coming shortly before noon in London.  From there it rallied about ten bucks off its low by 11:30 a.m. EDT---and then gave up almost all those gains by the 5:15 p.m. close of electronic trading.

The high and low ticks were reported by the CME Group as $1,169.30 and $1,137.10 in the December contract.

Gold finished the Wednesday session at $1,140.00 spot, down $28.20 from Tuesday's close.  Net volume was over the moon once again at 231,000 contracts.

The silver price chart was a virtual carbon copy of the gold chart, so I'll spare you the play-by-play.

The high and new record low tick in this precious metal were recorded as $16.045 and $15.12 in the December contract, which was an intraday move of 5.75 percent.

Silver closed yesterday at $15.315 spot, down an incredible 71.5 cents from Tuesday's close.  Net volume was very heavy at 68,500 contracts.

The engineered price declines in platinum and palladium were mini versions of what happened in gold and silver.  Platinum was closed down $17---and palladium was down 26 bucks.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 86.995---and didn't do much until shortly before noon Hong Kong time.  Then away it went to the upside, with the 87.60 high tick coming a minute or so after 12 o'clock noon in London.  From there the index drifted quietly lower for the remainder of the day, closing at 87.47---up another 47 basis points---and a new high close.

The gold stocks gapped down about 3.5 percent at the open, but managed to crawl back to almost unchanged by 11 a.m. EST---and tried twice more to break into positive territory, with the last time coming minutes before the 1:30 p.m. Comex close.  Then just a few minutes before 2 p.m. an active seller, probably a mutual fund that was forced to sell, appeared---and by the time the carnage was over, Nick's HUI chart was down another chunky 4.74%.

The silver equities more or less echoed the price activity of the gold stocks, except they got hit for even more, as Nick Laird's Intraday Silver Sentiment Index closed down 5.40%.

And,as I mentioned yesterday, with all these sellers, the question still remains---who are the buyers?

The CME's Daily Delivery Report showed that 4 gold and 35 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  The link to yesterday's Issuers and Stoppers Report is here.

November deliveries are turning exactly as I said they might, as there's nothing to see here.  December, of course, will be far more interesting, as it's the biggest delivery month of the year for both gold and silver.

The CME's Preliminary Report for the Wednesday trading session showed that there are 56 gold contracts open in the November delivery month, an increase of 1 from yesterday.  Silver's November o.i. is up 10 contracts to 135 contracts.  Of course to get the true November open interest at this point, one must subtract the deliveries mentioned two paragraphs ago.

Not surprisingly, there was another withdrawal from GLD yesterday, as an authorized participant took out 96,413 troy ounces, which was almost exactly 3 metric tonnes.   And as of 9:24 p.m. EST yesterday evening, there were no reported changes in SLV.

It was another big sales day over at the U.S. Mint.  They sold 12,000 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and another 635, 000 silver eagles.

In the last four business days, the U.S Mint has sold 2,685,000 silver eagles, about twenty times their daily production rate---and I know for a fact that little of this was sales involving the demand from the general public.  This was Ted Butler's 'Mr. Big' at the trough.

Our store, along with every other bullion dealer in North America, got an e-mail from A-Mark Precious Metals, Inc. yesterday morning advising us that the U.S. Mint was sold out of silver eagles for the moment---and that should come as no surprise to anyone if you've been reading this column for any length of time---and I have three stories about this in the Critical Reads section further down.

Bullion sales have certainly picked up at our store in the last five or six business days, but we're not exactly being run off our feet, either---and that's what I'm hearing from other retail bullion dealers we're talking to, which includes our wholesale supplier.  By the way, silver maple leafs from the Royal Canadian Mint have been rationed since sometime in September, but I can tell you that the rationing has nothing to do with retail demand here in Canada, which has been pretty horrid.

It was another huge day in gold over at the Comex-approved depositories on Tuesday---and the silver activity wasn't far behind, either.  In gold, 90,908 troy ounces were reported received---and 135,726 troy ounces were shipped out.  In the last six weeks or so, the in/out activity in gold has picked up substantially---and the link to Tuesday's activity is here.

In silver, there was 1,409,598 troy ounces reported received---and 100,080 ounces were shipped out the door for parts unknown.  The link to that action is here.

Here are four charts courtesy of Nick Laird.  The first two show gold and silver coin sales at the U.S. Mint---and the other two are gold and silver coin sales from The Perth Mint.

Once again I don't have all that many stories for you today, which I'm sure suits you just fine, as it certainly does me.

¤ The Wrap

Make no mistake – these are historic times for silver and gold. Tired of drawing imaginary price points from which I believe silver can’t possibly go any lower, instead I can only focus on the reason for the decline and knowing that whatever the low price print may be, it will be a number many will remember for a long time to come. I know all silver investors are struggling with reconciling the reality of the historic decline and why it's occurring. For me, the reasons still seem clear, although the extent of this decline was not fully expected. (Although I think I may have written in the distant past about there being a mother of all silver sell-offs arranged by the commercials in which they got every speculator to sell out or go short as was possible, right before the big price blast-off). Truth is, with the record technical fund short position already in place, I thought we had seen the big sell-off. Then again, such a sell-off, by definition, would need to exceed preconceived extremes. - Silver analyst Ted Butler: 05 November 2014

Just when you thought it was safe to come up for air, JPMorgan et al and their HFT buddies showed up in the thinly-traded Far East market at 1:30 p.m. Hong Kong time on their Wednesday afternoon---and spun their algorithms once again.

Here are the 6-month charts for all four precious metals, but only gold and silver set new lows yesterday.  No new record lows were set in the other four of the 'Big 6' commodities---and it wasn't for lack of trying, as they did come close in copper, platinum and crude oil.

Are we done to the downside yet?  Beats the hell out of me.  Like Ted, I'm more than a little shell-shocked that 'da boyz' were able to coax this many technical funds onto the short side in the Managed Money category---and it's a safe bet that there are very few technical fund longs left standing, as the margin calls would have pretty much done them in during the last few trading days.

That leaves the 'unblinking' non-technical long contract holders still standing in the Managed Money category---and their positions will be the first thing I check in the Disaggregated Commitment of Traders Report when it's released tomorrow afternoon.

And as I write this paragraph, the London open is about 15 minutes away.  All four precious metals are up a bit from yesterday's close in New York, but not by much.  However, gold and silver's net volumes are very substantial already---37,000 contracts and 9,500 contracts respectively.  The dollar index is down 22 basis points at the moment.

As I was saying earlier, it's been busier at the bullion store since late last week, but not overly so---and most customers, not surprisingly, are buying silver.  If the U.S. and Canadian mints are either sold out or on an allocation program, its certainly not John Q. Public that's vacuuming up all these coins this year and last, as business in most of 2013---and all of 2014---has been down across the board everywhere in North America.  So it has to be someone with very deep pockets buying them---and as Ted Butler has been mentioning for more than a year now, he suspects JPMorgan.  And if it's not JPM, it has to someone like them.

The Royal Canadian Mint will show up with its third quarter sales numbers sometime this month---and at that point we'll get a better idea of just why they're on an allocation program, as all these silver maple leafs aren't being sold in Canada.

And as I sent this off to Stowe, Vermont at 5:15 a.m. EST, I see that with the exception of silver, which is now down a few pennies, the other three precious metals are still up about the same amount they were twenty minutes before London opened.  Not much happening here.

Net gold volume is now around 45,000 contracts---and silver's net volume is around 12,000 contracts.  The dollar index is down 18 basis points.

After the events of the last four or five days in particular---and the last couple of months in general---I won't hazard a guess as to where we go from here in the short term, either up or down.  But the stars are most favourably aligned for a melt-up in all commodities, led by the precious metals---along with a corresponding melt-down in the U.S. dollar.

But whether the powers-that-be will allow it to happen is still the $64,000 question.  It seems like they've gone to a lot of effort to get to the position that we're in today---and I find it hard to believe that they would vigorously cap the inevitable rallies in the same fashion that they've been doing for the last twenty-five or so years.

We'll just have to wait some more---and be on the lookout for their next move.

That's all I have for today---and I'll see you here tomorrow.

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