Thursday, November 13: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price traded a few dollar either side of unchanged on Wednesday during the Far East and early London trading session.  The smallish rally that began 20 minutes before the Comex open ran into the usual not-for-profit sellers at 8:30 a.m. EST.  It was all down hill from there, with the low tick of the day coming shortly after the 1:30 p.m. Comex close.  The subsequent rally cut the  COMEX loses in half.

The high and low ticks were recorded by the CME Group as $1,169.40 and $1,156.50 in the December contract.

Gold closed yesterday at $1,161.70 spot, down $1.20 from Tuesday's close.  It would have performed better if JPMorgan et al hadn't put in an appearance at 8:30 a.m. EST yesterday morning.  Gross volume was well in excess of 200,000 contracts, as we're well into roll-over process out of the December delivery month, but it all netted out to 127,000 contracts, with over a third of that amount coming before the London a.m. gold fix.  After that, the net volume fell off to next to nothing.

After the usual down tick at the New York open at 6 p.m. EST on Tuesday evening, the silver price didn't do much until shortly after 2 p.m. Hong Kong time, which may have been the high of the day.  Then it chopped lower to its low tick, which appeared to come around 1 p.m. GMT---twenty minutes before the COMEX open.  Silver managed to rally back to pennies above unchanged by 12:30 p.m. in New York, but then got sold down into the 1:30 p.m. COMEX close.  After that it didn't do a thing.

The low and high price ticks for silver were recorded as $15.545 and $15.765 in the December contract.

Silver finished the Wednesday session at $15.665 spot, down 3.5 cents from Tuesday's close.  Like gold, gross volume was pretty high, but it all netted out to only 20,500 contracts, with about 40 percent of that amount coming before the London a.m. gold fix, so there was no net volume worth mentioning after that.

The platinum price action was very similar to both gold and silver---and platinum was closed well off its high once again, finishing the Wednesday session up 3 bucks.

Palladium traded flat until around 1:30 p.m. Hong Kong time---and then rallied steadily until its high price spike which occurred shortly after the COMEX open.  By the 1:30 p.m. EST COMEX close, the price had been sold back down to unchanged and, like silver, it traded ruler flat into the 5:15 p.m. electronic close---finishing the day up 2 whole dollars.

The dollar index closed late on Tuesday afternoon at 87.59.  It's low tick of 87.40 came minutes before the London open on their Wednesday morning---and the 87.89 high came five minutes or so after the 1:30 p.m. EDT COMEX close.  From there it sold off a handful of basis points, closing at 87.85---up 26 basis points on the day.

The gold stocks traded in positive territory up until minutes before 11:30 a.m. EST.  From there they slid into the red, hitting their low around 1:35 p.m.---and minutes after the Comex close, at the same time that the dollar index hit its zenith.  The gold stocks managed to eke out a tiny gain in the last few minutes of trading, as the HUI closed up 0.08%, which is basically unchanged.

The silver equities had a chart pattern that was almost a carbon copy of what happened with the gold stocks, except they couldn't squeeze a positive close, as Nick Laird's Intraday Silver Sentiment Index closed lower by 0.69%.

The CME Daily Delivery Report showed that zero gold and 31 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The short/issuer on all of them was Jefferies---and the long/stopper on all of them was Canada's Scotiabank.

The CME Preliminary Report for the Wednesday trading session showed that there are 34 gold contracts still open in November, up 5 contracts from Tuesday's report.  Silver's November o.i. is unchanged at 110 contracts---minus the 31 contracts to be delivered tomorrow that I mentioned in the previous paragraph.

There was another withdrawal from GLD yesterday.  This time an authorized participant took out 57,664 troy ounces.  And as of 9:35 p.m. EST yesterday evening, there were no reported changes in SLV.

The good folks over at the Internet site finally got around to updating the short positions for both GLD and SLV---late, to be sure, but better late than never.   This report is for the period October 16 to October 31.  During that time, the short position in SLV declined by 1,795,000 shares/troy ounces, or 10.79%.  The short position in GLD dropped as well---by 45,160 troy ounces---or 2.90%.

For the second day in a row, there was no sales report from the U.S. Mint.

And also for the second day in a row, there was little in/out activity at the Comex-approved depositories.  In gold, nothing was reported received---and 3,225 troy ounces were shipped out.  In silver, there was nothing received either---and only 185,515 troy ounces shipped out the door.  No need to link this activity.

I note that First Majestic Silver " Subsequent to quarter end, the Company sold all 934,000 ounces of silver that it held over from the third quarter for an average price of $17.29 per ounce increasing the cash balance by $16.1 million."

I also note that Endeavour Silver who, along with First Majestic Silver, reported their less-than-stellar third quarter results the other day---mentioned that " Bullion inventory at quarter-end included 523,526 oz silver and 937 oz of gold."  One has to wonder if they still hold this, or have they gone the First Majestic route as well?

As usual, silver analyst Ted Butler came out with his mid-week commentary yesterday---and he had something to say to all the primary silver producers out there that are prepared to listen and save themselves before they go bankrupt---and take all their shareholders, including me, with them.

I never asked his permission to reprint what he had to say, but after writing the comments about First Majestic and Endeavour above, I thought I'd include this lengthy commentary---so I'll be ready for an ear full when I talk to him later today, but this is important enough that it should be posted in the public domain.

I, like you you, have stuck by the silver miners through thick and thin, even though I've discovered over the years that these silver miners [along with their golden brethren] don't give a flying #%@# about any of their stockholders---including you or me.  As I've said before on several occasions, if I do manage to get to a position where I can sell their equities for the prices that they should be selling for, I'll never own another mining share in my entire life---and for good reason.

Here's what Ted had to say---

"There does seem to be a budding reaction building among the leaders of the primary silver miners to the COMEX action of depressing silver prices, namely a recognition that the continued existence of their enterprises is threatened. This has long been recognized by the shareholders of mining stocks and is reflected in the prices of the shares. An intelligent reaction by the primary silver miners to the artificial price-setting on the COMEX could have a profound influence in hastening the coming resolution and in ending the continuing silver price suppression. But what’s the most intelligent reaction by the primary silver miners at this time?

"While understandable, withholding production alone is not the best way of fighting back, simply because the extremely low price of silver is not caused by overproduction, but by COMEX dealings. And forget about any illegal cartel of silver miners. As I’ve suggested previously, the best thing for the primary silver miners to do, either individually or collectively, is to openly petition the regulators to address the price manipulation on the COMEX. But wait a minute – didn’t I just say that there would never be a regulatory resolution? Yes, I most certainly did and I still believe that to be true. Please hear me out.

"The primary silver miners (the byproduct producers aren’t necessarily excluded either) have to go the regulators, even if the regulators will do nothing, because it’s the right thing to do. In fact it’s the only practical approach the miners can take. Petitioning the regulators is the only legitimate action the miners can take (although I am always open to other suggestions). Forget low-cost, my approach is no cost to the miners. Further, shareholders would applaud any mining leader who took this approach.

"Most importantly, the miners have a responsibility to adopt such an approach for the simple reason that they have the most legitimate reason for complaining about the COMEX price setting. It is this legitimacy that makes the silver miners the perfect candidates to petition the regulators. Miners are not speculators or market analysts desirous of higher prices; they have a legal right to expect the level playing field of a non-manipulated price. Producers of every product hold important protections against dumping and artificial price restraints.

"But why should the miners petition the regulators if the regulators will do nothing?  Because of the message that will send to the rest of the world. Try to imagine the potential reaction in the investment world to news that a silver miner or group of miners asked the regulators to investigate evidence of manipulation? It is one thing for an Internet analyst (me) to make such allegations, but quite another for a legitimate producer to do the same. It’s all about legitimacy. It is well-known that in establishment media circles the allegations of a silver (and gold) manipulation is populated by conspiracy types and that’s a big reason the scam has lasted so long. But if a silver miner or miners the allegation, it just might prompt some of the establishment types to actually look at the evidence, something none have done to this point.

"The only thing a silver miner must be careful about in adopting an approach of openly petitioning the regulators to address the goings on in COMEX dealings is to stick to the facts and don’t say anything wrong. Unfortunately, there are an incredible amount of misstatements of fact regarding the COMEX’s role in setting silver prices that a miner repeating them will reduce any petition to a fool’s errand. Ego aside, I don’t think I’ve ever made an error when petitioning the regulators and it is this careful approach that has made me immune from a counter reaction in calling JPMorgan and the CME market criminals. Of course, I would assist any miner desiring to petition the regulators. - Silver analyst Ted Butler: 12 November 2014

[Note: the bolding and underlining is mine. - Ed]

Please feel free to send Ted's commentary to any silver mining company that you feel might be interested in higher silver prices.  You should even send this to The Silver Institute, even though it will be for naught, as they are not at all interested in helping their members in this regard.  Here's the link to their "Contact Us" page.

I have very few stories for you today---and I'm quite happy about that.  I hope you'll find one or two from the list below that are worth reading.

¤ The Wrap

I’ve been writing for quite some time that I sensed the presence of a big buyer in Silver Eagles and that the strong sales over the past few months and past few years have come when retail demand has been lacking. By process of elimination, the strong demand, if it wasn’t coming from the retail public, had to come from a more concentrated source. Further, I speculated that JPMorgan was the Mr. Big behind the extraordinary buying of Silver Eagles. I even alleged that JPMorgan, since it knew silver prices were about to collapse in mid-summer (because it would cause prices to collapse), suddenly stopped buying Silver Eagles for three months, which created an inventory of unsold coins at the Mint.

In the October 4 Weekly Review, I laid out the case for why I thought there was a Mr. Big buying Silver Eagles and why I speculated it was JPMorgan. In the next weekly review (Oct 11) I had calculated that there may have been 4 to 5 million Silver Eagles in the U.S. Mint’s inventories and that JPM had purchased 3 million (after it resumed purchases), leaving only 1 to 2 million coins in inventory. The Mint’s announcement dovetails perfectly on an amount and timeline measure to my comments. The Mint’s announcement proves there was a fairly sizable inventory which didn’t exist prior to JPMorgan’s stepping away in summer; and when the sales resumed they resumed stronger than ever and again with no obvious retail demand. I wrote that JPM played the Mint (and U.S. taxpayers) like a fiddle in letting the Mint build up inventory that Mr. Big would soon take off THE Mint’s  hands, but only at much lower (and manipulated) prices. Hey, we’re talking about JPMorgan and that’s the way these boyz roll. - Silver analyst Ted Butler: 08 November 2014

I wouldn't read too much into Wednesday's price action in either gold or silver, as there wasn't much net volume associated with it.   But, having said that, there was some shape to the gold price action during the Comex trading session---and silver certainly wasn't allowed to get far above its Tuesday closing price.

Here are the 6-month charts for gold and silver, plus West Texas Intermediate crude oil.  Nothing has changed, as the four PMs are still hugely oversold across the board, along with crude oil, copper---and and a raft of other commodities as well.

All we can do is sit here and wait for this situation to hatch into something, which it inevitably will.  And as I continually point out, only the timing is unknown.

And as I write this paragraph, London has been open for half an hour already, as I'm way behind today.  Gold, silver and platinum all rallied until 1 p.m. Hong Kong time---and then got sold down to their current low ticks at the London/Zurich opens, depending on which precious metals you're referring to.  Palladium, which has been trading more or less independently of the other three metals, was flat up to that point.

Net gold volume is already monstrous at 59,000 contracts, with very few roll overs---and silver's net volume is a hair under 5,900 contracts, with virtually no roll over volume at all, so it looks like most trading up to this point has been of the HFT variety.  The dollar index is down 13 basis points.

Tomorrow we get the Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday---and as I mentioned before, I wouldn't hazard a guess as to what it might show considering the price volatility during the reporting week.

And as I send today missive out the door at 5:10 a.m. EST, I see that gold, silver and platinum rallied in the first hour of their respective trading days in London and Zurich, but all three got sold down minutes after 9 a.m. GMT London time.  Both gold and silver are down a bit on the day so far---and both platinum and palladium are up a couple of bucks.  If there are price trends developing, it's too soon to tell from the current price data.

Net gold volume is now 70,000 contracts, which is a huge number considering the price activity---and still the roll-over volume is a tiny percentage of the gross volume.  Silver's net volume is around 7,300 contracts with only a few hundred contracts worth of roll-overs out of the December contract.  I'm not sure what to make of all this volume, except it appears to be of the HFT variety, so it's obvious that there's some price management going on in these metals currently.  The dollar index hasn't changed much---and is down 12 basis points as of this writing.

That's all I have for today---and I'll see you here tomorrow.  I hope all of my readers that live west of the International Date Line have a good weekend, as it's already Friday morning there.

Ed Steer

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