Friday, November 14: Today in Gold and Silver

NEW YORK ( TheStreet) -- There wasn't any price activity in gold worthy of the name on Thursday, with the low price tick coming at the London open---and the high at precisely 12 o'clock noon in New York.  Nothing much to see here.

The gold price traded within a twelve dollar range yesterday, so I shan't waste the energy to look up the low and high prices.

Gold closed in New York on Thursday at $1,161.90 spot, up 20 whole cents.  Gross volume was pretty decent, but once the roll-overs out of the December contract were subtracted, it netted out to 141,000 contracts, with more than 50 percent of the total amount traded before the morning gold fix in London, which is a highly unusual state of affairs.

After the usual 6 p.m. EST sell-off on Wednesday evening, the silver price flopped and chopped around unchanged for the entire Thursday session.  Like gold, the low tick was at the London open---and the high came ten minutes after COMEX trading began in New York.  After that, the price wasn't allowed to do much.

With the silver price trading well within a two bit range, the low and high ticks aren't worth looking up, either.

Silver was closed up a half a cent at the end of electronic trading on Thursday afternoon in New York.  Net volume was only 24,000 contracts, but the roll-over activity out of the December delivery month was pretty decent---and will get heavier as the month progresses.

Both platinum and palladium reached their highs during the Zurich lunch hour yesterday---and were under choppy selling pressure after that.  Both were closed down on the day; platinum by 7 dollars and palladium by 6 dollars.  Here are the charts.

The dollar index closed late on Wednesday afternoon in New York at 87.85.  It sagged a bit starting around 3 p.m. Hong Kong time, with the 87.65 'low' coming around 9 a.m. GMT in London.  It didn't do much after that, closing the Thursday session at 87.77---down 8 basis points.  Nothing much to see here, either.

The gold stocks opened in positive territory---and then sagged into negative territory going into the London p.m. gold fix.  From there the rallied back into positive territory, hitting their zenith at exactly 12 noon EST when the gold price topped out.  From that point the gold prices sagged back into negative territory---and closed there, as the HUI finished down 1.87%.

The silver equities follow an almost identical price pattern, except Nick Laird's Intraday Silver Sentiment Index closed down 2.01%.

The CME Daily Delivery Report showed that a whopping 920 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  Remember that I said that, barring a surprise out of left field, November was normally a very quiet delivery month for both precious metals.  Well, that surprise out of left field just put in an appearance, as there was no hint of this in Wednesday's Preliminary Report, which is normally when you would see it first.

The only short/issuer was JPMorgan out of its client account---and the biggest long/stopper was Canada's Scotiabank with 833 of those contracts---and ABN Amro was a very distant second with 79 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed the surprise delivery, as the contracts open in the November delivery month blew out by 909 contracts to 942 contracts outstanding.  Silver's November o.i. fell by 21 contracts down to 89 contracts.

Minus the 920 contracts posted for delivery tomorrow, the November open interest now nets out to 22 contracts remaining.  Will we get another surprise 'out of left field' in what remains of the November delivery month?  Absolute nothing will surprise me going forward.

Another day---and another withdrawal from GLD.  This time it was 65,954 troy ounces.  There was also a report from SLV and, not surprisingly, an authorized participant added a whopping 2,012,354 troy ounces, which is one full day of world silver production.  One has to wonder how many Air Miles those 2,000 good delivery bars racked up in the process of getting to London.

Since yesterday was Thursday, Joshua Gibbons, the " Guru of the SLV Bar List," updated his website with the in/out data from the website---and this is what he had to report:  " Analysis of the 12 November 2014 bar list---and comparison to the previous week's list -- 1,911,745.4 troy ounces were removed, 1,432,087.6 troy ounces were added (all to/from Brinks London).  Five bars had a serial number change."

" The bars added were from Solar Applied Materials (1.3M oz), and 4 others (all less than 52,000 oz). All appear to be freshly minted bars (new to SLV)."

"The bars removed were from Russian State Refineries (1.5M oz), Prioksky (0.2M oz), and 6 others. All were bars that had been in SLV many years."

" As of the time that the bar list was produced, it was overallocated 98.6 oz.  All daily changes are reflected on the bar list."  The link to Joshua's website is here.

And, for the third day in a row, there were no reported sales from the U.S. Mint.

However, the mint did mention the fact that they will be selling 2014 silver eagles on an allocated basis starting on Monday---and I have a story about that in it the Critical Reads section, but if you can't wait, it's linked here.

There was decent activity in both gold and silver at the Comex-approved depositories on Wednesday.  In gold, 10,049.181 troy ounces were shipped out of HSBC USA---and precisely the same amount, to the nearest 1/1,000 of an ounce, was deposited, in Scotiabank's account.  The link to that activity is here.

In silver, nothing was reported received, but 1,386,077 troy ounces were shipped out the door.  And with the exception of JPMorgan, all the depositories had metal withdrawn.  The link to that action is here.

Here are the 6-year charts for both GLD and SLV.  The dichotomy between the two could not be more stark---and except for Ted Butler and myself, virtually nobody is talking about this, not even the 'lunatic fringe'.  You would think that any of these self-anointed silver experts would have stolen Ted's work by now [without attribution, of course] and attempted to lead the parade on this, but not a word so far.

Since today is Friday, the Shanghai Gold Exchange updated their website with their gold withdrawals for the week ending Friday, November 6.  They reported that 54.190 tonnes were taken out, which ain't too shabby---and here's Nick Laird's most excellent chart showing the change.

The next chart from Nick shows the Shanghai Gold Exchange's " Monthly Physical Gold Withdrawals"---and it will be interesting to see if they really put the 'pedal to the metal' [pun intended] for the remainder of the 2014 calendar year like they did in 2013.

I don't have a lot of stories for you today---and I'll happily leave the final edit up to you.

¤ The Wrap

There is a reason why the regulators seem to be finding that the big banks have manipulated every market except silver (and gold). In all the new findings and admissions of wrongdoing by the banks, there was no prior strong record of allegations that the banks were up to no good. Because of this, the regulators haven’t been accused of overlooking and missing crimes that they should have caught long ago, even though the crimes couldn’t have just started recently.

Another key difference to why the regulatory charges of manipulation in Libor and foreign exchange can’t be made in COMEX silver and gold is that damage to outsiders is too easy to prove in the case of the precious metals. This means the flood of private lawsuits that would emerge should the CFTC find what most everyone knows already (that silver and gold are manipulated) would swamp the banks and the CME. Can’t have that. - Silver analyst Ted Butler: 12 November 2014

It was another 'nothing' sort of day in the precious metals yesterday.  I'm still trying to figure out why volumes were so high in Far East and early London trading yesterday, as the price activity didn't warrant that sort of volume, although it's a reasonable bet that the price activity would have been different if the HFT boyz and their algorithms hadn't been around at that time.  Almost all of the roll-over activity occurred after the London a.m. gold fix was put to bed.

Here are the 6-month charts for gold, silver, copper, natural gas and crude oil.

As you are more than likely aware, crude oil set a new low for this move down---and natural gas has turned lower with a vengeance.  It's also a good bet that the Commercial traders are gleefully gorging on Managed Money traders as they dump longs and/or go short in these two key commodities.

And as I write this paragraph, the London open is about twenty minutes away---and it appears the HFT boyz and their algorithms have been hard at it in all four precious metals at the most illiquid time of day---on a Friday afternoon as the Far East trading session was winding down.

At their lows, which came shortly before 3 p.m. Hong Kong time, gold was down more than 12 bucks, silver [JPM's enfant terrible] was down 45 cents---that's 3 percent at this price---platinum down 9 bucks and palladium down 7.  Gold's net volume currently sits at 33,000 contracts---and silver's net volume is way up there at 9,700 contracts, which is huge, so it was obvious that a boat load of longs were dumped, or there was massive shorting going on.

Only a tiny percentage of the volume was roll-over related, so that makes it obvious that it was HFT trading that set off the selling binge.

The dollar index hit its Far East 88.07 high at precisely 2 p.m. Hong Kong time, but has now backed off to 87.98---up 20 basis points at the moment.

Today we get the Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday---and like I've said a couple of times this week already, I'm not exactly sure what to expect.  But whatever the numbers are, I'll have them for you tomorrow.

With the fear of deflation everywhere these days, there's always a sure cure for it if the powers-that-be really want to reverse the situation.  All they have to do is take their foot off the commodities complex in the COMEX futures market and let nature take its course---and we'd have commodity inflation in short order, like in days or weeks.  From there it wouldn't take long to spread into the finished goods sector.

Of course the flip side to that is that the stampede would be on from the paper asset side of the street to the physical asset side---and a melt-down in all things paper would be upon us.  Whether that is in the works or not remains to be seen, but gold/commodities card is the only one that the central banks have left---and the U.S. banks, being loaded up on the long side of all of them, are set to benefit the most, if this scenario comes to pass---either over a period or time, or as part of a financial 'reset.'

Frankly, we're so far down this rabbit hole that I'm no longer sure what to expect---and Chris Powell's quote from back in April of 2008 rings even more true today than it did back then, because " there are no markets anymore---only interventions."

But with China gobbling up 50-odd tonnes of gold a week---and silver well below its cost of production for the primary producers of the metal---it's only a matter of time before the situation resolves itself on its own.  The only question remaining is who will be left standing when it does.

And as I sent today's missive out the door at 5:15 a.m. EST, I see that all four precious metals have rallied off their current lows somewhat. 

Both gold and silver are still down on the day at the moment---and platinum and palladium are back to unchanged.  Net gold volume is now about 44,000 contracts, with decent roll-over activity---and silver's net volume is 12,500 contracts with still no roll-over volume to speak of.

The lion's share of today's volume so far was obviously associated with the co-ordinated sell-offs before the London open---and there hasn't been much net volume in either gold or silver since.  I would assume that is the case in the other two white metals as well. The dollar index has faded a bit more in the last two and a half hours of trading---and is now up only 9 basis points.

Today is Friday---and after the way the trading day has started, you should steel yourself for any eventuality when trading begins on the Comex at 8:20 a.m. EST.

See you here tomorrow.

Ed Steer

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