Wednesday, November 19: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price didn't do a lot during most of the Far East trading session, but starting about thirty minutes before the London open---3:30 p.m. Hong Kong time---a rally developed in it and the other three precious metals as well.  The high tick came minutes after 5:10 a.m. EST, as I was watching the chart as it happened---and as I said in The Wrap section of yesterday's column, HFT volume was immense---as JPMorgan et al threw 'whatever it took' at it to prevent the price from exploding to the upside, which is precisely what it was attempting to do, as it had all the hallmarks of a 'no ask' market.

'Da boyz' had the price more or less back in the box---and back below $1,200 spot---by the London p.m. gold fix, but the price chopped quietly higher from that point right into the close of electronic trading at 5:15 p.m. EST.

The low and high ticks were reported by the CME Group as $1,182.70 and $1,204.10 in the December contract.

Gold closed yesterday at $1,197.50 spot, up only $10.30 from Monday's close.  Net volume was only 137,000 contract, but at least 40 percent of that occurred before the London a.m. gold fix.

Here's the 10-minute tick gold chart courtesy of Brad Robertson.  You can see the volume blow out when the rally started 30 minutes before London open, along with the big volume spike that occurred either at, or just before the London a.m. gold 'fix' was in when the price spike got capped.  Add two hours for EST.  The ' click to enlarge' feature helps here.

After getting hit for about two bits in the first three hours of trading in the Far East on their Tuesday morning, the silver price rallied back to almost unchanged before it took off thirty minutes before the London open.  The not-for-profit sellers had the price back to unchanged by 1 p.m. GMT---and twenty minutes later 'da boyz' in New York finished the job once COMEX trading began.  After that, the silver price didn't do a lot.

The low and high ticks in silver were reported as $15.97 and $16.40 in the December contract.

Silver finished the Tuesday session at $16.19 spot, up only 4.5 cents from Monday.  Net volume was only 30,500 contracts but, once again, 40 percent of that occurred before the London a.m. gold fix when the rally in silver met the same fate as gold's.

It was more or less the same chart pattern for platinum as it was for gold, with the rally back in the box by the time the London p.m. fix rolled around.  Platinum closed up 7 bucks.

After not doing much for most of the Far East trading session, palladium also rallied starting thirty minutes before the London open---and despite a minor sell-off, continued to inch higher as the trading day progressed.  However, there was obviously a "Do Not Pass $775 Spot" sign up, as the price was not allowed to break above that level.  Palladium was only allowed to close up 4 dollars.

The dollar index closed in New York late on Monday afternoon at 87.995--which turned to be its high tick for Monday, because it dropped 20 basis points in the first hour of trading in the Tuesday session.  It began to head south with more authority staring about 40 minutes before London opened---and that's when the rallies began in all four precious metals.  The slide ended about 10:10 a.m. GMT---and that's the moment that the precious metals topped out.  After that the index attempted to rally a few times, with no success---and when all was said and done, it closed at 87.61---down about 39 basis points on the day.

The gold stocks gapped up a couple of percent at the open---and then chopped steadily higher for the remainder of the day---as the HUI closed close to its high tick, up 5.33%.  We'll take it.

It was more or less the same story for the silver equities, as Nick Laird's Intraday Silver Sentiment Index closed up 4.81%.

Here's the long-term Silver 7 index---and you can see that despite the decent gains of the last three trading sessions, we've barely crawled off the bottom.

The CME Daily Delivery Report drew a blank for the second day in a row.  There were only copper deliveries posted yesterday.

The CME Preliminary Report for the Tuesday trading session showed that November open interest in gold dropped by one contract down to 20 contracts---and once again silver's November o.i. was unchanged at 88 contracts outstanding.

There were no reported changes in GLD---but there was a big deposit made in SLV yesterday, as an authorized participant added a chunky 2,395,515 troy ounces of the stuff.  That's more than one day's world silver production, so it's a good bet that it's another pile of good delivery bars with some decent Air Miles/Frequent Flyer points attached to them.

There was another sales report from the U.S. Mint.  They sold 500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 298,500 silver eagles.

There was no in/out activity in gold worth mentioning at the COMEX-approved depositories on Monday.  But, as is almost always the case, the story was different in silver, as 1,018,220 troy ounces were received---and 728,24 troy ounces were shipped off to parts unknown.  The link to that action is here.

I have have a decent number of stories today---and I hope you find some in the list below that interest you.

¤ The Wrap

But more than ever, the current setup brings an old theme of mine directly into the crosshairs. To the point of redundancy, I’ve written over the years that the speed and extent of any silver rally would be determined by whether JPMorgan and the other seven big concentrated shorts added to short positions for the purpose of capping the price of silver. The events of the past two weeks bring that premise into sharper focus than ever before. With an assured reduction of potential raptor long liquidation, if JPMorgan and the other big concentrated shorts don’t add significant new short positions on the next silver rally (possibly begun on Friday) silver will fly like a rocket to the moon.

In the event these big crooked commercial shorts do add big numbers of new silver shorts, this must be accepted as prima facie evidence of manipulation presented in advance. One thing for sure, with the cost of primary silver production several dollars above the current price, it is not economically conceivable that any new short selling by the 'Big 8' could possibly be for legitimate hedging purposes below $20. After all, no producer looks to lock in a loss when hedging and that means any commercial shorting below $20 can’t be legitimate selling. Maybe there is some grey area ahead, but it looks to me like a case of black and white – either we explode if the big commercials don’t add new shorts or the price gets capped illegally if the big commercial shorts do add new shorts. - Silver analyst Ted Butler: 15 November 2014

Well, I was hoping for no upside price action yesterday in order that I would get unfettered view of what happened during the bifurcated trading day last Friday, when this Friday's Commitment of Traders Report was posted.  But with the big blow out---and subsequent price capping---of the rally in both gold and silver in the three hours prior to the London a.m. gold fix yesterday morning, that hope sort of went out the window, as yesterday at the close of COMEX trading was the cut-off for Friday's COT Report.

Make no mistake, dear reader, if JPMorgan et al hadn't stepped into the 'no ask' market in gold like they did, we would be looking at precious metal prices at the moment that would make your eyes water.  I don't call these guys 'sellers of last resort' without good reason---and we saw it again in spades on Tuesday, especially in gold.

Here are the 6-month gold and silver charts with yesterday's data in place.  The gold price got stopped just short of its 50-day moving average---and silver wasn't allowed to go anywhere.

And as I type this paragraph, the London open is a bit over 20 minutes away.  All four precious metals are down from their Tuesday closes in New York---albeit not by much in the case of palladium.   With no fires to put out in Far East trading on their Wednesday morning, net gold volume is much more subdued---around 20,000 contracts, with a decent amount of roll-over activity, at least compared to Tuesday at this time.  Net volume in silver is very low, around 2,500 contracts---and a big chunk of the gross volume is roll-overs.  Everything looks 'normal' at the moment---whatever passes for normal these days.  The dollar index isn't doing much at the moment, but it's up 14 basis points from the New York close yesterday.

I was somewhat surprised to see such a large deposit in SLV yesterday, as physical silver in that quantity is pretty hard to come by these days---and IF, and it's pretty big if, the silver rally is allowed to continue, then SLV will require even more silver as investors pile back into that ETF.  At that point JPMorgan will be forced to short the shares in lieu of depositing physical metal---and one has to wonder what will happen from that point onwards, because all the silver ETFs will be looking for metal at that stage.

It seems like an impossible situation with no viable solution that I can see---and what the end game will be for all the silver ETFs when physical metal is no longer available at any price, will be a sight to behold.  One way or another, that day is coming.

And as I prepare to sent this off to Stowe, Vermont at 5:30 a.m. EST, I note that three of the four precious metals had tiny rallies at the London open---and the rally in gold was stopped in its tracks just under the $1,200 spot price mark.  All four precious metals are currently trading at, or a hair above their closing prices in New York on Tuesday.

Gold's net volume is at 37,000 contracts---and silver's net volume is 5,600 contracts.  About 15 percent of gold's gross volume is roll-overs out of the December contract, but in silver it's closer to 25 percent.  The dollar index is up only 10 basis points at the moment.

It's hard to tell what the precious metals will do for the rest of the Wednesday trading session.  I know what they'd like to do, but it's painfully obvious from yesterday---and so far today---that the they aren't being allowed to get far, at least for the moment.

And as I hit the send button, I see that gold has popped above the $1,200 spot price mark, so nothing will surprise me when I check the charts after I roll out of bed later this morning.

Here's the Kitco gold chart as of 5:30 a.m. EST---

But before heading in that direction, I'd like to mention the following one more time---and that's that Nick Giambruno, the Senior Editor over at the Internet site is launching a brand new publication entitled " CRISIS SPECULATOR"---and you can read all about it by clicking here.

Now I'm off to bed---and I'll see you here tomorrow.

Ed Steer

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