Friday, November 28: Today in Gold and Silver

NEW YORK ( TheStreet) -- With the U.S. markets closed, the activity in Far East trading in all four precious metals came as surprise, at least to me---and all of it took place before there was any news on the oil front out of Europe, as the high tick of the day came minutes after 9 a.m. Europe time on their Thursday morning.  After that, the gold price didn't do much---and the Globex trading system closed/shut down at 6 p.m. GMT, which was 1 p.m. EST.

With no data out of the CME Group in New York, I guesstimate the low and high ticks at $1,187 and $1,198 in the December contract.  The gold finished trading down at $1,189.80 spot, down $8.20 on the day.  Gold's net volume was around 83,000 contracts, with a good two thirds of that traded before the London a.m. gold fix.

Silver really got taken to the cleaners.  At its 12:45 p.m. Hong Kong low tick it was down about 45 cents from Wednesday's close.  From there it rallied until shortly after 3 p.m Hong Kong time---just like the gold price---and then sold off starting just before noon in London, which may have been an early silver fix.

Silver finished the Thursday 'session' at $16.20 spot, down 34 cents---and it's net volume was around 18,000 contracts, with more than 50 percent of that amount transacted before London opened.

Platinum had a similar down/up move---and its recovery rally high topped out shortly before Zurich opened---and it drifted lower from there until 6 p.m. GMT/1 p.m. EST.  Platinum was closed down an even 10 dollars.

Palladium rallied sharply the moment that trading began in New York at 6 p.m. on Wednesday evening.  But the not-for-profit sellers showed up within ten minutes---and palladium hit its Thursday low tick at 1 p.m. in Hong Kong.  After that it struggled back above $800 the ounce, with a spike high shortly after 4 p.m. Zurich time---and it got sold down a bit from there, but managed to finish up 3 bucks on the day, closing at $803 spot.

The dollar index closed late on Wednesday afternoon in New York at 87.68---and didn't do much until it dipped to its 87.53 low about 3:10 p.m. Hong Kong time.  From there it rallied in stair-step fashion for the remainder of the day, closing at 88.01---up 33 basis points from Wednesday.

With New York closed, there was no trading in the precious metals stocks, so there was no HUI or Intraday Silver Sentiment Index---nor was there any other report out of New York yesterday.

On Thursday afternoon, Nick Laird passed around the three charts posted below---and shows what happens to the gold price when national currencies got to hell in a hand basket, a fate that will befall the U.S. dollar at some point.

The only real reason for a column today was to deal with the stories that I knew I would accumulate---and I certainly didn't want to be faced with the task of shoving them all in Saturday's column.

¤ The Wrap

Without a doubt, the main criterion for why this is the best COT setup ever to me is the radical change in JPMorgan’s formerly concentrated short position in COMEX silver futures. In the six years in which I had first discovered that JPMorgan (as a result of acquiring Bear Stearns) had become the biggest COMEX silver short, the bank has never held a smaller short position than it does now. In fact, considering what I think the bank has accumulated in physical silver over the past three and a half years, it appears to me that JPMorgan is massively net long in silver overall, to the point of perhaps holding the largest silver position in history.

There is no question that a dominant and concentrated position is at the heart of every manipulation; and JPMorgan’s concentrated short position in COMEX silver since March 2008 meant that the bank was the big silver price manipulator (and allowed me to get away with calling JPM crooked). But right now, JPMorgan is no longer the big silver short and may, in fact, be the big silver long. It took years and a price rigging that resulted in a sickening drop in the price of silver, but JPMorgan has succeeded in completely reversing its overall position in silver from short to long. This is nothing less than the most radical structural change in silver over the past six years, if not forever. - Silver analyst Ted Butler: 26 November 2014

I must admit that I'm not sure what to read into yesterday's price action in Far East trading on their Thursday morning.  Volume up until the London open was very heavy, at least double the normal volume---whatever passes as 'normal' these days.  It had all the hallmarks of the the HFT traders and their algorithms, but it's impossible to tell for sure.  Next Friday's Commitment of Traders Report may or may not shed some light on what happened, but that report is a lifetime away at the moment.

The noteworthy price events in gold and silver yesterday was their apparent 'failure' at their respective 50-day moving averages---particularly in gold.  As I pointed out the other day, there was a similar 'failure' at gold's 50-day moving average back in the third week of October---and it remains to be seen if this 'failure' is a sign of things to come.  But, on the other hand, their respective prices may be held just under their 50-day moving averages for as long as possible, without having to resort to another brutal leg down courtesy of JPMorgan et al.

So we wait.

Here are the 6-month gold and silver charts as of Wednesday's close.

With New York closed yesterday, there are no updated 6-month charts for any commodity, but the only commodity that counted was crude oil---and with the price down almost five bucks, it will be ugly when I post it in Saturday's column.  At the moment [3:15 a.m. EST] it's trading at US$68.66 a barrel---down another 39 cents.

And as I type this paragraph, the London open is about twenty minutes away---and for the second day in a row, all four precious metals got sold down in the Far East.  This time their respective lows came minutes before lunchtime in Hong Kong trading---and all have rallied off their these lows but, with the exception of palladium, all have a ways to go to get back to their closes on Thursday.

With Thursday's trading volume now mixed in with Friday's volume, it's hard to tell what the real Friday volumes are at the moment, but based on what I reported for Thursday, they don't look out of line for this time of day.  As a matter of fact, it looks to be on the lighter side in both gold and silver.

The dollar index is off it's earlier high, which appeared to come around noon Hong Kong time--the low tick in all four precious metals---and is only up 5 basis points at the moment.

And as I sent this out the door at 5:15 a.m. EST this morning I note that gold's tiny rally ended at the London open---and it's now trading sideways, down six bucks from yesterday's close.  Silver met the same fate, along with a HFT sell-off to a new low for the day [and below $16 spot] about 8:40 a.m. GMT---and it's now attempting to rally back to unchanged.  Platinum and palladium were only affected a tiny amount at the London open---and both are struggling higher at the moment, but both are down a couple of bucks from Thursday's close.  It's hard to tell what the volumes are in silver and gold at the moment.

The dollar index continues to struggle higher---and is up 18 basis points at the moment.

With today being Friday---and the last trading day of the month---I must admit that I'm not overly optimistic about what may happen for the remainder of the trading session.  But we've had a few Friday surprises to the upside so far this month---and today may or may not turn out to be another one of those, so I'll keep an open mind until I get a chance to check the charts later this morning.

Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see you here tomorrow.

Ed Steer

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