Saturday, November 29: Today in Gold and Silver

NEW YORK ( TheStreet) -- The gold price was under gentle selling pressure right from the 6 p.m. open in New York on Thursday evening, but was only down a couple of dollars by 9 a.m. in New York on Friday morning.  Then one London was closed for the weekend at 4 p.m. GMT/11 a.m. EST, the HFT boyz put in an appearance---and by 12:55 p.m. they had the price down to its low of the day.  It recovered a few dollars off its low before trading ended around 1:45 p.m.

The high and low ticks were reported by the CME Group as $1,199.30 and $1,163.90 in the February contract.

Gold closed in New York yesterday afternoon at $1,168.50 spot, down $21.30 from Thursday's close.  Net volume, which includes Thursday's volume as well, was 262,000 contracts.

The silver price pattern was similar to gold's, right up until a few minutes before 9 a.m. in New York.  The HFT traders and their algorithms went to work, sell stops were hit---and JPMorgan et al just stood there buying all longs sold, plus taking the long side of any short trade being put on.  The same scenario occurred in gold and platinum as well.

The high and low ticks were recorded as $16.575 and $15.41 in the March contract.

Silver finished the Friday session at $15.58 spot, down 62 cents from Thursday's close.  Net volume, including Thursday's, came to 73,000 contracts.

Platinum was also under selling pressure, hitting its Far East low shortly after 12 noon Hong Kong time.  From there it rallied back to slightly above unchanged just before 1 p.m. Zurich time, but once the COMEX opened at 8:20 a.m. EST, that was all she wrote.  The rally attempt mid-way through the engineered price decline in that metal didn't slow 'da boyz' down one bit.  Platinum was closed down $19 on the day.

Palladium, which has been hoeing its own row for a while now, hit its low of the day at noon Hong Kong time---and was up a couple of bucks by the COMEX open---and took off from there.  But all rally attempts got hammered flat by the not-for-profit sellers---and palladium was only allowed to close up a couple of bucks from Thursday.  Heaven only knows how high it would have gone if 'da boyz' hadn't show up when they did.

The dollar index, which closed late on Thursday afternoon in New York at 88.01, rallied up to 88.22 just minutes after the London open, before falling down to its 87.95 low a few minutes before noon GMT.  From there it rallied, with some help I would think, up until 12:35 p.m. EST, before sliding a handful of basis points into the close.  The index finished at 88.23, which was up 22 basis points from its Thursday close.

The gold stocks got crushed at the open---and worked their way lower as the trading day progressed, finishing virtually on its low tick of the day, as the HUI got clocked for a loss of 8.11 percent, the largest one day decline I can ever remember.

The silver stocks did even worse, as Nick Laird's Intraday Silver Sentiment Index got closed for a loss of 9.96%.

Well, dear reader, once again you must ask yourself this question:  Who are the buyers on big down-days like this---and will they be sellers on the next rally?  I suspect that the new owners of all these shares that were sold yesterday now rest in the strongest of hands.

The CME Daily Delivery Report for First Day Notice in the December delivery month actually came out on Wednesday evening---and I completely missed it.  It showed that 582 gold and 1,614 silver contracts were posted for delivery on Monday.  In gold, the only short/issuer worth mentioning was Canada's Scotiabank with 580 contracts.  The biggest long/stoppers were HSBC USA, Credit Suisse and JPMorgan in its in-house [proprietary] trading account---with 180, 123 and 101 contracts respectively.  There were 17 other long/stoppers that took delivery of much smaller amounts---and they made up the rest.

In silver, the four largest short/issuers were Credit Suisse, Scotiabank, Newedge USA and Jefferies out of its client account.  The contracts for each were 553, 428, 328 and 277 respectively.  HSBC USA as by far the biggest long/stopper with 946 contracts.  JPMorgan, in its client account, stopped 110 contracts, with Merrill taking delivery of 99 contracts.  There were about twenty-five other long/stoppers that divided up the rest between them.

Since I missed posting the above in either my Thursday or Friday column, the Daily Delivery Report for 'Day 2' of the December delivery month has now overwritten the data for 'Day 1'---and here's the 'Day 2' information.

In gold, there were 109 contracts posted for delivery within the COMEX-approved depositories on Tuesday.  There were no large short/issuers of note---and the two biggest long/stoppers were HSBC USA and JPMorgan out of its in-house [proprietary] trading account with 50 and 46 contracts respectively.

In silver, another 517 contracts contracts were posted for delivery.  The two largest short/issuers were JPMorgan with 256 contracts out of its client account---and Merrill in distant second with 99 contracts.  The biggest long/stopper by far was HSBC USA with 339 contracts.  Like the 'Day 1' report, there was a regular smorgasbord of issuers and stoppers in yesterday's report as well---and they're worth a quick look.  The link is here.

It should be noted that in the first two delivery days in December, HSBC USA has taken delivery of 1,285 silver contracts of the 2,131 that have been posted for delivery so far.  That's 6.4 million ounces.

The CME Preliminary Report for the Friday trading session showed that December open interest in gold fell by 6,967 contracts---and is now down to 4,540 contracts, net of 'Day 1' deliveries.  In silver, December open interest crashed by 2,198 contracts---and is now down to 1,752 contracts.  That number would be net of First Day Notice deliveries as well---and you can subtract the 517 contracts posted for delivery on 'Day 2' to get a more accurate picture as of the close of Friday trading---so there's only a bit over 1,200 silver contracts to go in the December delivery month---not including 'out of left field' delivery surprises between now and the end of the year.  Those possible surprises apply to gold as well.

There was another withdrawal from GLD yesterday.  This time an authorized participant took out 67,265 troy ounces.  And as of 6:52 p.m. EST, there were no reported changes in SLV.

Because of Thanksgiving, I had to prod Joshua Gibbons, the " Guru of the SLV Bar List" into updating his website with the activity over at iShares.com for the week ending Wednesday, November 26---and this is what he had to say.

" Analysis of the 26 November 2014 bar list, and comparison to the previous week's list:  1,277,014.8 oz were removed and 893,000.5 oz were added (all from/to Brinks London), and 66 showed as a serial number change."

" The bars removed were from Russian State Refineries (0.4M oz), Handy Harman (0.3M oz), and 16 others.  The bars added were from Met-Mex (0.6M oz), and 11 others."

" As of the time that the bar list was produced, it was overallocated 25.1 oz.  All daily changes are reflected on the bar list.  All the bars that were removed had been in SLV for many years, and about 96% of the bars added had been in SLV before."

The U.S. Mint had a sales report to close out the month of November.  They sold 3,000 troy ounces of gold eagles---and another 118,500 silver eagles.

For the month of November, provided nothing is added to the above sales on Monday, the U.S. Mint sold 60,000 troy ounces of gold eagles---12,500 one-ounce 24K gold buffaloes---and 3,426,000 silver eagles.  I shan't compute the silver/gold sales ratio, as there was big chunk of November that there were no silver eagles sales because there were none to sell.

I should point out that up until they stopped selling silver eagles after the first week of November, the mint had sold 1,260,000 of them.  Since they resumed selling silver eagles on November 17, they sold an additional 2,166,000.  It's a big question mark as to how many 2014 eagles they may or may not sell in December, as I'm sure that most of their silver eagle production is now being stockpiled for January 2015.  We'll see how things shape up next week.

There wasn't a lot of in/out activity in either gold or silver at the COMEX-approved depositories on Wednesday---and I'm sure that the impending holiday had something to do with that.  In gold, only 2,932 troy ounces were reported received---and 29,332 troy ounces were shipped out.  In silver, 175,161 troy ounces were received---and nothing was shipped out.

Because of the Thanksgiving holiday in the U.S.A. on Thursday, there was no Commitment of Traders Report on Friday.  It goes up on the CFTC's website at 3:30 p.m. EST on Monday afternoon---and I'll have all the details for you on Tuesday.

Nick Laird sent along the weekly gold withdrawal number from the Shanghai Gold Exchange for the week ending November 21---and the magic number was 52.5 tonnes.  Here's Nick's most excellent chart showing that.

And here's another chart that Nick passed around in the wee hours of Saturday morning.  It's the premium/discount for Central Fund of Canada's precious metal fund---and as Nick points out, the discount is now back to long-term lows.  You can buy silver and gold for 13 percent below spot at the moment.  Don't expect this Christmas sale to last.

I have about the same number of stories that I had in Friday's column---and the final edit is all yours.

¤ The Wrap

It does remain to be seen if JPMorgan and/or the other eight largest COMEX shorts will add new short positions aggressively on the next silver price rally, but if that occurs at least we should be able to see it in future reports. Highlighting the importance of JPMorgan’s involvement in any future silver short selling, without JPM joining in, I doubt the big eight would succeed in capping prices as they have on every past occasion. And considering the swirl of negative news surrounding big banks influencing commodity prices, it’s hard for me to imagine JPMorgan not beating it out of Dodge City and quitting their manipulative control of silver to the downside. If JPMorgan (or the big eight) do cap silver prices ahead, I promise not to be anywhere near as polite as I’ve been to these crooks until now.

Aside from the radical transformation of JPMorgan from being the world’s largest silver short to possibly the largest long in history, the recent double cross of the raptors (the smaller commercials who were net long) is remarkable in its own right. The forced sale of more than 12,000 net contracts by around 8 to 10 raptors over the past few weeks has probably knocked those traders out of silver permanently considering the estimated size of their losses (over $200 million). There is no doubt these 12,000 contracts would have been sold on the next silver rally and now that is impossible. Mathematically, this greatly increases the burden on the 8 big shorts if they intend to cap the next silver rally. These 8 big shorts, with or without the collusive cooperation of JPMorgan, will have to sell many more contracts short than they would have had the raptors not been double crossed.

I admit that my reasoning could turn out to be wrong, but I believe the increased short selling burden of the Big 8 will persuade them not to even try, or alternatively, if they do try, they may fail in their manipulative intent. - Silver analyst Ted Butler: 26 November 2014

Today's pop 'blast from the past' is by a Swedish foursome that needs no introduction---and neither does the song.  It was performed live in Leysin, Switzerland back in February 1979---and the link is here.  If I had to pick my favourite ABBA tune, it's linked here.

Today's classical 'blast from the past' is a video I've posted before.  It's Mozart's Piano Concerto #20 in D Minor, K466 with Czech pianist Ivan Klánský as soloist.  Some kind soul has now posted this concerto on the youtube.com Internet site in HD---and as one complete work, rather than the four separate parts it was posted in before.  The improvement in video and audio quality is immense---and as I said when I posted in last time several years back, I consider Klánský's interpretation of this piece to be definitive.  I just love the cadenza in the first movement, which goes on for more than two minutes---and which he composed himself.  I wish this was available on CD, as I'd buy it in a heartbeat.

The orchestra is the Virtuosi di Praga---and it's world class in every respect.  Maestro Jiří Bělohlávek conducts.  The link is here.  Enjoy!

In a final 'up yours' to the precious metals world on the last trading day of November, 'da boyz' kicked the living snot out of gold, silver and platinum prices during the COMEX trading session yesterday.  This had nothing to do with supply or demand, as it was all engineered by 'da boyz' and their trading algorithms.  And at the same time, we've had spectacular failures by both gold and silver at their respective 50-day moving averages.  What that portends for the future prices of these two metals is hard to judge at this point in time.

In my chat with Ted on Friday afternoon, he was wondering out loud who the sellers might have been that got forced to selling longs---or went short on this move down---as there has to be a seller for every buyer.  JPMorgan et al are always the buyers on the these engineered price declines, so who does that leave as the sellers at these below-the-cost-of-production price levels?  I suggested it might be the 'unblinking longs' in the Managed Money category, but that seems unlikely on the face of it.

We may or may not find out in next Friday's Commitment of Traders Report---and I know that Ted will be talking about this in his weekend review to paying subscribers later today.

Here are the 6-month charts for the 'Big 6' commodities, plus natural gas.  As you can see, there were new record lows for this move down in both copper and crude oil.

The day of reckoning for all things paper is out there somewhere, but at times like this, it's hard to keep your chin up.  And as I've said a few times over the last few years---this too, shall pass.

I'm comforted by the fact that gold demand now appears to greatly exceed yearly mine supply---and that silver demand is hand-to-mouth---and has been that way since early 2011, as confirmed by the manic in/out flows of the physical metal at the COMEX-approved depositories, along with the steadily-climbing levels of physical silver in SLV.  And the not-to-be-forgotten 'Mr. Big' buyer in U.S. silver eagles and Canadian silver maple leafs for the last number of years.

I also take solace in the comments that Alan Greenspan made to the Financial Times' Gillian Tett at the Council on Foreign Relations, that at some point in the not-to-distant future, the gold price will be " materially" higher than it is now.  In Greenspan speak, I interpret " materially" to mean significant multiples of today's price.

But as to when, I don't know.  Jim Rickards says a couple of years at best.  My belief is that we won't even get that far---and what comes after that is unknown---Special Drawing Rights, perhaps---but it's a reasonable bet that the current economic, financial and monetary system will not go quietly, especially if it goes quickly---as I suspect it will.

Tomorrow is the gold vote in Switzerland---and no matter which way it goes, I'll be watching the Sunday night open in New York with more than the usual amount of interest.

That's all I have for today---and for the week---and I'll see you here on Tuesday.

Ed Steer

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