¤ The WrapWe can dismiss any thought of a developing pattern of Friday rallies, as Friday’s plunge in gold and silver and most other commodities is already being referred to as Black Friday. As a result of heavy futures trading, prices crashed during what is usually a quiet holiday period; with gold falling $35 (2.9%) for the week and silver ending lower by a full dollar (6.1%). As a result of silver’s steeper percentage decline, the silver/gold price ratio widened out to 75.5 to 1, the cheapest silver has been relative to gold in more than five years. Because the Thanksgiving holiday period is always such a slow business time in the U.S., there was little activity in physical metals dealings, wholesale and retail. That there was such frantic volume and price volatility in precious metals and copper underscores a consistent theme of mine that has become increasingly more obvious – prices are set on the futures market and not in the actual world of supply and demand. Besides being strictly against the intent of commodity law, this illegal market perversion has now reached the point of threatening global financial stability. - Silver analyst Ted Butler: 29 November 2014 There wasn't a thing in Monday's price action in any of the 'Big 6' commodities that was supply/demand related. It was all paper trading on the Globex/COMEX. JPMorgan and their algorithms did the dirty just after New York opened on Sunday evening---and the short covering rally that began in the early afternoon in the Far East, and ended around the Comex close in New York yesterday afternoon was more paper being traded. This had zero to do with the Swiss gold referendum, as the polls showed a week ago that the 'no' side was going to win. But it was too good an opportunity to pass up, with the action starting on the thinly-traded Black Friday session when 'da boyz' were the only game in town. It was a wild trading day in the 'Big 6' commodities yesterday---and I've thrown natural gas in here as well. Gold blasted through, and closed above its 50-day moving average---but silver and platinum broke through, but were closed just below their respective 50-day moving averages---and palladium either couldn't, or wasn't allowed to break above its 200-day moving average. If you're a T.A. freak, we had huge key reversals to the upside in the three of the four precious metals. So big, in fact, that even Stevie Wonder could have seen them. Of course we've had these key reversals painted for us before---and all have ended in tears. It remains to be seen if this particular trend reversal is allowed to have any legs. As is 100 percent the case, it all depends on what JPMorgan and the other big traders do. As silver analyst Ted Butler said in his Commitment of Traders commentary to his paying subscribers yesterday: " As for Monday’s price action, I can’t imagine how it can be explained in non-manipulative terms. It can’t be clearer that prices are controlled on exchanges owned and operated by the CME Group because nothing else can explain why silver fell so sharply overnight, only to rally $2.50 from the lows. The only question is how much, if any, new short selling was by the JPM and the Big 8. We should know by the next COT Report [on Friday] ." So we wait some more. And as I write this paragraph, the London open is about 25 minutes away. The gold price got sold down about five bucks in the first of hour trading in New York on Monday evening---and has done precisely nothing since then. Silver's price hasn't done much, either---and is down about a dime as of this writing.
Ditto for platinum and palladium. Net gold volume at the moment is pretty chunky at 33,000 contracts---and silver's net volume is a hair under 10,000 contracts, which certainly falls into the heavy category as well. The dollar index, which did nothing during most of the Far East trading session, rallied a bit over 10 basis points starting at 2:30 p.m. Hong Kong time---and is currently up 14 basis points at the moment. Nothing to see here. Today, at the close of COMEX trading, is the cut-off for this Friday's Commitment of Traders Report---and all of Friday's and Monday's spectacular price/volume action should be in it. We also get the companion December Bank Participation Report---and that will be helpful as well. If you're looking to me to give you an indication of where we go from here price-wise in all four precious metals, plus the other two commodities, copper and WTIC---you're asking the wrong person. As I said, what you're looking at in the price action is all paper trading, not supply/demand fundamentals, so the question should be put to Jamie Dimon & Co.---as they and their ilk control prices on the GLOBEX/COMEX. In some ways, Monday's price action can be compared to the big rallies we had in gold and silver back on the first two Friday's in November. Both came like a bolt of lightning out-of-the-blue that was all paper trading once again, as there was no news to account for those rallies. Here's the 30-day gold chart so you can see these rallies for yourself. The silver chart looks similar. There was no news to account for the big sell-offs on this chart, either. And as I hit the send button on today's column at 5:45 a.m. EST, I see that all four precious metals are down from their earlier highs in late Tuesday afternoon Far East trading---and most are down substantially from Monday's closes in New York. Net gold volume is just north of 58,000 contracts---and silver's net volume checks in at 17,000 contracts. The rally in the dollar index is still ongoing---and is now up 26 basis points. Once again, at least for the moment, there has been no overnight or London follow-through to the big short covering rallies that occurred yesterday. This has always been the case after key upside reversals like we saw yesterday---and have seen in the past. I certainly don't want to prejudge this one but, at the moment, it looks like the same old, same old. I await the COMEX trading session with some interest. That's more than enough for today---and I'll see you here tomorrow.