Tuesday, December 16: Today in Gold and Silver

NEW YORK ( TheStreet) -- After opening with a positive bias in New York at 6 p.m. on Sunday evening, the HFT boyz and their algorithms showed up at 9 a.m. Hong Kong time.  From there it traded flat before rallying a hair going into the London open.  Then it was all down hill until 8:30 a.m. EST in New York.  The subsequent rally ended at noon---and then JPMorgan et al had their way with the gold price for the remainder of the COMEX and electronic trading session.

The high and low ticks were recorded by the CME Group as $1,225.00 and $1,191.30 in the February contract.

Gold finished the Monday session in New York at $1,193.50 spot---down $28.30 from Friday's close.  Considering the price action, the associated volume wasn't as big as I would have expected---156,000 contracts, net of December and January.

Here's the 5-minute gold chart courtesy of Brad Robertson.  The charts starts at 2:00 a.m. MST, to which you have to add 2 hours for EST.  The lack of really big volume on the engineered price declines is very evident here.

The silver price wasn't spared by the HFT traders in Hong Kong trading, either---and after that, the price didn't do much of anything until noon in New York---and 'da boyz' really put the lumber to the price starting at 12:40 p.m. EST.  The bloodshed ended at exactly 3:30 p.m. in electronic trading.  After that it traded flat in the 5:15 p.m. close.

The high and lows recorded as $17.08 and $16.135 in the March contract.

Silver finished the day at $16.185 spot, down 85 cents from Friday's close.  Net volume was only 44,500 contracts.

The platinum chart was a mini version of the gold chart, with the high of the day coming just before Zurich opened on Monday morning.  After that it chopped lower, closing on its low tick of the day---$1,199 spot, which was down 26 bucks from Friday.

Palladium's rally attempt at the 6 p.m. EST open on Sunday evening didn't get far---and after that it chopped around the $810 mark until about 1:30 p.m. in Zurich---and down it went from there---probably with a little help.  Palladium closed at $796 spot---down $16 on the day---and almost on its low tick.

The dollar index finished the week last Friday at 88.335---and didn't do much on Monday.  It dipped as low as 88.19 about 3:20 p.m. Hong Kong time---and its 88.61 high came at 11 a.m. EST, which was the close of the precious metal markets in London on their Monday afternoon.  At that point it had a two hour long 30 plus point down/up dip---and then didn't do much after that.  The index finished the Monday session at 88.43---up 10 basis points.

The gold stocks opened down a bit, but then chopped around either side of unchanged until 12:20 p.m.---which was when the HFT boyz and their algorithms showed up.  Then the stock cratered---and didn't stop until 3:30 p.m.---and traded sideways from there into the close.  The HUI chart was painful to look at, as it closed down a whopping 7.01%.

The silver equities appeared to be trading on some other planet, because at one point they were up 4 percent.  Then 'da boyz' appeared shortly after noon EST---and even then the silver equities stayed in positive territory until they rolled over with a vengeance starting at 2 p.m. EST, with their low tick also coming at 3:30 p.m.  Nick Laird's Intraday Silver Sentiment Index closed down 'only' 4.33%.

The CME Daily Delivery Report showed that zero gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  Nothing to see here.

The CME Preliminary Report for the Monday trading session showed that gold open interest for December declined to 803 contracts, down 78 contracts from Friday's report.  In silver, the December open interest is now down to 195 contracts, which was a drop of 188 contracts from last Friday.

There was a withdrawal from GLD yesterday.  This time an authorized participant took out 76,859 troy ounces.  And as of 8:31 p.m. EST yesterday evening, there were no reported changes in SLV.

Much to my surprise, the U.S. Mint had another silver eagles sales report.  This time it was only 84,500 of them, but I was still amazed to see it nonetheless.  Maybe yesterday was the last day for 2014 sales.  Once again there was no gold of any type reported sold by the mint.

Over at the COMEX-approved depositories on Friday, there wasn't much action in gold, as only 16,075 troy ounces were reported received---and 2 kilobars were shipped out.  The link to that activity is here.  In silver, nothing was received---and 850,525 troy ounces were shipped out.  The link to that action is here.

Here's a chart that Nick Laird passed around yesterday.  It's the price of gold in Russian roubles for the last 30 days---and as you can tell, it protects against currency debasement very well.

I have a pretty decent number of stories for you today---and there should be some in the list below that you'll find worth reading.

¤ The Wrap

It was another well-above-average week in the physical turnover among the six licensed COMEX silver warehouses, as more than 6.6 million oz either came in or were removed. Total COMEX silver inventories fell 1.3 million oz to 176.4 million oz, remarkably close to where these inventories, the second largest in the world (behind the SLV), began the year. I know I beat this issue to death, but please consider that the weekly movement of 6.6 million oz annualized is more than 40% of the world mine production of silver.

I also know that this unprecedented physical turnover is one of the “unmentionable” topics of the precious metals market despite being so unusual and so easy to verify. At the very least, I know that no one would undertake the time, effort and expense to move such an unusually large amount of metal into and out from the six COMEX silver warehouses unless it was absolutely necessary to do so. To me, absolutely necessary is another term for insatiable demand. In addition to the remarkable consistency of the unusual movement over the past more than 3.5 years, the data suggest it is actually increasing. - Silver analyst Ted Butler: 13 December 2014

As I said in my Saturday column, everything was set up for an engineered price decline in both gold and silver because of the massive deterioration in the Commercial net short positions in both metals recently---and especially after those 'orphan' rallies last Tuesday.

Well, we certainly didn't have to wait long to get them, as the HFT boyz and their algos were there at 9 a.m. Hong Kong time on their Monday morning, two hours after trading began in New York on their Sunday evening---and after that it was only a matter of when they showed up during the COMEX trading session in New York.

And show up they did.

After its 'orphan' rally last Tuesday, gold touched its 50-day moving average yesterday, but did not close at, or below it.  Silver closed below its 50-day moving average---and after spending a day or so barely above its 50-day moving average, platinum is now below its by a considerable amount.  Palladium was never allowed to break convincingly above its 200-day moving average---and was closed well below it yesterday.

Here are the 6-month charts for all four precious metals, plus WTIC which, as you know, set a new low price for this move down.

So how far down the rabbit hold can 'da boyz' take us from here?  Beats the hell out of me.  Can the technical funds in the Managed Money category be coaxed back on the short side after making enormous profits on this trade just last month?  Are the raptors, the Commercial traders other than the Big 8, in a financial position to go back on the long side since they got their collective lights punched out during the last five weeks?  What can the Big 4 and Big 8 shorts expect to gain out of this mess?

I mentioned the small amount of volume for such big price moves yesterday---and that may be a sign that this engineered price decline may be different than the rest.  Ted Butler pointed out that with a lot of the raptors dead or dying after getting keelhauled for about $400 million, the market may actually be very illiquid.

Anyway, regardless of what happens, I will continue to watch with morbid fascination as JPMorgan et al continue to rape the precious metal industry, with barely a peep out of them---or the countries that live off them.  Of course that's why the World Gold Council and Silver Institute are there, to prevent the miners from doing anything, either individually or collectively.

And as I type this paragraph at 2:39 a.m. EST---the London open is twenty minutes away.  All four precious metals rallied a bit once New York opened at 6 p.m. on their Monday evening---however none of these rallies were allowed to get far.  Except for silver, the other precious metals remain up a bit from Monday's close.  Gold volume is considerable at the moment, at just a hair under 25,000 contracts.  Silver's volume is more than substantial at a bit more than 10,000 contracts.  The lion's share of all this volume in both metals was traded many hours before the London open. The dollar index is down 12 basis points.

The other event upon us is the FOMC meeting, which starts today---and lasts until tomorrow.  The smoke goes up the chimney at 2 p.m. EST on that day---and I can't remember a time when the powers-that-be didn't use the FOMC shindig to beat the crap out of the precious metals.  We obviously got a taste of that yesterday---and I await the almost predictable pounding it will get tomorrow at 2 p.m. on the dot.

Today is the cut-off for this Friday's Commitment of Traders Report, so all of Monday's nefarious price/volume action, along with whatever happens today, will be in it.

And as I send this off to Stowe, Vermont at 4:30 a.m. EST, I see that not much has changed.  Silver is still down a few pennies---and everything else is up a few bucks.  Gold volume is up to 32,000 contracts---and silver's volume is just north of 12,000 contracts.  The dollar index took a header starting right at the 8:00 a.m. London open---and as I type this, it's down almost 38 basis points at 88.05.  Will 'gentle hands' show up again today?  Oil is down another $1.62 a barrel.

Absolutely nothing will surprise me when I check the charts later this morning.

Before heading off to bed, I'd like to mention that my good friend Dennis Miller over at Miller's Money Forever has a new piece out titled " The Truth About Bonds".

The first question you should ask yourself is " Should I buy bonds in today's market?" Depending on which pundits you listen to, you may have heard that bonds are dangerous and should be avoided in today’s market. Other pundits still tout them as great investments—relatively safe and capable of generating the income we’re all so desperate for.  So, to whom should we listen? Click here to find out.  It costs nothing to read all about it.

See you tomorrow.

Ed Steer

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