Can JPMorgan et al., along with their associated high-frequency trader buddies, wring more blood out of this stone?

I'd forgotten all about yesterday's jobs report, so the $30 face-plant in the gold price starting at 8:30 a.m. EST was a bit of a shock. But once I realized what had caused it, then I calmed down a lot, as this is standard operating procedure for JPMorgan et al. and their associated high-frequency trading teams.

Gold traded around $1,310 spot [on very light volume] all of Friday right up until the jobs report release at 8:30 a.m. in New York. The low tick came at 10:30 a.m. in New York, right on the button, but the gold price managed to pare its losses as the trading day continued.

The CME recorded the high and low price as $1,313.40 and $1,280.50 in the December contract.

Gold closed late on Friday afternoon in New York at $1,289.50 spot, down $18.10 from Thursday's close. Gross volume was very high for the second day in a row, but once the roll-over and spreads were subtracted out, net volume was 151,000 contracts, the same as it was on Thursday.

Here's the New York Spot Gold [Bid] chart on its own, so you can see the Comex price action in more detail.

The silver price action was a virtual carbon copy of what happened in gold. The only difference was that the low tick came in a small spike down just moments before the 1:30 p.m. Comex close. The subsequent rally lasted until 2:45 p.m. EST, and then traded almost ruler-flat into the 5:15 p.m. electronic close.

The high and low prices as recorded by the CME were $21.905 and $21.25 in the December contract.

When all was said and done, silver closed the Friday trading session at $21.51 spot, down only 16 cents on the day, which wasn't a lot, all things considered. Net volume was 40,500 contracts, only a few thousand higher than Thursday's volume.

Here's the New York Spot Silver [Bid] chart on its own.

Friday's price action in platinum and palladium were basically mini versions of what happened in gold and silver. Here are the charts.

The Dollar Index closed on Thursday afternoon in New York at 80.86, and then traded flat until a rally began about 8:15 a.m. in New York. The subsequent rally ended at its high of the day [81.46] at 10:25 a.m. EST. By shortly after 12 noon EST, the Index was back down to 81.21 and traded sideways for the rest of the Friday session, closing at 81.23, which was up another 37 basis points.

Here's the one-year dollar chart, and I'd guess that the lion's share of this current rally is already behind us.

Not surprisingly, the gold stocks gapped down at the open. But by 9:45 a.m. EST, the low was in, and then they began to struggle higher. Then, starting around 2:15 p.m. in New York, the gold stocks began to rally at a faster pace, as the gold price rallied as well. The HUI managed to eke out a small gain, closing the trading session up 0.59%.

Nick Laird's Intraday Silver Sentiment Index chart had a pattern similar to the HUI, but its gain on the day was even more impressive, as it closed up 1.19%.

I'm wondering what the motive was for the precious metal equity buyers yesterday, and was it the good guys or the bad guys? I expect we'll find that out in the not-too-distant future.

The CME's Daily Delivery Report showed that zero gold and nine silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday, and as of 10:16 p.m. EST last evening, there were no reported changes in SLV.

There was no sales report from the US Mint, either.

Over at the Comex-approved depositories on Thursday, there were no in/out movements in gold. And, as is always the case, the real action was in silver. This time 300,763 troy ounces were reported received, and 648,491 troy ounces was shipped out. The link to that activity is here.

The Commitment of Traders Report, for positions held at the close of trading on Tuesday, showed only a slight improvement [302 contracts to be exact] in the Commercial net short position in silver. I must admit that I was expecting more. The Commercial net short position as of this report was 129.2 million ounces. Ted Butler said that JPMorgan's short-side corner in the silver market was around 85 million ounces, which is down a few million ounces from the last reporting period. They are short about 17% of the entire futures market in silver.

It was a different story in gold, however, as the Commercial net short position declined by 1.29 million ounces, and is now down to 9.39 million ounces. Ted said that most of the change came from the managed money within the Commercial category, and the rest came from the technical funds in the Non-Commercial category. According to Ted, the numbers in the report also indicated that JPMorgan Chase increased their long-side corner in the gold market by three or four thousand contracts; and as of Tuesday, it currently sits at 7.5 million ounces. This amount represents about 23% of the entire Comex futures market in gold on a net basis.

You couldn't make this stuff up!

Here's Nick Laird's famous “Days of World Production to Cover Short Positions” of all physical commodities that are traded on the Comex. Note that the obscene “days to cover” for silver has now been over taken by the even more obscene “days to cover” for palladium.

Unless there are big rallies on Monday and Tuesday that will distort it, the next COT Report will show further improvement in the Commercial net short positions in both gold and silver, as the data from the two engineered price declines in both metals that occurred on Thursday, and again on Friday, will be in it. Only the amount of those improvements is unknown at the moment.

I was under the impression that there was going to be a companion Bank Participation Report as well yesterday. But the November BPR was a “no-show,” so hopefully it will put in an appearance on Monday.

Here's another chart that Nick Laird sent my way late last night. It's titled “Monthly Chinese Gold Net Imports From Hong Kong”. He said he finally got the raw data for September yesterday, and here it is now. Bloomberg broke this story on the last day of October, as they had an inside source that gave them the data, and I reported on it in my November 1 column.

Despite the fact that it's the weekend, I don't have that many stories, but some of the ones I do have are incredible, so I hope you have the time for them.

Undoubtedly, JPMorgan will try to exploit the role it plays in market making as justification for its holdings being way above proposed position limits. The crooked bank will try to convince the CFTC that it is providing necessary liquidity to silver and gold; in essence, claiming that without JPM’s buying on sell offs and selling on rallies, silver and gold prices would be disorderly. This is rich – JPMorgan manipulates prices and then claims that if they stop their manipulation, prices would go crazy. I can’t help but think of the guy who kills his parents and then pleads for mercy because he’s an orphan. Will the CFTC buy JPMorgan’s bologna?Silver analyst Ted Butler: 06 November 2013

Today's pop “blast from the past” dates from 1971, and is another tune I remember playing on radio station CHAR-FM in Alert, N.W.T. way back then. If you're of that vintage, you should remember it as well. The link is here.

Ralph Vaughan Williams was an English composer of some note, and was just as famous as his fellow countryman, composer Sir Edward Elgar. His composition Fantasia on a Theme by Thomas Tallis for string orchestra was an instant hit at its premiere when it was performed in Gloucester Cathedral in September 1910.

The work takes its name from the original composer of the melody, Thomas Tallis (c.1505–1585). Vaughan Williams took much inspiration from music of the English Renaissance, and many of his works are associated with or inspired by the music of this period. Here is the London Philharmonic Orchestra doing the honours, and the link is here.

You don't need me to fill in the blanks as to what happened to precious metal prices yesterday. It was the high-frequency traders doing their thing when the jobs numbers came out. I hope you're not surprised, as this happens pretty much all the time when this event occurs, or when the FOMC minutes are released, or when some other precious metal-positive news comes out.

Where we go from here is the big unknown. Can JPMorgan et al., along with their associated high-frequency trader buddies, wring more blood out of this stone by rigging prices lower? I suppose, but as Ted says, we won't know it's over until we're looking at the bottom through the rear-view mirror of the subsequent rally.

Of course when that rally occurs, will JPMorgan et al. be there as not-for-profit sellers/short sellers of last resort once again? Beats the hell out of me, but as I mentioned yesterday, all we can do is wait it out.

December is probably the biggest delivery month for gold and silver for the year, and the lead-up to that is the roll-overs out of that delivery month and into various delivery months in the new year. There's a lot of outstanding open interest that has to dealt with between now and First Day Notice, and as I've said before, if you're holding a December contract [either long, short, or a spread trade] you only have three choices before the end of the month.

You can either sell, roll it over into a future delivery month, or stand for delivery on First Notice Day. Every contract of open interest, except for those standing for physical delivery, has to be out by the end of the month, and there's lots of open interest left to go, so guessing what happens price-wise between now and the end of the month is really a mug's game, and entirely up to JPMorgan et al.

That's it for today, as I've been at this for almost ten hours. I'm off to bed.

See you on Tuesday.

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