I really don’t know how things are going to play out between now and year end…and neither does anyone else.
The spike in the dollar index produced a corresponding drop in the gold price in mid-day trading in the Far East yesterday. The low price tick of the day came somewhere just below the $1,720 spot price mark at the beginning of the lunch hour in Hong Kong.
From there, the gold price began to rally, but it was obvious from the price pattern that there was a not-for-profit seller lurking about…especially during the Comex trading session in New York…as every rally attempt ran into resistance. The New York low came at London p.m. gold fix, which was 10:00 a.m. Eastern time.
The high price tick came at 1:00 p.m…and from that point, gold got sold off immediately going into the Comex close thirty minutes later. After that, the gold price traded sideways for the rest of the electronic session.
Gold closed at $1,729.20 spot…up $1.10 on the day. Gross volume was pretty heavy, as there were lots of roll-overs out the December contract. Net volume was very light at around 88,000 contracts.
The silver price followed the same downward price pattern in Far East trading that gold did…and the low of the day came at around 1:00 p.m. Hong Kong time. Silver then spent the rest of Wednesday trying to claw its way back above its Tuesday closing price…finally making during the New York lunch hour.
Silver’s high tick [$33.53 spot] came at the same time as gold’s…a few minutes after 1:00 p.m. Eastern…and from there the metal traded sideways into the 5:15 p.m. close of electronic trading.
Silver closed at $33.39 spot…up 20 cents on the day. Gross volume was big because of switching volume…but the net trading volume was only around 22,500 contracts.
As you can see from the 3-day dollar index chart below, the index blasted skyward about 11:25 a.m. Hong Kong time yesterday morning…and within forty-five minutes, the rally had topped out. The price hung in there until around 3:20 p.m. in Hong Kong before rolling over, hitting its New York low at the London p.m. gold fix…10:00 a.m. Eastern, 3:00 p.m. GMT. From there the index traded sideways until just about the close, when it hit another air pocket, dropping about 14 basis points in just a few minutes.
When all was said and done, the dollar index closed at 80.80…down 20 basis points from Tuesday’s close, with almost all of the ‘loses’ coming in the last few minutes of trading.
Here’s the Wednesday chart on its own.
Not surprisingly, the gold shares sold off a bit at the open, hitting their low of the day at gold’s low…minutes after 10:00 a.m. at the London p.m. gold fix. From there they rallied about two percent by shortly before lunch in New York…and then more or less traded sideways into the close of the equity markets at 4:00 p.m. Eastern. The HUI finished up 1.47%…and the usual chart from ino.com is M.I.A., so here is a little dinky one that I stole from Kitco.
The silver stocks performed much better yesterday than they did on Tuesday…and Nick Laird’s Silver Sentiment Index closed up 1.37%.
(Click on image to enlarge)
The CME’s Daily Delivery Report showed that 21 gold contracts were posted for delivery on Monday, the 26th.
For the first time in quite a while, there were no reported changes in either GLD or SLV.
The U.S. Mint had a decent sales report. They sold 4,000 ounces of gold eagles…1,000 one-ounce 24K gold buffaloes…and 225,500 silver eagles.
Over at the Comex-approved depositories on Tuesday, they did not receive a single ounce of silver…but they did report shipping 927,344 troy ounces out the door. Almost all of it came out of Scotia Mocatta. The link to that activity is here.
Here’s a chart that Australian reader Wesley Legrand sent our way yesterday. It’s from the good folks over at www.chartoftheday.com. Here are the comments that came with it…
“For some perspective on the long-term performance of the stock market, today’s chart presents the Dow priced in another global currency — gold (i.e. the Dow/gold ratio). For example, it currently takes less than a mere 7.5 ounces of gold to ‘buy the Dow’ which is considerably less than the 44.8 ounces it took back in 1999. Priced in gold, the Dow has been in a massive 12-year bear market. The current downtrend channel is the third of this bear market. While this latest channel is the least steep of the three, the Dow priced in gold has just failed to punch through resistance for the fourth time.”
I have the usual number of stories today…and I hope you have the time to run through all of them before my next column, which will be on Saturday.
In silver, the headline total commercial net short position increased by a moderate 1,300 contracts, to 51,000 contracts. This was essentially the first increase in 5 weeks, the same as in gold. The real story was in the details. Somewhat surprisingly, the silver raptors actually bought an additional 1,300 contracts, increasing their net long position to 9400 contracts, their largest net long position since August 21. The standout feature was that the big 4 (read JPMorgan) sold 2,000 additional contracts short, markedly increasing the big 4’s concentrated short position on only a modest advance in the price of silver. It would be hard not to classify this concentrated short selling as overt price capping. When one trader does most of the new short selling, price-capping is the first motivation that comes to mind, as free market sellers are more interested in getting the highest price possible, not in halting a price rally. Seeing how the new silver short selling was due to JPMorgan, it is reasonable that JPM had the same motive in gold as it had in silver, namely, keeping the price rally from picking up a head of steam. Therefore, I would bet JPM was the big gold short seller this [past reporting] week as well. – Silver analyst Ted Butler…17 November 2012
I was impressed to see both gold and silver finish higher especially considering the fact that they got sold off pretty hard during the Far East trading session. However, I wouldn’t read a whole heck of a lot into it, as we’re still trading in a very tight price range in both metals…and as I’ve said a few times already this month, I’m expecting a somewhat similar pattern for the rest of November, as the roll-overs out of the December contract continue.
But, having said all that, I’m still somewhat surprised that “da boyz” haven’t smashed the price based on the obscene and grotesque short positions they hold in the Comex futures market. Maybe they are waiting until December…and then we’ll get hit between the eyes just like what happened in December 2011. Don’t forget that the price got smoked in the lead-up to Christmas…and then really got blasted to the downside in the normally dead period between Christmas and New Years.
Just to refresh your memory, here are the gold and silver charts that cover that period…and they ain’t pretty.
(Click on image to enlarge)
(Click on image to enlarge)
However, I’m just speculating, as I really don’t know how things are going to play out between now and year end…and neither does anyone else. As I keep saying, I’m always hoping for the best, but always ever watchful for “in your ear”.
Of course we may have arrived at the point that the numbers in the Commitment of Traders Report really don’t matter…but until that theory is laid to rest by JPMorgan/Scotia Mocatta et al getting over run…I’ll stick with the COT Report’s interpretation of what’s probably coming at some point in the future.
By the way, because of the Thanksgiving holiday, this week’s COT Report won’t be posted on the CFTC’s web site until Monday.
In Far East trading on their Thursday, not much of anything happened price wise. Not surprisingly, volumes were virtually non-existent…but there were a fair amount of roll-overs in what little volume there was. The dollar index was flat. This situation has continued into London trading as well…and with New York shut for the day, I’ll be very surprised if much happens during what’s left of the Thursday trading session.
As I mentioned in this space yesterday, I will have no column on Friday, so I’ll see you here on Saturday…Sunday west of the International Date Line.
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