It was a bit of a strange day price wise…but underneath it all was volume so monstrous that it took my breath away.

What little gains that had accrued during the Far East and London trading session had all but disappeared by the time that New York opened on Wednesday morning.  The rally that began shortly after trading began on the Comex, wasn’t allowed to go far…and from that point, the gold price got sold down to its low of the day, which was $1,702.30 spot.

The low tick came at 11:00 a.m. virtually right on the button…and the subsequent rally ran out of gas about 2:45 p.m. in the New York electronic market.  From there it got sold down a few dollars into the 5:15 p.m. close.

Gold finished the Wednesday trading day at $1,717.30 spot…up 40 cents on the day.   Net volume in early London trading, which I had mentioned in ‘The Wrap’ in yesterday’s column, was an off-the-charts 65,000+ contracts when I hit the ‘send’ button on Wednesday’s column at 5:20 a.m. Eastern time yesterday morning.  The closing gross volume for Wednesday was an astonishing 306,070 contracts…with net volume checking in around 225,000 contracts. Under no circumstance would one consider this to be normal trading volume…especially considering the small intraday price changes.  I’ll have more on this in ‘The Wrap’.

What I said about the gold price action above, could be directly applied to the silver price action on Wednesday as well.  The gold and silver charts are virtual carbon copies of each other.

Silver closed at $31.84 spot…down 18 cents from Tuesday’s close.  Silver’s volume was sky high as well during the entire Wednesday trading session all over Planet Earth.  Gross volume was an astonishing 77,047 contracts…and net volume was very chunky at 53,603 contracts.  This wasn’t normal price/volume action either.  Like gold, I have my suspicions about what may be happening…and I’ll talk about it ‘The Wrap’ as well.

As I mentioned in ‘The Wrap’ in yesterday’s column, the dollar index tanked by 40 basis points on the Obama election news in late morning Far East trading on their Wednesday…but began to recover strongly from that low about 3:30 p.m. Hong Kong time…about thirty minutes before the London open.

By 8:00 a.m. in New York, the dollar index had gained 60 basis points from its low tick in the Far East.  From its 8:00 a.m. 80.90 high tick, the index got sold down 10 basis points…and then traded almost ruler flat going into the close.  The index closed at 80.81…up 18 basis points from Tuesday’s close.

Even a cursory glance indicates that there was absolutely no relationship between the dollar index and the precious metal prices yesterday…especially during the Comex trading session.

The gold shares pretty much followed the gold price in the early going…with the low in the shares coming just a minute or two before 11:00 a.m. Eastern time…the low price tick for gold yesterday.  After that, the shares chopped higher…and moved back into positive territory.  Then, starting at 2:00 p.m. in New York, a strong buyer showed up…and the shares moved solidly higher from there, right into the close…almost without a break.  Despite the fact that the general equity markets got killed, the HUI finished up 1.83%…almost on its high tick of the day.

Despite the fact that the silver price finished down, most of the silver stocks finished in positive territory…and Nick Laird’s Silver Sentiment Index closed up 0.84%.

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The CME’s Daily Delivery Report showed that only 4 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Friday.

An authorized participant added 87,207 troy ounces of gold to GLD yesterday…and there were no reported changes to SLV.  Based on this information, it’s pretty obvious that last Friday’s price smash in both gold and silver was a 100% paper affair on the Comex…as it almost always is.

The U.S. Mint had a tiny sales report.  They sold another 50,000 silver eagles…and that was it.

The Comex-approved depositories reported receiving 1,203,658 troy ounces of silver on Tuesday…and also shipped 283,338 ounces of the stuff out the door.  Virtually all of the activity involved the Brink’s, Inc. depository…and the link to the action is here.

Three readers that I know of [Marvin Wieler, Eric Gould, Normand Bedard and Cave Caron] were kind enough to e-mail the CEO of Scotiabank, Mr. Rick Waugh…and they got the same non-answer canned response from Mr. Dave Shearim that I got, namely…

Dear Mr. Wieler,

Thank you for your email of November 6th addressed to Rick Waugh, CEO of Scotiabank. I have been asked to review your inquiry and provide a response to you on behalf of the Scotiabank Group.

We have determined from our review, the Scotiabank Group is not involved in the research or publication of the Commitment of Traders Report and as a result we are unable to comment on the data provided in the report. We respectfully recommend you consider making direct contact with the Commodity Futures Trading Commission (CFTC) as we understand they are the source of the report and would be better positioned to respond to you with answers to any inquiries you may have about the report.

Once again, thank you for writing, giving us an opportunity to review and respond to your inquiry.

Dave Shearim
Senior Manager – Office of the President
Scotiabank – Executive Offices
e-mail: [email protected]

Telephone: (416) 933-1700 or (877) 700-0043
Fax: (416) 933-1777 or (877) 700-0045

Although it’s obvious that the truth won’t be forthcoming from the Bank of Nova Scotia/Scotia Mocatta any time soon…if at all…at least they are aware of the fact that large numbers of people are now on to them.  I thank everyone who took the time to write in and make their opinions known.

Normally I would have a chart from Nick Laird at this point…but instead of that, Nick sent me a series of photos of a female Yellow-bellied Sunbird building her nest hanging from the Christmas lights on the verandah of Nick’s house.  Living in Canada, it’s hard for me to associate spring with the Christmas season…but south of the equator, that’s what happens.  Here are five photos that track the bird’s progress over the three days it took to construct the nest.  The fifth shot shows the male supervising from a safe distance.

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I don’t have a lot of stories today…and the first four are reactions to Obama’s victory yesterday.

Government is a broker in pillage…and every election is a sort of advance auction in stolen goods. — H.L. Mencken

It was a bit of a strange day price wise…but underneath it all was volume so monstrous that it took my breath away.  It started the moment that gold and silver began to trade on Tuesday evening in New York…Wednesday morning in Tokyo.

Normally a volume day such as we had yesterday would have been accompanied by either a massive rise in price…or a waterfall decline of biblical proportions in both metals.  Neither happened.  I suppose that it could have been high-frequency traders, but that sort of volume activity is even beyond them.

Besides the eye-watering volumes…the other thing that pegged the needle on my b.s. meter was the fact that it occurred on a Wednesday…the day after the cut-off for the weekly Commitment of Traders Report, which is due out tomorrow afternoon.

As I’ve mentioned countless times in this space over the years, sometimes JPMorgan Chase et al will make a big move after the Comex close on Tuesday, as that is the cut-off for the Friday Commitment of Traders Report…so they can hide what they’re doing until the following Friday…which gives them eight business days to do whatever they want to [or have to] do…without it showing up in any public document…and yesterday’s volume/price action may have been one of those times.  Whatever happened yesterday, won’t be known until next Friday’s COT Report comes out…not tomorrow’s.

But what might have happened is pure speculation on my part…and I want you to treat it as such.  I’m guessing that large long positions currently held by some traders in the Non-Commercial/Technical fund category, were sold directly to the ‘Big 4’ bullion banks [and maybe the raptors] in the Commercial category.  This allowed them to cover a huge portion of their short positions in both metals without having to compete for these long positions in the open market. If the raptors weren’t include in this ‘rescue’…then it could be the perfect set-up for a double cross…and a possible short squeeze of biblical proportions.

Ted Butler caught “da boyz” pulling this exact stunt quite some time ago…and it’s entirely possible that JPMorgan Chase et al decided to do it again, except on a much larger scale this time around.  This incident was the first thing that popped into my mind when I saw the Wednesday volume numbers on the CME’s website late yesterday afternoon.  But we won’t know for sure until a week from tomorrow…and anything could happen between now and then…and probably will.

In overnight trading, very little happened in the Far East on their Thursday.  Volumes were very light in both metals…and the dollar index was comatose, but spiked up to just about the 81.00 level shortly after London opened.  All of this is light years away from what was happening on Wednesday at this time of day.  And as I hit the ‘send’ button at 5:15 a.m. Eastern, both metals are down a bit from yesterday’s close in New York.

I haven’t a clue what to expect in New York trading today…but I’m getting the impression based on the share price action of the last five weeks…and the unprecedented volume numbers from yesterday…that there are big changes going on under the surface of he precious metals market that the powers-that-be are desperately trying to keep hidden for the moment.

I know that the Fed and the U.S. government would like some real positive inflation numbers to show up…and that can’t happen until the velocity of money picks up.  And nothing would help that process along more than a rapidly rising gold price…and it’s entirely within the realm of possibility that just such an event lies in the not-too-distant future…and the decks are being cleared to prepare for it.  An event such as that would be the end of the price management scheme in both silver and gold.

We’ll see.

Before hitting the sack, I’d like to remind you one more time that there’s still an opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold…and I respectfully suggest that you take out a trial subscription to either Casey Research‘s International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations…as well as the archives. Don’t forget that our 90-day guarantee of satisfaction is in effect for both publications.

I’ll see you on Friday…Saturday west of the International Date Line.

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