It was disheartening, but not surprising, to see JPMorgan et al show up

The gold price didn't do much in Far East trading yesterday—and the only rally worthy of the name began once the London a.m. gold fix was done for the day at 10:30 a.m. BST, which was 5:30 a.m. EDT.  Gold rallied until 8:10 a.m. EDT—about ten minutes before the Comex open—and at that point someone hit the 'Buy the dollar index/Sell the precious metals” button.  The low came a minute or so after 12 o'clock noon in New York—when the dollar 'rally' ended at precisely the same moment—and the precious metal traded sideways from there into the 5:15 p.m. EDT electronic close.

The high and low ticks were recorded as $1,234.00 and $1,219.30 in the December contract.

Gold closed in new York yesterday afternoon at $1,223.60 spot, up $2.10 from Wednesday's close.  Net volume was very decent at 159,000 contracts

Silver, of course, got sold down at the 6 p.m. Wednesday evening open in New York, but rallied back into positive territory around 11 a.m. Hong Kong time.  At that point it traded sideways for a few hours, before beginning to rally anew an hour before London opened.  Like gold, the rally got cut off at the knees a few minutes after 8 a.m. EDT—and spent the next forty-five minutes or so heading lower.  Then the silver price had the audacity to rally anew—and hit its high tick of the day shortly before 10:30 a.m. EDT.  At that point the HFT boys and their algorithms showed up—and by noon they had the price back to unchanged and, like gold, silver traded basically flat from there for the remainder of the New York session.

The low and high price ticks were reported by the CME Group as $17.325 and $17.72 in the December contract.

Silver finished the Tuesday session at $17.35 spot, down 3 cents from Wednesday's close.

Platinum and palladium traded similarly, as both had their London rallies capped a few minutes after 1 p.m. BST/8:00 a.m. in New York.  After that they continued to get sold down right into the 5:15 p.m. electronic close.  Both were closed down 8 bucks on the day.  Here are the charts.

The dollar index closed late on Wednesday afternoon in New York at 85.32.  From there it began to chop quietly lower, dipping a few basis points below the 85.00 mark on two occasions—with the last time coming about 12:40 p.m. BST in London.  Then minutes after 1 p.m. BST/8 a.m. in New York, someone hit the “Buy the dollar index/Sell the Precious Metals” button.  The 85.63 high tick came about 12:15 p.m. EDT—and the index shed a handful of basis points going into the close.  It finished at 85.55—which was up 33 basis points from its Wednesday close.

The co-relation between the beginning and end of the dollar 'rally'—and the beginning and end of the sell-offs in all four precious metals [gold and silver in particular]—was hardly coincidental.  It looked totally engineered to me.  But you're free to make up your own mind on this.

The gold stocks opened down a hair—and never looked back until the 3:00 p.m EDT low tick.  After that they rallied fairly sharply into the close.  The HUI finished down 'only' 3.54%—but it was down a bit over 5 percent at its low.

The silver equities followed a similar path as the gold stocks—and even though the silver price only closed lower by 3 cents, their shares got body slammed to the downside to the tune of 5.19%.

The CME Daily Delivery Report showed that zero gold and 4 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  Nothing to see here.

The CME Preliminary Report for the Thursday trading session was a no-show.  When I checked their website at 3:30 a.m. EDT this morning, they had the final trading data posted for September 30.  I'm sure that this will be fixed when the CME office opens in Chicago later this morning.

There were no reported changes in GLD yesterday, but 1,438,131 troy ounces of silver were withdrawn from SLV.  It's hard to say whether that was a 'plain vanilla' withdrawal because of price action—or whether the silver was more desperately needed elsewhere.

While on the subject of SLVJoshua Gibbons, the “Guru of the SLV Bar List,” updated his website with what was happening over at the iShares.com Internet site with regards to silver as of the end of trading on Wednesday.  This is what he had to report:  “Analysis of the 08 October 2014 bar list, and comparison to the previous week's list — 695,726.3 troy ounces were removed (all from Brinks London) and 3,756,699.6 troy ounces were added (all to Brinks London). No bars had a serial number change.

The bars removed were from: Britannia Refined Metals (0.3M oz), Handy Harman (0.1M oz), and 13 others.

The bars added were from: Solar Applied Materials (1.6M oz), Degussa (0.6M oz), Handy Harman (0.5M oz), Britannia Refined Metals(0.4M oz), and 24 others.

As of the time that the bar list was produced, it was overallocated 244.6 oz.  All daily changes are reflected on the bar list.  Again, about 3.7M oz of the deposits appear to be fresh bars (never in SLV before).”  The link to Joshua's website is here.

I also noted that the good folks over at the shortsqueeze.com Internet site updated their short interest data for GLD and SLV as of the last trading day in September—and this is what they had to say:  In SLV, the short interest increased by 9.37 percent, from 13.73 million shares/troy ounces up to 15.02 million shares/troy ounces.  I would assume, maybe wrongly, that this was 'normal' shorting of the shares.  This is naked shorting because the short seller never had to deposit any physical metal to back it up.  There are now two owners of the same shares, but only one has real silver backing it.

In GLD, the numbers went the opposite way, as the short interest in that ETF declined by 5.32 percent, from 1.55 million troy ounces, down to 1.47 million ounces.

There was no sales report from the U.S. Mint.

Over at the Comex approved depositories on Wednesday, there was a decent withdrawal in gold, as 96,750 troy ounces were shipped out—and 4,179 troy ounces were reported received.  Virtually all the activity was at Canada's Scotiabank—and the link to that is here.

The in/out activity in silver was much quieter than normal, as only 207,500 troy ounces were received—and 4,987 troy ounces were shipped out that door.  The link to that action is here.

Here are a couple of charts Nick sent out to all and sundry last night.  The first shows the weekly and cumulative withdrawals from the Shanghai Gold Exchange for each year going back to 2008—and the second is just the total yearly chart, with the last bars in both charts being the “Withdrawn-to-Date” total.  Both show precisely the same data, but presented differently.  The first one shows the intra-year trend, which is slightly different for each year.  I doubt if it means much, but it does give a birds-eye view over time.

I have very few stories today, so few in fact that I had to check around the Internet to see if anything had been missed.  It was just a very slow news day.  However, having said that, there are some must reads in here that you should find the time for.

The emergence of the technical funds on the short side of silver (along with gold and other commodities) over the past two years has transformed a marginal improvement into something so spectacular that I can hardly believe it has occurred. Simply put, the headlong rush by the technical funds onto the short side of silver (and gold and copper) has created the opportunity for a price explosion that didn’t exist in 2008.

At the price bottom in 2008, the total non-commercial short position (and that includes both managed money and other large reportable traders) was less than 11,000 contracts. The current COT report indicates that more than 44,500 contracts (222 million oz) are held short in the managed money category alone. In other words, the technical funds are short 4 to 5 times more silver contracts today than they were short on November 18, 2008. In less than three months, the technical funds have sold short 36,000 additional contracts (180 million oz) of COMEX silver. (For those curious about gold, the technical funds appear to hold twice as many short contracts as they did on November 18, 2008, similar in pattern to silver’s configuration, just not as extreme).Silver analyst Ted Butler: 08 October 2014

It was disheartening, but not surprising, to see JPMorgan et al show up in the precious metal and currency markets again yesterday shortly after 1 p.m. BST in London.  They still have the six key commodities firmly in their iron grasp and, for the moment, aren't prepared to let them rally.

Here are the 6-month charts for all six commodities.  I have the 20 and 50-day moving averages showing for each, except palladium, which has the 20 and 200-day moving averages, as the 50-day is miles above the 200-day.

The other thing worth noting is that WTIC was crushed to a new low for this move down yesterday—and copper got smacked pretty good as well, but didn't make a new low.

 

 

 

 

During the last three business days, crude oil has been hit for almost six bucks—and it had zero to do with supply and demand.  It had everything to do with JPMorgan et al—and their HFT boyz and their algorithms.  It's unfortunate that none of this will be in today's COT Report, or the companion Bank Participation Report.

And as I write this paragraph, the London open is about twenty minutes away.  Three of the four precious metals are down a bit from Thursday's close.  Palladium is flat.  Volumes are light, as gold is a hair under 14,000 contracts—and silver's volume is only 4,400 contracts.  The dollar index is down a small handful of basis points.

As I mentioned two paragraphs ago, we get both the Commitment of Traders Report and the companion Bank Participation Report at 3:30 p.m. EDT today.  Their should be improvements in the Commercial net short positions in all six commodities but, as I mentioned yesterday, I'm most interested in seeing what the U.S. banks have been up to during the last month of engineered price declines.

And as I send today efforts into cyberspace at 4:55 a.m. EDT, I note that all four precious metals got sold down a bit more in early London trading, but are now rallying a bit off their 9 a.m. BST lows.  Gold volume has doubled to 28,000 contracts—and silver volume is now up to 7,600 contracts.  The dollar index began to rally around 2:30 p.m. Hong Kong time—and is now up 20 basis points.

Since today is Friday, I haven't the foggiest notion as what price action we might see as the rest of the trading session unfolds—and nothing will surprise me once I roll out of bed later this morning.

But, before heading in that direction, I'd like to point out that the MP3 files from the San Antonio Summit are now available—and if you've purchased the Summit in that format, you can download them—and today [Friday] is the last day they can be ordered at a discount.  So if you want to buy the contents of the “Thriving in a Crisis Economy” Summit, you can find all about it here.  You can buy the CDs, or the MP3 files.  The choice is yours.

That's all I have for today—and I hope you enjoy your weekend, or what's left of it if you live west of the International Date Line.  And I'll also take this opportunity to wish all my Canadian readers a happy Thanksgiving long weekend.  Eat lots—and drink lots—as I plan on doing exactly that myself.

See you tomorrow.

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