The gold card is about the only one they have left to play

It was a nothing day in gold yesterday—and the tiny gains from Far East and London trading began to disappear at 10:30 a.m. EDT—and the New York low was in at 11:00 a.m. EDT, the close of trading in London.  After that, the gold price traded sideways for the remainder of the Friday session.

The high and low ticks aren't worth looking up.

Gold finished the day at $1,231.00 spot, down 90 cents from Thursday's close.  Net volume barely moved the needle at only 80,000 contracts.

After the obligatory sell off at the 6 p.m. EDT open in New York on Thursday evening, the silver price didn't do much until a rally began once the noon London silver fix was put to bed.  That got halted right at the 9:30 a.m. EDT open of the equity market in New York—and at 10:30 a.m. the HFT boyz showed up, taking silver down to its spike low tick shortly before 11:30 a.m.  Within ten minutes, the silver price rallied back to unchanged on the day—and traded almost ruler flat into the 5:15 p.m. electronic close.

The high and lows were recorded by the CME Group as $17.355 and $17.135 in the December contract.

Silver closed yesterday at $17.205 spot, up a penny from Thursday's close.  Net volume was in the vicinity of  22,000 contracts.

The platinum price didn't do a lot on Friday—and also got sold down a bit at 10:30 a.m. EDT—just like gold and silver.  Platinum was closed down seven bucks.

Palladium made several rally attempts in early Zurich trading, but both got sold down before they could develop into anything.  Then at 10:30 a.m. in New York, the same not-for-profit sellers showed up in this metal as well—and palladium got closed down a couple of bucks.

The dollar index closed late on Thursday afternoon in New York at 85.83.  It slid to 85.75 by 2:30 p.m. Hong Kong time—and then rose quickly to its 85.88 high about 8:15 a.m. BST in London.  From there it headed lower at an ever faster pace, until someone caught the proverbial falling knife at the London p.m. gold fix at precisely 3 p.m. BST/10 a.m. EDT.  The low tick at that points was 85.57.  It 'rallied' back about twenty basis points before chopping sideways into the close.  The index finished the day at 85.73—which was down 10 basis points from Thursday's close.

The gold stocks chopped within a percent or so of unchanged during the entire New York session yesterday—and the HUI closed down a smallish 0.31%.

The silver equities, like the gold shares, tried to stay in positive territory, but the sell-offs across the board at 10:30 a.m. EDT in all four precious metals put the silver equities in a deeper hole—and although they struggled mightily back into positive territory, they couldn't manage a positive close, as Nick Laird's Silver Sentiment Index also finished the Friday session in the red by a tiny amount—0.12%.

The CME Daily Delivery Report showed that 50 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The only short/issuer was Barclays out of their in-house [proprietary] trading account once again—and they also stopped 39 of those contracts in their client account.  The balance was picked up by Canada's Scotiabank.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in October rose 53 contracts—and now stands at 286 contracts.  Silver's remaining October open interest dropped from 8 contracts to 2 contracts.

There was another withdrawal from GLD yesterday, as an authorized participant took out 144,194 troy ounces.   And as of 6:59 p.m. EDT yesterday evening, there were no reported changes in SLV.

There was a decent sales report from the U.S. Mint yesterday.  They sold 5,000 troy ounces of gold eagles—1,500 one-ounce 24K gold buffaloes—and 125,000 silver eagles.

Month-to-date the mint has sold 55,500 troy ounces of gold eagles—20,500 one-ounce 24K gold buffaloes—3,940,000 silver eagles—and 400 platinum eagles.  Based on these numbers, the silver/gold sales ratio is a hair under 52 to 1.

There was no in/out movement in gold at the Comex-approved depositories on Thursday, but the gargantuan in/out movement in silver more than made up for it, as 2,451,366 troy ounces were received—and 846,366 troy ounces were shipped off for parts unknown.  The big deposit was at HSBC USA—and the big withdrawal was from Brink's, Inc.  The link to yesterday's action, which is worth a quick look, is here.

The Commitment of Traders Report for positions held at the close of Comex trading on Tuesday was in the ballpark of what I was expecting, but there was the odd surprise.

The first surprise was in silver—and it was a positive one, as the Commercial net short position actually declined by 1,669 contracts, or 8.3 million troy ounces.  The Commercial net short position is now down to 72.96 million troy ounces, which is pretty much on par with the lowest short position these traders have had for many years.

However, Ted Butler said it appeared that JPMorgan added 2,000 contracts to their short-side corner in the Comex silver market during the reporting week, so their short positions now stands at 12,000 contracts, or 60 million troy ounces which, using the number from the previous paragraph, represents about 82 percent of the total Commercial net short position.

Ted was rather surprised by this turn of events—and told me he was going to spend some time thinking about it between now and the time he posts his weekly review to paying subscribers early this afternoon EDT, so he may have something to add to his initial thoughts on this.

Under the hood in the Disaggregated COT Report, there was very little change in long and short positions in the Managed Money category, so all of the reporting week's activity was commercial trader vs. commercial trader,  along with a bit of long position reduction in the Nonreportable/small trader category.

The disappointment was in gold.  I was expecting/hoping that the Commercial net short positions wouldn't be much worse than the prior week's COT Report, or at least not over 20,000 contracts worse.  That was not the case, as the Commercial net short position blew out by 26,075 contracts, or 2.61 million troy ounces.

Most of the activity on the rally during the reporting week was the Managed Money going long and covering shorts, to the tune of 20,292 contracts.  The Nonreportable/small trader category covered 3,250 of their short positions, so the balance of the contracts, about 2,500 or so, involved the Commercial traders.  On the other side of all these trades—and capping the price in the process—was JPMorgan et al.  And while on the subject of JPMorgan, Ted said that they reduced their long-side corner in the Comex gold market by 2,000 contracts—and it now stands at 16,000 contracts, or 1.6 million ounces.

As I mentioned in yesterday's column, the price action since the Tuesday cut-off, which has been down three days in a row, has certainly reduced the Commercial net short position by a decent amount.  But, having said that, 'da boyz' could still skin the Managed Money crowd to the tune of 30-35,000 Comex contracts, if they wanted to put them all back on the short side again.  That would drive the price down to around the October 6 low price tick without too much trouble.

So, if the T.A. crowd is looking for a double bottom in gold, the powers-that-be are in a perfect position to oblige them, especially with the good start they've had to the process during the last three trading days of this week.

So we wait.

Before leaving the COT Report, there were also very decent improvements in the COT structure of both copper and platinum—and bit in palladium as well.  The only fly in the ointment—as I just mentioned—is in gold.

The Shanghai Gold Exchange reported their withdrawals for the week ending Friday, October 17—and the magic number for that week was 51.506 tonnes, which is a very chunky number once again.  Here's Nick Laird's excellent chart that shows the change.

Since this is my Saturday column, I have a fair number of stories for you today, including three or four that I've been saving for today.  I also have a fair number of big reads that fall into the must read category, so I hope you have enough time in what's left of your weekend, to read them all.

Today's pop 'blast from the past' is by a North American rock group that started out in Chicago back in 1967.  Once the group got established, there was no stopping them, as the 1970s belonged to them.  They're second only to the Beach Boys in Billboard singles and chart success.  This 1984 ballad, with lead singer Peter Cetera doing the honours, has producer David Foster's fingerprints all over it—and the link is here.

I'm not sure how many plays have been performed or how much classical music has been written to the words of Shakespeare's Romeo and Juliet, but it's a lot over the centuries.  I was listening to Sergei Prokofiev's interpretation of it on CBC-FM a few days ago—and although interesting; I, like most people, prefer the Tchaikovsky version.  His third and final iteration of this work was completed in 1880, but was not premiered until May 1, 1886.

Here is The London Symphony with Maestro Valery Gergiev conducting—and this is as good as it gets.  The link is here.

Nothing much happened in the precious metals yesterday, except for the fact that silver's rally in New York was obviously dealt with in the usual manner—and three of the four precious metals were closed down on the day.  Volumes were light across the board.

Here are the 6-month charts for both gold and silver.  The engineered 'failure' at gold's 50-day moving average is still intact.

Tuesday and Wednesday of next week we get the FOMC wiener roast in Washington—and it will be interesting to see if the comments at 2 p.m. EDT on Wednesday will be used as another platform for 'da boyz' to hammer the precious metals, particularly gold, down to its October 6 low.

With the Commercial traders positioned in the 'Big 6' commodities to their maximum advantage—and further improvement possible if next week's FOMC news is used to beat this group of commodities into the ground one last time, we could see important never-to-be-seen-again lows in all of them.

If the powers-that-be want to avoid deflation at all costs, the only credible option they have left is to let commodity prices run to the upside for awhile—starting with the four precious metals,  plus copper and crude oil.  But as I've also mentioned before, this particular path is fraught with its own dangers, one being that once this inflation genie is out of the bottle, commodity prices included, it's always a tough one to get back in.  But it's a much preferable option to the one that's staring them in the face right now—and that's serious deflation.

Will they do it?  Beats me.  But the gold card is about the only one they have left to play, as money printing and their zero interest rate policy is now a spent force as an inflation-generating tool.

For these reasons, I'll be watching the Sunday night open in New York with great interest, along with the first three trading days of the new week.

I'm done for the day—and the week—and I'll see you here on Tuesday, or Wednesday if you live just west of the International Date line.

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Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations.

An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff  the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information, [email protected]