Thursday, October 27, 2011


Yesterday in Gold and Silver

Gold didn't do a whole heck of a lot in Far East trading on Wednesday, but the price was up about a percent shortly after 2:00 p.m. Hong Kong time...and that was the high print for the gold price in the Far East.

From there it went into a very slow, quiet decline that lasted until minutes after the New York open yesterday morning. The price bottomed at Tuesday's closing price in New York...and after that, a rally began. This rally ended just a few minutes before the 1:30 p.m. Eastern time Comex close...and the gold price pretty much traded sideways from there.

By the close of the New York electronic market at 5:15 p.m. Eastern time, gold was up $20.90 at $1,725.50 spot. Net volume was around 140,000 contracts.

The silver price pattern was a totally different animal to gold's price action yesterday...and was far more 'volatile' and, if you hadn't already noticed, it has a tendency to be more 'volatile' every day compared to gold. It was obvious to me that every time that the silver price tried to break out anywhere in the world on Wednesday, a not-for-profit seller was close by.

The high of the day [probably a hair over $34.00 spot] came shortly before the London a.m. silver fix at noon local time. After that, the price was never allowed to get very far...and had a downward bias for the rest of the day.

Silver closed up one thin dime from Tuesday's close at $33.37 spot. Volume was pretty decent at around 34,000 contracts net.

Here's the New York Spot Bid price for silver yesterday, to give you a closer look at the price action in the market where it really matters. You can see the actions of the not-for-profit seller quite clearly...although there is a chance that this could have been the small Commercial traders [Ted Butler's raptors] dumping their long positions for a profit. However, it's a stretch to think that a 'for profit' seller would ever exit a profitable long position in such a price-disrupting manner.

The stocks did just OK yesterday, but I'm hard pressed to explain the decline in the gold stocks starting about 10:25 a.m. Eastern time. In the space of less than 20 minutes, the HUI declined three percentage points. There was a tiny $12 drop in the gold price during that time frame, but a sell off of that size in the shares to go along with it, seemed like a bit of an overreaction.

But, when all was said and done, the HUI still finished up 1.04% on the day.

Despite the fact that silver was only up a dime on the day, most of the silver shares did much better than that...and Nick Laird's Silver Sentiment Index closed up a respectable 1.85%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 66 gold and 7 silver contracts were posted for delivery on Friday. Most of the delivery action in gold centered around JPMorgan. The link to the 'action' is here.

There were no changes reported in either GLD or SLV yesterday.

The U.S. Mint had a smallish sales report yesterday. They sold 1,500 ounces of gold eagles along with 40,000 silver eagles.

And, for the second time in a week, the action at the Comex-approved depositories on Tuesday is not worth mentioning.

1 Tonne Gold Kangaroo Coin

Up until yesterday, Canada held the record for the largest gold coin in the world...a 100 kilogram monster that was produced by the Royal Canadian Mint some years back.

My good friend Bron Suchecki at The Perth Mint sent along this photo of the world's now-largest gold coin in the world...a 1,012 kilo leviathan.

(Click on image to enlarge)

There's also a way to view it in three dimensions...and see how it was made. The link to that is here...and is a must read/watch/listen. The West Australian newspaper also did a big story on it...and here's the link to that.

Silver analyst Ted Butler posted his mid-week commentary yesterday for his paying subscribers...and I've expropriated a couple of paragraphs for you.

"As far as the timing of the implementation of the all-months-combined position limits [in silver], it would appear to be at least a year or two from now. Upon first hearing of the time delay, most come to the conclusion that the silver manipulation will remain a crime in force for the next year or two. Perhaps that will turn out to be the case, but I don’t think so. Markets have a way of discounting and adjusting to certain known events before enactment, even manipulated markets. Further, a trader would garner unwanted regulatory attention were he to play over position limits up until the deadline.

"Of more concern is the current level of proposed silver position limits of over 4,500 contracts (22.5 million oz). This level is three times the 1,500 contract level requested by thousands in the public comments. The question becomes is the level so high as to negate the anti-manipulative protections promised by legitimate position limits? While I could make the case for 1,500 contracts in my sleep, the staff’s formula is a good first step in silver position limits. Everything is relative. 1,500 contracts would be a better level than 4,500 contracts, but 4,500 is a heck of a lot better than what we have now, which is no limit at all, thanks to the CME which only seems to exist to reward its biggest members and punish the public by promoting manipulative trading practices . Certainly, JPMorgan is currently short more than three times the amount of the proposed silver position limit, so one would think they have some short covering in store or som e fancy explaining to do. Time will tell, but my reaction to what just transpired is positive.

I have the usual number of stories for you again today...and, once again, I will leave the final edit up to you.

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