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first_imgSponsor Advertisement I’m only speculating here, but I would guess that JPMorgan et al were covering short position like mad in all precious metals yesterdayWell, that little uptick shortly before 10:00 a.m. in London yesterday morning turned out to be the high of the day for gold.  If it made it above the $1,600 spot level, it was only for a few seconds before the buyer[s] ran into an avalanche of selling from the usual not-for-profit suspects.It was all down hill from there, of course…but the gold price managed to open the Comex trading session in the black by a few bucks, but that lasted less than five minutes before the high-frequency traders showed up and began to engineer the price lower.The most ferocious part of the price decline started at 10:30 a.m. Eastern time…and in well under twenty minutes, the gold price cratered for another fifteen bucks.That proved to be the low the day at $1,570.70 spot…and from there a nice rally began that took the gold price back to over $1,592 spot.  But that was as high as it got…or was allowed to get…and the gold price slowly drifted lower until shortly before 4:00 p.m. Eastern time…and from there traded flat into the 5:15 p.m. electronic close.Gold finished the Tuesday session at $1,582.40 spot…down $6.20 from Monday.  It should come as no surprise that the volume figures for Tuesday were 50% higher than Monday’s, as net volume was around 129,000 contracts.It was precisely the same story in silver…except the price was more ‘volatile’.  Silver’s high…around $27.65 spot…came at the same time as gold’s…shortly before 10:00 a.m. in London.  Silver was still up about a dime at the Comex open until the high-frequency traders showed up at 9:40 a.m….and then again at 10:35 a.m. Eastern time.The low in silver [$26.68 spot] came at the same as gold’s low.  The subsequent rally took silver back above its Monday close and the Tuesday opening price on the Comex…and the New York high of the day.  But that wasn’t allowed to last, and silver closed the trading session at the same closing price as Monday…$27.31 spot.  What was the chance that that was a coincidence?  Net volume was also 50% higher than Monday’s volume…with 36,000 contracts traded vs. 23,000 contracts traded on Monday.The dollar index didn’t do a whole heck of a lot during Far East or London trading on Tuesday.  It was down about twenty basis points in early Far East trading…but then rallied back to basically unchanged by the 8:00 a.m. London open.  From there it more or less traded sideways until exactly 10:00 a.m. Eastern time, which also happened to coincide with the time of the London p.m. gold fix.Then, in the space of about forty minutes, the index rallied about 40 basis points.  The dollar index high tick just coincidentally happened to coincide with the low of both gold and silver in New York yesterday morning.From that high, the index got sold off…giving up all its gains and more by 4:00 p.m. Eastern time.  From there, the dollar index traded flat into the close, finishing the Tuesday trading session down about 15 basis points at 82.92.I’d like to say that yesterday’s sell-off in the precious metals was all currency related, but that certainly doesn’t explain the decline in both metals that began at 10:00 a.m. in London…and which continued right up until 10:00 a.m. in New York.  A large chunk of the dollar index rally was in the bag before either gold or silver got sold off hard…and it’s my opinion that they didn’t fall off the turnip truck at 10:30 a.m. Eastern on their own…they got pushed.The gold stocks actually spent a few minutes in the black after trading began in the equity markets in New York yesterday morning.  But that didn’t last too long..and from there they got sold off over two percent to their low at 10:40 a.m. Eastern time.  Then they rallied sharply until a few minutes after 12 o’clock noon…and then traded sideways from there.  The HUI finished down 0.97% on the day…and back below the 400 mark.There was the odd green arrow in the silver stocks yesterday…but they closed mostly down on the day…but Nick Laird’s Silver Sentiment Index actually finished the Tuesday trading day up 0.56%.  Considering the closing price of the seven big cap silver stocks that make up this index, I found this very hard to believe…and I told Nick that.(Click on image to enlarge)The CME’s Daily Delivery Report showed that 2 gold and 436 silver contracts were posted for delivery on Thursday.  The big shocker, at least for me, was that the big short/issuer was JPMorgan in its in-house/proprietary account.  They’re delivering 426 contracts.  The biggest long/stopper was the Bank of Nova Scotia with 324 contracts…along with 63 contracts for JPMorgan in its client account…and 43 contracts for ABN Amro.  The Issuers and Stoppers Report is definitely worth looking at…and the link is here.There were no reported changes in either GLD or SLV…and the U.S. Mint didn’t have a sales report either.Over at the Comex-approved depositories, they reported receiving 599,779 troy ounces of silver on Monday…and shipped 906,225 ounces of the stuff out the door.Ted Butler pointed out to me yesterday that Sprott’s Physical Silver Trust [PSLV/PHS.U] has already reported receiving around 5.2 million ounces of the silver that it had ordered.Here’s an e-mail that I received from reader Eddie Costik yesterday…and it’s pretty much self-explanatory…Ed…”I have news for you….the home industry in the U.S. is finished as we know it. Retail sales for home improvement were down 1.6% for the month of June. I’m still in touch with wholesale distributors of building materials…nobody in that industry is making any money. My small retail lumber company is only one of five remaining in a five county area of Central Pennsylvania. Everyone is struggling. The halcyon days from the past are over. Mortgage rates are at all time lows but very few can qualify because of stringent qualification requirements. There are so many foreclosures that banks are holding them off the market so they don’t have to write them down. If Obama gets his way…. eliminating the Bush tax cuts we’re headed for an economic abyss. Then again how much worse can it get? A lot. Hold onto your behind this is not going to end well.” It was a very slow news day yesterday, so I’m delighted to report that I don’t have much reading material for you…but there are quite a few of the ones that I do have, that are well worth your time.As investors begin to realize that gold has not peaked, and that today’s “high” prices are actually just a step on the way up, I expect more of them to pile into the gold sector. The pressure to find sectors and companies with a good return will send Main Street investors, Wall Street fund managers, and sovereign wealth funds into our market. The spectacle will be, as Doug Casey likes to say, like trying to pour the contents of the Hoover Dam through a garden hose. – Louis James, Senior Metals Investment Strategist, Casey ResearchThere’s not much one can say about yesterday’s price action in all the precious metals except to say that we’ve seen this particular movie lots of times in the past…an engineered price decline behind a manufactured rally in the dollar index.As I mentioned in my closing remarks in ‘The Wrap’ yesterday…Tuesday was the cut-off for Friday’s Commitment of Traders Report, so I was prepared for anything as far as price movement went…and this price pattern didn’t surprise me one bit.I’m only speculating here, but I would guess that JPMorgan et al were covering short position like mad in all precious metals yesterday…and going further on the long side as well in the subsequent rally, which had all the hallmarks of a short covering rally.  I am hopeful that all this price action will show up in Friday’s COT report…and it should be obvious to anyone that the ‘powers that be’ want gold below $1,600 spot for as long as possible.It was gratifying to see John Hathaway come out of the closet and state that ‘da boyz’ are obviously managing the gold price…just as they are managing the LIBOR.  I would suspect that Eric King will have the audio interview of that blog posted on this website sometime today…and I will be posting it this space as soon as it becomes available.Not much happened in Far East trading during their Wednesday…and it’s pretty much the same now that London is open.  Volume is light in both metals…and the dollar index is not doing a thing, either.I haven’t a clue as to how gold will trade during the Comex session in New York today, but one can assume that the worse the news, the lower the gold price will be engineered.  As to when the precious metal prices break higher, it’s 100% up to JPMorgan et al…and when they decide to end their duties as a not-for-profit seller, it will be immediately apparent in the price…and not a moment before.I hope that your Wednesday goes well…and I’ll see you tomorrow. 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Notable drill results include 60.05 grams per tonne gold and 362.96 grams per tonne silver over 11.2 metres within 26.70 grams per tonne gold and 170.69 grams per tonne silver over 25.5 metres, as well as 35.93 grams per tonne gold and 359.65 grams per tonne silver over 10.0 metres. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. Please visit our website to learn more about the company and request information.last_img

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