California Munis Get Crushed Again

Gold made some gains early in Far East trading on Monday morning, but then got sold off in fits and starts until the exact moment that Comex began trading in New York at 8:20 a.m. Eastern Time yesterday morning. The smallish rally that began at that point took gold to its high of the day [$1,377.90 spot] around 12:05 p.m. Eastern time.

From there, the selling began... slowly but relentlessly... right up until precisely 4:00 p.m. Eastern Time... which was gold's low of the day at $1,355.10 spot. The gold price recovered a few dollars going into the close of electronic trading in New York at 5:15 p.m.

Silver's price path was similar to gold's... with the time of the New York highs and lows varying a bit. Silver's high price tick [$26.51 spot] occurred at 10:45 a.m. Eastern time... and the low [$25.42 spot] came minutes after 4:00 p.m.

The dollar's low came early in Far East trading on Monday morning [around 77.88]... and by the time the low price was in for silver and gold at 4:00 p.m. Eastern time yesterday afternoon in New York, the world's reserve currency was up about 80 basis points... a bit over one percent.

The dollar action yesterday had nothing to do with the precious metals price action whatsoever, as gold and silver had their big New York losses in the four hour period between noon and 4:00 p.m. Eastern. During that time, the dollar struggled to gain 25 basis points.

It should be obvious that a not-for-profit seller was at work during that time slot, as both gold and silver were in positive territory prior to that... despite a rising greenback.

The stocks followed the gold price pretty much to the tick all day long... with the HUI finishing on its absolute low of the day... down 1.19%

The contents of Monday's CME Delivery Report aren't worth mentioning.

For the second day in a row, there were no reported changes in either GLD or SLV.

The U.S. Mint had another sales report yesterday. They sold another 9,500 ounces of gold eagles, plus 523,000 silver eagles. Month-to-date, gold eagle sales total 49,000... along with 2,463,000 silver eagles. These are pretty big sales numbers... and we're only half-way through November. However, the mint always has huge sales during November and December, so these sales numbers are not a big surprise.

Over at the Comex-approved depositories, they reported a net decline of 349,897 troy ounces of silver on Friday. The link to that action is here.

Well, the Commitment of Traders report came out at 3:30 p.m. Eastern Time yesterday... and there was a big dichotomy between silver and gold for the reporting week ending Tuesday, November 9th.

In silver, there was a big decrease in the Commercial net short position... 27.8 million ounces to be exact. Ted Butler says that it was mostly the Raptors going long... all the Commercials except the '8 or less' traders. The big bullion banks actually increased their net short position by a few hundred contracts during that week.

Anyway, the Commercial net short position in silver is down to 252.4 million ounces. The '4 or less' traders are short 244.0 million ounces of that... and the '8 or less' traders [which includes the '4 or less'] are short 310.5 million ounces. Grotesque, isn't it?

Gold was, as they say, a horse of a different color. The Commercial net short position rose by a chunky 1.4 million ounces... bringing the net short position in gold up to 29.1 million ounces. Of that amount, the '4 or less' bullion banks were short 22.0 million ounces... and the '8 or less' bullion banks were short 30.4 million ounces. Not as grotesque as silver... but bad enough it its own right.

This Friday's COT will show all of the big smack-down that we experience starting late on Tuesday of last week. Here's what silver analyst Ted Butler had to say about it in his commentary to clients on Saturday... "What's more of interest is what occurred in the volatile sell-off since the cut-off. I'm convinced that since [last] Tuesday's cut-off for the report, we have experienced a significant reduction in the commercial short position, particularly in the big 4 and 8 concentrated net short categories. In fact, this short-covering is why we had such a vicious sell-off on Friday."

Ted went on to add the following about last week's price action... "The problem for the big shorts was that not only were they experiencing financial stress due to the rising price, they were unable to reduce their short positions, thereby leaving the source of their problem intact. That was a circumstance that threatened to result in financial ruin if permitted to continue. Faced with that... and the growing awareness by many of the predicament the big shorts were in, they resorted to their only alternative to that ruin--create a large and dramatic sell-off. That was what we began to see [last] Tuesday, with the CME's criminally-timed silver margin increase and collusive vicious sell-off on Friday, under the cover of general commodity weakness."

"Make no mistake--the sell-off in silver did not occur because of any real supply/demand factors, it was strictly a function of 'do or die' for the big shorts. They pulled out every dirty trick in their manipulative bag to get this done, because it had to be done. It was either that, or financial ruin. As painful as these intentional manipulative sell-offs may be, especially to late-entering margined longs, they do improve the market structure, which wasn't that negative to begin with. Now it's better as a result of the intentional sell-off and flush-out."

Here's Ted's "Days of Production" graph courtesy of Nick Laird over at sharelynx.com.

Here's another nifty graph from Nick. He sent it to me in the wee hours of Saturday morning and just missed my weekend column, so here it is now. It shows the total aggregate pool of known ounces of all metals... gold, silver, platinum and palladium... as per all repositories (Comex & Tocom) ETFs, ETNs & Funds. As one would expect, the total ounces are skewed towards silver, and total value is skewed towards gold. All in all, it shows that the total pool has been an aggressive buyer through the rising prices. Demand for product has not abated and is relentless even with such high prices.

¤ The Funnies

¤ The Wrap