As it turns out, Monday is "first notice" day for December gold/silver. What this means is that anyone with a long position has to either sell their position by yesterday's access close OR have an account that can 1) to accept delivery (most online trading futures accounts to not allow this) and 2) if the account can take delivery, it has to be fully funded to accept a delivery notice as of Friday evening. What typically happens leading into the day before first notice is that the cartel will make an aggressive attempt to force the market lower knowing that many smaller traders will be natural sellers going into the day before first notice. Moreover, the thin volumn on Wed/Fri makes this task a lot easier - ergo yesterday's action.
With this as the context, a couple of data points in silver and gold could make next week very interesting - to the upside. First, as of Wednesday, there were 28,000 open silver contracts. Yesterday's ambush may have forced most of those to sell (see the previous paragraph). Preliminarily, and I do not put a lot of faith in the Comex "prelimary" open interest report, only about 7900 December silver contracts liquidated. That would mean about 105 million ounces are standing for potential delivery. The Comex would default if this were to play out like that. It is likely that the silver contract liquidation was closer 20,000 contracts. We'll find out Monday mid-morning. That would leave 8k contracts standing, or 40mm ounces. That is still about 80% of the silver reported to be available for delivery. If that scenario plays out, the price of silver is going to explode over the next couple of weeks.
The second interesting piece of data was reported yesterday evening by zerohedge.com. Right at the close of the afternoon electronic trading session, someone bought 2000 contracts of February gold. I don't think I've ever seen something like that in 9 years of doing this sector exclusively. That is an enormous purchase. It was either desperate short-covering ahead of news that could propel the metals higher next week or a very big player has decided to square off against the egregiously corrupt maneuvers of JPM/HSBC. You can read about that trade and some interesting volatility color here: LINK
Are gold stocks poised to stage a big move higher?
The answer to this depends on which the way metals move. I've posted a chart which shows the ratio of the HUI to gold over the past year. The chart shows the relative price performance between mining stocks and gold. As you can see, the ratio is roughly in the middle of its trading range for the past year. It has bumped up against resistance again and appears to be headed lower. If this is the case, the mining stocks are likely to outperform gold/silver for awhile.