Casey Research Publication
Gold & Silver Daily
"It remains to be seen how these rallies develops in the days and weeks ahead."
 

¤ Yesterday In Gold & Silver

Gold added about seven or eight bucks to its price in the hours leading up to lunch time in Hong Kong on their Thursday morning...and then traded more or less flat into the London p.m. gold fix...10:00 a.m. in New York.  From there, the gold price rallied another ten bucks up until 2:00 p.m. Eastern time...and then traded flat into the 5:15 p.m. electronic close.

Gold closed at $1,468.20 spot...up $36.70 spot... and virtually on its high of the day, which was $1,470.50 spot.  Volume was way up there...around 209,000 contracts, so it's obvious that this rally did not go unopposed.

Silver also rallied in early Far East trading...and then wandered around either side of $23.25 spot right up until 1:00 p.m. in London...twenty minutes before the Comex open in New York.  Then the price popped for about 60 cents in the next thirty minutes of trading...and rallied at a much slower pace from there.

Silver closed at $24.40 spot...up $1.24 from Wednesday's close...and virtually on its high tick of the day as well.  Net volume was a chunky 40,000 contracts.

The dollar index closed on Wednesday at 82.94...and then began to head south shortly after it opened in the Far East on their Thursday morning.  By the time the low of the day was in 8:20 a.m. in New York...the Comex open...the index was down to 82.42.  From there it rallied back to virtually unchanged on the day by 10:30 a.m. Eastern time...but then slid a hair into the close...finishing the Thursday session at 82.78...down 16 basis points on the day.

Compared to the 7 percent rally on nothing on Wednesday, I was underwhelmed by the performance of the gold stocks in the face of a solid rally in the metal itself on Thursday.  The rally in gold flat-lined at 2:00 p.m. Eastern time...and at that moment, the HUI was up a bit over 3 percent.  But then someone came along and sold the stocks down...and the HUI finished up only 0.70%.  One has to wonder who was selling in such a reckless manner yesterday.

The silver stocks did much better, but only marginally so considering the size of the gains in the metal itself.  Like gold, one has to wonder who the 2:00 p.m. EDT sellers were on Thursday, compared to the smooth-as-glass-rally-based-on-nothing price action on Wednesday.

Nick Laird's Intraday Silver Sentiment Index closed up 3.18%.

(Click on image to enlarge)

For the day, gold finished up 2.56%...and silver closed up 5.35%...so compared to the metals themselves, the shares did lousy.  I'd be prepared to bet that there was a not-for-profit seller lurking about to make sure that the shares didn't have a blow-out day to the upside.  But if that was the case, would someone please explain the share price action on Wednesday.

The CME's Daily Delivery Report showed that 202 gold and 10 silver contracts were posted for delivery on Monday.  JPMorgan Chase was the short/issuer on all 202 contracts out of its client account...and Barclays and Canada's Bank of Nova Scotia were the long/stoppers on 133 and 67 contracts respectively.  The link to yesterday's Issuers and Stoppers Report is here.

GLD's inventory levels continue to slide, as an authorized participant withdrew 87,041 troy ounces yesterday.  But the big surprise was in SLV...as an authorized participant deposited 1,545,392 troy ounces!

There was another sales report from the U.S. Mint yesterday.  They sold 7,000 ounces of gold eagles, along with 1,500 one-ounce 24K gold buffaloes.  For the second day in a row they didn't report any silver eagles sales.

It was another busy day over at the Comex-approved depositories on Wednesday.  They reported receiving 598,041 troy ounces of silver...and shipped 1,296,767 troy ounces of the stuff out the door.  The link to that activity is here.

In gold, the Comex-approved depositories reported receiving 1,286 troy ounces on Wednesday...and shipped 355,996 troy ounces out the door.  The link to that activity is here.

I'd love to be a fly on wall at these depositories and know for sure what this 'metal in motion' is all about.

It was another busy day at the store yesterday...and I was a tired puppy by the time I left for the day.  It's not wall-to-wall people anymore, but the traffic just never stops for more than a few minutes at a time.  There always seems to be someone in the store at any given moment...and we have little time to do anything else.  I don't think the mints of the world could even keep up with this demand level. One thing that is worth noting, is that we went from two week delivery on gold maple leafs and bars last week, to two months...maybe...on Wednesday.  This delivery delay in gold is unprecedented in this country!  One can only imagine what it will be like when the gold price begins to rise in earnest once again.

Here's a group of photos sent to me by Hong Kong reader Frank Lin yesterday.  He comments that "These pictures were taken from one of the largest gold jewelers in Hong Kong [on Tuesday].  I was told only expensive pieces are left."  The photos of the empty cases certainly confirms that.  Having spent some time in Hong Kong myself...and knowing how many jewellery stores there are just in the Kowloon area alone, one has to wonder just how long it will take all of them to restock when they've been wiped out to that extent...and that doesn't include replacing the bullion they've sold as well.

As I noted in a story posted in the 'Critical Reads' section yesterday, there's a new U.S. $100 bill coming out in October...and it's already been redesigned by someone on the Internet.  It's rather fetching, isn't it?

While on the subject of money, I received the chart posted below from Casey Research's own Jeff Clark around 2:00 a.m. Eastern time this morning.  According to the St. Louis Fed, the adjusted monetary base has just exceeded 3.0 trillion for the first time.  That happened on April 17th.

(Click on image to enlarge)

I have what I believe to be a 'reasonable' number of stories for you today...but the final edit is always up to you.

 

¤ Critical Reads

Matt Taibbi: Everything Is Rigged...The Biggest Price-Fixing Scandal Ever

The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix.

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

Today's first story is your big read of the day...and there are few surprises in it, at least for me...and I'll have more on this further down.  This Matt Taibbi essay was posted on the Rolling Stone website early yesterday afternoon Eastern Time...and is well worth reading.  I thank reader U.D. for the first contribution of the day.

Read more...

Fed Debate Moves From Tapering to Extending Bond Buying

Debate among Federal Reserve policy makers is shifting away from the timing of a reduction in bond buying to the need to extend record stimulus as inflation cools and 11.7 million Americans remain jobless.

At their meeting last month, several members of the Federal Open Market Committee advocated slowing purchases and stopping them by year-end. Since then, seven have voiced support for maintaining the current pace, including five who vote on the policy making panel: Governor Daniel Tarullo, New York Fed President William C. Dudley, James Bullard of St. Louis, Chicago’s Charles Evans and Boston’s Eric Rosengren.

“We heard a lot of discussion earlier in the year on the timing of tapering,” Ward McCarthy, chief financial economist at Jefferies Group LLC. in New York and a former Richmond Fed economist, said in a Bloomberg Radio interview yesterday. “Some of the more recent developments -- the slowdown in the economy, the somewhat disquieting inflation data -- has taken that off the table for now.”

It's 'print, or die'.  Nothing has changed.  This Bloomberg piece was posted on their website early yesterday morning Mountain Daylight Time...and I thank Manitoba reader Ulrike Marx for finding this for us.

Read more...

Christopher Whalen: Fed Is Wasting Its QE Ammo

The Federal Reserve is throwing away the benefits of quantitative easing (QE) because government regulations are blunting the impact of the Fed’s ultra-loose monetary policies, according to Christopher Whalen, executive vice president and managing director of Carrington Investment Services.

In fact, the federal reform legislation is discouraging banks from making all but the least risky mortgage loans, he told Yahoo.

“When you look at all the constraints on banks in terms of lending, it's just not being effective in terms of growing jobs, and the key thing is that even with say housing up 10 percent last year, there’s no credit growth,” said Whalen, editor of the weekly Institutional Rate Analyst.

This article was posted on the moneynews.com Internet site early yesterday morning Eastern time...and I thank West Virginia reader Elliot Simon for sending it along.

Read more...

CBOE Trading System Knocked Out in Latest Trading Black Eye

preventing investors from trading two key products used mainly by institutions to hedge the broader stock market and volatility.

The CBOE said the problem was "an internal systems issue" caused by a software problem and "not the result of any outside influence" or cyber-attack.

Trading resumed in the S&P 500 options contracts at 12:50 p.m. ET, and trading in all other equity and ETF options were opened by 1 p.m. Traders speculated about multiple causes but said they heard that the glitch was due to a software upgrade and a problem purging data from Wednesday's trading that affected prices.

"Customers were mad. Brokers were mad. Market makers that need to hedge their positions were mad. It wasn't good for anybody," said Brian Stutland of Stutland Equities and CNBC contributor.

This CNBC piece from very early yesterday morning is thanks to Elliot Simon once again.

Read more...

Central Banks Load Up on Equities

Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves, are buying stocks in record amounts as falling bond yields push even risk- averse investors toward equities.

In a survey of 60 central bankers this month by Central Banking Publications and Royal Bank of Scotland Group Plc, 23 percent said they own shares or plan to buy them. The Bank of Japan, holder of the second-biggest reserves, said April 4 it will more than double investments in equity exchange-traded funds to ¥3.5 trillion ($35.2 billion) by 2014. The Bank of Israel bought stocks for the first time last year while the Swiss National Bank and the Czech National Bank have boosted their holdings to at least 10 percent of reserves.

“In the last year or so, I have spoken with 103 central banks on diversification,” Gary Smith, London-based global head of official institutions at BNP Paribas Investment Partners, which oversees about $649 billion, said in a phone interview. “If reserves are growing, so are diversification pressures. Equities are not for every bank tomorrow, but more are continuing down this path.”

This Bloomberg item, filed from London, was posted on their website very early yesterday morning Mountain Time...and it's courtesy of U.A.E. reader Laurent-Patrick Gally.

Read more...

Fiscal pump-priming averts U.K. triple-dip

Lest anybody draw the idiotic conclusion that Britain's 0.3pc rebound in the first quarter validates "naked" austerity, three quick points.

1) There has not been much austerity in Britain, whatever the Nobel fraternity in the US likes to think. It has been moderate, well-calibrated, at the therapeutic dose of roughly 1pc of GDP a year. 2) To the extent that there has been austerity, it has been offset by a 15pc-20pc devaluation since the crisis and QE worth 30pc of GDP. 3) Nobel economist Joe Stiglitz was on BBC Newsnight yesterday slamming the Chancellor, insisting that Britain is not spending enough.

Well, we most certainly are spending. Unfortunately it is going into imports. The UK trade data is frightful. The current account deficit is running at 3.7pc of GDP, the worst since the Lawson boom of 1989.

Ambrose Evans-Pritchard is up on his soap box again in this blog posted on The Telegraph's website yesterday...and it's courtesy of Roy Stephens.

Read more...

Zurich Mayor Renounces U.S. Citizenship Amid Tighter Tax Rules

The mayor of Zurich gave up U.S. citizenship, one of a growing number of Americans to do so after Switzerland agreed to implement tighter asset-disclosure rules.

Corine Mauch, 52, a member of the Socialist Party born in Iowa City, Iowa, returned her passport to the U.S. Embassy as she regards Switzerland as her home and doesn’t want to deal with Internal Revenue Service paperwork, according to an e- mailed statement from her office today.

“My relationship with the U.S. is limited to my very early youth,” said Mauch, who retains Swiss citizenship. “Neither the double taxation or any new directives on the taxation of U.S. citizens outside the U.S. have affected this decision. But I won’t miss the U.S. tax bureaucracy either.”

This Bloomberg story from last week was sent to me by Swiss reader B.G. yesterday.

Read more...

E.U. against austerity: Spaniards and Portuguese take to the streets as unemployment skyrockets

The Iberian Peninsula has once again been engulfed in protest, as police used brute force to disperse thousands in front of the Spanish Parliament in Madrid while in Portugal citizens climbed on top of a tank to make themselves heard.

Police detained at least 15 in Madrid, including one minor, as they used force to quell an angry mob of protesters near the Spanish parliament, united under a “Besiege Congress” slogan calling for the government to quit.

The riots come as Prime Minister Mariano Rajoy is set to announce a raft of measures on Friday aimed at tackling the country's recession.

An estimated 1,400 policemen were deployed around the chamber as politicians cancelled the session for the day.

This Russia Today story from yesterday also has a 1:34 minute video clip embedded...and I thank Roy Stephens for his second offering in today's column.

Read more...

Japan's 'wall of money' proves elusive for global markets

Japanese investors are repatriating funds from around the world at an accelerating pace, dashing hopes that stimulus from the Bank of Japan will flood global asset markets with newly-printed money.

Fresh data from Japan's finance ministry showed that large banks, insurers, and pension funds sold a net $8.7bn in foreign bonds and stocks last week, bringing the total to $35bn over the last six weeks.

Analysts had expected the big institutions to start chasing global assets in a revival of the "yen carry trade" after dramatic policy shift by the Bank of Japan's new team under Haruhiko Kuroda, but the fondly-awaited "wall of money" has yet to materialise.

Instead, Tokyo's behemoth funds are cashing windfall gains abroad generated by the 20pc slide in the yen since July, rotating the profits into assets at home.

This Ambrose Evans-Pritchard commentary was posted on the telegraph.co.uk Internet site early yesterday afternoon BST...and I thank Ulrike Marx for sharing it with us.

Read more...

Three King World News Blogs

The first interview is with Dr. Stephen Leeb...and it's headlined "The Fed's Big Lie, Gold, Silver and the Reality of Inflation".  Next comes Keith Barron.  It's entitled "Stunning and Massive Run on Physical Gold and Silver Continues".  And lastly is this blog with Jim Sinclair.  It bears the title "The Gold War and Unprecedented Financial Destruction".

Read more...

Shortages of physical gold now a global phenomenon

Those who precipitated the recent fall in the gold price may have unleashed a beast that will put future efforts at market manipulation way out of their control.  Physical metal is now seemingly becoming key in investors’ minds.

They are no longer putting any faith in paper gold and this is being seen in all quarters with reports from virtually all continents of demand exceeding supply of physical metal, and some hefty premiums being applied on sales of gold bullion.

Add to this particularly strong demand from Asia - reports have put the volume of deliveries into the Shanghai exchange so far this year of over 1,000 tonnes as actually exceeding estimated new mine production over the period.

There's nothing much that's really new in this commentary by Lawrie Williams over at the mineweb.com, but he's such a good writer that his take on things has a freshness about it that makes it worth the read.

Read more...

Bitcoin Dealers Are Running Into Problems In Canada

Two Canadian businessmen recently got some bad news from their banks.

James Grant, owner of Canadian Bitcoins, got a letter.

Melvin Ng, proprietor of CADBitcoin, got a phone call.

Both men run online exchanges where you can purchase Bitcoins for Canadian dollars.  

And both were informed their businesses’ accounts frozen by Canada’s largest banks.

“It’s a weird situation,” Ng told us by phone recently. “We’re a normal Canadian business, we’re registered with the government, and a Canadian bank can just block it off.”

Grant was more blunt: “They just don’t like Bitcoins.”

This story was filed from Australia and posted on the au.businessinsider.com Internet site early Friday morning  'down under'.  I thank Michael Cheverton for bringing it to my attention...and now to yours.

Read more...

Better “Safe Haven” – Switzerland or Canada?

Despite the well-engineered ‘bear raid’ conducted by some U.S. banks together with some hedge funds –which knocked the gold price back on its heels down to $1,344—the demand for gold from all over the world remains unabated. The fall in the gold price caused the physical buying of gold to surge everywhere and the gold price has begun to recover. 

The dilemma facing most gold investors remains. “Where does one hold their physical gold?” 

More to the point, where does one hold one’s gold away from institutions and governments that may want to keep your gold. We’ve seen depositors funds confiscated from banks in Cyprus, so the prospect of gold being confiscated is now on the screens of gold investors. So where does one hold gold to avoid this probability? This is not just a vague fear but a real danger. It is insufficient to wait until the dollar collapses. That would be far too late!

This piece by Julian Phillips was posted on the goldseek.com Internet site yesterday...and I thank Ontario reader Richard O'Mara for today's last story.

Read more...

Alasdair Macleod: Physical vs. paper gold -- waiting for the dam to break

GoldMoney research director Alasdair Macleod provides what is probably the most comprehensive and yet concise description of the world gold market, concluding most soberly that the recent gold price smash was likely engineered by Western central banks and that it may cost them not only control of the gold market but control of all markets.

Macleod writes: "We can only speculate about day-to-day interventions by Western central banks in gold markets. In this regard it seems that the slide in prices on the 12th and 15th April was triggered by a very large seller of paper gold; if this market story and the amount mentioned are correct, it can be only central bank intervention, acting to deliberately drive prices lower.

"Given the market position, with money managers in the futures markets already short and highly vulnerable to a bear squeeze, the story seems credible. The objective would be to persuade holders of physical exchange-traded funds and allocated gold accounts to sell and supply the market, on the assumption that they would behave as investors convinced the bull market is over."

This very long essay was posted on the goldmoney.com Internet site yesterday...and it's certainly worth reading if you can find the time.

Read more...

 

¤ The Funnies

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¤ The Wrap

The issue which has swept down through the centuries...and which will have to be fought sooner or later...is the people vs. the banks. - Lord Acton, Historian, 1834-1902

I was happy to see the rally in all four precious metals yesterday...including copper and crude oil.  It certainly didn't look like short-covering to me...and looking at the volume numbers I would guess that the bullion banks were going short against all comers in all six markets.  Unfortunately, what happened yesterday won't be in today's Commitment of Traders Report.

It remains to be seen how these rallies develops in the days and weeks ahead.  Here's the 6-month gold chart showing the 20 and 50-day moving averages.  We should start to see some signs of short covering by the technical funds once the 20-day moving average is pierced to the upside.  How the bullion banks and small traders [Ted Butler's raptors] react once that event happens will be interesting to watch.  Will they allow the technical funds out on the cheap, or will they inflict some pain by refusing to sell their longs positions to them until we are much higher in price?  That, as Ted Butler has stated on many occasions in the past, is the key to how this rally unfolds.  So we wait.

(Click on image to enlarge)

If you had time to run through Matt Taibbi's essay at the beginning of the 'Critical Reads' section further up, you will have discovered what GATA has known for almost a decade...and that is that the banks control everything.  However, British economist Peter Warburton wrote about it long before we at GATA cottoned on to this fact.  I discovered his essay on the Prudent Bear website about a decade ago...and what I call the 'three most important paragraphs in the world' embedded in that essay, have been the lens that I have looked at the financial system through ever since.

I've posted them many times in this space...but they bear repeating at this point in time.  Needless to say they are a must read.  Keep in mind while you're reading that this was written in 2001...twelve years ago to the month.

"What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets."

"It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. In November [of 2000], I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200bn, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil and commodity prices."

"Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. [Emphasis is mine. - Ed] Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade."

Warburton's essay is headlined "The debasement of world currency: it is inflation, but not as we know it".  It was written on April 9, 2011...and this copy of it is posted at the gold-eagle.com Internet site.  The link is here.

Today we get the latest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday, April 23rd.  As I've mentioned several times in this space during the last week, it's my opinion that the latest data in the Commercial and Non-Commercial category is totally compromised...and I will be more than interested to see if they have made amends in this report when it shows up on the CFTC's website at 3:30 p.m. Eastern time.  I'll let you know tomorrow.

Both gold and silver were rallying nicely in early Far East trading on their Friday, but got sold down the moment they got too frisky...and both metals are down a bit now that London has been open about thirty minutes.  Volume in gold is already very chunky...over 45,000 contracts...most of which is of the high-frequency trading variety.  Silver's volume is getting up there too, but roll-overs out of the May delivery month are very heavy as well, so net volume is very light. Monday should be the last big day for roll-overs out of the May contract in silver.  The dollar index is down about 15 basis points.

And as I hit the 'send' button at 5:10 a.m. Eastern time, both gold and silver are a bit lower now that London has been open for two hours and change.  Gold is down about seven bucks...and silver is down 28 cents.  Gold volume is now over 70,000 contracts...and silver's net volume is very light...around 4,800 contracts.  The dollar index is still down 15 basis points.

Since today is Friday, I'll be ready for any possible price scenario when I switch my computer on later this morning.

Enjoy your weekend, or what's left of it...and I'll see here tomorrow.