Gold & Silver Daily
"Well, it was obvious from yesterday's price action that JPMorgan et al aren't done to the downside yet."

¤ Yesterday In Gold & Silver

In gold, the price action on Wednesday looked very similar to the price action on Tuesday...the gentle sell-off in London, the rally that began shortly before the Comex open, the smack-down shortly after the Comex open...and the low of the day coming at 9:45 a.m. Eastern, which may have been an early London p.m. gold fix.

The gold price recovered a bit from that low until just before the close of Comex trading...and then traded sideways into the close of electronic trading in New York at 5:15 p.m.

Gold closed at $1,653.70 spot...down $8.50 from Tuesday.  Net volume was a third higher than Tuesday at around 112,000 contracts.

The silver price traded sideways until about 9:00 a.m. Hong Kong time on their Wednesday morning...and then the price decline began.  The tiny rally that got under way shortly before the Comex opened, if you wish to dignify it with that name, got dealt with in the usual manner...and silver's low price tick [$30.31 spot] came at the same moment as gold's low price tick...9:45 a.m. in New York.

And also like the gold price, the silver price then gained back a bit until the close of Comex trading at 1:30 p.m. Eastern time...and then more or less traded sideways until the end of electronic trading.

The silver price traded in a 2 percent price range on Wednesday...and closed at $30.65 spot...down 32 cents...which is a hair over a one percent loss on the day.  Silver volume was also up a third from Tuesday at 30,000 contracts.

The dollar index crawled slowly higher during the Far East trading day...but jumped about 20 basis points in just a few minutes starting at 8:30 a.m. in London.  From there, the index picked its way higher, with the high tick coming a couple of minutes before 9:00 a.m. in New York.  Then it gave up a bit of those gains going into the close.  The dollar index finished up about 36 basis points at around 79.19...which was just under a half a percent.

I would say that what little dollar index action there was during the Comex session had nothing to do with the price action of any of the precious metals.

The gold stocks gapped down at the open...and the low came just minutes after 10:00 a.m. Eastern.  From there, the equities recovered just a little, then more or less traded sideways after that.  The HUI finished down 1.84%.

The silver shares didn't do well, either...and Nick Laird's Silver Sentiment Index got clobbered to the tune of 3.41%.

(Click on image to enlarge)

Day four of the May delivery month showed that 5 gold and 64 silver contracts were posted for delivery on Friday.  JPMorgan and Deutsche Bank were involved in the lion's share of the deliveries...and the link to the Issuers and Stoppers Report is here.

There were no reported changes in either GLD or SLV...and the U.S. Mint didn't have a sales report on Wednesday, either.

Over at the Comex-approved depositories on Tuesday, they had a much quieter day than they had on Monday.  They didn't receive any silver, but shipped 537,909 troy ounces of the stuff out the door.  The link to that action is here.

Silver analyst Ted Butler posted his mid-week commentary for his paying subscribers...and here are three free paragraphs that are must reads.

"The price of silver began to climb in earnest in the late summer of 2010 from about the $18 level to roughly the $31 level by the end of the year as physical silver began to grow tighter. My basis for the physical tightness explanation is that there was no net speculative buying in futures contracts on the COMEX for that period. In fact, the net speculative long/commercial short position declined by almost 25% from the mid-September through year end 2010. Almost 99 times out of 100, it is COMEX positioning that drives the price of silver. So if it wasn’t speculative buying on the COMEX that was driving the price, by process of elimination, it had to be something else. That something else was demand for physical, as evidenced in the collective 100 million oz growth in various silver ETFs (like SLV, PSLV, SIVR, etc) over that time period."

"After correcting to $27 in late January 2011, the price of silver surged to $49 in three months to the end of April. Once again, after some gyrations in the COT structure, the total net commercial short position was lower by the end of April, proving that it wasn’t buying by speculators on the COMEX that drove prices to historic highs; it was continued physical buying in ETFs and elsewhere and commercial short covering into the highs. The changes in the COT structure prove that the COMEX commercials on the short side were in a bind and were clearly panicking into the end of April. It was not a speculative bubble in any true sense of the word. I do admit that a good chunk of the buying in the silver ETFs was obviously momentum buying on rising prices and that was the metal that was subsequently liquidated on the May 2011 price smash. But it would be a stretch to call that a bubble. In retrospect, it was a shortage of silver, more than anything else that drove prices to the highs."

"Had the big COMEX commercials not collusively banded together [starting on the evening of May 1st...and continuing to this day] to manipulatively rig prices lower, we would be looking down at $50 silver, instead of looking up to that price now. There’s no real way of telling how high we may have gone had the physical silver shortage into April 2011 jumped the fire break and spread to the world’s industrial users. Such a development would have created a situation where the fire would need to burn itself out by prices moving irrationally higher. I don’t know if the commercials knew on May 1st that they would be able to trip off the metal liquidation in SLV and the subsequent liquidation in COMEX contracts, but I am inclined to think that their backs were up against the wall...and it could have gone the other way. Let’s face it – if the commercials were in such total control, they never would have let silver have gotten to such extremes with them so close to being overrun to the upside. The commercials miscalculated from $18 on up...and only got lucky on their desperate last-gasp sell-off a year ago."

Here's a chart that Australian reader Wesley Legrand sent me late last night.

(Click on image to enlarge)

Here's a rather unhappy looking chart that Washington state reader S.A. sent me yesterday.  I'm not sure what he stole it from, but whatever the source, I'm glad he did.  The graph is self-explanatory.

Reader Scott Pluschau has posted another short commentary on gold at his website...and the link is here.


¤ Critical Reads

NBER's Martin Feldstein Bashes The Deplorable US Economy, Says Bernanke Has Engineered Another Stock Bubble

That the market is merely yet another transitory sugar high bubble creation of the Chairsatan and his central planning colleagues in various marble buildings around the world is no surprising to anyone, at least not anyone who maintains a pretense of objectivity, is not desperate to sell a weekly newsletter, and has a frontal lobe.

What however is not only surprising, but outright shocking, is that such embedded members of the aristocratic status quo elite as Martin Feldstein - a professor of economics at that bastion of Keynesianism Harvard as well as president emeritus of the NBER - the folks who tell us when recessions start and end, are starting to get it.

This piece from yesterday is courtesy of reader Phil Barlett...and the link is here.


Norwegians take big broker's trading algos for an expensive ride

Two Norwegian day traders who outwitted the automated trading system of a big US broker have been cleared of all wrongdoing by the country's highest court.

The two men were handed suspended prison sentences for market manipulation in 2010 after they worked out how the computerised system would react to certain trading patterns -- allowing them to influence the price of low-volume stocks.

Their appeal against that ruling was upheld by the Norwegian Supreme Court on Wednesday, which cleared them of market manipulation. The verdict will please the trading community in Norway, which had come to view the duo as Robin Hood figures, beating the big financial houses at their own game.

This Financial Times story from yesterday is posted in the clear in this GATA release.  I thank Australian reader Wesley Legrand for bringing it to my attention...and then Chris Powell's.  It's a must read...and the link is here.


Retirement, Slipping Farther and Farther Away

Over the last decade and a half, Americans’ expected retirement age has slowly risen to 67 from 60, according to a new Gallup survey.

If a standard retirement age of 60 sounds relatively low, remember that the economy was booming in the 1990s and Americans’ savings were being inflated by the tech bubble. That’s about the time when housing prices began to skyrocket, which also made homeowners feel particularly wealthy. Since then, of course, both the dot-com and housing bubbles have burst.

Americans have been putting their money where their mouths are, so to speak, and have been working longer and longer in recent decades. In 1996, for example, 45.8 percent of workers ages 60 to 64 were either working or looking for work. Last year, the figure was 54.5 percent.

This short story, with some excellent graphs, was posted in The New York Times yesterday.  I thank Phil Barlett for his second offering in a row...and the link is here.


Dallas Fed’s Fisher Not Supportive of Quantitative Easing

“No amount of monetary accommodation will make up for this problem of not dealing with this fiscal cliff,” Fisher said in an interview from Los Angeles played today on BNN Television in Canada.

He said Europe’s fiscal and economic issues are a lesson for the U.S.

“Monetary policy alone cannot solve problems without proper fiscal policy,” Fisher said. “If we let it go too far as the Greeks obviously did, we’ll end up with riots in the streets in the United States.”

This was a Bloomberg story that was posted on their website on Tuesday.  I 'borrowed' it from yesterday's King Report...and the link is here.


A Scream Worth $119,922,500

If Munch's Scream was a public company, its stock would be limit up now, because contrary to expectations of it selling at a just concluded auction in Sotheby's for $80 million, the painting just slammed all expectations (except LaVorgna's we are told), selling at a record $119,922,500 (that's $119.9 million... for a made in 1895, 36" x 28.9" painting).

This makes it the highest amount of money ever spent for an artwork, with only Picasso's "Boy With a Pipe" and Giacometti's "Walking Man I" selling for more than $100 million in the past.

No bubbles here, folks.  I thank West Virginia reader Elliot Simon for sending me this very interesting piece..and the link is here.


Jobless Rate Reaches New High in Euro Zone

Unemployment in the euro zone rose to a new high in March, according to figures released on Wednesday. The data came a few days before crucial elections in France and Greece, and it is likely to prompt more intense calls for an easing of Europe’s austerity drive.

Unemployment in the 17 countries that belong to the euro zone rose to 10.9 percent in March from 10.8 percent in February, according to Eurostat, the European Union’s statistics agency. In March 2011, the rate was 9.9 percent, a number that illustrates the deterioration of the region’s economy in the last year.

The monthly increase, the 11th in a row, translates into more than 17 million jobless people, and it is in line with other recent indicators showing that the euro zone economy remains distressed. Manufacturing in the region hit a 34-month low in April, according to a survey of purchasing managers released Wednesday by the research firm Markit.

This story was filed from Frankfurt yesterday...and was posted in The New York Times.  I thank Phil Barlett for his third offering in today's column...and the link is here.


Crisis? What Crisis? - Election Threatens to Become Snapshot of Greek Despair

Greek voters are slated to head for the polls this weekend. The candidates are pledging to change everything in the crisis-plagued country. But in many cases these promises are coming from the very politicians who helped drive the country into the abyss.

"It's absurd that precisely those who drove the cart against the wall are now expected to pull it out of the dirt again," says political scientist Seraphim Seferiades.

It's almost as if the crisis has been forgotten. Crisis? What crisis?

This very interesting read was posted over at the German website yesterday...and I thank Roy Stephens for bringing it to our attention.  The link is here.


The euro crisis just got a whole lot worse

With Europe plunging back into recession and unemployment soaring, Francois Hollande, the French presidential candidate, is calling for growth objectives to be reprioritised over the chemotherapy of austerity.

Angela Merkel, the German Chancellor, has meanwhile continued to insist that on the contrary, Europe must persist with the hair shirt. What's needed is political courage and creativity, not more billions thrown away in fiscal stimulus. Stick with the programme, she urges, as the anti-austerity backlash reaches the point of outright political insurrection.

Hollande and Merkel are, of course, both wrong. What Europe really needs is a return to free-floating sovereign currencies. Only then will Europe's seemingly interminable debt crisis be lastingly resolved. All the rest is just so much prancing around the goalposts, or an attempt to make the fundamentally unworkable somehow work.

This story was posted in The Telegraph early yesterday evening...and I thank Roy Stephens for sending it.  The link is here.


Chancellor George Osborne tells EU he won't sign Britain up to 'idiotic' Basel III plan

George Osborne has warned the European Union that Britain will refuse to sign up to “idiotic” proposals that would water down tough international rules on bank capital requirements.

During angry exchanges, the Chancellor told a meeting of Europe’s finance ministers last night that EU measures to implement “Basel III” bank rules would be ridiculed by financial markets and the banking sector because it so clearly failed to enforce clear and tough rules.

“We are not implementing the Basel agreement as anyone who will look at this text will be able to tell you. I’m not prepared to go out there and say something that will make me an idiot five minutes later,” he said.

After 10 hours of talks, a furious Mr Osborne said that since he had been forced to cancel a Downing Street dinner party he was ready to keep EU finance ministers at the negotiating table all night until they got it right.

This is another Roy Stephens offering from The Telegraph late last night...and the link is here.


Three King World News Blogs

The first is with multi-billionaire Hugo Salinas Price...and it bears the title "Elites Plan to Control the World"...and it's worth the read.  The second is with money manager Stephen Leeb...and it's headlined "We Will See Unbelievable Chaos Going Forward".  And lastly is this blog with GoldMoney founder James Turk.  It's entitled "Banks and Governments Will Collapse Together"...and it's a must read.


Inept Central Bankers Will Keep Long-Term Gold Prices High: Marc Faber

Swiss-born and educated Marc Faber's distinct voice is a common sound on CNBC and Bloomberg TV when it comes to big-picture forecasting in investments.  The contrarian views of his "Gloom, Boom & Doom Report" often garner headlines, but Faber does go along with the crowd when it comes to pointing out the dangers of rising government debt and unabated monetary intervention.  HAI Managing Editor Dre Voros caught up with Faber at his Hong Kong residence and spoke to him about gold, the Treasury market, which countries should be out of the eurozone and what an ideal portfolio allocation looks like.

This interview was posted over at the website on Monday...and I thank reader Donald Sinclair for sending it my way.  The link is here.


Expats facing special gold scans at major Indian airports

Travellers to India are being searched for gold ornaments by customs officials at major airports across the country.

An Indian law dating back to the 1960s states that those travelling to India are supposed to pay tax for carrying any gold valued at more than Rs20,000 (Dh1,379).

What’s strange is that a man is allowed to carry 50 per cent less gold in comparison to a female traveller, on his person as jewellery.

Indian airports have been conducting stringent checks on most travellers and asking them to shell out duty for any gold ornaments over the stipulated amount.

This story was posted on the website yesterday...and I consider it a must read.  I thank Georgia reader Bill Houseman for sharing this story with us...and the link is here.


Rick Rule on Contrarian Speculation

Yesterday's edition of Conversations With Casey contained a 17-minute interview with Rick Rule.  Louis James does the honours...and it's well worth your time.  It's posted over at the Casey Research website...and the link is here.  You can either watch the video, or read the transcript, which appears directly below it.


Gold Standard for All, From Nuts to Paul Krugman

Nut cases. That's what they are. And if you take an interest in them, you are a nut case too.

That's the consensus among credentialed economists who describe advocates of a return to the monetary regime known as the gold standard. In fact, the economic pack will marginalize you as a weirdo faster than you can say "Jacques Rueff" if you even raise the topic of monetary policy in relation to gold.

An example of such marginalizing appears in a recent issue of the Atlantic magazine. Author Adam Ozimek lists four rules upon which economists overwhelmingly agree. Right away, that puts readers on guard; they don't want to be the only one to disagree with eminences.

This op-ed piece showed up posted on the Bloomberg website yesterday...and I plucked it from a GATA release that Chris Powell headlined "Amity Shales: Nutty would be NOT considering a return to a gold standard".  I consider this a must read as well...and the link is here.


Earth's Resources Conference in Hong Kong to hear about gold market manipulation

GATA's secretary/treasurer Chris Powell will join renowned mining entrepreneurs Robert Friedland, Rob McEwen, and Bob Quartermain among the speakers at Standard Chartered's Earth's Resources Conference in Hong Kong on Wednesday and Thursday, June 20 and 21.

The conference will be held at the luxurious J.W. Marriott Hotel at Pacific Place in the glamorous Wan Chai section of Hong Kong, and the conference has arranged a special discounted room rate for attendees staying at the hotel.

At this conference Chris plans to bring gold market manipulation to the attention of a huge and influential Asian audience, and thus to hasten the manipulation's end.

The rest of the conference information is contained in this GATA release...and the link is here.


MineWeb's Williams sees U.S. using gold for gradual devaluation of dollar

Lawrence Williams notes the recent strange smash-downs in the gold price, cites GATA's work, and endorses GATA's view that, through the gold price, the U.S. government is attempting a gradual and controlled devaluation of the dollar. Williams' commentary is headlined "Patterns in Gold Price Puzzling -- but Understandable".

The story is posted over at the website...and the link is here.



¤ The Funnies

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¤ The Wrap

All that is necessary for evil to triumph is for good men to do nothing. - Edmund Burke

Well, it was obvious from yesterday's price action that JPMorgan et al aren't done to the downside yet.  As silver analyst Ted Butler said it in his commentary yesterday..."In silver, the price action has been so poor that every day the phrase “the beatings will continue until morale improves” plays in my mind.  I’m left with the impression that the commercials are deliberately making silver look so bad in order to extract every last drop of blood from the speculative selling stone."

And how long this will continue remains unknown.  But one thing is for sure, the price action in all the precious metals is as far away from a free market as you can possibly imagine.

Here's the 2-year silver chart so you can see the history of what Ted Butler was speaking of in the three paragraphs that I lifted from his Wednesday commentary.  It's hard to tell how this will all end going forward...but we are definitely a lot closer to the bottom than we are the top.

(Click on image to enlarge)

Here's the 2-year gold chart as well.  As Ted has pointed out several times recently, JPMorgan et al will probably have to engineer a further decline in the gold price if they expect to get much more spec long liquidation in silver.  So all we can do is wait it out and see what 'da boyz' have in store for us.

(Click on image to enlarge)

In Far East trading during their Thursday, both gold and silver came under selling pressure once again.  At the 8:00 a.m. London open, gold was down about ten dollars...and silver was down 30 cents.  Volume was light in gold...and microscopic in silver.  The dollar index was flat.

That's all I have for today...and I'll see you here on Friday.