Gold & Silver Daily

¤ Yesterday In Gold & Silver

[Note: After three years without a break, I'll be taking some time off.  There will be no Gold and Silver Daily next week.  Ed]

The gold price got sold down a few dollars in the first three or four hours of Far East trading on their Tuesday.  The tiny rally that was born out of that around 1 p.m. Hong Kong time got met by the usual not-for-profit sellers 10 minutes after the Comex open---and by the time "da boyz" were done at 11:35 a.m. EDT in New York, they had sold gold down about 14 bucks from its 8:30 a.m. high.  The subsequent rally from that point, such as it was, met with a willing seller the moment that it really started to gather strength shortly before 4 p.m. in electronic trading---and that was that.

The CME Group recorded the high and low prices as $1,293.10 and $1,275.80 in the June contract.

Gold finished the Tuesday session in New York at $12,83.70 spot, down $6.60 from Monday's close.  Volume, net of April and May, was pretty decent at 131,000 contracts---and a lot of that came as a result of the engineered price decline that began at 8:30 a.m. EDT, as "da boyz" took another slice off the golden salami.

The silver price action was very similar to gold's price action, but quite a bit more subdued---and the major inflection points as far as price was concerned, also occurred at the same times.  Silver would have closed higher on the day, except the same seller of last resort in gold that showed up at 4 p.m. EDT, also showed up in the Comex silver market at the same time as well.  And, for the second day in a row, no new lows were set.

The high and low ticks, such as they were, were reported as $19.53 and $19.285 in the May contract.

Silver closed in New York yesterday at $19.385 spot, down 5.5 cents on the day.  Gross volume jumped up to 73,300 contracts, but once the huge amount of May roll-overs were deducted, net volume fell all the way down to about 22,500 contracts.

The general shape of the platinum chart was similar in virtually every way to the gold and silver charts posted above.  But the timing of the high and lows ticks was slightly different.  Platinum's engineered price decline also set a a new low price tick for this move down.  Palladium attempted to rally starting around 2 p.m. Hong Kong time, but the tiny gain got taken away during the London lunch hour.  After that it didn't do much.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 79.95---and then did nothing until shortly after 2 p.m. Hong Kong time on their Tuesday afternoon.  From there it chopped lower, hitting its 79.80 low tick at the 8:20 a.m. EDT Comex open.  From there it rallied back to just above unchanged on the day by around 10:35 a.m., before sliding a bit lower into the close.  The index finished the Tuesday session around 79.90, which was basically unchanged.

The rallies in all four precious metals began the moment that the dollar index headed south in Hong Kong trading, but all four got scuppered at different times than the dollar's absolute low and, of course gold, silver and palladium's engineered price declines extended long after the dollar index had rallied back to unchanged.  As a matter of fact, the index had rallied back to unchanged before prices really cratered, so the sell-offs had zero to do with what was happening in the currency markets.

And, for the second day in a row, the scale of the chart makes the index movements look far more impressive than they actually were.

Despite the shenanigans of JPMorgan et al, the gold stocks chopped around the unchanged mark until the low was set around 10:45 a.m. in New York.  Then, despite the smack-down in the metal itself, the stocks moved solidly higher---and closed on their high tick of the day, which was probably the result of that tiny rally in gold going into the 4 p.m. close of the equity markets.  The HUI finished up 1.49%.

Everything that the HUI lost on Monday and Friday, plus a bit more, was recovered in Tuesday's rally.

The silver equities also finished in the black, but Nick Laird's Intraday Silver Sentiment Index only finished up 1.36%---which was everything it lost on Monday.

The CME Daily Delivery Report showed that 51 gold and 1 lonely silver contract were posted for delivery within the Comex-approved depositories on Thursday.  Once again the biggest short/issuer was Jefferies and, once again, JPMorgan and Canada's Scotiabank [the largest silver shorts on the Comex] were the largest stoppers. The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday---and as of 9:33 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had another sales report yesterday.  They sold 2,500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---399,000 silver eagles----and 100 platinum eagles.

Over at the Comex-approved depositories on Monday, they reported receiving a decent chunk of gold, as 89,248 troy ounces were accepted.  It was divided up between Canada's Scotiabank and HSBC USA.  The link to that activity is here.

And, for the second day in a row, there wasn't a lot of silver activity.  Nothing was reported received---and 27,003 troy ounces were reported shipped out.  The link to that 'action' is here.

Here's a chart that reader Brad Robertson sent our way yesterday.  It's the 2-minute price tick chart [The time scale is Mountain Daylight Time---BST-7].  It shows the final smack-down in gold just after 11:30 a.m. EDT, when the final slice of the golden salami took place in Comex trading yesterday.

Here are two more charts courtesy of Nick Laird over at that he sent my way a couple of days ago, but had to wait until today because of space issues.  They look colourful---which they are---and complicated---which they're not.

This is the data for both gold and silver---and it comes out of the weekly Disaggregated Commitment of Traders Report.  It's precisely same data as what's in the legacy COT Report that I talk about every week, but it just reported in different categories---in these cases, four.

The first chart is the price of the metal itself.   The last chart in the sequence are the spread trades in each category.  They are trades that are market neutral because they represent a pair of trades that are long one month and short another, or vice versa.  The middle chart is the all-important net figure---total open interest minus spread trades.

It's the overall shape of the 'net figure' over time, versus the price of the metal itself in the top chart that is of interest---especially when you compare what's been going on with gold and silver prices lately.  The internal dynamics of one vs. the other, especially over the last few years---and few months---is striking.

As Ted Butler said to his paying subscribers on Saturday---as the net open interest in gold is approaching historic lows---the net open interest in silver is blowing out almost to new highs, despite the fact that both gold and silver are either at, or within spitting distance of their low prices as this current rendition of the engineered price declines unfold.
Here's the chart for gold.

And here is silver's chart.

When the next rally in both metals begins, it will be interesting to see what happens to the net open interest in both metals.  This blow-out to the upside in silver's net open interest can't go on forever.  And as Ted also mentioned, the Big 8 shorts in silver are holding their biggest short position in three and a half years---and with silver at its lows for this move down, will they continue to add to their already grotesque short positions on the next rally?  Stay tuned?

I have the usual number of stories for a mid-week column---and I hope you find some in here that you like.


¤ Critical Reads

Social Security, Treasury target taxpayers for their parents’ decades-old debts

A few weeks ago, with no notice, the U.S. government intercepted Mary Grice’s tax refunds from both the IRS and the state of Maryland. Grice had no idea that Uncle Sam had seized her money until some days later, when she got a letter saying that her refund had gone to satisfy an old debt to the government — a very old debt.

When Grice was 4, back in 1960, her father died, leaving her mother with five children to raise. Until the kids turned 18, Sadie Grice got survivor benefits from Social Security to help feed and clothe them.

Now, Social Security claims it overpaid someone in the Grice family — it’s not sure who — in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter. Why the feds chose to take Mary’s money, rather than her surviving siblings’, is a mystery.

Wow!  You couldn't make this stuff up!  This news item showed up on The Washington Post's website almost two weeks ago---and Roy Stephens dug it up for us.  It's certainly worth skimming.



Retail Store Closures Soar In 2014: At Highest Pace Since Lehman Collapse

What a better way to celebrate the rigged markets that are telegraphing a "durable" recovery, than with a Credit Suisse report showing, beyond a reasonable doubt, that when it comes to traditional bricks and mortar retailers, who have now closed more stores, or over 2,400 units, so far in 2014 and well double the total amount of storefront closures in 2013, this year has been the worst year for conventional discretionary spending since the start of the great financial crisis!

While distressed retailers (e.g. Radio Shack) and bankruptcies, which have reached a three-year peak year-to-date, make up 63% of the unit closures in 2014, they comprise only 34% of the total square footage closed. On a square footage basis, broadline retailers  contributed over 28% of closures, with M, DDS, JCP, TGT, and Sam's Club participating in right-sizing their store bases.

Office supply stores have been equally significant contributors to the rationalization process as they grapple with the effects of broader distribution and deeper online penetration. We expect this trend to continue as Office Depot evaluates its real estate in the wake of its merger with OfficeMax. Even dollar stores and drug stores, which combined have consistently built out hundreds of stores per year, are beginning to reel back on expansion, with Family Dollar and Walgreens both planning to shutter  underperforming stores.

This Zero Hedge piece from Monday, was something I found in yesterday's edition of the King Report.


Existing Home Sales Hit 1-1/2 Year Low in March

U.S. home resales fell to their lowest level in more than 1-1/2 years in March, but there were signs a recent downward trend that has plagued the housing market may be drawing to an end.

"The negative housing momentum, which was exacerbated by severe weather conditions during the winter months, may be starting to fade," said Gennadiy Goldberg, an economist at TD Securities in New York.

Existing home sales are counted at the closing of contracts and March's sales reflected contracts signed in January and February, when the country was in the grip of an unusually cold and snowy winter.

[But] even accounting for the terrible weather, the housing market has slowed significantly since last summer as a run-up in mortgage rates, high house prices and a dearth of properties sidelined potential buyers.

This very interesting news item appeared on the Internet site yesterday morning EDT---and it's the first offering of the day from West Virginia reader Elliot Simon. It's worth reading as well.


Hussman: The Fed Has Built a 2-Legged Stool

The Federal Reserve is resting the fate of the U.S. economy on a two-legged stool by focusing only on jobs and inflation, while financial excesses are left unchecked, according to Fed perma-critic and mutual fund manager John Hussman.

In his weekly market commentary, the founder of the eponymous Hussman Funds predicted the Fed has baked unavoidable consequences into the cake of massive monetary stimulus that will prevent its employment and inflation goals from being met.

"Make no mistake. The Federal Reserve's policy of quantitative easing has starved investors of all sources of safe return, provoking them to reach for yield in more speculative assets, including equities, leveraged loans, covenant-lite debt and other securities," he wrote.

"Having stomped on the pedal for years, all of these asset classes are valued at levels that are strenuously elevated from a historical perspective, and as a result, offer strikingly poor prospective returns for long-term investors."

It sounds like John has been reading Doug Noland's weekly Credit Bubble Bulletin on a regular basis, as his  weekly market commentary [which is linked in the story itself] is spot on.

This is another article from the Internet site---and it's also courtesy of Elliot Simon.  It falls into the must read category.


IRS workers who didn't pay taxes got bonuses

The Internal Revenue Service handed out $2.8 million in bonuses to employees with disciplinary issues — including more than $1 million to employees who didn't pay their federal taxes, a watchdog report says.

The report by the Treasury Inspector General for Tax Administration said 1,146 IRS employees received bonuses within a year of substantiated federal tax compliance problems.

Non-payment of taxes by federal employees is a government-wide problem. The IRS says 311,536 federal employees were tax delinquents in 2011, owing a total of $3.5 billion.

I came close to deleting this news item after reading the first few paragraphs, but I'm glad I read the whole thing, as it's definitely worth your while.  This short story was posted on the Internet site early yesterday evening EDT---and I thank Harry Grant for sliding it into my in-box in the wee hours of this morning.


What Germany Left Behind: A Feeling of Abandonment in North Afghanistan

For 10 years, Germany was responsible for the province of Kunduz as part of its role in the International Security Assistance Force (ISAF). It was the first real war the Bundeswehr, as Germany's military is known, participated in, and Berlin's aims were lofty indeed. German development experts were to help extend rights to women, democracy was to be fostered and the economy was to grow significantly. Billions of euros were made available -- and the blood of German soldiers was spilled. Kunduz was a place of great sacrifice.

Until Oct. 6, 2013. On that day, Germany handed over the camp to Afghanistan.

"They ran away," croaks the deputy police chief for the Kunduz province in his office and gestures dismissively. "They simply ran away. It was too soon."

"It was too soon. It was like an escape." One can hear almost exactly the same thing from the mouths of German soldiers, some of whom even compare the Bundeswehr's departure with that of the Americans from Saigon at the end of the Vietnam War. "If there is one thing the Bundeswehr is really good at, it's retreating," is a sentiment that can often be heard in the government quarter in Berlin these days.

This very interesting, but not surprising, 2-page essay appeared on the German website late yesterday afternoon Europe time---and it's courtesy of Roy Stephens, for which I thank him.  And if you have the time, it's worth reading.


Japan warns Beijing over ship seizure

China’s seizure over the weekend of a container ship owned by shipping giant Mitsui O.S.K Lines for its failure to respond to a wartime compensation order related to a contractual dispute has raised concerns in Japan that further assets may be confiscated if more rulings favor Chinese plaintiffs.

The container vessel was seized Saturday at a port in Zhejiang province, Shanghai municipal authorities said Sunday.

The seizure appears to mark the first time that an asset belonging a Japanese company has been seized over litigation related to wartime compensation.

The Maritime Court said that if Mitsui does not honor its legal obligations, it will dispose of the ship in accordance with the law.

This article showed up on the Internet site on Monday---and it's worth reading as well.  It has also had a headline change in the hours between the time I posted it---and finally got around to checking the link.  It now reads "China ship seizure hikes redress fears".  My thanks go out to Roy Stephens once again.


BOJ Survey: Japan Q1 Bank Loan Demand Down; 1st in 3 Qtrs

Japan's corporate demand for financing via bank loans fell in January-March for the first time in three quarters on the back of lower capital investment and improvement of other funding tools, according to a survey of senior loan officers by the Bank of Japan, released Monday.

The BOJ's index for corporate fund demand, which is calculated by subtracting the number of banks reporting a decline in lending from the number of those reporting an increase, fell to +5 in the first quarter of 2014 from +8 in the fourth quarter of 2013.

But the index is expected to rise to +6 in the April-June quarter, the survey showed.

Loan officers cited the drop in capital spending and improvement of other funding tools as the main reasons for the drop in demand in the first quarter, according to the survey conducted from March 11 to April 10.

This very short news item, filed from Tokyo, was posted on the Internet site on Sunday evening---and it's another article I found embedded in yesterday's edition of the King Report.


Four King World News Blogs

1. SentimenTrader: "Presenting the Massive Tech Bubble in One Astounding Chart"  2. Dr. Stephen Leeb: "Axis of Power" as Countries Move to Link Currencies to Gold"  3. Jeffrey Saut: "Massive Volcanic Eruptions Wreaking Havoc On The World"  4. Grant Williams: "Collapse of Western Ponzi Scheme to Send Gold Skyrocketing"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]


Barclays joins retreat from commodities as new rules bite

Barclays will quit most of its commodities trading businesses, joining a broader retreat by banks as profits tumble in the face of tougher regulation.

The British bank's exit means three of the top five banks in commodities have significantly reduced or shuttered their natural resource trading arms since last summer, with profits hit by regulatory demands for lenders to hold more capital to shield them against any problems.

Barclays said it would exit most of its base metals, energy and agricultural trading but will continue in precious metals, some oil and gas derivatives products and index products. The smaller business will be based on electronic execution, it said.

The fact that Barclays will continue to trade precious metals should come as no surprise to anyone, as all the big banks that are selling their commodities divisions are keeping their precious metal trading desks, as you can't rig prices on the Comex if don't control the trading activity---especially when their in collusion.  This Reuters story appeared on their website during the New York lunch hour yesterday---and I found it on the Internet site.


That Was Quick! Coins Commemorate Crimea-Russia 'Reunification'

A Russian factory has produced 25 palm-sized silver coins bearing President Vladimir Putin's face to commemorate Crimea's "reunification" with Russia, state media reported on Tuesday.

“Crimea's reunification with Russia was a historic event which we decided to embody in a souvenir collection of coins made of 925 grade silver,” said Vladimir Vasyukhinsaid, the director of the factory in Yekaterinburg, Russia, according to ITAR-TASS.

Each coin weighs about 2.2 lbs. [1 kilogram] and features Putin's portrait on one side and a map of Crimea on the other. The makers had not decided how much to charge for each, the news agency reported.

This news item showed up on the Internet site early yesterday morning EDT---and it's the final offering of the day from Elliot Simon, for which I thank him.


Sprott Money: Ask the Expert---Koos Jansen

This 21:08 minute audio interview with Koos was posted on their Internet site yesterday.  There's also a transcript coming, but it won't be posted until today sometime.  I haven't had the time to listen to this Q&A session as of yet, but will read the transcript later today.


Goldman Sachs Upgrades Gold/Silver Stocks to Neutral; Barrick Upped to Buy

Goldman Sachs is becoming more constructive on gold and silver equities and as a results is raising their coverage view to Neutral.

Analyst Andrew Quail said, "After underperforming the SPX by 21% since September 2013, gold and silver equities now appear more fairly valued, offering an average 7% total upside. We raise our coverage view to Neutral as we believe (1) more responsible capital allocation, (2) successful cost cutting initiatives, (3) a refocus on maximizing free cash flow, and (4) sound strategic portfolio optimization should improve the positioning of our companies offsetting our below-consensus outlook for commodity prices (we forecast $1,200/oz for gold from 2015 onwards)."

The firm is upgrading Barrick Gold Corp. to Buy, while initiating coverage on five others.

Please excuse me for asking, but isn't this the same Wall Street investment firm that said that gold at $1,050 was a slam-dunk this year?  This gold-related new item showed up on the Internet site early yesterday morning EDT---and I thank Casey Research's own John Grandits for bringing it to my attention---and now to yours.


Lawrence Williams: Anglo’s platinum policy – fact or fiction?

Almost 20 years ago, Anglo American sacrificed Johannesburg Consolidated Investment (JCI) on the altar of emerging black investment in South African mining and in so doing took over the then around 50% owned JCI’s best assets. Of these perhaps the most significant were the company’s platinum mines around Rustenburg and its Union and Amandelbult operations, leaving Anglo American Platinum as comfortably the world’s largest platinum miner. Now, according to reports circulating in South Africa and in London, it appears to be looking at disposing of its deep Rustenburg platinum mining operations which it sees as a problematic and vulnerable business.

As we noted in recent articles the recent takeover of union negotiating rights on the platinum mines by the fledgling, highly aggressive, AMCU, and the subsequent now 13 week-long strike which has closed the Rustenburg mining operations, appears, according to media reports, to have focused Anglo’s mind on how to rid itself of this troublesome part of its operations, which requires a significantly higher platinum price to make it decently profitable.

As Lawrie has pointed out recently in another article on platinum mining, he's more than aware of the fact that platinum and palladium prices are just as managed as the prices of gold and silver.  This news item was posted on the Internet site yesterday.



¤ The Funnies

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¤ The Wrap

I suppose it’s possible these new [Managed Money] longs could still end up selling at even lower prices, but anything is always possible, even if it is unlikely. Taking everything into account, including a near-record raptor net long position, a near-record technical fund short position and what may be a fully liquidated technical fund long position; that is a compelling list of buy signals. I know that the concentrated and manipulative short position of the Big 8 shorts is way too high, but between the raptors---and what now looks like new value players on the long side of the managed money category---it’s just possible those concentrated shorts may have met their match. If we do rally at some point in the short term, it will be interesting to see if the big silver shorts add aggressively from current holdings and expose themselves to greater criticism.  - Silver analyst Ted Butler: 19 April 2014

It was another day of salami slicing in gold and platinum on Tuesday.  Not much happened in palladium---and likewise silver, but the bottom, as Ted Butler has pointed out on several occasions in this column, already appears to be in.

Now all we have to do is wait and see if JPMorgan et al can force more technical funds to go short in gold as the days pass.  It was 'mission accomplished' yesterday---and it wouldn't surprise me in the slightest if the same thing happened again today, although I reserve the right to be wrong about that.

Here are the 6-month charts for both gold and silver, so you can see the lay of the land in both metals after yesterday's price action.

After heavy trading volume in silver yesterday, I was somewhat surprised to see that open interest in May had only declined by 6,223 contracts when I checked out the CME's Preliminary Report at 3:32 a.m. EDT this morning.  There are still 50,000+ contracts that have to be rolled or sold by the end of trading on Monday, so there's miles left to go.

Not much happened in gold in Far East trading on their Wednesday---and the same can be said now that London has been open 35 minutes.  Silver had a price spike about 9:30 a.m. Hong Kong time on their Wednesday morning, but it didn't take long for a seller of last resort to hammer that flat---and the silver price hasn't done much since.  Gold volume is very light for this time of day---around 18,000 contracts.  Silver's volume is pretty light as well---and about 25% of it is roll-overs out of May and into July, the next front month once May goes off the board next week.

Platinum and palladium aren't doing much of anything---and prices are mostly flat.  I note that platinum had the audacity to rally a few dollars over the $1,400 the ounce price mark---and it will be interesting to see how long that state of affairs is allowed to last.

Yesterday was the cut-off for this Friday's Commitment of Traders Report---and I'm expecting some pretty decent numbers when the report is released at 3:30 p.m. EDT on that day.

And as I send today's commentary off to Stowe, Vermont at 5:10 a.m. EDT---I note that nothing much has changed in London trading since my previous paragraph about 35 minutes after the market opened over there.  Prices are still flat across the board and volumes are up---but not by a lot---and roll-overs in silver are up by a noticeable amount.  The dollar index, which hadn't been doing much of anything up until 2 p.m. Hong Kong time, has become more agitated---and the index is currently down about 16 basis points.

Like the trading pattern in all four precious metals yesterday, I'm not expecting a lot of price activity until Comex trading begins in New York at 8:20 a.m. EDT---and after that, all bets will be off.

Enjoy your day---and I'll see you here tomorrow.