Casey Research Publication
Gold & Silver Daily
"Whatever is going on behind the scenes is known only to those who need to know."
 

¤ Yesterday In Gold & Silver

I wouldn't read much into Tuesday's price action anywhere on Planet Earth yesterday, although there was some structure to the market...the sell-off up until 2:00 p.m. in Hong Kong, gold's low of the day...then what looked like a short-covering rally of sorts around 9:00 a.m. in London...then the gentle decline into the London close...and the rally into the close of electronic trading in New York...the second day in a row that has happened.

The high tick...$1,478.60 spot...came just about at the electronic close.  The low, around $1,460 spot came minutes after 3:00 p.m. Hong Kong time, less than an hour before London opened.

Gold closed on Tuesday at $1,477.20 spot...up 70 cents from Monday.  Gross volume was in the neigbourhood of 154,000 contracts, which wasn't a lot.

In silver, the big rally into the New York electronic close on Monday wasn't allowed to stand...and by 2:00 p.m. on Tuesday afternoon, the entire rally, plus all of Monday's gains, were history.  Then silver price followed the same price as gold did, but never came close to getting back to its Monday closing price.

The low was a hair over $24.00 spot in afternoon trading in Hong Kong...and the high was in during the London lunch hour.

Silver closed at $28.35 spot...down 24 cents from Monday.  Net volume was around the 32,000 contract mark.

Platinum and palladium traded in a very narrow range in all markets yesterday.

The dollar index closed at 82.14 on Monday afternoon in New York...and then traded more or less sideways until 9:00 a.m. in New York.  Two hours later it was at its low of 81.61...and barely recovered off that low, closing the Tuesday session at 81.72...down 42 basis points from Monday's close.

There was absolutely no indication of that big currency move to be found in any of the precious metals prices.  As I've said before, the relationship between the currencies and the dollar...over the long term...is myth.  It's also a myth over the short term as well, with today's action being a case in point.

I was somewhat taken aback by how hard the gold stocks got hit at the 9:30 a.m. open of equities trading in New York yesterday...but after being down over 3 percent for most of the morning, the shares began to struggle back starting around noon EDT.  I was even more taken aback when the share rallied powerfully into the close...and finished on their absolute high tick of the day...with the HUI closing up 1.03%.  I'm not sure what to make of that action.  Let's see if there is any follow-through in today's trading.

Despite the fact that silver closed down by about a percent on the day, every stock in Nick Laird's Intraday Silver Sentiment Index closed in positive territory...and the index showed a gain of 1.81%. 

(Click on image to enlarge)

The CME's Daily Delivery Report for 'Day 2' of the May delivery month in silver showed that 394 gold and 357 silver contracts were posted for delivery on Thursday. In gold, the only short/issuer worth mentioning was JPMorgan Chase out of its client account, with 368 contracts issued.  Canada's Bank of Nova Scotia was the only long/stopper of note with 354 contracts.

In silver, there were a lot of short/issuers, but the main one was Merrill with 153 contracts...and the largest of the long/stoppers was JPMorgan Chase in its client account with 164.  Yesterday's Issuers and Stoppers Report is also worth a quick peek...and the link is here.

GLD was down again...this time an authorized participant withdrew 67,695 troy ounces and, for the fourth day in a row, an authorized participant added silver to SLV.  This time it was rather chunky 1,448,739 troy ounces.

In the last eight calendar days there has been 4.3 million ounces of silver added to SLV...and during that same period 600,000 troy ounces of gold have been withdrawn from GLD.  Something does not compute here...and that story about "investor liquidation" in GLD is getting a little tired.  It appears that there is something else going on that we aren't privy to, at least for the moment.

The good folks over at Switzerland's Zürcher Kantonalbank...for the week ending at the close of trading on Monday...reported that 33,111 troy ounces of gold were withdrawn from their gold ETF but, for the second week in a row, more silver was added to their silver ETF.  This time it was 169,402 troy ounces.  Where the heck is all the silver coming from that's disappearing into all these silver funds?

The U.S. Mint had a tiny sales report yesterday.  They didn't report selling any gold eagles or buffaloes...but they pushed their silver eagles sales up by another 111,500...finishing the month at 4,087,000.

If yesterday was the last change to April's sales, then the month ended with 209,500 ounces of gold eagle sales...along with 37,000 one-ounce 24K gold buffaloes...plus the silver eagle total above.

Here's another piece of gold sales trivia for you to chew on.  Year-to-date in 2013, the U.S. Mint has sold 132,000 one-ounce 24K gold buffaloes...a bit over four tonnes.  That equals [to the ounce] the number of gold buffaloes sold during the entire 2012 calendar year!

Over at the Comex-approved depositories on Monday, they reported receiving 647,095 troy ounces of silver...and shipped 649,75 troy ounces out the door.  The link to that activity is here.

In gold, the Comex-approved depositories reported receiving 269,169 troy ounces on Monday...and shipped 189,258 troy ounces out the door.  The link to that activity is here.

Here's your daily "cute quota"...

I've whittled today's story list down to what I consider the bare minimum but, as always, the final edit is up to you.

 

¤ Critical Reads

Welcome Back Recession: Chicago PMI Implodes to 49, First Sub-50 Print Since September 2009

Total collapse. That is the only way to explain what just happened with the Chicago PMI which imploded from 52.4, and printed at a contractionary 49: the first sub-50 headline print since September 2009. But that's not all: Deliveries, Prices Paid and Production all hit their lowest since 2009; Backlogs posted their tenth month of contraction in the past 12 months. And what's worst for the Department of Making Shit Up, Employment plunged from 551. to 48.7, its third month over month decline.

This Zero Hedge piece from yesterday contains some excellent charts...and was sent to me by Manitoba reader Ulrike Marx.  I thank her for today's first story.

Read more...

Moody's: 'Less Than Impressive' Consumer Spending Proves Economy Is Slowing

Consumer spending unexpectedly rose in March, temporarily boosted by demand for utilities due to colder weather, according to data on Monday that did little to alter a picture of a cooling in the economy.

The Commerce Department said consumer spending advanced 0.2 percent last month after a 0.7 percent rise in February.

The increase, which beat economists’ expectations for a flat reading, was driven by higher spending on services as outlays on utilities posted a second straight month of hefty gains. Spending on goods, a key measure of underlying demand, fell.

"Utilities made up a pretty decent chunk of spending," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "When you extract from that, spending was less than impressive in March. The economy is slowing."

This moneynews.com article appeared on their website late Monday morning...and I thank West Virginia reader Elliot Simon for sharing it with us.

Read more...

As Jobs Lag, Fed is Viewed as Unlikely to Do More

The Federal Reserve is making modest progress in its push to reduce the unemployment rate. But that is not the jobs goal Congress actually established for the Fed. The central bank is supposed to be maximizing employment. And on that front, it is not making progress.

The share of American adults with jobs has hovered around 58.5 percent for more than three years, roughly five percentage points below its prerecession peak.

Job creation has merely kept pace with population growth. The unemployment rate, now 7.6 percent, has fallen mostly because people stopped looking for work.

There is little sign, however, that Fed officials are considering an expansion of their four-year-old stimulus campaign as the Fed’s policy-making committee prepares to convene Tuesday and Wednesday in Washington.

This article appeared in The New York Times on Monday...and it's courtesy of Roy Stephens.

Read more...

Fed May Shift Talks Toward More Stimulus, El-Erian Says

Federal Reserve policy makers may shift discussion away from when to reduce monetary stimulus, given data showing the economy is weakening, according to Pacific Investment Management Co.’s…El-Erian.

"The inherent momentum of the economy is still weak and you don’t want to taper off too quickly," El-Erian said…"They are going to try to change the narrative away from the Fed is taking its foot off the accelerator, to the Fed is maintaining its foot on the accelerator. It could even press it harder."…

"The benefits of the Fed come with costs and risks…What I worry about is when you run a system at artificial price levels, you start creating damage, resources are misallocated, too much risk is taken."

So...what will the boyz behind the curtain do when they report later this afternoon?  This Bloomberg story was also posted on Monday...and I found it in yesterday's edition of the King Report.

Read more...

Europe's Scariest Chart Leaves 1 in 4 Young People Unemployed

While near record low sovereign bond spreads and near record high equity prices have been taken as vindication by the European elites that all is well and 'we just need a little less fauxsterity' to be done with this crisis; the data, as it so often does, says the exact opposite. European unemployment just broke above 12% for the first time ever and European youth unemployment remains miserably above 24%. And while 1-in-4 under-25s unemployed is a bad enough statistic in terms of likely emergence of social unrest, the individual countries are in general deteriorating once again at a faster rate.

This short must read Zero Hedge piece was posted on their website yesterday...and is the second offering of the day from Ulrike Marx.

Read more...

Germany will think twice before saving France next time

The Franco-German axis that has driven EU affairs ever since Schuman and Adenauer in the early 1950s is collapsing before our eyes.

This was inevitable. Their interests have become incompatible under monetary union. The currency that was supposed to bind them is turning them into enemies, as this newspaper long warned.

The latest argument gaining traction – advanced by Prof Bernd Lücke and the German eurosceptic party AfD among others – is that the only way to save the Franco-German relationship and therefore the EU is to break up the euro before it does more damage. Interesting twist.

In the thirty or so years that I have been following EU affairs – or is it nearer 35 years now since I studied in French literature in Paris, and German philosophy in Mainz – I have never seen ties between Europe’s two great land states reduced so low.

This Ambrose Evans-Pritchard offering from yesterday falls into the must read category...and was posted on the telegraph.co.uk Internet site yesterday.  I thank Roy Stephens once again.

Read more...

Spain sinks deeper into recession

The National Statistics Institute said the Eurozone’s fourth largest economy shrank by a further 0.5 per cent between January and March deepening a double-dip recession suffered since mid-2011.

The latest figure is in line with Bank of Spain forecasts which predict that Spain’s will shrink by around 1.3 per cent by year end and not begin to return to growth until well into 2014.

Embattled Prime Minister Mariano Rajoy was forced to acknowledge that despite stringent austerity measures the nation would need an additional two years to bring its public deficit to within the 3 per cent limit demanded by European Union partners.

This short article was posted on The Telegraph's website during the U.K. lunch hour yesterday...and is another news item courtesy of Roy Stephens.

Read more...

Italian showdown with Germany as Enrico Letta rejects 'death by austerity'

Italy’s new premier Enrico Letta is on a collision course with Germany after vowing to end death by austerity, and warned that Europe itself faces a “crisis of legitimacy” unless it charges course.

Italy is dying from fiscal consolidation. Growth policies cannot wait any longer,” he told Italy’s parliament. He said the country is in “very serious” crisis after a decade of stagnation and warned of violent protest if the social malaise deepens.

The grand coalition of Left and Right - the first since the late 1940s - will abolish the hated IMU tax on primary residences, a wealth levy imposed by ex-premier Mario Monti, and push for tax cuts for business and young people to pull the country out of perma-slump. A rise in VAT to 22pc in July may be delayed.

Mr Letta said Italy would abide by EU budget pledges and but in reality he seems to have broken with the core demands of the EU fiscal compact.

This is another Ambrose Evans-Pritchard that's worth reading if you have the time...and I thank Roy Stephens for his last offering in today's column.

Read more...

Band of Cyprus converts portion of uninsured savings to equity...the dreaded 'bail in'

The Bank of Cyprus (BoC) said on Sunday it had carried out a conversion of uninsured cash deposits in the bank into equity, one of the conditions of international lenders to offer the cash-starved island financial aid.

The process, known as a 'bail-in', made depositors in the bank pay for its recapitalisation, after the institution was hit by massive losses from its exposure to debt-crippled Greece.

The island's largest bank, said it had converted 37.5 per cent of deposits exceeding €100,000 on March 26, into "class A" shares – nominal value €1 -- with an additional 22.5 per cent held as a buffer for possible conversion in the future.

Any loans or other financial obligations had been deducted before the conversion, the lender said.
Another 30 per cent would be temporarily frozen and held as deposits, BoC said.

This short must read article was posted on the cyprus-mail.com Internet site yesterday...and I thank reader Bill Houseman for digging it up on our behalf.

Read more...

Euro Lessons Unlearned as Blunders Mar Cyprus Rescue

As Greece lurched toward its first bailout in early 2010, the largest bank in Cyprus was stocking up on Greek bonds.

That lethal misjudgment helped drive the government in Nicosia toward a rescue of its own, a 10 billion-euro ($13 billion) project involving measures so novel -- beyond an unprecedented raid on bank deposits that sparked a global uproar -- that policy makers initially kept them under wraps.

Neither a plan for Cyprus to sell gold reserves nor one to repay a loan from the Cypriot central bank with real estate was disclosed in a statement by euro-area finance chiefs in the early morning hours March 16. The measures were cited by Jeroen Dijsselbloem of the Netherlands, the group’s chief, in a confidential recap, which was obtained by Bloomberg News.

“It’s clear they’re making stuff up as they go along: every bailout is different in an unexpectedly horrible new way,” Alexander Apostolides, an economics lecturer at European University Cyprus in Nicosia and a member of the Cypriot government’s economic-advisory council, said in an interview. “They’re not really thinking ahead.”

This Bloomberg story from yesterday afternoon MDT arrived in my in-box just minutes before I hit the 'send' button on today's column...and I stuck it in here.  I thank U.A.E. reader Laurent-Patrick Gally for sending it our way.

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Nigel Farage on "wholesale, violent revolution" in Europe

This 1:58 minute video clip is an excerpt from the Sovereign Man's "Offshore Tactics Workshop in Santiago, Chile at the end of March...and it was posted on the youtube.com Internet site yesterday.  It's worth watching if you're an N.F. fan...and I thank Marshall Angeles for bringing it to my attention...and now to yours.

Read more...

Three King World News Blogs

The first interview is with Bill Fleckenstein...and it's headlined "Massive Shorts May Create Squeeze in Gold". The second blog is with Robert Fitzwilson.  It's entitled "World Changing Events and the Global Run on Gold and Silver".  And lastly is this commentary by John Embry...and it bears the title "This May Create a Massive Upside Breakout in Gold".

Read more...

Gold price crash unleashed frenzy of physical demand

Physical gold stocks held at CME Group's Comex warehouses in New York have dropped to a near-five year low in a further sign that gold's price crash unleashed a frenzy of demand as investors scramble to buy bars and coins.

U.S. gold stocks, comprised of 100-troy ounce COMEX gold bars, have fallen almost 30 percent since February, as dealers have switched to selling into the burgeoning Asian market, where prices and demand are higher than in New York.

But the pace of the outflows from vaults has accelerated since bullion's historic sell-off, falling more than 7 percent last week for its biggest weekly drop since 2005.

This very interesting Reuters piece ended up on the mineweb.com Internet site yesterday...and the same Big 3 names show up in gold that always show up in silver...JPMorgan Chase, Canada's Bank of Nova Scotia...and HSBC USA.  No surprises here...and I thank Ulrike Marx for digging this story up for us.

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UAE gold retailers buy bullion at any cost

Gold prices may have had a partial recovery over the last week, but the premium jewellery retailers need to shell out to ensure they have enough bullion stock to get by has nearly doubled. As against the $5 an ounce average of two weeks ago, the premium for fresh deliveries is now hovering at the $10 an ounce mark.

Even with retailers willing to pay the premium, the market continues to see shortfalls in gold bars and biscuits due to “excessive — and sustained demand”. After taking a fall to $1,321 an ounce, prices were up to $1,463 and even touched $1,484 during a certain intra-day spell. But there is still a gap with the $1,580 an ounce before the fall came into play.

“There is a shortage of physical gold in the local market due to retail buying of small and medium gold bars (weight between 10 — 1,000 grams),” said Tarek El Mdaka, managing director at Kaloti Jewellery Group. “What made things worse is the demand from the Gulf, Mena region, Turkey and India which largely depend on the physical material from Dubai’s gold traders and refiners.

This Associated Press story was picked up by the gulfnews.com Internet site during Dubai lunch hour on Monday...and it's worth reading.  I thank Elliot Simon for sending it along.

Read more...

Elections, Monsoon to impact India Gold market

Although general elections are at least a year away, chances of it to happen sooner due to coalition break ups could hit the markets in a negative way, they said.

India's elections, the largest of it's kind in the world, is crucial to country's economy and no major decisions were taken during the time as people awaits for policies of new government.

On the other hand, a normal monsoon forecast by the Indian Met Department has brought a big smile to the Indian gold trade. Rural demand has already picked up as the Akshaya Tritiya is nearing and the news of a normal monsoon has further added fuel to it.

Analysts said farmers are major buyers in rural India and they are buying gold according to their capacity. A good monsoon can bring good harvest and increase their purchasing power.

This short new item was posted on the bullionstreet.com Internet site early yesterday afternoon India Standard Time...and I thank Ulrike Marx for her last offering in today's column.

Read more...

CME Chairman On Gold: “People Don’t Want Gold Certificates, They Want the Real Product”

I’m actually still in a state of shock that the head of the CME Group would make such an observation and in such blunt terms.  I mean the guy admits that volume on his exchanges suck, yet basically claims paper gold (one of their marquee products) is becoming irrelevant.

This short article was posted on the Zero Hedge website late yesterday.  The Bloomberg TV video clip where Terrence Duffy, President and CEO of the criminal organization known as the CME Group, says the magic words...is embedded as well.  I thank Phil Barlett for sharing it with us.

Read more...

U.S. Mint Sales of Gold Coins Jump to Highest in Three Years

Sales of gold coins by the U.S. Mint rose to the highest since December 2009 after the price of the metal in April fell the most in 16 months.

Last month, sales totaled 209,500 ounces, up from 62,000 ounces in March, data on the mint’s website show. The amount for December 2009 was 231,500 ounces. Silver-coin sales rose to 4.2 million ounces from 3.36 million in March.

Demand surged at mints from Australia to the U.K. and the U.S. after futures slumped 13 percent in two days through April 15. Gold futures tumbled 7.8 percent last month and dropped into a bear market as some investors lost faith in the metal as a store of value. Perth Mint, which refines almost all of the nation’s bullion, said that demand jumped to the highest in five years after prices plunged, with the factory kept open through the weekend to meet orders.

“People are flocking to buy physical gold,” Todd Dutkevitch, a senior account executive at Los Angeles-based American Bullion Inc., said in a phone interview. “The price drop has made it possible for many retail buyers to add gold.”

This Bloomberg story was filed from New York just after midnight.

Read more...

Frank Holmes: It's Hard To Argue That Gold Was Ever In A Bubble

Since gold’s bull run began a decade ago, many people have asked me whether the metal was in a bubble, despite the fact that there were many drivers in place for gold.

This short article from Frank Holmes, along with a most excellent chart, was posted on the businessinsider.com Internet site early yesterday afternoon EDT...and it's certainly worth checking out.  I thank Roy Stephens for his final story in today's column.

Read more...

Book Review...Nick Barisheff: $10,000 Gold

Given the recent shellacking in the price of gold, you have to sympathize with the unfortunate timing of the publication of a book entitled $10,000 Gold. Given the long lead times involved in book publishing, I’m sure the publishers were powerless to do anything about it; on the other hand, the “any publicity is good publicity” school of thought might even view the recent massive publicity over gold’s alleged demise as ultimately a positive.

I would normally view a book with such a title with considerable skepticism even though, as the previous blog post reveals, I’ve long been a believer in having a 5 to 10% position in some combination of gold or precious metals stocks, mutual funds or ETFs, or the underlying physical metals (coins or bullion bars).

But $10,000 as the price of a single ounce of gold? That’s almost a seven-fold rise from the most recent post-correction price of $1,460. There are at least two reasons why I even dignify the idea with a blog post. The first is I’ve known the author—Bullion Management Group founder Nick Barisheff—since the turn of the century. I followed with interest his four-year struggle to create an RRSP-eligible mutual fund that held not just gold bullion but also equal amounts of silver and platinum. It finally saw the light of day in 2002.

The second is that I’d also watched the development of this manuscript over the years and note with interest that it has finally been published by perhaps the most credible North American publisher out there in the field of financial non-fiction: Wiley (in this case, John Wiley & Sons Canada). Furthermore, Wiley has chosen to publish this as a hard-cover edition at a suggested retail price of $39.95. That’s at the upper end of the range for such books and I note the irony that such a price is slightly over the $35 price of an ounce of gold that held throughout a large part of the early 20th century.

This book review by Jonathan Chevreau was posted on the moneysense.ca Internet site on Monday...and is well worth reading...and I would suspect that the book is, as well.

Read more...

 

¤ The Funnies

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¤ The Wrap

I believe in only one thing...liberty.  But I do not believe in liberty enough to want to force it upon anyone. - H.L. Mencken

It was another 'nothing' day in the precious metals yesterday...as the high-frequency traders kept a lid on the markets...and I don't expect much to happen until "da boyz" decide that it's time.  It's incredible to watch the frantic in/out movements in the Comex-approved gold and silver depositories...and even more incredible to watch gold get removed from GLD...while SLV stocks are on the rise.

Whatever is going on behind the scenes is known only to those who need to know...and doesn't include "we, the people."

The 20-day moving averages are sneaking every closer.  Gold close on its 20-day moving average yesterday...and silver's current price isn't that far away, either. If gold and silver prices are allowed to break [and close] above these price points, it will be interesting to see how the mega-short technical funds will react.  And the even more important question to be asked is will JPMorgan et al sell to them at a low price, or at a much higher price?  Questions with no answers at the moment...and I know that silver analyst Ted Butler is also watching this situation closely.

Here are the 6-month charts in both metals with their respective 20 and 50-day moving averages displayed.  As you can tell, we're on the cusp...and today's price action should be watched more carefully than normal.

(Click on image to enlarge)

(Click on image to enlarge)

I also note the bullish configuration of the MACD lines as well...but as you already know, 'da boyz' can paint any chart pattern they want...and the T.A. guys swallow it up like it was the gospel.  As I've said many times, technical analysis is meaningless in a market where prices are managed.

The Fed meeting concludes today, but like every other time they've met over the last year or so, they are now powerless to stop, or even slow down, the money-printing process.  Not only is it "print, or die" time...it's also "print...and die" time.  It's baked in the cake.  So what they say when the time comes early this afternoon, really doesn't mean much.

However, having said that...I wouldn't be at all surprised if the precious metals market "reacted" to the news.

The world's central banks need some inflation in the system...and one of the ways to get people's attention would be to run the gold price up a bit...and get their captive main-stream media outlets to write the proper stories...just like the wrote the proper stories prior to the engineered price decline of a few weeks gack.  I'm speculating here, but I'm not the only person that has floated this idea...and I'm in some rather good company.

As I type this paragraph at 3:35 a.m. Eastern time, the London market has been open for 35 minutes.  Gold and silver volumes are shockingly low...a hair under 10,000 contracts in gold...and just under 3,000 contracts in silver.  This looks like it could be real trading volume rather than the price-controlling high-frequency stuff.  The dollar index is comatose.

And as I hit the 'send' button on today's column at 5:15 a.m. Eastern time, the prices of both silver and gold are still down a bit, but with volume still at extremely low levels, I wouldn't read much into that price action...and the dollar index still isn't doing much of anything.

I hope your day goes well...and I'll see you here tomorrow.