Gold & Silver Daily
"As I mentioned in Saturday's column, the fact that the raptors [the et al] were selling on lower prices was like having the law of gravity repealed."

¤ Yesterday In Gold & Silver

On the back of a spike in the dollar index at the open on Sunday night in New York, gold got sold off about five bucks...and from there it traded within a five dollar range of that price for the rest of Monday everywhere on Planet Earth.

The gold price tried to move higher a couple of times during the day.  The first smallish rally got stopped in its tracks at precisely 6:00 a.m. Eastern time...and the second time was shortly before 9:30 a.m. Eastern time...but both ran into an not-for-profit seller almost immediately...and by 10:45 a.m. gold was down a bit more than eleven bucks from the New York high of the day, which was $1,642.60 spot.

The volume in the first couple of hours of trading on Sunday Night was three or four times the normal volume, so I'm guessing that gold had to have some help staying down, despite what was happening with the dollar.

London was closed for a bank holiday on Monday...and that added to the rather lackluster performance in gold yesterday.  Gold closed at $1,638.50 spot...down $3.60 on the day.  Net volume was basically vapour at 77,000 contracts.

Of course silver really got it between the eyes.  It got hit hard at the Sunday night open...and was down 40 cents during the first forty-five minutes of trading.  But by lunchtime Hong Kong time, silver was back above the $30 mark at $30.10 spot.  Then shortly before 3:00 p.m. in Hong Kong, he silver price began to rise anew...and by 11:00 a.m. in London was back above its Friday close before getting sold off a bit before going into the start of Comex trading in New York.

Then the moment that the equities markets opened at 9:30 a.m. Eastern, silver got sold down almost 80 cents from its New York high...with the low of the day [$29.60 spot] coming at 10:45 a.m. Eastern...the same as gold.

Silver gained some of that loss back within the next two hours of trading, but faded into the Comex close...and basically traded sideways from there.

Silver closed the New York session on Monday at $30.09 spot...down 25 cents from Friday.  Volume was pretty decent at 27,000 contracts.

As I mentioned in the first paragraph of this column, the dollar index blasted higher right at the open on Sunday night...briefly penetrating the 80.00 cent mark.  It held close to that mark until 2:00 a.m. Eastern time...and then went into a slow decline that ended at half past lunchtime in New York.  From there it traded sideways into the close.  When all was said and done, the dollar index finished up about 10 basis points on the day.

For such a big initial up move in the dollar index, I'm surprised that gold didn't sell off more than it did...and of course there's nothing in that currency move that would account for the 80 cent sell-off in silver that began at 9:30 a.m. Eastern time.  That was JPMorgan et it was in gold during the same period.

The gold stocks opened in the black for just a few minutes before getting vigorously sold off until shortly after the lows for both gold and silver were in during the New York morning at 10:45 a.m. From there, the shares recovered back to just unchanged before rolling over into the close.

At its low, the HUI was down well over two percent...but finished the day down 1.30%.

The silver shares got slaughtered once again...and despite the fact that silver closed down only two bits on the day, Nick Laird's Silver Sentiment Index closed down 2.49%.

(Click on image to enlarge)

Most silver stocks are now trading back at levels when silver was selling for around $21 the ounce back in October of 2010.

The CME's Daily Delivery Report wasn't very exciting, as only 5 gold and 22 silver contracts were posted for delivery tomorrow.

The GLD ETF added 29,129 troy ounces of gold yesterday...and there were no reported changes in SLV once again.

The U.S. Mint had a sales report on Monday.  The sold 2,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 235,000 silver eagles.  Month-to-date the mint has sold 22,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 335,000 silver eagles.

And, surprisingly enough, there were no reported changes in silver inventories over at the Comex-approved depositories on Friday.

Silver analyst Ted Butler posted his weekend commentary on his website on Saturday...and here are three free paragraphs...

"Remarkably, at least to me, the frantic turnover in metal coming into and out from the COMEX silver warehouses continued this week. In fact, it was one of the most active weeks in memory, even though total inventories remained largely unchanged at 142 million ounces. I can’t help but be fascinated by the continued high movements of COMEX silver inventories over the past year. I keep searching for a more plausible explanation than it means tight wholesale physical conditions, but I have been unable to find that explanation. Increasingly, I have the suspicion that some large entity or entities may be acquiring silver in a determined fashion. I can’t prove it, but the movements suggest it. Yesterday’s 1.5 million oz deposit in the big silver ETF, SLV, leaves it ahead almost a million ounces net deposited for the week. This is very much in contrast to expectations of net withdrawals for the week, given the weak price action and adds to my suspicions of major accumulation."

"The big surprise in[the Commitment of Traders for silver] was the composition of the change among two of the commercial categories. Whereas the big 4 (read JPMorgan) reduced their net short position as much or more than anticipated, the raptors (the smaller commercials apart from the big 4 and the big 5 thru 8) sold 4,700 contracts from their net long position, reducing that net long position to 13,600 contracts. I don’t recall the raptors ever selling like this into a notable price decline. It could be that there was some type of reporting error, but an analyst has to take the data as it comes. If there is some type of adjustment in the next COT, I’ll deal with it then; for now, I’ll consider the numbers as being accurate as reported."

"The big 4 (read JPMorgan) reduced its net short position by 3,500 contracts, one of the largest weekly reductions ever. As a result, the listed percentage of total open interest held net short by the big 4 was, at 26.3%, the lowest in many years, even lower than the extreme lows seen this past December. In terms of the number of contracts held net short by the big 4, while not the lowest number ever, at 29,157 contracts, it is one of the three smallest short positions on record. In simple but accurate terms, the recent takedowns in the price of silver were designed and executed to get this concentrated short position reduced."

Here's a graph that's titled "Tough Time" that was sent to me by Washington state reader S.A. on Monday.  It's pretty much self-explanatory...and is very depressing to look at, especially the last bar on the chart.

Here's another graph that requires no explanation. It's titled "Gold Demand - Physical vs. ETFs".  I got this from Phil Barlett.

(Click on image to enlarge)

And the next chart is courtesy of Washington state reader S.A.  It's captioned "Berkshire Hathaway vs. Gold"...and also needs no explanation.

It was quite a weekend...and I have a lot of stories from it, so I hope you have the time to go through them all.


¤ Critical Reads

Stock Trading Is Still Falling After ’08 Crisis

Even though American stocks have doubled in price in the last three years, investors and traders large and small keep giving the market the cold shoulder. 

Trading in the United States stock market has not only failed to recover since the 2008 financial crisis, it has continued to fall. In April, the average daily trades in American stocks on all exchanges stood at nearly half of its peak in 2008: 6.5 billion compared with 12.1 billion, according to Credit Suisse Trading Strategy.

The decline stands in marked contrast to past economic recoveries, when Americans regained their taste for stock trading within two years of economic shocks in 1987 and 2001.

This time around, the stock market has many more players, including high-speed trading firms, which have recently come to account for over half of all stock market activity. But even they, like all other major groups, have recently been doing less overall trading.

This story was in the Saturday edition of The New York Times...and I thank Phil Barlett for sending it.  The link is here.


Study Says Broker Rebates Cost Investors Billions

The rules governing Wall Street generally force stockbrokers to seek out the best prices for clients who pay them to buy and sell shares.

In recent years, though, brokers have had another enticement that can pull them in a different direction: payments from stock exchanges in return for sending them business.

The practice has attracted criticism from several industry participants and former regulators who say the so-called rebates that the exchanges pay Wall Street firms could give those firms an incentive to profit at the expense of investors. Now a new study using industry data says that the rebates could be costing mutual funds, pension funds and ordinary investors as much as $5 billion a year.

This is another story from Sunday's New York Times...and it's also courtesy of  Phil Barlett.  The link is here.


Look Who’s Pushing Homeowners Off the Foreclosure Cliff

One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.

Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.

The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.

This Bloomberg story was posted on their website on Sunday...and I thank West Virginia reader Elliot Simon for bringing it to our attention.  The link is here.


Stock markets fall as Greek and French elections renew fears that Europe cannot solve debt crisis

Weekend election results in Greece sent tremors throughout Europe as voters punished the parties responsible for highly unpopular austerity measures instituted to prevent the country from defaulting on its massive debts and exiting the euro currency bloc. 

No political party won enough votes to form a government, raising the possibility of new elections within months and protracted uncertainty for global markets.

Japan's Nikkei 225 index plunged 2.8 per cent to close at 9,119.14 – its lowest finish in three months – while Dow Jones industrial futures fell 0.8 per cent to 12,857 and S&P 500 futures lost 0.9 per cent to 1,350.90.

Among European markets, Germany's DAX dropped 1.5 per cent to 6,463.67 and France's CAC-40 shed 1.6 per cent to 3,112.49.

This story out of yesterday's edition of The Telegraph was sent to me by Roy Stephens...and the link is here.


Europe has reached a watershed moment and leaders need to refocus

The post-war political model is breaking down. And about time. For the political elites have failed the people they are supposed to represent.

People are worried sick about the economy. At the moment, anxiety centres on the problems of the euro. That is understandable. It is the great issue of our day. But it is not sui generis. It is the latest in a long line of European failures.

Put the word euro or European in front of the name of almost any policy issue or area – Agriculture, Fisheries, Immigration, Defence – and you will immediately conjure up a catalogue of failure. The common European money – the euro – is just the most important addition to this list.

It wasn't willed by the people but was rather thrust upon them by their leaders, without sufficient thought or preparation. They have created a monster which threatens to destroy the European economy – and with it, to threaten the world.

This is another Roy Stephens contribution...and this one was posted on website late on Sunday night.  The link is here.


Merkel says fiscal pact is not up for renegotiation

Merkel said Hollande would visit the German capital shortly after his inauguration as president, expected to take place on May 15, without giving a date for the much-awaited meeting.

The German chancellor irked Hollande by openly campaigning for his rival Nicolas Sarkozy, who comes from the same conservative political family as Merkel.

During the campaign, Hollande won few friends in Berlin by criticising Merkel's insistence on austerity as the way out of the eurozone debt crisis, seeking to shift the focus to growth.

But Merkel told reporters that both budgetary consolidation as well as growth was necessary in Europe and reiterated that the EU's fiscal pact -- aimed at reducing ballooning deficits -- was not up for discussion.

This AFP story was posted on the website yesterday...and is Roy Stephens' third offering in a row.  The link is here.


GREECE: Conservative Leader Fails To Form Government, As 'All Hell Has Broken Loose'

This story that's just breaking now via AP and Bloomberg is ominous for Europe...

The leader of the conservative party in Greece, which just took the plurality of votes in the Greek election, says he has given up on forming a coalition government.

He said that all attempted combinations have failed, and that the need to renegotiate the bailout is now agreed to by everyone. Samaras technically had three days to form a government, and he's given up after less than one day.

Now that Samaras has failed, it's up to the far-left wing party to give it a shot. They're not just in favor of renegotiating the bailout. They're against austerity in total. We'll see if they get it. If they fail, then it's up to PASOK to give it a shot.

This story was posted over at the website yesterday afternoon...and is another Roy Stephens offering.  The link is here.


Three stories from the Tehran Times

The first is headlined "Japan to insure ships carrying Iranian Oil".  The second story is entitled "World Bank chief opposes sanctions on Iran's central bank: CBI governor".  And lastly is this story headlined "Old tensions between Russia and U.S. set to revive".  These are Roy Stephens' final offerings of the day, for which I thank him.


India removes excise tax on gold jewelry

Indian Finance Minister Pranab Mukherjee Monday removed the excise tax on sales of all gold jewelry, a move that will calm retailers who went on strike when the scope of the levy was widened in March.

In the federal budget on March 16, Mr. Mukherjee imposed a 0.3% excise tax on non-branded gold jewelry. Branded-jewelry sales by companies such as Tata group's Tanishq already attracted a 1% tax.

He also raised the threshold limit for taxation on cash purchases of gold jewelry to 500,000 rupees ($9,350) from the budgetary proposal of 200,000 rupees.

This Wall Street Journal story from yesterday was posted in the clear in this GATA release...and the link is here.


Keynesian vs. Austrian debate hotting up: Alasdair Macleod

Economist Alasdair Macleod celebrates the grudging attention being given to Austrian economics as the world economy keeps sinking despite -- or because of? -- ever-more Keynesian medicine.

This short essay was posted over at the website on Saturday.  I thank Chris Powell for writing the above paragraph of introduction..and the link is here.


From government to 'robberment' - James Turk

The first is from Richard Russell.  It's headlined "Warren Buffett, Gold & My Secret Barometer".  The second blog is with Michael Pento.  It's entitled "Time to Buy Mining Shares, Economic storm Intensifies". Next comes James Turk...and it's headlined "Gold & Silver Bottoming as Euro Troubles Re-emerge".  In fourth spot comes Caesar Bryan with the headline "The Federal Reserve is Under the Gun & Gold".  And last but not least is Bill Fleckenstein with commentary entitled "Stock Market to Tank, Buffett's Ego & Gold".


New York Sun: The Munger Games

A New York Sun editorial on Monday talks back probably better than anyone to the shallow disparagement of gold spoken the other day by Berkshire Hathaway's Charles Munger.

I thank Chris Powell for writing the above introduction, but I personally thought that the editor really pulled his punches...and was much nicer to Munger than was necessary.  You can be the judge on this one.  It's posted over at The New York Sun website...and the link is here.


Stick to Depopulating the Planet, Bill Gates

It must be "Bash Gold" week on the CNBS network.  Warren Buffett has been leading the charge by talking down the precious metal in a recent newsletter to Berkshire Hathaway shareholders and followed up today on CNBS's "Squawk Box" where he warned that despite the declining value of the dollar, running to gold is a "mistake."

Not to be outdone, Buffett’s partner in crime Charlie Munger recently declared "gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold - they invest in productive businesses."

And now, Bill Gates went on CNBS yesterday to try and explain the great error in investing in the barbarous relic.  It's like they're trotting out the billionaire boys club to scare people back into Berkshire and Microsoft stock.

Jeff Berwick over at the website tells it the way it really is...and my hat is off to him.  I thank Nick Laird for sending me this must read commentary...and the link is here.


Gold is limited government, which is more 'civilized' than the alternative

Not to be outdone, GATA's secretary treasurer, Chris Powell, has his own comments on Buffett and Munger in this short commentary posted on the website...and the link is here.


Atlantic City's newest novelty: Gold from a vending machine

The casino that boasts a Gold Rush theme is offering modern-day prospectors a chance to pick up some real gold and silver.

But they will need some cash to make purchases from Atlantic City's newest novelty, a "Gold to Go" machine. The machine made its glitzy debut at Golden Nugget Atlantic City on April 26, when the casino staged a grand opening ceremony to celebrate the completion of its $150 million renovation project.

Loosely resembling a gigantic gold bar, the machine acts like an ATM -- but it dispenses gold and silver coins and trinkets instead of cash. Inscribed on the side of the machine are the words "The gold ATM." It is located in Golden Nugget's atrium, just off the casino floor.

This story was posted in the Chicago Tribune yesterday...and I thank Elliot Simon for his second offering in today's column.  The link is here.


The Reserve Vault in Brisbane, used by wealthy to store gold and valuables, at centre of allegations of misappropriation and dodgy business practices

The claims appeared in court documents filed in the Supreme Court which describe a hunt for at least $150,000 worth of "missing" silver ingots amid a fight for control of the company running the high security vault, The Reserve Vault.

The company is defending the action and has denied all of the allegations.

The man previously in charge of the vault, Peter Rex Sands, was declared bankrupt in December, making it illegal for him to be a director of a corporation.

He was also prevented from having anything to do with the running of the vault last month by a Supreme Court order made in the same proceedings.

This story was posted on the website yesterday...and I thank Washington state reader S.A. for digging it up on our behalf. It's just another example that just because you have allocated storage, doesn't mean it's magically safe. It all comes down to who is storing it for you...and do you trust them.  Do your due diligence.  The link is here.


Shanghai Futures Exchange starts a silver futures trade on Thursday

Silver and China are coming full circle. In the mid-1930s the academic journal Foreign Affairs noted how "the world was startled by the news that China had abandoned the silver standard" after foreign miners began dumping surplus metal into China.

Seventy-eight years later, this coming Thursday, the Shanghai Futures Exchange begins trading silver contracts. China Daily noted there had been an absence of silver trading ability in China and -- significantly -- it would make the market more liquid.

The silver buffs jumped on that one, predicting the end of big Western speculators manipulating the price, which so many of them believe has been occurring.

This subscriber protected story appeared over at website on their Monday morning.  It still remains to be seen how this will affect silver prices, as the world price is still set in the Comex futures market...which is 100% under the thumb of JPMorgan et al.  But, having said that, it's a must read anyway...and I thank reader Federico Schiavio for bringing it to our attention.  It's posted in the clear in this GATA release...and the link is here.


Buy the Bear: Louis James, Casey Research

Your metals team has just returned from the Casey Research Recovery Reality Check conference in Weston, Florida. I think the quality of the speakers was perhaps the best ever. There were clever tales and insights aplenty, but I'll cut to the chase for investors in the metals and mining sector: The correction we've been experiencing was discussed at length, and while no one is sure when it will bottom, legendary investors in our sector are buying now.

Some say my calls to buy the best of the best mining stocks in the midst of a continuing share-price decline evoke a fear akin to what one feels trying to catch a falling safe. It may help to know that investors today are buying alongside Rick Rule of Sprott Global, John Hathaway of the Tocqueville Fund, and Doug Casey, of course - among other legendary resource investors.

This commentary appeared in yesterday's edition of Casey's Daily Dispatch...and is another must read.  The link is here.



¤ The Funnies

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¤ The Wrap

My investing model is ABCD: Anything Bernanke Cannot Destroy: flashlight batteries, canned beans, bottled water, gold, a cabin in the mountains. - David Stockman, Former Congressman and director of the U.S. Office of Management and Budget

It was just another day off the calendar for 'da boyz' a tight rein was kept on gold...and silver got hammered once again.  Silver is now at a new low for this move down, as JPMorgan covers more short positions.  Here's the 6-month silver chart.

(Click on image to enlarge)

I found it more than strange that Buffett, Munger and Gates were all trotted out in quick succession to bash gold in the main stream media.  If you believe that this was pure coincidence, then I really do have a bridge I can sell you for cheap...and you're just the kind of person to buy one.  Once could not ask for a bigger contrarian 'BUY' signal than this.

As I mentioned in Saturday's column, the fact that the raptors [the et al] were selling on lower prices was like having the law of gravity just doesn't happen.  But as silver analyst Ted Butler pointed out in his weekend column..."It's somewhat ironic that JPMorgan buying from the raptors was always one of my special pet theories, but that was expected by me only on sharply higher prices...not lower prices."

Gold was under slight selling pressure all through Far East trading during their Tuesday, most likely because the dollar index was trending slightly higher at the same time.  Then the gold price rallied a bit and almost made it back to Monday's New York close.  But at 3:00 p.m. Hong Kong hour before the London open at 8:00 a.m. BST...someone hit the 'sell' button...and gold got sold off about eight bucks.

Silver was under the same selling pressure as gold...and its more serious sell-off began at 3:30 p.m. Hong Kong time...about thirty minutes before the London open.  As of 8:30 a.m. London time...3:30 a.m. in New York...silver had already taken out its Monday low by a few pennies.

At the moment, the dollar index is up about 25 basis points...and net volume in both metals is very light, with the emphasis on the word 'very'.  One has to wonder how many short positions in both metals JPMorgan et al are able to cover on such light volume...and is it really worth their while?  Maybe the raptors are selling their long positions to JPMorgan once again?  Beats me on both counts, but we'll find out on Friday when the latest Commitment of Traders Report comes out...and after last Friday's big surprise numbers in silver, I'll be ready for anything.

Almost two hours have past since I wrote the prior three paragraphs...and the engineered price decline in both silver and gold is it is in platinum and palladium as well.  The silver price has now taken out Monday's lows with real it has in the other three precious metals.  The gold price is still above its low of early April, but not by much.

The dollar index is basically unchanged from what it was two hours ago...up about 25 basis points...but volumes have blown out in both metals and are a bit more than double what they were a couple of hours ago.

Just looking at silver's price action as of 5:20 a.m. Eastern time, I'd guess that we're seeing a lot of technical fund shorting going on as well...and this is just adding fuel to the price decline.

One thing I can say is that if this downward price trend in silver and gold continues, I will be a buyer of physical silver once again later this morning once I crawl out of bed.

I haven't the foggiest idea as to what will happen during Comex trading when it begins at 8:20 a.m. in New York, but it wouldn't surprise me if 'da boyz' take another shot at all the precious metals.  The only good thing to come of that, besides a first rate buying opportunity, is new record lows in both silver and gold in all categories in Friday's COT report, as the cut-off is today at the close of Comex trading at 1:30 p.m. Eastern time.

So take the blue pill...and repeat Chris Powell's famous quote just one more time..."There are no markets anymore, only interventions."

See you on Wednesday.