Casey Research Publication
Gold & Silver Daily
"I was more than impressed by the price action in the precious metal stocks yesterday...and I'm hoping that this is a trend that will continue."
 

¤ Yesterday In Gold & Silver

It was a nothing sort of trading day during the Far East and London markets on Thursday.  The low price tick came about half past lunchtime in London...and then edged slowly higher from there.

This pastoral setting came to an abrupt end shortly after the equity markets opened in New York at 9:30 a.m. Eastern time...and an hour later, gold had gained about twenty bucks.  From there, the gold price worked its way another five bucks higher to its high tick of the day, which was $1,681.30 spot, but got sold off a bit shortly before the 1:30 p.m. Comex close.  The gold price traded quietly sideways from there.

Gold closed at $1,675.30 spot...up $15.60 on the day.  Net volume was pretty light...around 121,000 contracts.

The silver price action was much the same as gold's, expect for the fact that silver gained well over two percent, whereas gold closed up less than a percent.

Silver's low came at the same time as gold's...12:30 BST in London...and then shortly after 9:00 a.m. in New York, away it went to the upside.  The bulk of the gains were in by 10:40 a.m...but, like gold, the silver price continued to work its way slowly higher...and the high tick of the day also came at the same time as gold...about 1:25 p.m. Eastern.  That price was $32.71 spot.  From there, silver got sold off by a percent going into the close of electronic trading at 5:15 p.m. Eastern.

Silver finished the Thursday trading session in New York at $32.38 spot...up 77 cents from Wednesday's close.  Net volume was a pretty decent 37,000 contracts.

The dollar index opened around 79.75 on Thursday morning in Tokyo...and held in there until minutes after 10:00 a.m. in London...and then it rolled over.  The low, around 79.20, came about 1:10 p.m. in New York.  From there the index recovered about 15 basis points of that decline...and the dollar index closed down about 40 basis points on the day.

It's obvious from the chart below, and the Kitco charts above, that the big jumps in gold and silver prices yesterday had absolutely nothing to do with what was going on in the currency markets.

The gold stocks followed the gold price like a shadow yesterday, with the 1:25 p.m. high in gold being fairly obvious on the HUI chart below.  From there, the gold stocks traded sideways, but sold off a hair going into the close.  The HUI finished up a very respectable 3.90%.

With the odd exception, the silver equities were on fire yesterday...and Nick Laird's Silver Sentiment Index rose by 3.86%.  A lot of the juniors did much better than that.

(Click on image to enlarge)

The CME's Daily Delivery Report finally showed what I had been waiting for, for many days now.  As I'd mentioned last weekend, there were still about 3,300 gold contracts left open in the April delivery month...and I was wondering out loud what the short/issuers were waiting for.  Well, some of them showed up yesterday, as 1,040 contracts were posted for delivery on Monday.

The two big short/issuers were Merrill and the Bank of Nova Scotia...with 636 and 385 contracts respectively.  The big long/stopper was no surprise, as it was JPMorgan taking delivery of 592 contracts in its client account...along with 415 contracts for its in-house trading account.

There were no deliveries in silver. The link to the Issuers and Stoppers Report is here...and it's worth a look.

There were no reported changes in GLD yesterday...and an authorized participant withdrew 242,736 troy ounces of silver out of SLV.

The U.S. Mint reported selling 43,000 silver eagles yesterday...and that was it.

There was a lot of movement over at the Comex-approved depositories on Wednesday.  They received 1,002,039 troy ounces of silver...and shipped a smallish 76,190 troy ounces out the door.  The link to that action is here.

Nick Laird sent me a couple of graphs and some commentary to go with them about midnight local time here in Edmonton last night...and here it all is.

"Again it looks like the PMs are bottoming here. (There's a clear A-B-C-D-E pattern in the waves.)

What's missing so far on this wave down (which could be considered a retest of the bottom made at end of Dec 2011) is a panic V-shaped sell-off which is quite normal in the metals.

Bernanke stopped the breakout in late February and perhaps he has put an end to the price seeking a low here considering that the pressure is now back on for more QE."

(Click on image to enlarge)

I got an e-mail from Bron Suchecki over at The Perth Mint just before I hit the 'send' button on today's column...and I thought I'd stick his comments in at this point.  It appears that Gold Field Mineral Services [GFMS] is calling for miners to return to hedging, which Bron thought "very irresponsible".  It's not only irresponsible, it's insanity...and I'll be very much surprised if the gold and silver miners ever go down that road again.  But knowing the intellect level of some of the management of these companies, I suppose that I shouldn't put anything past them.

Bron told me to check the story about it that he had attached...but there was no attachment and I couldn't find it using my computer's search engine.  It's after 5:00 p.m. on Friday afternoon in Perth, so he's already gone for weekend...however I'm sure the story will show up on the Internet at some point today.

I have the usual number of stories today...and I hope you have time to at least hit the high points.

 

¤ Critical Reads

Goldman Sachs fined $22 million over ‘huddles’

Goldman Sachs Group Inc. settled charges with the Securities and Exchange Commission on Thursday, agreeing to pay a $22 million fine over allegations that the Wall Street bank didn’t have policies to prevent analysts from sharing nonpublic information with the firm’s traders.

The exchanges took place in weekly “huddles,” where Goldman’s research analysts met to provide “their best trading ideas” to the firm’s traders and later passed them on to a select group of “top clients,” the SEC said.

“Despite being on notice from the SEC about the importance of such controls, Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients,” said Robert Khuzami, the SEC’s director of enforcement.

No surprises here, but it's a good bet that this sort of activity goes on at just about every Wall Street brokerage firm there is.  I thank Florida reader Donna Badach for sending me this marketwatch.com story from yesterday...and the link is here.

Read more...

Energy regulators in new push to quash manipulation

Emboldened energy market regulators are mounting an aggressive new campaign to stamp out a once-common trading practice that crosses physical and paper markets, unnerving traders who fear a backlash over years-old deals.

Away from the contentious debate over Dodd-Frank derivative market reforms that followed the 2008 financial crisis, this new battle takes place in the gray area separating cash markets for commodities like crude oil and power from the swaps or futures contracts that are tied to those prices.

While many companies legitimately trade in both markets, often to hedge their positions, regulators say others are manipulating one market in order to profit in the other.

As long as the manipulation is on the long side of the market, the CFTC and SEC will act.  But if it's a short side manipulation, they conveniently look the other way.

This Reuters story was sent to me by reader Andrew Holland...and the link is here.

Read more...

Neel Kashkari: Don't Worry, The Fed's Morphine Drip Will Continue To Drip Drip Drip Into 2014

Many attribute the stock market's meteoric rise to the liquidity provided by the world's central banks. But in an interview with CNBC, Kashkari tells everyone to calm down because the Fed won't be tightening anytime soon.

"Every time the Fed tries to back away from their massive, easing policy, the risk markets react. We saw that last week with the FOMC minutes. This is ...like a morphine drip. You give morphine to the patient, it makes the patient feel better, it doesn't cure the underlying disease. The moment you try to take the morphine away the patient wakes up horrified in a lot of pain."

"And so I think risk markets are getting addicted to this easy money policy, and I think as the Fed tries to back away risk markets are going to respond, that's going to put more pressure on the Fed to act. So our central forecast is the Fed will stay easing, maybe even QE3 through the end of 2014 as they forecast, could be even longer."

If you check out Kashkari's bio here, you'll see why I don't doubt what he has to say for a minute.  I'll go one step further and say that we'll never see a material rise in interest rates ever again.

This businessinsider.com story from yesterday was sent to me by Roy Stephens...and the link is here.

Read more...

Financial Survival Network interviews your humble scribe

Kerry Lutz was kind enough to interview me yesterday...and the audio interview, along with the transcript, are posted at the financialsurvivalnetwork.com website.  The interview runs for about fifteen minutes...and the link is here.

Read more...

The Return of the Spanish Flu: Uncertainty about Spain Worries Euro Zone

In Rasquera, they reckon marijuana is the solution.

On Wednesday, the authorities in the eastern Spanish village, population 900, announced that the residents had agreed to an unusual plan that the municipality has come up with to fight the crisis. In the future, Rasquera will lease several fields to a Barcelona association that plans to grow hemp there. The revenue is intended to help the municipality reduce its debts of €1.3 million ($1.7 million).

Around 500 kilometers (300 miles) away, in Madrid, the federal government is also worried about money. This week, Spain found itself in the financial markets' crosshairs again. On Tuesday, the government had to pay significantly higher interest rates, of almost 6 percent, on its 10-year bonds.

Italy's borrowing costs have also risen. The rate that the country pays for one-year bonds more than doubled, to 2.84 percent, from last month's rate of 1.40 percent at an auction on Wednesday, while yields on three-year bonds hit 3.89 percent at an auction on Thursday, up from 2.76 percent last month.

It looks like the euro zone is getting sick again -- this time with a case of Spanish flu.

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

Read more...

ECB may act to bring down Spanish borrowing costs

The European Central Bank may intervene to pull down Madrid's borrowing costs as prime minister Mariano Rajoy warned that debt had created a "vicious circle that strangles Spain". 

Benoit Coeure, an executive director of the ECB, said the bank could restart its sovereign bond buying programme in a move likely to antagonize Germany but relieve a spiralling political, economic and social crisis in Spain.

Mr Coeure said that market fears over Spain were "not justified" but he added: "Will the ECB intervene? We have an instrument, the securities markets programme [SMP] which hasn't been used recently but it still exists."

Bond traders were soothed by the comments. The yield on Spain's benchmark 10-year bonds was pulled back from 6pc on Tuesday to 5.88pc, while the yield on Italy's 10-year debt also dropped marginally, to 5.54pc.

This story was posted in The Telegraph late Wednesday night...and is another Roy Stephens offering.  The link is here.

Read more...

Spanish bailout 'impossible' for eurozone, says prime minister Mariano Rajoy

The eurozone is not equipped to bail out Spain, the country's prime minister Mariano Rajoy has admitted, as global traders continued to punish the nation's stocks and bonds.

"To talk about a bail-out for Spain at the moment makes no sense," he told reporters. "Spain is not going to be rescued; it's not possible to rescue Spain, there's no intention to, it's not necessary and therefore it's not going to be rescued."

Despite his comments, the Madrid bourse fell and the yields on the country's benchmark bonds remained stubbornly high. While other European markets soared on Thursday following strong gains in America, Spain's Ibex index lost 0.5pc.

Politicians in Rome tried to counter the markets' view that Italy was in the same predicament as Spain.

This story from The Telegraph yesterday evening is another story that's courtesy of Roy S...and the link is here.

Read more...

Greek Crisis Leaves Cyprus Mired in Debt

A barrier splits Turkish and Cypriot areas of Nicosia, the capital of Cyprus. Banks in the country hold $199 billion in debt.

Michalis Sarris is not the only European banker working seven days a week, trying to scrape together enough capital to satisfy regulators and keep his institution afloat. But he may be the only one with the financial fate of his nation potentially hanging in the balance.

Mr. Sarris, a 65-year-old onetime World Bank economist and former Cypriot finance minister, was drafted by bank regulators in January to take over as chairman of Cyprus’s largest financial institution, Cyprus Popular Bank, formerly known as Marfin Popular Bank. It is now his job to find investors willing to help put €1.8 billion, or $2.4 billion, in new money into the bank, which was devastated by its exposure to bad Greek debt.

The failure of its biggest bank would have grave consequences for Cyprus, where the economy revolves around financial services — a result of the island’s appeal as a low-tax gateway to the Middle East and Africa for companies from Russia and elsewhere in Europe.

Tiny little Cyprus is a country that we rarely hear anything about, but that has now changed...and certainly not for the better.  This story was posted in The New York Times on Wednesday...and I thank Roy Stephens for sending it along.  This is certainly worth reading if you have the time...and the link is here.

Read more...

In Struggling Spanish Town, Hopes of Reopening Mine Are Delayed

The Riotinto mine in the Andalusia region of southern Spain was once the world’s largest copper producer, a British-owned operation that helped fuel the Industrial Revolution and gave its name to a mining giant that remains one of the world’s biggest commodities producers. 

Now, a new foreign investor is eager to reopen the long-idle mine to capitalize on soaring global copper prices. Proponents say the mine could help provide the sort of money and jobs Spain desperately needs right now, as the nation struggles with high unemployment and Europe worries it might be the next economy in need of a bailout.

But the Riotinto mine remains closed, tied up over regulatory delays, environmental concerns and a property dispute. No matter who is right, the stalled mining project illustrates the challenges Spain will face in digging itself out of a deep economic hole.

This is another story from yesterday's edition of The New York Times...and if the story doesn't interest you, the photo that accompanies it is worth the trip all by itself.  I thank reader Phil Barlett for passing this along...and the link is here.

Read more...

CME Group Cuts Silver, Copper, Palladium Futures Margins

The amount that speculators must keep on deposit for an initial account in silver futures was reduced 13 percent to $18,900 from $21,600, CME Group said today in a statement on its website. Silver prices tumbled after the Chicago-based CME boosted margins 84 percent in two weeks from late April to early May.

The copper margin was cut to $5,400 from $6,750, and palladium was reduced to $5,225 from $5,775.

The rates are effective after the close of business on April 16th.

All the material parts of the Bloomberg story from yesterday are posted above...but the link to the hard copy, if you wish to read it, is here.  I thank reader Federico Schiavio for sharing it with us.

Read more...

Jan Skoyles: Vietnam goes nuclear on gold

Jan Skoyles of bullion dealer The Real Asset Co. in London examines in detail the Vietnamese government's awkward war on gold, the Vietnamese people's currency of overwhelming choice. Despite the government's ever-increasing restrictions, Skoyles writes, "Citizens are voting with their money, and that money is gold."

This story is posted over at therealasset.co.uk website...and I borrowed it and the above introductory paragraph from a GATA release yesterday.  The link is here.

Read more...

Peter Brimelow: China buying gold?

Gold's rebound puzzles the bugs -- but they'll take it anyway.

It helps to have luck -- or something! Michael Gayed's brave column yesterday, "Was That the Bottom in Gold?," published just after gold closed with an impressive $16.80 rise in the CME June gold contract, was not followed by an immediate reversal. June gold closed today down only 40 cents, so the gains were held.

In contrast, my own recent cheerful chat about gold was followed by a horrible $57.90 drop in gold the next day.

Of course, I was just reporting what the investment letters say -- but I felt bad anyway.

This was in Peter's column that was posted over at the marketwatch.com website...and I plucked it from a GATA release yesterday.  It's a must read for sure...and the link is here.

Read more...

Four King World News Blogs/Audio Interviews

The first is from Rick Rule and is headlined "The Most Spectacular Opportunity in Ten Years"...and I agree with that assessment.  The next is from John Mauldin.  It's entitled "Europe is Destroying Their Currency".  The third KWN offering is the audio interview from a James Turk blog I posted in this space yesterday.  And lastly is this Jim Sinclair blog that was sent to me shortly after midnight.  It's headlined "Expect Another $17 Trillion of QE & War in Gold".

Read more...

South Africa's gold output down 11.5 pct y/y in February

South Africa's gold output fell by 11.5 percent in volume terms in February while total mineral production was down 14.5 percent compared with the same month last year, data showed on Thursday.

Production of non-gold minerals was down 14.8 percent, Statistics South Africa said.

This entire contents of this 2-paragraph Reuters story is posted above...and was picked up by the finance.yahoo.com website yesterday.  I thank Scott Pluschau for sending it...and the link to the hard copy is here.

Read more...

Goldseek radio interviews John Embry

This 15:22 minute interview was posted over at the radio.goldseek.com website yesterday.  Anything that John has to say is worth listening to.  I thank reader Dennis Meredith for sending it our way...and the link is here.

Read more...

Buying The Dips In Gold Has Been The Right Move For A Decade: Frank Holmes

This 3-page article by Frank Holmes, the CEO of U.S. Global Investors was posted over at the forbes.com website on Wednesday...and I thank Nick Laird for sharing it with us.  It's worth reading if you have the time...and the link is here.

Read more...

 

¤ The Funnies


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¤ The Wrap

People demand freedom of speech as a compensation for the freedom of thought...which they seldom use. Søren Kierkegaard

It's not possible to tell whether yesterday's rallies, like the rallies on Tuesday, were short covering or new long positions being placed.  There was more talk yesterday about U.S. interest rates remaining low into the latter part of 2014...or even into 2015.  As I mentioned further up, it's highly improbable that interest rates will ever be allowed to rise again...and one only has to look at Japan as a template for the future path of long-term interest rates in every other country on Planet Earth.

Ted Butler mentioned yesterday that gold had convincingly broken through one of its key moving averages...the 20-day.  Here's the stockcharts.com graph to prove that was the case.  The next target will obviously be the 50-day moving average, which is a hair under the $1,700 mark.

(Click on image to enlarge)

Silver also poked its nose above the same moving average, but just barely.

(Click on image to enlarge)

Where we go from here price wise is anyone's guess, but I'm voting for up.

It was deathly quiet in both volume and price in gold and silver during Far East and early London trading.  Net volume in both metals was down substantially from Thursday's volume at this time yesterday.  If volume continues this light, I wouldn't read a thing into whatever price action occurs between now and the New York open.  And as I hit the 'send' button at 5:20 a.m. Eastern time, gold is down about four dollars...and silver is down about 20 cents. The dollar index is up 18 basis points.

Since today is "Friday the 13th"...nothing would surprise me as far a price action goes once trading begins on the Comex at 8:20 a.m. Eastern time.  After the drive-by shooting on February 29th, I've become a little more gun shy about calendar dates.  I think I'll take one of those blue pills before I hit the sack.

I would like to believe that the bottom is in for this move down.  I was more than impressed by the price action in the precious metal stocks yesterday...and I'm hoping that this is a trend that will continue, as they are horribly oversold, with the emphasis on horribly.  The quality gold and silver producers are marked down to fire sale price levels.

There's still the opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best (and current) recommendations...as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Have a great weekend...and I'll see you here on Saturday.