Gold & Silver Daily
"How long 'da boyz' can keep this up remains to be seen, but they certainly can't keep it up forever."

¤ Yesterday In Gold & Silver

The gold price got sold off about fifteen dollars in Far East trading yesterday.  Then shortly after 2:00 p.m. Hong Kong time, the price trend reversed itself...and this rally lasted until shortly after 12 o'clock noon in London.

Then the gold price began to head south, but really got kicked in the teeth just minutes after 9:00 a.m. Eastern time...and shortly before the equity markets began to trade in New York.  The absolute low of the day came at the London p.m. gold fix minutes after 3:00 p.m. in London...10:00 a.m. Eastern.

By lunchtime in New York, the gold price had recovered all its gains from morning trading...and was struggling higher until shortly before 3:00 p.m. in the thinly-traded electronic market.  Then a not-for-profit seller showed up and sold the gold price down about fifteen bucks going into the close of trading at 5:15 p.m. Eastern time.

Gold closed at $1,762.60 spot...down $18.90 on the day.  Gross volume was very heavy, but once the roll-overs out of December were subtracted, net volume was a more subdued 136,000 contracts.

The silver price was definitely more 'volatile' yesterday...and I'm not even going to attempt to describe all the action.  The high of the day came at 10:00 a.m. in London...and it was all down hill from there.  Like gold, there was the obvious big smack-down between  9:10 and 10:30 a.m. in New York...but it's also obvious from the chart that every rally attempt got crushed before it got too out of hand to the upside.  There wasn't a snowball's chance in hell that 'da boyz' were going to allow silver to close above Tuesday's closing price...or above it's 50-day moving average.

Silver closed at $33.70 spot...down 87 cents on the day. Volume, net of all roll-overs, wasn't overly heavy at 36,000 contracts.

The dollar gained about 25 basis point by 2:00 a.m. Eastern time on Wednesday morning...but then lost all of those gains by about 1:40 p.m. in New York.  From there, the dollar rallied about 40 basis points into the close.  If you're looking for a reason why gold and silver prices acted the way they did yesterday, you're not going to find much co-relation here.

It should come as no surprise that the gold stocks gapped down at the open.  The morning low obviously came at the London p.m. gold fix.  Then, like the metal itself, the stocks rallied sharply...and then spent most of the day slightly below, or slightly above, the unchanged mark.  Considering how poorly the general equity markets were doing in the afternoon, this was quite an amazing performance.

But, it wasn't allowed to last, as the not-for-profit seller that showed up late in the day in the New York Access Market, took gold and silver down even lower...and the shares followed in kind...ending up back at their low of the day from the London fix.  The HUI finished down 1.65%.

The silver stocks were also down on the day, but considering how hard silver got hit in electronic trading, the stocks held in there pretty well.  Nick Laird's Silver Sentiment Index was down 2.12%.  It could have been worse.

(Click on image to enlarge)

Wednesday's Daily Delivery Report was another quiet one, as only 9 gold, along with 2 silver contracts, were posted for delivery on Friday.

The GLD ETF added a very chunky 291,829 troy ounces of gold yesterday...and, once again, there were no reported changes in SLV.  The U.S. Mint had no sales report either.

It was a pretty quiet day over at the Comex-approved depositories on Tuesday as well, as 81,297 ounces of silver were reported received...and 86,653 ounces were shipped out the door.

Silver analyst Ted Butler posted his mid-week commentary on his website yesterday...and here's a free paragraph.  In it, he talks about yesterday's price action in silver...

"As can be seen in today’s price action, where silver declined a full dollar from last night’s close (for no legitimate reason), COT readings have little bearing on day to day price activity. I get the feeling more and more that silver is put down early in the COMEX trading day which forces it to struggle to recover the balance of the day. What controls daily pricing is the crooked trading activity on the CME, no doubt influenced by the presence of JPMorgan’s crooked concentrated short position. I guess I’ll get tired of calling the CME and JPMorgan crooks when they stop behaving as crooks. In the meantime, we must endure their illegal activities. While they control the next dollar or so in silver, they don’t control the next ten to twenty dollars, which should be up."

Here's a chart of the U.S. public debt as of yesterday.  I have a story from The Washington Times about this further down in today's column.  I thank Washington state reader S.A. for sending it along...and it requires no further comment from me.

(Click on image to enlarge)

As usual, I have a lot of material again today...and a fair amount of it is definitely worth your undivided attention.


¤ Critical Reads

Finance Job Losses Near 200,000 as BNP, Citigroup Trim Employees

Citigroup, the U.S. bank that shook up senior management earlier this month, may cut as many as 3,000 jobs as Chief Executive Officer Vikram Pandit squeezes out costs, said a person familiar with the company’s plans. BNP Paribas, France’s biggest bank, said today it will trim about 1,400 jobs at its investment-banking unit, with most coming from the lender’s capital markets and structured-finance teams. Bank of America also cut part of its equities unit in Europe yesterday.

The reductions add to the 195,000 banks, insurers and asset managers announced this year, and surpass the 174,000 losses in 2009, data compiled by Bloomberg show.

“I have never seen it as bad,” said Jason Kennedy, 41, CEO of Kennedy Group in London and a recruiter for the past 16 years. “The future is also bleak. This will continue for another 14 or 15 months: 2012 is definitely a write-off.”

This Bloomberg story was sent to me by reader Matthew Nel...and the link is here.


U.S. boosts estimate of auto bailout losses to $23.6B

The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.'s steep stock decline.

In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.

The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion.

This story was posted in The Detroit News on Tuesday...and is courtesy of reader Scott Plushau.  The link is here.


Federal debt tops $15 trillion

The Treasury Department said Wednesday that the federal debt has climbed to a record $15 trillion — a staggering figure that caps a precipitous decade-long rise.

The exact total stood at $15,033,607,255,920.32 as of the end of business Tuesday, marking a jump of $56 billion over Monday’s tally. All told, federal debt has risen $4.407 trillion since President Obama took office. It stood at $5.7 trillion in 2001, when George W. Bush moved into the White House.

“Today marks an infamous day in American history,” said House Budget Committee Chairman Paul Ryan, Wisconsin Republican.

The chart on this is posted above...and here's the story out of The Washington Times yesterday.  It's another contribution from Scot Pluschau...and the link is here.


Fed Now Largest Owner of U.S. Gov’t Debt—Surpassing China

In its latest monthly report, the Federal Reserve said that as of Sept. 28, it owned $1.665 trillion in U.S. Treasury securities. That was more than double the $812 billion in U.S. Treasury securities the Fed said it owned as of September 29, 2010.

Meanwhile, as of the end of this September, entities in mainland China owned $1.1483 trillion in U.S. Treasury securities, according to data published today by the U.S. Treasury Department. That was down slightly from the $1.1519 trillion in U.S. Treasury securities the Chinese owned as of the end of September 2010, according to the same Treasury Department report.

Thus, at the end of September 2010, the Chinese owned about $339.9 billion more in U.S. Treasury securities than the Fed owned at that time. By the end of September 2011, the Fed owned about $516.7 billion more in U.S. Treasury securities than the Chinese owned.

This is Scott Pluschau's third and final offering in today's column.  This story is posted over at the website...and the link is here.


Detroit Faces $45 Million Deficit, State Takeover Without Cuts, Mayor Says

“Our city is in a financial crisis and city government is broken,” Bing said today in the speech. “If we continue down the same path, we will lose the ability to control our own destiny.”

“Without change, the city could run out of cash by April with a potential cash short-fall of $45 million by the end of the fiscal year,” he said.

This is the entire contents of this very short Bloomberg story from yesterday.  It was sent to me by Washington state reader S.A...and the link to the hard copy is here.


U.S. Stocks Fall as Fitch Says Europe a Risk to American Banks

The S&P 500 slid 1.7 percent to 1,236.91 at 4 p.m. New York time. The Dow Jones Industrial Average fell 190.57 points, or 1.6 percent, to 11,905.59. Oil rose above $100 a barrel.

“It’s fear of the unknown spooking the market,” Madelynn Matlock, who helps oversee about $14.5 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “There may be more exposure to Europe out there than people really think even if banks think they are covered. It’s going to be a tough market for quite a while,” she said. “Increasing oil prices is a concern because it’s like a tax on the consumer.”

Stocks extended losses after Fitch said that while U.S. lenders have “manageable direct exposures” to Greece, Ireland, Italy, Portugal and Spain, further turmoil in those markets poses a “serious risk.” Equities also fell after the Bank of England Governor Mervyn King said Britain faces a “markedly weaker” outlook for the economy as Europe’s crisis threatens global growth.

This Bloomberg story is courtesy of West Virginia reader Elliot Simon...and the link is here.


This Crisis is the End Game...It's a 'BANG' Moment: John Mauldin tells King World News

Europe will either start to monetize everything in sight or crash in the next two weeks, fund manager John Mauldin told King World News yesterday.

Mauldin says that "If they allow their banks to implode, then the technical term that we use in economics is...we're all screwed."

This KWN blog is linked here.


Political fires are alight across Europe as currency debate burns again

The widening spreads of eurozone bond yields over Berlin's anchor rate are consistent with a currency system breaking apart.

The badly bolted together superstructure, creaking heavily for the past two years, is beginning to buckle and pull apart. There has, until now, been an assumption in the capital markets that while this was a financial crisis involving sovereign debt and affected banks, the politics underpinning the system would resolve the problems. The eurozone may have been politically dysfunctional but its democratically elected leaders would arrive at the right answer and take the right action, eventually.

But that's not happened. The scale of the political failure in the eurozone has become one of the biggest shocks for the market to come to terms with in recent months, a failure that's accelerating. Political argy-bargy is one thing, but the eurozone crisis now risks creating a democratic deficit, alongside the area's trade and budget deficits.

This story was posted late last night in The Telegraph...and is Roy Stephens first offering of the day.  The link to this rather short must read article is here.


Eurozone bond markets in turmoil as France and Germany dig in over ECB

The row between France and Germany over whether to use the European Central Bank to rescue the eurozone has intensified, further shattering international confidence that a solution can be found to the escalating debt crisis.

On a day when the US president, Barrack Obama, accused the eurozone of suffering from a "problem of political will", Paris and Berlin clashed over whether the ECB should be called on to do more to bail out countries that are struggling to borrow.

Despite some renewed buying of Spanish and Italian bonds by the ECB, the rout in markets continued and yields on debt around the eurozone continued to climb. In Italy borrowing costs remained at unsustainable levels, with the benchmark 10-year bond yield at 7.12%.

The story was posted in The Guardian yesterday evening...and is Roy's second offering in a row.  The link is here.


Thousands of Kuwaitis 'storm parliament'

Thousands of Kuwaitis stormed parliament after police and elite forces beat up protesters marching on the prime minister's home to demand he resign, an opposition MP said.

The demonstrators broke open parliament's gates and entered the main chamber, where they sang the national anthem in a country so far spared the "Arab Spring" pro-reform revolts. 

Tension has been building in Kuwait over the past three months after it was alleged that about 16 MPs in the 50-member parliament received about $350 million (259 million euros) in bribes, apparently for their parliament votes.

This AFP story was posted over at the website early this morning...and I thank Roy once again for providing this item.  The link is here.


Chinese TV Host Says Regime Nearly Bankrupt

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.

In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

This story was posted over at website on the weekend.  It's a must read for sure...and I thank Casey Research's own Bud Conrad for forwarding it to me.  The link is here.


Conversations With Casey; Gordon Chang, Forbes Columnist and Author

Guest host Stefan Molyneux speaks with Forbes Columnist Gordon Chang about the current economic and cultural state of China.

This 17-minute interview fits like a hand in a glove with the previous must read story on China posted above.

For more on China, you don't want to miss this month's issue of The Casey Report. It contains an in-depth analysis of China's predicament by Bud Conrad and an another interview with Gordon Chang.

The link to this must watch video is here.


World Bank President: Gold is Still a Good Investment

I spent some time Tuesday afternoon at The Wall Street Journal CEO Council, which was being held at the Four Seasons in Washington D.C. The usual suspects were there, everyone from Rupert Murdoch to Dick Cheney to Tim Geithner.

The most fascinating conversation I had was by far with Robert Zoellick, president of the World Bank.  If you recall, a year ago he wrote an op-ed piece in the Financial Times stating that the Group of 20 leading economies should consider adopting a global reserve currency based on gold as part of structural reforms to the world’s foreign-exchange platform. He wrote that the increasing use of gold as a monetary asset was an “elephant in the room” that was being ignored by policymakers in the debate over how to correct global trade and fiscal imbalances.

On the sidelines of Tuesday's WSJ event, I probed him on the topic. It's clear that Zoellick is a big fan of gold. I have asked many high profile officials and investment people about gold, they usually yawn. Zoellick seemed pleased with the topic. I asked him for his current view on gold, he smiled, stopped himself and said, "No, I better not."

This story was posted over at the website...and is another must read.  I thank reader Christopher Cathis for sending it my way...and the link is here.


Gold crosses Rs 29K milestone, silver spurts

Buoyant wedding seasonal demand amidst higher investors off-take pushed the yellow metal to cross the psychological 29,000 rupee mark at the domestic bullion market on Wednesday.

Silver also spurted on frantic speculative buying following heavy industrial demand.

"Prolonged uncertainty in equity market is moving the yellow metal as an alternate investment amidst marriage seasonal demand," traders said.

This 3-paragraph story, posted at the website, was filed from Mumbai early yesterday morning...and I thank Roy Stephens for sharing it with us.  The link to the hard copy is here.


Silver prices may breakout strongly from the pennant pattern

Silver prices are forming a pennant pattern (shown below in the chart) near its long term trend line inside a short term uptrend channel. And the outlook proves difficult to determine since it would require the investor to choose between two different analysis.

The analyst makes the case for both the bears and the bulls.  It's a very short read...and the graph alone is worth the trip.  It was posted over at the website...and I thank reader Richard Craggs for sharing it with us.  The link to this very balanced story is here.


Gold Dealers Pitch to Institutional Investors, Cite Market Turmoil

Investing in gold would be a good way to rebalance the portfolio of pension funds and other institutional investors before the European sovereign debt crisis turns for the worse, a bullion expert advises.

"Sovereign debt and bank leverage in developed countries is out of control. As they turn their gaze from European turmoil back to exploding U.S. and Japanese debt, prudent investment managers should rebalance their portfolios appropriately before bigger storms hit," said Bullion Management  Group Chief Executive Officer Nick Barisheff.

The article quoted Casey Research's own Jeff Clark..."Gold is still a safe haven, but it is a tradable asset and people buy gold for different reasons."

This story was posted in the International Business Times out of the U.K. yesterday morning...and is well worth your time.  The link is here.


Gold is the only winner from the euro crisis

Peripheral country bonds have been hammered. Equities have struggled to make any progress all year. The main euro-zone banks have had to make huge write-downs on their holdings of Greek debt and have seen their shares collapse in value as a result. The euro itself has started to fall in value against other currencies, and almost certainly has a lot further to go.

But where are the winners? After all, all that money has to go somewhere.

In reality, the only big winner from the euro crisis will be gold.

Even if the saga just staggers on for two or three more years, with no real resolution is sight, gold should still do well. The crisis can only steadily erode people’s faith in paper money of any sort. Right now gold looks a “heads I win, tails you lose” bet — and the only sure way to protect yourself from the euro crisis.

This story was filed from London yesterday...and is another must read article.  I thank Roy Stephens for sharing it with us...and the link is here.


Kyle Bass Un-Edited: "Buying Gold Is Just Buying A Put Against The Idiocy Of The Political Cycle. It's That Simple!"

Yesterday I ran a small video clip of a BBC interview with Kyle Bass.  Well, the entire 24:28 minute interview showed up imbedded in a story posted over at last night.

Without question, this interview is a must watch from beginning to end.  It's Roy Stephens last offering of the day...and the link is here.



¤ The Funnies

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¤ The Wrap

There is always free cheese in a mousetrap. - H. R. Gross [1899-1987], Member of Congress [1948-1974] [R] Iowa

With Europe's financial system teetering on the brink...and the rest of the world's banking system not far behind, the New York Bullion banks left nothing to chance...hitting both gold and silver hard whenever they looked like they were about to break out to the upside.  They did this most effectively in New York, but they were most certainly active elsewhere in the world using the Globex trading system.

How long 'da boyz' can keep this up remains to be seen, but they certainly can't keep it up forever.  The only solution, unless they use their gold reserves to back sovereign debt, is still the same...print, or die.  We are living in historic times...and how long all this takes to play out, is still a big unknown.

Here's silver's 6-month chart.  You can see the 'flag formation' that was mentioned in the story about silver further up in this column.  How it breaks from here...either up or still a very good question.

(Click on image to enlarge)

What's still obvious is how carefully JPMorgan is keeping silver below its 50-day moving average.  It really wants to sail...and one can only fantasize about how high the price would go if 'da boyz' weren't there as short sellers of last resort.

Here's the 6-month gold chart.  It's developing a tiny flag of its own...and how the bullion banks will let this break is anyone's guess as well.

(Click on image to enlarge)

I'm not sure how much of these daily price management schemes in both gold and silver have to do with options expiry, or the December delivery month.  But as I said above, it may all be currency related.  We'll see.

In Far East trading earlier today, the gold price didn't do much of anything...but both metals are now getting sold off pretty hard now that London has been open for about two and a half hours.  The silver price was actually up about two bits by 2:00 p.m. Hong Kong time...but that has all changed now.

Gold's net volume, if the CME's numbers are to be believed, is light.  Silver's volume numbers are still not available.

That's all I have for today...and, as has been the case for the last while, it's more than enough.

I await the New York open with great interest.

See you on Friday.