Casey Research Publication
Gold & Silver Daily
"Since November 4th, 'authorized participants' have deposited 1,427,300 ounces of gold in GLD. Considering the price action, this is a huge amount."
 

¤ Yesterday In Gold & Silver

Well, the decline that began shortly after the London open, continued unabated until precisely 12:00 o'clock noon in New York.  Then the bid disappeared...and gold crashed more than $25 in forty minutes.  The low of the day was $1,709.20 spot.

From that low, the gold price recovered about twenty bucks going into the close of electronic trading in the New York Access Market.  Gold closed at $1,719.90 spot, down $42.30 on the day.  Net volume was a very chunky 189,000 contracts.

It was pretty much the same story in silver on Thursday, with the rug getting pulled out from underneath the silver price at 12:00 o'clock noon in New York as well.  It took JPMorgan et al just over an hour to peel a bit over $1.50 off the price.  Kitco reported the low tick of the day at $30.96 spot.

From there, the silver price recovered about 70 cents of its loss...and closed at $31.71 spot, down $1.99 on the day.  Net volume was very heavy at 56,000 contracts.

The dollar closed pretty much unchanged...and was not a factor in yesterday's bear raid on the precious metals.

The gold stocks gapped down at the open...and then really took a dive when 'da boyz' engineered the big noon sell-off in New York.  The HUI closed down 4.05%.

The silver stocks got smoked, with Nick Laird's Silver Sentiment Index closing down 5.36%

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 40 gold, along with 4 silver contracts, were posted for delivery on Monday.  The link to that action, such as it was, is here.

Well, the GLD ETF has sure been taking in the metal.  Yesterday they reported receiving another huge shipment.  This time it was 389,102 troy ounces.  Since November 4th, 'authorized participants' have deposited 1,427,300 ounces of gold in GLD.  Considering the price action, this is a huge amount.  What do they know that we don't?

And, once again, there were no reported changes in SLV...and there haven't been any since November 8th.  Since November 1st, only about 650,000 ounces have been deposited in SLV.

The U.S. Mint had a tiny sales report yesterday.  They reported selling another 1,000 ounces of gold eagles.

Over at the five Comex-approved depositories on Wednesday, they reported receiving 1,196,368 ounces of silver...and only shipped two good delivery bars out the door...2,028 troy ounces in total.  All the receipts were at Brink's, Inc...and the link to the action is here.

I have a few stories today about the continuing saga into the MF Global catastrophe...starting with this comment from reader "Frances in Texas".

"[On Tuesday] you commented that the traders from MF Global must not be able to get back up on their trading. 

Well, I am one of those traders whose commodity trading account was with MF. 

I liquidated all of my positions the last week of October,  with the intent of moving my account to another firm.  I did not feel comfortable with the news on the street about MF. 

My account has now been moved .... but, and it's a big BUT,  because my account was 'all cash' on the day MF went bankrupt...no cash has been transferred.

I am unfortunately one of those in the 'pool' of that missing $600 Million dollars,  and the administrator/judge has not released our funds yet. (they released the positions of those who had not liquidated along with a portion of their funds to cover margin calls).

From what I have learned/read/talked to others about .... there was a large number of us who took the same action (of liquidating positions) at about the same time.   

We saw the handwriting on the wall, but our timing was terrible.  And all of us are now 'stuck'...waiting for our funds from MF...or having to cough up funds out of our other pockets for trading.  Today, I have a significantly reduced trading account until the judge releases MF's funds to my account.

The ones to really pity are those who called for wire transfer of funds the last couple of days of October.  Many were sent bank checks which 'bounced'.  Now, they have to jump through hoops with claims on bounced checks, since their accounts show the funds have been sent to them." END

To really help out the CFTC in the MF Global situation, I noted these two paragraphs in a Bloomberg story that reader Scott Pluschau sent me yesterday...

"Republicans blocked Obama’s request to increase by one-third the budget of the Commodity Futures Trading Commission, which is responsible for helping implement the 2010 overhaul of financial-industry regulations. The agency instead will be funded at roughly its current level."

"Representative Barney Frank of Massachusetts, the top Democrat on the Financial Services Committee, called it a “terrible act of irresponsibility” that would “open us up to the kind of irresponsible, unregulated financial behavior that led to the greatest crisis that we’ve had in so many years.”

I received an e-mail from Dr. Dave Janda over at all-talk radio WAAM 1600 out of Ann Arbor, Michigan yesterday...as he was none to pleased with the antics of the bullion banks yesterday...

"So, in the past 2 days....while Europe implodes....and the US. Federal deficit is announced to be over $15 trillion dollars....now greater than the GDP....the criminals have severely taken down gold and silver when in fact they should be exploding to the upside.

"NOT a word out of the CFTC....other than Chilton selling his book on "Ponzi Schemes" on CNBC....what a clown....he, Gensler and the entire CFTC need to go to jail along with Dimon, Masters and everyone at the CME. This is beyond criminal."  Dave.

Time to go long guillotines.

Despite my best editing efforts, I have a lot of stories again today.

 

¤ Critical Reads

"The Entire System Has Been Utterly Destroyed By The MF Global Collapse" - Presenting The First MF Global Casualty

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator...but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law. - Ann Barnhardt

This is an absolutely stunning letter...and a must read from one end to the other.  I would also recommend that you distribute this article far and wide.  The letter is posted over at zerohedge.com...and I thank reader Matthew Nel for being the first of many who sent me this piece.  The link is here....and the link to he original letter posted at her website is here.

Read more...

MF Global Trustee to return roughly $521 million to cash-only customers

Trustee James Giddens for the MF Global bankruptcy filed a motion [on Wednesday] to return up to a 60% distribution to those former MFGI customers that had only cash in their accounts as of the commencement of this proceeding on Oct. 31, 2011. This release will only affect MFGI customers that were cash-only and did not have any positions on at the time of the bankruptcy. This is approximately 21,000 customers with a total of over $869 million in cash assets.

This 1-paragraph article...plus the link to the 13-page 'motion to release'...was sent to me by  reader "Frances in Texas".  It's posted over at the futuresmag.com website...and the link is here.

Read more...

MF Global customer group joins battle

James L. Koutoulas has formalized his group advocating on behalf of former MF Global customers and brokers and given it a name: The Commodity Customer Coalition, which is more than 2,500 strong and growing. And on Monday Koutoulas filed an objection to JP Morgan’s interim order that he claims could put JP Morgan interests ahead of MF Global customers whose funds are still frozen by the liquidation trustee.

The objection states, “Were this Court to allow any party to have an interest superior to customer segregated funds, it would provide a loophole in the protections which are the bedrock of commodity trading. This Court should only provide for the use of Cash Collateral which protects customer funds as Congress, the CFTC, CME, and hundreds of thousands of commodity traders have, for over 100 years, believed to have been the case.”

This is another very short story posted over at the futuresmag.com website...and "Frances from Texas" sent me this one as well.  The link is here.

Read more...

Probe points to MF Global's misuse of segregated customer funds

MF Global's internal records indicate that the company moved segregated customer funds in transactions as large as hundreds of millions of dollars at a time, these people said. The money was transferred out of the unit that houses the assets of futures-trading customers and went into the accounts of MF Global's brokerage, people familiar with the situation said.

Such moves could violate regulations stipulating that commodities brokers can't mix customer funds with brokerage funds. Brokerage funds often are used to back proprietary-trading positions.

One has to ask why Jon Corzine isn't sitting in jail right now?

This story out of yesterday's edition of The Wall Street Journal is posted in the clear in this GATA release.  The link is here.

Read more...

Sale of MF Global's LME Shares Separate to Deal For Metals Team

The sale of the metals team of MF Global Holdings Ltd. is being conducted as a separate process from the sale of the U.S. brokerage firm's near 6% stake in the London Metal Exchange due to "a high level of interest," a person familiar with the matter said.

Given the interest, the process to sell the shares is unlikely to be conducted as a fire sale, the person said.

MF Global is the fourth-largest holder of LME shares, with 600,000 shares, or 5.9%, and is a category-one member of the exchange.

The rest of this story, posted in yesterday's edition of The Wall Street Journal, is subscriber protected...but the above few lines were sent to me by Washington state reader S.A....and the link to the 'subscriber protected' portion is here.

Read more...

First Felony Charges Brought Against Robosigners

Up until now, fraudclosure and robosigning were both merely civil offenses, and as such the banks were actively doing all they could to bury any and all pending litigation under a large settlement umbrella, wash their hands of the whole affair and move on, with nobody in danger of actually walking the plank and certainly not in danger of going to jail. That has all changed as of now.

This zerohedge.com story was sent to me by reader Doug Beiers yesterday...and the link is here.

Read more...

More than 1 in 5 U.S. children poor, Census says

In 2010, when the Census survey was conducted, 21.6 percent of children across the country were poor, compared to 20 percent in 2009.

That was mainly due to a rise in the number of children living below the federal poverty threshold, defined as an annual income of $22,314 for a family of four, to 15.7 million from 14.7 million in 2009.

The figures reflect the overall state of the economy. The national poverty rate stands at 15.3 percent and the unemployment rate is at 9 percent some two years after the recession that began in 2007 officially ended.

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

Read more...

Woman Gets Jail For Food-Stamp Fraud; Wall Street Fraudsters Get Bailouts: Matt Taibbi

Last week, a federal judge in Mississippi sentenced a mother of two named Anita McLemore to three years in federal prison for lying on a government application in order to obtain food stamps.

Apparently in this country you become ineligible to eat if you have a record of criminal drug offenses. States have the option of opting out of that federal ban, but Mississippi is not one of those states. Since McLemore had four drug convictions in her past, she was ineligible to receive food stamps, so she lied about her past in order to feed her two children.

The total "cost" of her fraud was $4,367. She has paid the money back. But paying the money back was not enough for federal Judge Henry Wingate.

This Matt Taibbi blog from yesterday is posted over at Rolling Stone magazine...and I thank Randall Reinwasser for sharing it with us...and the link is here.

Read more...

UniCredit Bombshell Shouldn’t Be the Last One: Jonathan Weil

Everyone in the world who pays any attention to the financial markets seems to know that the balance sheets of European banks are a joke. All you have to do is compare the stock prices of these companies with the book values on their balance sheets to see that.

On average the shares of the 32 companies in the Euro Stoxx Banks Index trade for about 44 percent of book value, or common shareholder equity, according to data compiled by Bloomberg. Put another way, a typical large euro-area bank would have us believe its net assets are worth more than twice what the stock market says the bank is worth. The problem is the companies’ numbers can’t be trusted, and it’s been this way for years.

So imagine the surprise this week when UniCredit SpA, one of Italy’s largest lenders, had the fortitude to acknowledge that its asset values were in need of an 11-figure chopping. The truly unexpected part wasn’t that the bank experienced a loss of 10.6 billion euros ($14.3 billion) during the third quarter, but that its management chose to recognize these losses’ existence.

This most excellent op-ed piece showed up in Bloomberg on Wednesday...and is most definitely worth the read.  I thank Washington state reader S.A. for sending it along...and the link is here.

Read more...

New Italian government does not include a single elected politician

The emergency administration, which is meant to govern Italy until elections are due in 2013, is made up of bankers, lawyers and university professors but not a single elected official – an extraordinary development for a Western democracy.

But it is a deal that much of the electorate and nearly all the mainstream parties have signed up to, in order to save Italy from the economic abyss by trimming the country's bloated bureaucracy, slashing its 1.9 trillion euro debt and unleashing its economic potential after years of stagnation.

Mr. Monti said that after talks with the country's big parties, he had decided that "the non-presence of politicians in the government would help it."

This very interesting story was posted in The Telegraph late on Wednesday night...and I thank reader Jason Hall for sending it my way.  The link is here.

Read more...

Greek protests as France, Spain face squeeze

Italy's new government has announced far-reaching reforms in response to a European debt crisis that on Thursday pushed borrowing costs for France and Spain sharply higher, and brought tens of thousands of Greeks onto the streets of Athens.

Italy's new technocrat prime minister, Mario Monti, unveiled sweeping reforms to dig the country out of crisis and said Italians were confronting a "serious emergency."

In Athens, at least 50,000 Greeks joined a protest rally presenting the first public test for a new national unity government, also headed by an unelected figure, that must impose spending cuts and tax rises if Greece is to escape bankruptcy.

This Reuters story was posted yesterday evening...and I thank Roy Stephens for forwarding it.  The link is here.

Read more...

Real decisions about Ireland's future being made in Berlin and elsewhere

Beyond the government’s huge embarrassment at the German Bundestag getting sight of Irish budgetary proposals in advance of the Oireachtas is a new and harsh reality – when you are a programme country you no longer have full ownership or control of your destiny, or even your secrets.

The political context in Europe this week has been about future plans of a two-track euro zone and about European Union treaty changes that will lead to Ireland ceding more fiscal sovereignty. Yesterday gave critics of that process some tangible ammunition when a confidential document was leaked from a German parliamentary committee.

This story was filed early this morning over at the irishtimes.com website...and I thank Roy Stephens for sending it along.  It's worth skimming...and the link is here.

Read more...

'Them and us' mentality now colours eurozone's relations with UK

The French propensity to blame Anglo-Saxon speculators, particularly those in London, whenever the politicians aren't getting their way, is well known. Never mind the fundamentals, if the economy hits choppy waters, it's London's financial markets that are invariably found to be the culprits.

As long as widening eurozone bond spreads were confined to the periphery, it was possible to blame lazy Greeks, feckless Italians and rotten government for the euro's travails. They'd brought it on themselves. But now the phenomenon has spread to the French core, and is even lapping at the edges of the mighty Germany itself, an older enemy has been identified – les speculateurs, lodged like pirates, in their offshore haven across the Channel.

Unfortunately, it's a mindset no longer confined to France. Never far from the surface, it has come to dominate eurozone thinking with regard to the UK. For many, Britain's non participation in the euro, and its strong association with the financial service industry, are seen as one and the same thing.

This story was posted late yesterday evening in The Telegraph...and is another Roy Stephens offering...and the link is here.

Read more...

Watch Nigel Farage Dance On The Euro's Grave

Nigel Farage needs no introduction: the famous Euroskeptic is one of very few men who has had the temerity to question, often in an abnormally high decibel fashion, the stupidity of the Eurozone leaders from day one. Now that he has been proven correct, he has every right to gloat, which he does to everyone's delightful amusement in the European parliament.

The 2:39 minute video is imbedded in a short piece over at zerohedge.com...and is an absolute must watch, especially the last thirty seconds where he really rips von Rompuy a new one.

This is Roy's last offering of the day...and the link is here.

Read more...

"The most bullish chart on the face of the planet"

That was James Turk, author and president of online bullion dealer Goldmoney, speaking at the Gold and Silver Summit in London in early August about a specific metal.

He went on. "In fact, it's the most bullish chart I've ever seen on the face of the planet."

What was he talking about? Silver.

This bullish piece about silver was written by Dominic Frisby...and was posted over a the moneyweek.com website on Wednesday.  I thank reader Roham Jackson for sharing it with us...and the link is here.

Read more...

John Hathaway: A King World News Audio Interview

A couple of days ago I posted the KWN blog of this interview.  Eric slipped the audio version into my in-box very late last night.  I haven't had time to listen to it, but it's probably well worth your time...and the link is here.

Read more...

The 2011 Gold Price: What Correction? - Jeff Clark

Here's an excellent commentary [with graphs to match] that BIG GOLD editor Jeff Clark posted in yesterday's edition of Casey's Daily Dispatch.  It's well worth your time...and the link is here.

Read more...

Gold Demand Advanced 6% in Third Quarter

Gold demand rose 6 percent in the third quarter from a year earlier as Europe's debt crisis spurred investors to accumulate the metal as a protection of wealth and push prices to a record, the World Gold Council said.

Global demand gained to 1,053.9 metric tons worth a record $57.7 billion, the London-based industry group said today in a report. Investor purchases of exchange-traded funds and products, bars and coins outpaced a drop in jewelry demand and increase in recycled supplies, it said. Central bank demand for 2011 may be the most since at least 1970, council data show.

Central-bank and government-institution purchases jumped more than six-fold to 148.4 tons in the quarter, the council said. Central banks may buy 450 tons for this year, signaling about 100 tons will be bought in the fourth quarter, Grubb said. The total for 2011 at 450 tons would be the most for any year since at least 1970, according to the latest available data from the council. The third quarter was probably the most ever also, according to the data. The demand is centered on central banks in Latin America, central Asia and the Far East, Grubb said.

This must read Bloomberg story was filed from London early yesterday morning...and I thank Russian reader Alex Lvov for sharing it with us.  The link is here.

Read more...

Gold Pullback Meaningless, It's Headed Much Higher: Jim Rickards

Eric King dropped this Jim Rickards blog into my lap in the very wee hours of this morning.  It, too, is a must read...and the link is here.

Read more...

 

¤ The Funnies

I've posted this cartoon a couple of times over the years...but it really feels very apropos at the moment.  This is from The Chicago Tribune sometime in 1934.

(Click on image to enlarge)

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¤ The Wrap

Do your little bit of good where you are; it's those little bits of good put together that overwhelm the world. - Archbishop Desmond Tutu

Well, JPMorgan et al certainly engineered an incredible decline in all the precious metals yesterday.  Volume in both gold and silver [and presumably in platinum and palladium as well] was enormous, so I would assume that they were able to get massive technical fund long liquidation...along with all the leveraged longs in the Nonreportable [small trader] category as well.  And, with no adult supervision anywhere in sight, there's was nobody there to raise a finger in the public's defence.

As I mentioned yesterday, I would suspect that all of this was related to options and futures expiry for the December delivery month coming up next week.  I get the impression that this had little to do with the woes over in Europe.  However, having said that, there's no doubt in my mind that if the big commercial traders weren't riding shotgun over this market, we would be enjoying spectacularly higher precious metal prices.

The preliminary open interest numbers for yesterday's trading day showed rather large increases in open interest in both metals.  It should have shown exactly the opposite if there had been massive liquidation of long positions, but 'da boyz' are really good at hiding their tracks when they have to...and the unfortunate thing is that we won't know the extent of the liquidation until next Friday's Commitment of Traders report, as the cut-off for today's COT report was three days ago.

There are still huge open interest positions left for the December delivery month in both metals, but they always melt away as we approached First Day Notice...November 30th...and I don't expect this month to be any different.  Nobody on the Internet is talking about delivery defaults any more...as many commentators that have been doing so, have been "crying wolf" for so long on this issue, that they've lost all credibility.  And nobody is mentioning the silver backwardation issue, either.  Ted Butler was right all along...it meant nothing...which was why I stopped talking about it a long time ago.

I'm not expecting big change in the Commercial net short position in gold when the COT report comes out at 3:30 p.m. this afternoon...but, based on the price activity in silver during the reporting week, there might be a slight decline there.  But I wouldn't bet the farm on that.

All the really big declines have occurred since the Tuesday cut-off...and it's one of the bullion bank's favourite tricks, as they can hide what they're doing for another week or so.

Here's the 6-month gold chart.  As you can see, JPMorgan et al were able to get enough long liquidation to penetrate the 50-day moving average to the down-side yesterday, but did not close below it, so there may be more selling pressure from them in the days ahead, just to make sure that they have gold all cleaned out once again.  We'll have to wait and see how this plays out.

(Click on image to enlarge)

Here's silver's 6-month chart.  I've been warning for the last week that JPMorgan was painting this chart to ensure that the 50-day moving average was not broken to the upside...and now we've had a 'failure' at that moving average.  After silver's two dollar decline yesterday, I'm guessing that we're back at the bottom of the barrel for silver...and back to 'wildly bullish' from a COT perspective.

(Click on image to enlarge)

Ted Butler was speculating yesterday that the bullion banks were using the gold price as a hammer to smash silver.  Well, they were spectacularly successful in that regard. It's impossible to tell how low they can get the price from here, because the number of speculative longs left to flush out are very few...and very far between.  So if they can engineer a lower price, it's not going to improve their short position by very much.

All I see here is another buying opportunity for the physical metal...and the shares are on sale as well.

I've been involved in this market back when gold was well under $300 the ounce...and silver was under $6...and it has taken twelve years to get to where we are today...and it has not been an easy trip.  It's been an emotional rollercoaster from the beginning...ranging from elation to outright despair. Investors have to stop looking at the day-to-day fluctuations...and concentrate on the big long-term picture, as this current sell-off will also pass...just like the rest of them have.

Don't forget that this is a controlled retreat by the bullion banks.  They know that prices have been way too low for way too long, they just don't want a runaway market.  The problem is that with world financial and monetary events being what they are, I wouldn't be surprised if it all ended badly for 'da boyz'...and it couldn't happen to a nicer bunch of crooks.

Looking at the activity in the Far East market overnight, I note that both silver and gold went no-bid at precisely 9:00 a.m. Hong Kong time during their trading day.  Of course there's no chance that this was a random market event.  Since then, gold has struggled higher and is up about ten bucks as of 5:20 a.m. Eastern time. Silver is up about forty cents.  The advances have been nice and orderly during the first two and a half hours of trading in the London market.

Gold volume is average...and the silver volume numbers from the CME aren't believable.

With everything back on sale once more, there's still time to either re-adjust 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. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well.  And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Without doubt it will be another interesting day in the precious metal markets...and, as always, I look forward to the New York open with great interest.

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