Casey Research Publication
Gold & Silver Daily
"Whoever is caught on the short side will be allowed to burn in hell."
 

¤ Yesterday In Gold & Silver

It was very quiet in Far East trading on their Monday.  The gold price traded pretty flat until noon Hong Kong time...and then it drifted down to its low of the day, which came around 9:30 a.m. BST in London.

The subsequent rally was hardly worthy of the name, but it lasted until 2:00 p.m. in electronic trading in New York...and from there it drifted sideways into the 5:15 p.m. EDT close.

The gold price finished the Monday session at $1,387.00 spot...up $2.40 on the day.  Gross volume was pretty light...around 114,000 contracts.

It was more or less the same chart pattern in silver, with the only real difference being that silver got sold down a bit after the rally ended at 2:00 p.m. in New York.  Silver made it above the $22 spot price mark briefly, but wasn't allowed to close there.

Silver's high tick at 2:00 p.m. was recorded by Kitco at $22.20 spot.

Silver closed at $21.95 spot...up 26 cents on the day.  Volume, net of roll-overs out of the July delivery month, were just under the 29,000 contract mark.

The platinum price followed the gold and silver price very closely...and it chart looked similar to the ones above.  But palladium did much better...and ploughed its own field yesterday...up 1.56%.

The dollar index closed on Friday afternoon in New York at 81.66...and by 3:15 p.m. Hong Kong time on their Monday, it had rallied to 81.98...before falling back to 81.82 by 8:30 a.m. in New York.  An hour later the index had rallied to its high of the day...a hair over 82.05...and from there it was all down hill to its low of the day...81.62...and that came shortly after 2:00 p.m. EDT...the hick tick for both silver and gold. After that, the dollar index rallied a hair into the close, finishing the Monday session at 81.69...basically unchanged from where it closed on Friday.

Nothing much to see here...although a drop of over 40 basis points during the New York trading session should have brought a bigger response in both gold and silver, but it didn't.

The gold stocks started off in the red, but managed to climb into positive territory...and hit their peak just before noon in New York...and from there the slid a bit into the close.  The HUI finished up a smallish 0.25%.

The silver stocks no better...and Nick Laird's Intraday Silver Sentiment Index closed up 0.28%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 195 gold and 2 silver contracts were posted for delivery within the Comex-approved depositories tomorrow.  In gold, the largest short/issuer was JPMorgan Chase out of its client account once again.  ABN Amro was in number two spot with 55 contracts issued.  Once again, the two biggest long/stoppers were HSBC USA with 114 contracts...and Barclays with 77 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

Much to my surprise, an authorized participant actually added to GLD yesterday...86,995 troy ounces to be exact.  After Friday's smash-down, both Ted Butler and I were expecting withdrawals...however, the week is still young.  And as of 10:12 p.m. EDT last night, there were no reported changes in SLV.

The U.S. Mint had a decent sales report on Monday.  They sold 5,000 ounces of gold eagles...2,500 one-ounce 24K gold buffaloes...and 678,500 silver eagles.

There was a lot of activity in silver over at the Comex-approved depositories on Friday.  They reported receiving 622,560 troy ounces...and shipped 1,125,887 troy ounces out the door for parts unknown.  The link to that activity is here.

In gold, 2 kilobars [64.30 troy ounces] were withdrawn from HSBC USA's vault on Friday.  The link to that 'action' is here.

The only chart I have for you today is courtesy of Washington state reader S.A...and knowing him like I do, I just know he stole this from a Zero Hedge story...however I just don't know which one.  I would guess that it would have something to do with the numbers from the jobs report on Friday.

(Click on image to enlarge)

Posted below is a photo that reader Andy Lawrisuk took while he was in Prague earlier this year.  Here's the description he sent me.

John of Nepomuk (or John Nepomucene) (Czech: Jan Nepomucký) (c. 1345 – March 20, 1393) is a national saint of the Czech Republic, who was drowned in the Vltava river at the behest of Wenceslaus, King of the Romans and King of Bohemia.  His tomb, a Baroque monument cast in silver and silver-gilt that was designed by Fischer von Erlach, stands in mid-14th century St. Vitus Cathedral, Prague. The tomb contains 1,680 kilograms of Bohemian silver.

Here's today's "cute quota"...

I have the usual number of stories today...and I hope you have the time to read the ones you find of interest.

 

¤ Critical Reads

Bulk of U.S. Payroll Gain in Jobs Paying Less-Than-Average Wages

Occupations paying below-average wages accounted for more than half of last month’s U.S. payroll increase, a dynamic that may restrain consumer spending and the economic recovery.

Retailers, the hospitality industry and temporary-help agencies accounted for 96,300, or 55 percent, of 175,000 jobs added in May, figures from the Labor Department showed today in Washington.

“It’s not just jobs, it’s the kinds of jobs we’re creating,” said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. “We need to see more broad-based and even growth in the economy to see better jobs return. We’re still relying too much on the part-time and contingent workforce.”

This story dove-tails nicely with that chart that Washington state reader S.A. sent our way further up.  This Bloomberg story was posted on their website just before noon MDT on Friday...and I thank reader Federico Schiavio for today's first story.

Read more...

Fed’s Bullard Says Low Inflation May Warrant Longer Q.E.

Federal Reserve Bank of St. Louis President James Bullard, who has voted this year in favor of maintaining stimulus, said inflation below the central bank’s 2 percent target may warrant prolonging the “aggressive” use of bond buying to spur growth and bring down unemployment.

While “labor market conditions have improved since last summer,” Bullard said today in remarks during a panel discussion in Montreal, “surprisingly low inflation readings may mean the Committee can maintain its aggressive program over a longer time frame.”

The Federal Open Market Committee, which meets next week, is discussing when to slow $85 billion in monthly bond purchases, with San Francisco Fed President John Williams saying last week a “modest adjustment downward” in the buying is possible as “early as this summer.” Atlanta Fed President Dennis Lockhart said “very mixed” economic data makes him “more cautious” about a near-term reduction in purchases.

This Bloomberg news item was posted on their Internet site early yesterday afternoonMDT...and I thank West Virginia reader Elliot Simon for sharing it with us.

Read more...

Economist Rogoff: Learn to Love Inflation

Instead of dreading inflation, central banks need to learn to love it, advises Kenneth Rogoff, former chief economist at the IMF, in an article for Project Syndicate.

Rather than preparing to take away the punch bowl, central banks should be spiking it, argues Rogoff, a Harvard University economics professor who co-authored the book, "This Time is Different: Eight Centuries of Financial Folly."

The Federal Reserve may soon end quantitative easing (QE) to "take away the punch bowl before the party gets going" and head off inflation before reaching its employment target.

"The trouble is that this is no ordinary recession, and a lot people have not had any punch yet, let alone too much," he explains.

This article was posted on the moneynews.com Internet site early yesterday morning...and it's Elliot Simon's second offering in a row.

Read more...

Hedge Funds Haven't Owned This Much of the Stock Market Since Right Before the Crash in 2008

Two interesting stats on hedge fund exposure to the market via BofA Merrill Lynch analysts Stephen Suttmeier, Jue Xiong, and MacNeil Curry:

In the first quarter of 2013, net exposure (the difference between long and short positions in stocks) rose to match the previous peak (made in the second quarter of 2007).

The percentage of the stock market (specifically, the Russell 3000 float) owned by hedge funds is now the highest since the second quarter of 2008.

Based on the quarterly 13F filings and estimated short positions of the equity holdings of 895 funds, we estimate that hedge funds reduced cash holdings to the 2Q07 trough of 4.3%, while raising net exposure to the 2Q07 peak of 59% in 1Q13. Meanwhile, dollar notional net exposure rose by 11% to $463bn notional in 1Q13 – setting a new record. The bullish positioning indicates that risk appetite is back to the peak set in 2007.

This businessinsider.com article was posted on their Internet site on Saturday afternoon EDT...and it's a little something I found in yesterday's edition of the King Report.

Read more...

Prism Exposed: Data Surveillance with Implications for the World

The American intelligence director and the White House have finally confirmed what insiders have long known: The Obama administration is spying on the entire world. Politicians in Germany are demanding answers.

South of Utah's Great Salt Lake, the National Security Agency (NSA), a United States foreign intelligence service, keeps watch over one of its most expensive secrets. Here, on 100,000 square meters (1,100,000 square feet) near the US military's Camp Williams, the NSA is constructing enormous buildings to house superfast computers. All together, the project will cost around $2 billion (€1.5 billion) and the computers will be capable of storing a gigantic volume of data, at least 5 billion gigabytes. The energy needed to power the cooling system for the servers alone will cost $40 million a year.

Former NSA employees Thomas Drake and Bill Binney told SPIEGEL in March that the facility would soon store personal data on people from all over the world and keep it for decades. This includes emails, Skype conversations, Google searches, YouTube videos, Facebook posts, bank transfers -- electronic data of every kind.

"They have everything about you in Utah," Drake says. "Who decides whether they look at that data? Who decides what they do with it?" Binney, a mathematician who was previously an influential analyst at the NSA, calculates that the servers are large enough to store the entirety of humanity's electronic communications for the next 100 years -- and that, of course, gives his former colleagues plenty of opportunity to read along and listen in.

George Orwell's wet dream come true.  This spiegel.de story from yesterday is a must read...and it's courtesy of Roy Stephens.

Read more...

Edward Snowden, NSA files source: 'If they want to get you, in time they will'

Q: Why did you decide to become a whistleblower?

A: "The NSA has built an infrastructure that allows it to intercept almost everything. With this capability, the vast majority of human communications are automatically ingested without targeting. If I wanted to see your emails or your wife's phone, all I have to do is use intercepts. I can get your emails, passwords, phone records, credit cards.

"I don't want to live in a society that does these sort of things … I do not want to live in a world where everything I do and say is recorded. That is not something I am willing to support or live under."

Q: But isn't there a need for surveillance to try to reduce the chances of terrorist attacks such as Boston?

A: "We have to decide why terrorism is a new threat. There has always been terrorism. Boston was a criminal act. It was not about surveillance...but good, old-fashioned police work. The police are very good at what they do."

Q: What do you think is going to happen to you?

A: "Nothing good."

This follow-up interview [12:35 video clip embedded] was posted on the guardian.co.uk Internet site on Sunday...and it's definitely worth your time.  I thanks "Dr. David" for bringing this news item to our attention.

Read more...

ECB says bond-buying program is unlimited

There is no limit to the European Central Bank's (ECB) bond-buying program, a spokesman for the bank said on Sunday, denying a German newspaper report published in the run-up to a court hearing on the scheme.

Frankfurter Allgemeine Sonntagszeitung on Sunday cited central bank sources as saying the ECB had set a limit of 524 billion euros on the Outright Monetary Transactions (OMT) scheme.

The bank had also had informed Germany's constitutional court - which will weigh the OMT's legality on Tuesday and Wednesday - of that limit, it said.

"The report is incorrect," an ECB spokesman told Reuters.

This Reuters piece, filed from Berlin, was posted on their website early Sunday morning EDT...and is another article I found in yesterday's edition of the King Report.

Read more...

Clashes rock Turkish capital as protesters defy Erdogan

Police in Ankara fired tear gas and used water cannons to disperse thousands of people protesting near government buildings on Saturday, as Turkey’s biggest wave of anti-government protests in decades entered its second week with no signs of waning.

Turkey's state-run agency said pro- and anti-government protesters also clashed, for the second time since demonstrations began, according to the AP. The Anadolu Agency said a pro-government group hurled stones at a march by anti-government demonstrators in the city of Adana late Saturday. The agency said police evacuated women and children, but the two groups continued to clash with stones and batons.

Turkish Prime Minister Tayyip Erdogan’s governing party on Saturday ruled out early elections as tens of thousands of anti-government demonstrators defied his call for an immediate end to protests. He convened the leadership of his Justice and Development Party (AKP) to discuss the protests Saturday afternoon.

This news item, courtesy of Roy Stephens, was posted on the france24.com Internet site yesterday.

Read more...

Japan’s Pension Fund Cutting Local Bonds to Buy Equities

Japan’s public pension fund, the world’s biggest manager of retirement savings, said it will reduce its holdings of local bonds and buy more shares.

The proportion of assets held in Japanese bonds will be cut to 60 percent from 67 percent, the health ministry said yesterday in Tokyo at a briefing to announce changes to the mid-term plan of the Government Pension Investment Fund. The weighting of local shares will be increased to 12 percent from 11 percent currently. The Health and Welfare Ministry, which oversees pensions, didn’t give a time frame for the changes.

GPIF’s shift toward higher-yielding assets comes as it prepares to fund retirements in the world’s most elderly population and Prime Minister Shinzo Abe tries to revive the economy through fiscal and monetary stimulus. Domestic shares have slid since Abe said on June 6 that a legislative campaign to loosen rules on businesses, the “third arrow” of his economic plan, won’t begin for months.

This Bloomberg news item, filed from Tokyo, was posted on their website late Friday afternoon Denver time...and I thank U.A.E. reader Laurent-Patrick Gally for finding it for us.

Read more...

Australian Financial Review: The great gold bullion conspiracy

Thanks to our friend A.F., a better PDF copy of the Australian Financial Review's "Pierpont" commentary published Friday, headlined "The Great Gold Bullion Conspiracy" and cited in Friday's dispatch, "The Debate on Gold Infiltrates the Mainstream" has been posted at GATA's Internet site.

Read more...

Gold's strange 'bear market': Deutsche Bank opens gold vault in Singapore

Deutsche Bank is opening a vault in Singapore that can hold $9 billion of gold, as it hopes to tap rising demand for the precious metal in Asia amid a push by the city-state to burnish its image as a bullion-trading hub.

Singapore last year scrapped a goods-and-services tax on gold in a bid to help boost its share of global gold demand to 10-15% within a decade from around 2% in 2012 as it seeks to compete with more established bullion-trading centers.

"Gold has traditionally been stored in London, Zurich, and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve," Mark Smallwood, Deutsche Asset & Wealth Management's head of wealth planning in the Asia-Pacific region, told The Wall Street Journal on Friday.

This subscriber-protected story was posted on The Wall Street Journal website on Sunday...and is posted in the clear in this GATA release.  I thank Marshall Angeles for first bringing this story to my attention...and now to yours.

Read more...

Jim Rickards: Roubini Doesn't Understand Gold

Following some heated Twitter debates with Nouriel Roubini, James Rickards, author of "Currency Wars: The Making of the Next Global Crisis" spoke with Kitco News' Daniela Cambone to counter Nouriel Roubini's prediction that gold will drop to $1,000 by 2015. Aside from his rebuttal of Roubini's call, Rickards discusses his open Twitter exchanges with Roubini which the two have recently become known for, and sheds some light on the nature and origin of their debate.

This 15:18 minute interview was posted on the kitco.com Internet site on Friday...and is a must watch/listen.  I thank reader Lou Horner for being the first through the door with this news item.

Read more...

China Approves Its First Gold Bullion ETFs

Chinese securities regulators approved for launch two gold bullion gold ETFs that will trade on the Shanghai stock exchange, bringing to investors in China an ETF concept that has been a smashing success in the U.S. but that has run into head winds in recent months as the 12-year gold rally falters.

The approvals allow Huaan Asset Management Co. and Guotai Asset Management Co. to proceed with separate product launches, according to a report published by Bloomberg News that cited sources at both asset management firms. It wasn’t clear from the report when the products might go live.

This story was posted on the indexuniverse.com Internet site yesterday...and it's courtesy of reader Randall Reinwasser.  There's also a WSJ story about it courtesy of Marshall Angeles...and the link to that is here.

Read more...

Indian Government could take more steps to curb gold import: Rajan

Within days of hiking import duty on gold, Chief Economic Advisor Raghuram Rajan today said government could take more steps to curb demand for the precious metal amidst widening current account deficit.

"We have taken number of measures to curb the import of gold. The government will never say its end of it," he told reporters on sidelines of a workshop here.

Last week the government increased import duty on gold to 8%, the second such hike within six months.

This short gold-related news item appeared on the business-standard.com Internet site yesterday afternoon IST...and it's another offering from Marshall Angeles.

Read more...

Casey Research: Gold Investor’s Stress Test

We've spent the past couple issues of BIG GOLD and the International Speculator examining our recommended companies in depth. We've analyzed all-in costs, tracked insider holdings, and projected stock prices based on lower metals prices. We've monitored political risk, reassessed the viability of projects, and examined past corrections to determine when gold might bottom.

But there's one factor that trumps all these.

The investor's attitude. More specifically, his or her emotional reaction to the gold industry's current retreat. After all, even if a company has high-grade projects, top management, low political risk, and below-average costs, it doesn't do the investor any good if they don't own the stock.

The realities of gold's price action over the past couple months dictate that our emotions not control our investment actions. We should coolly evaluate the circumstances based on facts, trends, and historical similarities.

Jeff Clark's comments were posted in yesterday's edition of the Casey Daily Dispatch...and they're definitely worth reading.

Read more...

Sprott's Thoughts: Platinum...ETF Demand Points to a Price Increase

Despite a seemingly slam-dunk supply/demand imbalance, platinum's spot price has bounced around in a trading range between $1,400/oz and $1,730/oz. More recently it has come back down to test the bottom end of that range, but current developments in the ETF space suggest that the platinum price may be set to improve significantly in the coming months.

Our optimism stems from the April launch of a new platinum ETF by South Africa-based Absa Capital. Absa’s new ETF, which is the first of its kind in South Africa, managed to acquire 368,000 oz of platinum in its first month alone.

This short commentary by Mssrs. David Franklin and David Baker was posted on the sprottgroup.com Internet site yesterday...and is worth your while.

Read more...

CFTC Gold and Silver Bank Participation Report - Ted Butler's Comments

"Since the BPR of February 5, the US bank category position (in effect, almost exclusively JPMorgan) has swung by a net 100,000 contracts, from net short 70,000 contracts to net long 30,000 contracts (all rounded). There has never been a move of such magnitude before. Over that same time, the total net commercial short position (in the COT) declined by 113,000 contracts, meaning that JPMorgan accounted for almost 90% of the entire commercial decline. It is not possible for that extreme degree of concentration and market share not to be manipulation, pure and simple.

And here’s the manipulative icing on the cake – JPMorgan was able to flip a net short position in COMEX gold of 50,000 contracts in February to a net long position of 50,000 contracts on a gold price decline of as much as $350. I would submit that the singular purchase of 10 million ounces of gold (worth the equivalent of $15 billion) within four months on a greater than 20% price decline could only be accomplished if the price was manipulated lower by the purchaser. No other explanation would be possible...

This absolutemust read article was posted on the jessescrossroadscafe.ca Internet site on Saturday.  The author 'borrowed' far more of Ted Butler's Saturday commentary than I would ever dare ask for...but since it's now in the public domain...I'll be happy to 'borrow' it too.

I had extensive comments on June's BRP in my Saturday column as well...but you, dear reader,must consider Ted's work on this as definitive.  He is the master...and the rest of us scribblers are just the messengers.  Everything about the BPR [and the COT Report, for that matter] came through him first.  I thank Marshall Angeles for the last story of the day.

Read more...

 

¤ The Funnies

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¤ The Wrap

I would ask you to consider that it would be impossible for any entity to buy 10 or 20 or 30 million ounces of gold in a matter of months on the deepest price decline in years. It would be like someone buying all the commercial office space in New York City in a few months 20% below market rates. Or someone buying all the stocks in the S&P in a short time frame at a big discount. That would be impossible. Just like it is impossible for JPMorgan to have bought as much gold (and silver) as they have over the past few months at such steep markdowns in price. The Bank Participation Reportof June 2013 shows that the big short crook has positioned itself massively on the long side of gold in a manner that would be impossible in a market that wasn’t manipulated. - Silver analyst Ted Butler...08 June 2013

I wouldn't read a whole heck of a lot into yesterday's price action.  Volume was light...and there's a major holiday in China that lasts until mid-week.

This big news continues to be the sudden shift of JPMorgan Chase from the short side in gold...to massively long in the Comex futures market...and most likely other markets as well.  It just remains to be seen how JPM will use this position to its advantage.  It's a given that when JPMorgan allows the precious metal markets to fly, whoever is caught on the short side will be allowed to burn in hell...as JPMorgan et al probably won't be there to take the opposite side of the trade when the shorts start heading for the exits.

Since JPMorgan has been the overpowering force to the downside in the precious metals for the last few decades, I would expect that they will be just as much in control when they finally allow prices to fly...and they, and they alone, will determine what the 'new' prices for all four precious metals will be.  However, if they allow a market-clearing event to occur with no interference, the final price will be very high by the time the last short position is covered.  This is pure speculation on my part, but those are the only two scenarios that I can envision at the moment.  Time will tell how close to the mark I am on either one.

The big smack-down on Friday's jobs number was pretty much preordained, as "da boyz" always hit the gold price at that point in time...and as Hong Kong fund manager and ex-Goldman Sachs alumnist William Kaye said in his interview at King World News posted further up in today's column..."The selling action on Friday was pretty well-foreshadowed.  Virtually every Non-Farm Payroll report, irrespective of the number, we’ve seen the same type of downside action.  The number, which is made up anyway, is always gamed."  He would be right about that.

Today, like every Tuesday, is the cut-off for Friday's Commitment of Traders Report...and if we get through Comex trading with little or no upside price action, we'll get a pretty good idea of how much more improvement we get in the structure of that report from last Friday's engineered price decline.

Not much went on in Far East trading on their Tuesday, which is no surprise.  Both gold and silver are down a hair, but I wouldn't read a thing into that.  Volumes in both metals are exceedingly light as the London open approaches in five minutes as I'm writing this paragraph...and the dollar index is down 10 basis points.

And as I hit the 'send' button on today's column I'm sure you've already noted the price action in both gold and silver the moment that London began to trade earlier today.  The high-frequency traders did their thing...and by 9:00 a.m. BST...and hour after the open...gold was down about seventeen bucks from yesterday's close in New York...and silver was down about 35 cents.  Both metals recovered somewhat after that, but the selling started again at exactly 10:00 a.m. BST...so it's obvious that today's price action will be anything but quiet...and I wouldn't hazard a guess as to what might happen when the Comex opens in New York at 8:20 a.m. EDT.

As of 5:15 p.m. EDT...gold volumes are now triple what they were when London opened...and silver's volume has more than doubled.  The dollar index isn't doing a thing.

Before heading off to bed, I'd like to point out that Casey Research has another FREE ON-LINE VIDEO EVENT in the works.  This one is entitled "GOLD: Dead Cat...or Raging Bull?"

It will feature Jim Cramer, Eric Sprott, Doug Casey, Steven Feldman, Rob McEwen and Jeff Clark. They explore the recent fluctuations of the gold price and what it means for investors. Does gold's drop signal the end of its bull run, or is it just taking a breather? Should investors load up on or unload gold? The free online event Gold: Dead Cat...or Raging Bull? hosted by The Street and Casey Research, with Jim Cramer, Eric Sprott, Doug Casey, and others will provide some answers. 

This free video will air on June 25th at 2:00 pm Eastern Daylight Time.  It will be available for viewing after the initial stream for those who have schedule conflicts.  You can check it out...and then sign up for it here.  It pretty much goes without saying that it will be worth your time.

That's all I have for today, which is more than enough...and I'll see you here tomorrow.