Gold & Silver Daily
"Whenever JPMorgan Chase, SLV and silver get mentioned together in the same sentence, I think it's worth pointing out."

¤ Yesterday In Gold & Silver

The gold price traded pretty flat through all of Far East and London trading on Thursday.  But the moment London closed for the day...4:00 p.m. GMT...11:00 a.m. in New York...a smallish rally developed that came to an end at 3:00 p.m. Eastern in electronic trading...and from there, gold got sold down a few bucks into the 5:15 p.m. close.

The high tick came shortly before 3:00 p.m...and that was recorded as $1,736.20 spot.

Gold closed the Thursday trading session at $1,731.90 spot...up $14.60 on the day.  Net volume was a far more reasonable 135,000 contracts.

Silver's absolute low tick [about $31.60 spot] came around 11:00 a.m. GMT in London...and once the noon silver fix was out of the way, the price began to rally in fits and every New York rally attempt ran into a willing seller the moment that it showed any signs of becoming "irrationally exuberant".

The silver price topped out shortly after 3:00 p.m. in New York...and then gold sold off a hair into the 5:15 p.m. Eastern time close.  The high tick was $32.56 spot which, looking at the 24-hour silver chart below, I find hard to believe.

Ordinarily I'd post the New York Spot Silver [Bid] chart to lay the matter to rest...but it's M.I.A. on Kitco's website.

Silver closed at $32.31 spot...up 47 cents from Wednesday.  Volume, net of roll-overs, was only 29,500 contracts.

The dollar index did zip...hovering just under the 81.00 mark all day long.  It opened at 80.81...and its feeble rally attempt to get above the 81.00 level crashed and burned...and the index closed at 80.81.  It was obvious that the price movements in the precious metals had to do with other factors.

The shares didn't do much...and I wouldn't read a heck of a lot into yesterday's HUI action.  It closed up 0.71%.

With the odd exception, the silver shares turn in a real decent performance yesterday.  But two of the stocks that didn't have a good day on Thursday...CDE and PAAS...make up a decent chunk of Nick Laird's Silver Sentiment Index.  And because of that, it only closed up 0.10%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 10 gold and 4 silver contracts were posted for delivery on Monday within the Comex-approved depositories.

Once again both GLD and SLV showed increased in their holdings.  In GLD an authorized participant added 77,517 troy ounces of gold...and in SLV it was 1,549,091 troy ounces.

The U.S. Mint had a decent sales report as well.  They sold 13,000 ounces of gold eagles...3,000 one-ounce 24K gold buffaloes...and 148,000 silver eagles.

The Comex-approved depositories showed that 309,750 troy ounces of silver were withdrawn on Wednesday...and nothing was received.  The link to that activity is here.

I have three charts for you today.  The first was from a colleague of Australian reader Wesley Legrand.  It's the Dollar Index vs. the Gold Price going back about thirteen years. Wesley's colleague had this to say about the relationship between the two...

"There are periods were there has been an obvious inverse correlation, but then there are also extended periods where both gold and the USD index have risen together including the last 1.5 years (this is a monthly chart)."

"Of particular significance, over the last eight years when the price of gold starting rising more rapidly, the price of gold rose from $400 to $1,700 and the USD has been in a trading range, but has ended up exactly where it started eight years ago, at 80."

"So the USD index is unchanged after eight years during which the price of gold quadrupled."

"I think the relationship is more psychological than anything else."

[He would be right about that! - Ed]

(Click on image to enlarge)

This next chart contains only three days of data...starting with the U.S. election day on Tuesday...and ending at the close of trading yesterday. It's a "Gold vs. Everything Else" chart.  Note how the gold price stands out above all others.  The other traces are the dollar index, the U.S. 10-year treasury, the S&P...and the commodity index.

I thank Washington state reader S.A. for sending it...and I just know he stole it from a Zero Hedge article.

(Click on image to enlarge)

The third graph is from Vancouver, Washington reader Duane Zelinka.  It's a graph from an AP story posted in the 'Critical Reads' section below...but in case you pass on the story, I want to make sure you at least skim the graph...and it needs no further embellishment on my part.

I have the usual number of stories for a weekday column and, as always, the final edit is up to you.


¤ Critical Reads

Ron Paul: We're Broke and Already Over the Fiscal Cliff

This 6:32 minute video interview was posted over at Bloomberg yesterday...and the brain dead Betty Liu is way over her head here.  Ron Paul is, as usual, right on the money.  I thank Federico Schiavio for providing our first story of the day...and the link is here.


Budget Disarray: U.S. Set to Restage Greek Tragedy

The US has more in common with heavily indebted southern European countries than it might like to admit. And if the country doesn't reach agreement on deficit reduction measures soon, the similarities could become impossible to ignore. The fiscal cliff looms in the near future, and its not just the US that is under threat.

With the elections behind them, Americans are now facing a different, much more real horror scenario: In just a few weeks time, thousands of children could be denied vaccinations, federally funded school programs could screech to a halt, adults may be forced to forego HIV tests and subsidized housing vouchers would dry up. Even the work of air-traffic controllers, the FBI, border officials and the military could be drastically curtailed.

That and more is looming just over the horizon according to the White House if the country is allowed to plunge off the "fiscal cliff" at the beginning of next year. Coined by Federal Reserve head Ben Bernanke, it refers to the vast array of cuts and tax increases which will automatically go into effect if Republicans and Democrats can't agree on measures to slash the US budget deficit.

This article was posted on the German website yesterday...and I thank Donald Sinclair for sending it along.  It's definitely worth reading...and the link is here.


Argentine Judge Orders Chevron Asset Seizure, Plaintiffs

An Argentine judge ordered the seizure of all Chevron Corp.’s assets in the country, according to Enrique Bruchou, a lawyer representing Ecuadorean plaintiffs in a lawsuit over pollution in the Amazon rain forest.

Bruchou, an Argentine attorney at Bruchou, Fernandez, Madero & Lombardi, made the comments today in a conference call. Civil Judge Adrian Elcuj Miranda ordered 40 percent of Chevron’s Argentine bank accounts to be held in escrow, Bruchou said. Miranda declined to comment when contacted by Bloomberg saying judges speak through their rulings.

The Ecuadorean plaintiffs said Oct. 31 they were asking an Argentine court to enforce a $19 billion award against Chevron, filing an attachment order in a Court of Justice in Buenos Aires in line with an international treaty signed by Ecuador, Argentina and Colombia that speeds up attachments. The Ecuadoreans blame Texaco Inc., which Chevron acquired in 2001, for destroying the environment in the Lago Agrio region, damaging living conditions of 30,000 inhabitants. Lago Agrio was named after Sour Lake in Texas.

This Bloomberg story was filed from Buenos Aires mid-afternoon Mountain Time on Wednesday...and I thank Donald Sinclair for his second story in a row.  The link is here.


The Bank of England is falling out of love with QE

Rarely has such a non-event had so big a build-up. The Bank of England has held interest rates at 0.5pc but, more significantly, it has left the stock of quantitative easing (QE) unchanged at £375 billion. Roll back just one month, and another £50 billion of QE was pinned on. A number of economists had even been expecting a rate cut to 0.25pc. Hints dropped by the Bank as well as the Monetary Policy Committee’s (MPC) voting patterns all seemed to point to more QE. Then something changed.

On the face of it, it was the economy. The big news was the 1pc rise in growth in the three months to September. But there were other equally important statistics. Unemployment dropped to 7.9pc, well below forecasts as the private sector continued to create jobs – both full-time and part-time. And inflation fell to 2.2pc, just a whisker above target and carrying the promise of improved economic growth. The public finances were also in better shape than thought. But, for all the good news, that wasn’t it.

This short blog by The Daily Telegraph's economics editor Philip Aldrick is a must read in my opinion...and I thank Federico Schiavio for his second offering in today's column.  The link is here.


Butting Heads on the EU Budget: Merkel and Cameron Deadlocked ahead of Summit

The front lines in the battle over the European Union budget remain unchanged. A dinner on Wednesday evening in London between German Chancellor Angela Merkel and British Prime Minister David Cameron brought no breakthroughs. Cameron reaffirmed that he would call for a decrease in the budget proposed to fund the EU from 2014 to 2020 at the bloc's summit on Nov. 22.

The atmosphere between the two during the dinner at Number 10 Downing Street was good, according to German government officials. But in terms of substance, as expected, neither side budged. The morning before the meeting even took place, the Financial Times said sardonically that the pair of conservatives "enjoy one of the warmest but least productive relationships in European politics."

Merkel came to London in the hopes of pressuring Cameron into a joint position on the budget dispute. "Great Britain and Germany are both net contributors, meaning we have a good deal of common interests," she said. At the same time, she wanted to make it clear to Cameron that the patience of his EU partners should not be tested. In principle, she agrees with the UK that in light of austerity programs on the national level, the EU budget should not be increased. But with the euro crisis still taking up much of her attention, she is willing to allow a modest spending increase in the interest of reaching a swift decision and avoiding a drawn-out battle among EU member states.

This story was posted on the Internet site yesterday...and I thank Roy Stephens for sending it.  The link is here.


Unpalatable choices facing Ireland if Britain leaves EU

After many centuries of semi-detachment from continental affairs, Britain joined the then EEC four decades ago. For well over half of the period since, Europe has been among the most divisive issues in British politics. It has become ever more divisive as the balance of forces move against membership.

Working in London as an analyst of European affairs for over decade from 1998, I was constantly struck by the steady and rapid decline in the number of people and organisations holding the view that Britain’s national interests were best served by EU membership.

This was most notable at the political level. On the Conservative side, no young pro-Europeans emerged to replace the aging pro-EU politicians. Tories under 50 today are all – to varying degrees and in many different ways – hostile to Europe and see their country’s future in a looser arrangement with the EU, if not entirely decoupled from it.

This story showed up on the Internet site yesterday...and I thank Roy Stephens once again for bringing this item to our attention.  The link is here.


Who will stop the Sado-Monetarists as jobless youth hits 58pc in Greece?

Greek unemployment rose to 25.4pc in August. Youth unemployment rose to 58pc.

Under the official forecast, the economy will contract by a further 4.5pc next year, so it fair to assume that lots more people are going to lose their jobs. It is certainly not going to improve in any meaningful way for years to come.

This is what happens when you lock into the wrong currency and block the escape routes – or join a "burning building with no exits" in the words of William Hague.

It is hard to see how the salary and pension cuts, etc, pushed through the Greek parliament last night with enormous difficulty can do any more than buy a few months’ delay. The protests on Wednesday bordered on urban guerrilla warfare. It will not take much to cross that line.

Even before I clicked on The Telegraph's headline in my in-box, I knew that this was an Ambrose Evans-Pritchard offering.  It's an absolute must read as well...and it's the third of four in a row from Roy Stephens.  The link is here.


Asia Times: China, Russia...and Obama's second coming

Barack Obama's four-year second term in office as the president of the United States will be setting the tone of the final countdown on China's emergence as a superpower. The power dynamic in Asia-Pacific becomes a crucial template in this historic process.

While the US can count on Japan and Australia as time-tested allies, its cogitations with China and Russia are evolving and how they shape up will decisively impact the power dynamic in Asia-Pacific.

The customary messages of greetings and the early reactions from Beijing and Moscow give some clues as to the level of expectations in the two capitals regarding Obama's second term. Neither capital showed any inkling in the run up to November 6 as to what result to expect and wore an air of studied aloofness, but both scrambled to react as soon as Obama's victory sailed into view.

This is a must read for all students of the "New Great Game".  Normally I would save this for a Saturday column, but it's not overly here it is now.  It's Roy's fourth offering in a row...and the link is here.


Opening Meeting, China’s President Warns of Risks

China’s Communist Party leader, Hu Jintao, defended his decade in power on Thursday and warned that the country faced stark challenges at home and abroad. He spoke at the start of a congress that will culminate in his retirement and the appointment of a new generation of leaders after a transition marked by scandal and anxiety about the party’s future.

Mr. Hu told the ranks of party-picked delegates assembled in the Great Hall of the People that China faced a period of major change and “complicated domestic and international circumstances.” Seated near him was his presumed successor, Xi Jinping, who is all but certain to take over as party chief after the congress ends next week and to take the reins as president in March.

Mr. Xi has privately signaled that he is aware of increasingly urgent calls from economists, intellectuals and some party insiders for a new round of market liberalization and even measured political relaxation to cure what they see as a deepening economic and social malaise. Mr. Hu acknowledged the problems facing the party, including corruption, but avoided specific mention of the scandals that have blighted his final year in power.

This story, filed from Beijing, was posted in The New York Times yesterday.  I thank Donald Sinclair for his last offering in today's column...and the link is here.


Three King World News Blogs/Audio Interviews

The first blog is with Marc Chandler of Brown Brothers Harriman.  It's headlined "Huge Moves Coming in Gold, Silver, U.S. Dollar & the Euro".  The second blog is with Citi analyst Tom Fitzpatrick...and it's entitled "'87 Market Crash & Stocks Today, Apple, Gold, Silver & the VIX".  The audio interview is with John Hathaway.


Sprott Physical Silver Trust [PSLV] Announces Offering

Sprott Physical Silver Trust, a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, announced today that it has launched a follow-on offering of transferable, redeemable units of the Trust. 

The Trust will use the net proceeds of the Offering to acquire physical silver bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to the Offering.  Under the trust agreement governing the Trust, the net proceeds of the Offering per Unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering. 

The Units are listed on NYSE Arca and the Toronto Stock Exchange under the symbols "PSLV" and "PHS.U", respectively. The Offering will be made simultaneously in the United States and Canada by underwriters led by Morgan Stanley and RBC Capital Markets in the United States and RBC Capital Markets and Morgan Stanley in Canada.

I found this story about one minute after it was posted yesterday afternoon after the market closed.  It will be interesting to see how well Eric and the guys at Sprott make out...considering the fact that the Royal Canadian Mint just purchased 3 million ounces on Tuesday.  It's my opinion that these two events will not conflict with each other by a lot...if at all.

But, whatever the outcome, the announcement will be posted on the Internet shortly after 8:00 a.m. Eastern time this morning.  The link to the hard copy of the press release is here.


China to overtake India in overall gold demand: GFMS

China's gold demand is expected to grow 1 percent this year to a record of around 860 tonnes, the global head of metals at consultancy Thomson Reuters GFMS said on Thursday, with both jewellery and investment sales rising.

That increase means China will overtake India as the world's biggest consumer of gold for the first time on a yearly basis, Philip Klapwijk told the online Reuters Global Gold Forum.

"China will overtake India ... both in overall demand terms and as the world's largest jewellery market," he said.

The headline sort of indicates that there's nothing really new here...but that is certainly not the case.  It's a must read...and I thank Roy Stephens for his final offering in today's column.  This Reuters story was filed from London at 2:58 p.m. India Standard Time yesterday...and the link is here.


Italy busts suspected gold-smuggling network

Italian police have seized assets worth at least $200m (£125m) from a network of suspected gold smugglers.

Officers raided more than 250 addresses across the country, including a villa allegedly used to stash gold and money.

The gang is suspected of smuggling the ingots into Switzerland after buying them on Italy's black market with laundered money.

The booming cash-for-gold sector has become an issue due to poor regulation and suspected mafia involvement.

This AFP story showed up on the Internet site yesterday afternoon Easter Time...and I thank German reader Rob Kitson for bringing this interesting read to our attention.  The link is here.


James Turk on Russia Today's Capital Account: Overestimated Gold Stock...and German Repatriation

I haven't had the time to listen to this 28-minute interview.  It was posted on the Internet site on Wednesday afternoon.  I thank Bill Busser for sending me the link...and I would guess that it's more than worth your time.  The link is here.



¤ The Funnies

Sponsor Advertisement

Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations. 

The 2012 exploration program includes additional drilling on both Golden Summit and Vinasale. An updated NI 43-101 resource was calculated on Golden Summit in December 2011 and using a 0.35 g/t cutoff is 14,840,000 tonnes @0.66 g/t Au - hosts 316,000 ounces in the indicated category and 50,0460,000 tonnes @0.61 g/t Au - hosts 991,000 ounces in the inferred category. Drilling has been underway on this road accessible project since mid January. To date over 36,000 feet have been drilled since January on the project, of which 30,000 feet have been aimed at resource expansion. Drilling remains ongoing.  An updated NI 43-101 is expected to be completed in Q3. 

Additional drilling is also underway on Vinasale. Vinasale currently hosts recently updated NI 43-101 resource calculation of 49,320,000 mt @1.09 g/t for a total of 1,735,000 contained gold ounces in the inferred category using a 0.5 g/t cutoff. Please visit our website for more information.


¤ The Wrap

Political language is designed to make lies sound truthful and murder respectable. – George Orwell

I wouldn't read a whole heck of a lot into yesterday's price action.  I was happy to see prices rise...and volume return to more normal numbers.  We are well along in the roll-overs out of the December delivery month...and barring something out of left field somewhere...I'm not expecting huge price action between now and the end of the month, although I reserve the right to be wrong about this.

Before I started writing this column early yesterday evening, I was browsing through a website that Ted Butler had mentioned a year or so back...and it was the contents of that Internet site that made me change my mind about SLV a while back.  The website is the proprietor keeps a close eye on what goes on within the fund.

As you know, JPMorgan Chase is the big silver short in the Comex futures market...with the Bank of Nova Scotia/Scotia Mocatta believed to be in second place.  The comments on this website about JPMorgan Chase and its SLV silver inventories in London between October 3rd and November 7th of this year, are worth noting...and here they are...

October 3..."For the first time in nearly a year, there was no movement of silver from JPM London A to Brinks London. About 95Moz in all has been transferred from JPM London A to Brinks London, with 5Moz left in JPM London A (which we expect will be transferred shortly)."  October 10..."Again, we see a small movement of silver (0.8Moz) from JPM London A to Brinks London."  October 31..."Another 1.6Moz was transferred from JPM London A to Brinks London, as part of what appears to be a phase-out of that vault."  November 7..."A final 3.1Moz was transferred from JPM London A to Brinks London, with just 3 bars left listed as being in that vault."

Beats me as to what it means, if anything...but whenever JPMorgan Chase, SLV and silver get mentioned together in the same sentence, I think it's worth pointing out.  You can read all the weekly commentary on SLV silver inventories at the link here.

But please don't get the idea that because I've changed my thinking on SLV [or GLD for that matter] that I now think they're great investment vehicles.  I still wouldn't touch either one with a 10-foot cattle prod.

Today we get both the latest Commitment of Traders Report...and the November Bank Participation Report...and I will have something to say about each in my Saturday column.

Very little happened with gold or silver during the Friday trading session in the Far East...and the same can be said for the first twenty minutes of London trading.  Volumes are near normal...whatever that means nowadays...and the dollar index is down about 12 basis points.

And as I hit the 'send' button at 5:00 a.m. Eastern time...two hours after the London is up about five bucks and silver's up a bit more than a dime.  Volume's are getting up there a bit...and the dollar index is basically unchanged.

I hate to beat this to death every week, but I'd like to remind you one more time that there's still an 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 out 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] well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Enjoy your weekend...or what's left of it...and I'll see you here tomorrow.