Gold & Silver Daily

¤ Yesterday In Gold & Silver

The gold price opened quietly in early Far East trading on their Tuesday...and then began to chop lower shortly before 10:00 a.m. in Tokyo.  It gained a bit of that back once London began to trade, but had the rug pulled out from under it the moment that Comex trading began at 8:20 a.m. EDT.

The low price tick...$1,440.40 spot...came at 10:15 a.m. in New York.  The subsequent rally lasted until noon...and that was it for the day.

Gold closed at $1,452.60 spot...down $17.70 from Monday's closed.  Net volume was very decent...147,000 contracts, double what it was on Monday...and most of it of the high-frequency trading variety.

It was more or less the same price pattern for silver, except its low tick came about twenty minutes after the Comex open...and Kitco recorded that as $23.35 spot.  The subsequent rally lasted until noon EDT as well...and then traded sideways into the 5:15 p.m. electronic close.

Silver closed at $23.96 spot...down 8 cents from Monday.  Net volume was 46,000 contracts, also exactly double what it was on Monday.

Platinum and palladium weren't spared either.

The dollar index opened at 82.34 in Far East trading on Tuesday...and then chopped sideways until just minutes before 11:00 a.m. in London...and the did a 23 basis point face plant, with its nadir coming at precisely noon BST.  The index struggled upward from there, before jumping higher starting at exactly 10:00 a.m. in New York.  Its high in New York thirty minutes later was 32.32...and the index chopped sideways into the close...finishing the day at 82.28...down only 6 basis points when all was said and done.

The gold stocks gapped down at the open...and hit their low at around 10:20 a.m. Eastern, a few minutes after gold's low tick at 10:15 a.m.  Despite the rally in the gold price after that, the stocks barely moved...and the HUI traded sideways into the close, finishing the Tuesday session down 2.73%.

Despite the fact that silver only finished down 6 cents on the day, the stocks got hammered...and Nick Laird's Intraday Silver Sentiment Index closed down 3.16%.

(Click on image to enlarge)

The CME Daily Delivery Report showed that 25 gold and zero silver contracts were posted for delivery tomorrow within the Comex-approved depositories.

Down, down, down goes GLD...and yesterday was no exception, as an authorized participant withdrew another 145,048 troy ounces.  And as of 9:10 p.m. EDT, there were no reported changes in SLV.

Over at Switzerland's Zürcher Kantonalbank as of the close of business on May 6th...they reported a decline of 47,064 troy ounces in their gold ETF...but their silver ETF showed an increase of 81,920 troy ounces, the third weekly increase in a row since the big engineered price decline of mid-April.

The U.S. Mint only had a smallish sales report yesterday.  They sold another 180,500 silver eagles.

Over at the Comex-approved depositories on Monday, they reported receiving 67,873 troy ounces of silver...and shipped 439,785 troy ounces of the stuff out the door.  The link to that activity is here.

On the same day, they reported receiving 82,944 troy ounces of gold...and didn't ship any out.  The link to that activity is here.

Here's a chart that I also look forward to seeing...the Hong Kong/China gold import chart for March.  And as impressive as these numbers are, the import figures for April, when they come out in a months time, will be something to see.

(Click on image to enlarge)

And before I start on today's story lineup, here's your "cute quota" for the day...

I have more stories than normal for a weekday column and, once again, the final edit is up to you.


¤ Critical Reads

David Rosenberg: The Fed Is Trying Like Crazy, But Nothing It's Doing Can Save The Economy

David Rosenberg, the veteran Wall Street economist and bearish strategist a Gluskin Sheff, gave an intense presentation last Friday at John Mauldin's Strategic Investment Conference.

Titled "Bernanke: The Wizard Of Potemkin," this presentation offers a sobering look at the anemic U.S. economy, the labor market mess, and the Federal Reserve's controversial efforts to get everything back on track.

Before you can even think about getting bullish, you must consider the eye-opening charts from Rosenberg's presentation.

David's entire presentation is embedded in this story from yesterday...and I would think that it's well worth your time.  I thank Roy Stephens for today's first story.  This web page takes a while to download, especially if you have an older browser/computer.


IMF Chief Lagarde Criticizes U.S. Government Spending Cuts

International Monetary Fund head Christine Lagarde criticized the U.S. government's budget policies as too tight on Tuesday, in an appearance in Amsterdam that was interrupted by student protestors.

Lagarde said the U.S. government's debt reduction plans are too abrupt, including the $85 billion in federal budget cuts known as the sequester. She said that the current policies would lower the U.S. economy's growth rate.

The IMF's most recent forecast in April said the U.S. economy would expand by 2 percent this year, 1.75 percentage points slower than it would have grown without the tax hikes and spending cuts.

The U.S. "should consolidate less in the short term, but give...economic actors the certainty that there will be fiscal consolidation going forward," she said.

What is this woman smoking?  Whatever it is, she needs to reduce the potency of her next joint.  That's the way I felt about the above comments from Ms. Lagarde in this story from did Elliot Simon in his covering e-mail.


This Is Your S&P...This Is Your S&P Without Tuesdays

Since the mid-November lows, the S&P 500 has gained a remarkable 268 points on the back of faith, hope, and Bernanke/Kuroda charity. But perhaps what is more mind-numbing is that this efficient market has given us more than 50% of those gains on Tuesdays. With 17 up-days in a row, Tuesday is the Monday dip-buyers dream. Since 1/18, absent Tuesdays, the S&P 500 has gone nowhere. Maybe Bob Geldof needs to write a new song for the US investor "I do like Tuesdays", or at least a slightly revised cover version of the Bangles' "Manic Tuesday".

What would we do without Tuesdays?

You've already read all the text.  It's the three charts in this Zero Hedge piece from yesterday that are a must to view...and I thank West Virginia reader Elliot Simon for sending it.


Moody's: 'Strategic Default' Viewed as Less Taboo by Cities

The number of defaults from U.S. municipal issuers rated by Moody’s Investors Service has more than tripled to 4.6 per year since 2007, showing willingness to pay can’t be taken for granted, the company said in a report.

Five municipalities rated by Moody’s defaulted last year, including Stockton, California, which became the biggest U.S. city to seek Chapter 9 bankruptcy protection in June. Wenatchee, Washington, failed to honor a guarantee on an interest payment for a sports arena. The figure doesn’t include issuers such as Vadnais Heights, Minnesota, which “selectively defaulted” on contingent liabilities, the report said.

Last year’s local-government defaults are more examples of political unwillingness to place payments to bondholders ahead of essential governmental services amid dwindling cash, New York-based Moody’s said.

This article was posted on their Internet site late yesterday morning EDT...and it's Elliot's third offering in a row in today's column.


Companies Cook the Books to Meet Tough Targets: Survey

Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young said in a survey Tuesday.

One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.

In addition 42 percent of board directors and top managers questioned in the fraud survey said they were aware of "some type of irregular financial reporting."

None of this should surprise you in the slightest, dear reader.  This Reuters story was posted on their website early yesterday morning EDT...and I thank U.A.E. reader Laurent-Patrick Gally for sharing it with us.


Bank deposits of over €100,000 may be at risk

Deposits of over €100,000 are likely to be hit in the event of future European bank collapses, according to a proposal put forward by the Irish presidency of the European Council ahead of a key meeting of finance ministers next week.

Discussions on the controversial bank resolution regime, which is likely to see savers with deposits over €100,000 “bailed in” as part of future bank wind-downs, are due to intensify this week in Brussels, ahead of Tuesday’s meeting, which will be chaired by Minister for Finance, Michael Noonan.

“We will try to get some guidance from Ministers about the possible design of the bailout tool,” one EU official said yesterday.

Under a compromise text proposed by the Irish presidency, uninsured deposits of over €100,000 would be bailed in, in the event that a bank is resolved, but depositors would rank higher than other creditors in the event of a wind-down.

This article was posted on the Irish Times website during the lunch hour in the U.K. yesterday...and I thank reader David in California for bringing it to our attention.  There's also a similar Fox News story about the Finnish Prime Minster saying the same thing...and that story is linked here.  My thanks to Ulrike Marx for that one.


Europe's Depression...and Outside View

The whole of Europe is headed for a permanent recession -- a depression.

Austerity and labor reforms can't save it. Radical measures -- abandoning the euro and deficit spending in Germany -- are the only way out.

Unemployment exceeds Great Depression levels in Spain, many parts of Greece, Portugal and Italy and is rising in northern Europe. Slashing government spending and labor market reforms have neither restored Club Med economies nor their governments to solvency.

Across much of Europe, gross domestic product is shrinking faster than governments can cut spending and sovereign debt burdens are becoming worse, not better.

This op-ed piece, filed from College Park, Maryland, showed up on the UPI website yesterday...and I thank Roy Stephens for sending it along.


Britain and Europe: mistaking plans for Nigel

There is no disputing that Lord Lawson's EU-turn reflects his party's own historic change of view over Europe.

Trouble, thy name is Nigel. Or so it must seem to David Cameron. In a week, the prime minister's authority has been rocked by Nigel Farage, shaken by the Nigel Evans allegations and now openly challenged by the most important Nigel in recent Conservative history. It is 24 years since Nigel Lawson's resignation signalled the endgame of Margaret Thatcher's premiership. And it needs to be stressed that, for most people under the age of 40, the former chancellor is much less of a name these days than his daughter. Nevertheless, Lord Lawson proved this week that, at 81, he is still one of the most articulate figures in politics and has lost none of his sense of theatre. By saying, on the eve of the Queen's Speech, that he thinks Britain should now quit the European Union, he has poured petrol on the flames already licking through the Conservative mansion after last week's local election defeats.

There can be no disputing that Lord Lawson's change of heart on the EU – he voted yes to British membership, along with Lady Thatcher herself, back in 1975 – reflects his party's own historic change of view over Europe, between the Ted Heath era and that of David Cameron. It is representative, too, of the more sceptical mood of the public, judging by the opinion polls. But it goes completely against Mr Cameron's optimism that he can negotiate a new relationship with the EU and win a referendum to endorse that view – and Lord Lawson knows this very well. The former chancellor has therefore chosen his time with malice aforethought, in order to make life much harder for the prime minister.

This commentary was posted on the Internet site early yesterday evening...and I consider it a must read.  My thanks go out to Roy Stephens once again.


German Euro-Skeptic Party Gaining Ground

The anti-euro party "Alternative for Germany" (AfD) was officially founded just a few weeks ago, but it has clearly struck a nerve: It already numbers 10,476 members, SPIEGEL has learned -- some 2,800 of which have switched allegiance from Germany's established parties.

As elections loom later this year, Alternative for Germany is making waves with an agenda that includes dissolving the euro currency zone and returning powers from Brussels to EU member-states. Although a survey released on Tuesday showed the party's support is currently barely nudging 4 percent, its rapidly swelling ranks could end up significantly altering the country's political landscape.

The numbers are so far not particularly threatening to the country's largest parties. Just over 1,000 of AfD's freshly minted members previously belonged to Chancellor Angela Merkel's Christian Democrats, while Germany's largest opposition party, the Social Democrats, have seen 558 members defect.

But the threat to smaller parties, particularly the CDU's junior coalition partner, the pro-business Free Democratic Party, is more acute. The FDP has lost 587 members lured by the AfD's slogan: "Straight talk instead of S€datives".

This article showed up on the German website yesterday...and it's another offering from Roy Stephens.


U.S. Accuses China’s Military Directly for Cyberattacks

The Obama administration on Monday explicitly accused China’s military of mounting attacks on American government computer systems and defense contractors, saying one motive could be to map “military capabilities that could be exploited during a crisis.”

While some recent estimates have more than 90 percent of cyberespionage in the United States originating in China, the accusations relayed in the Pentagon’s annual report to Congress on Chinese military capabilities were remarkable in their directness. Until now the administration avoided directly accusing both the Chinese government and the People’s Liberation Army of using cyberweapons against the United States in a deliberate, government-developed strategy to steal intellectual property and gain strategic advantage.

This news item appeared on The New York Times website on Monday...and it's Roy Stephens' final offering in today's column.


Reserve Bank of Australia Cuts Key Rate to Record Low

The Reserve Bank of Australia cut its benchmark interest rate to a record low, driving down a currency that has damaged manufacturing and boosted unemployment.

Governor Glenn Stevens reduced the overnight cash-rate target by a quarter percentage point to 2.75 percent, saying in a statement that the Aussie’s record strength “is unusual given the decline in export prices and interest rates.” Eight of 29 economists predicted the seventh cut in the past 19 months, while money markets had seen about a 50-50 chance.

“The board has previously noted that the inflation outlook would afford scope to ease further,” Stevens said. “At today’s meeting the board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy.”

This 2-page news item was posted on the Internet site yesterday...and I thank Manitoba reader Ulrike Marx for her second story in today's column.


New Bullion Businesses Squeezed?

With the 10-15 percent drop in gold and silver prices from April 12-15, the number of people liquidating their bullion-priced coins and ingots has dropped significantly. Even more, the number of people cashing in their gold jewelry, sterling silverware and the like has also fallen sharply.

A recent report stated that companies who jumped into the gold buying business over the past few years have seen their purchasing volume decline by more than 50 percent from what it was before April 12. A survey of pawn shops, check cashing places, jewelry stores and other Johnny-come-lately buying businesses shows the owners claiming that volume has disappeared almost as fast as it increased when they added a jewelry-buying service to the rest of their businesses.

Coin dealers who also sell bullion-priced gold and silver are also noticing the fall off in buying inventory from the public. However, at the same time they are enjoying soaring demand for physical gold and silver. This rise in sales masks the fall in purchasing activity.

This short piece by Patrick Heller was posted on the Internet site yesterday...and this is another story courtesy of Elliot Simon.


One Hour With Rick Rule on Broadcast News Network

Rick spent an hour on Market Call Tonight on Canada's Broadcast News Network last night...and he talks about precious metal stocks for the entire time.  I thank reader Ken Hurt for sliding this video into my in-box yesterday.


Mining exploration sinks to new low

According to IntierraRMG, mining exploration fell once more in March, extending a 17-month decline in exploration activity.

According to the group’s online database, there were drilling reports from a total of only 355 prospects (it adds that this figure includes reports from more than one drilling prospect per project). This, it says is compared to “440 in February, 662 in January and (a restated) 367 in December 2012”.

“Gold-exploration has been particularly weak, with activity reported from just 172 prospects in March, compared with 199 in February, 350 in January and 382 in March 2012. Last month’s gold activity is still better, however, than the nadir of 157 prospects reported in December,” the group writes.

While the number of drills turning at gold prospects fell in absolute terms during the quarter, the search for the yellow metal continues to dominate the overall figures. During the quarter 651 gold projects reported drilling activity, IntierraRMG says, as compared to only 192 copper projects, 154 silver projects, 63 zinc projects and 42 lead projects.

This article appeared on the Internet site yesterday...and I thank Ulrike Marx for sending it.


Diplomatic cables show central banks conspiring to rig gold even after demonetization

U.S. diplomatic cables show that three years after the United States canceled the dollar's official convertibility into gold for foreign governments, thereby ending gold's formal role as money, Western governments and central banks were still meeting secretly to scheme about controlling the monetary metal's market price.

The cables, identified this week by GATA's consultant R.M. among thousands published recently by Wikileaks, reiterate that when it comes to governments and gold, "conspiracy" -- that is, planning and acting together in secret -- is not mere "theory" but simple fact and the basic way business is done.

This longish GATA release from yesterday is worth spending some time on...and Chris Powell has much more to say on this issue than just the two paragraphs posted above.


The Enduring Glow of Gold

The recent sharp decline in gold prices has shaken the confidence of many people. Don't worry. The price of gold has dipped, but will rise to new heights soon. In the long term, gold prices will rise far more than inflation. For the masses, gold is the best inflation hedge. It is the best weapon for the little guy to fight central banks that help a few to rob many.

Yes, gold doesn't bear interest. Many, including Warren Buffett, belittle its investment value. But, paintings or antiques don't bear interest either. When money supply is rising, anything scarce tends to rise in value. Gold is the best scarce commodity in the world. There are more artists that can paint more paintings every day. Eighty percent of the world's gold has already been extracted. The remaining 20 percent will be dug up in the next 20 years. The money supply will grow forever. But the gold supply can grow only by 25 percent and no more.

The income growth in emerging economies will vastly increase with gold demand. When people realize how little gold the world has left, the price will skyrocket. If you don't know how to preserve your wealth in an inflationary environment, you should accumulate gold. When the price comes down, just as it did two weeks ago, just buy more.

This exceptional 3-page essay was posted on the Internet site...and I consider it a must read when you can find the time.  I thank Elliot Simon for his last contribution to today's column.


Gold Imports by India Seen Topping 100 Tonnes for a Second Month

Gold imports by India, the world’s largest consumer, are set to exceed 100 metric tons for a second month in May as jewelers rush to beat central bank curbs on overseas bullion purchases by banks, a refiner said.

The biggest slump in gold prices in more than three decades on April 15 spurred banks, traders and jewelers to import more than 100 tons last month, said Rajesh Khosla, managing director of MMTC-PAMP India Pvt. Purchases this month will match April’s imports, he said. MMTC-PAMP’s refinery in northern Indian state of Haryana can process 100 tons of gold, 600 tons of silver and make 2.5 million pieces of coins a year, he said.

The Reserve Bank of India, or RBI, will issue guidelines by the end of this month to restrict banks from importing gold on a consignment basis as it seeks to reduce domestic demand and curb a record current-account deficit, the central bank said on May 3. Banks will be allowed to buy on a consignment basis to meet only genuine needs of exporters of jewelry. The bulk of the imports by banks now is on a consignment basis that doesn’t require them to fund the purchase, RBI said.

This Bloomberg story, filed from New Delhi earlier today IST, was posted on their website late last night Mountain Daylight Time.  I found this must read news item on the Internet site in the wee hours of this morning.


Gold-hungry China braces for surge in imports

Chinese gold imports are likely to swell further after rising strongly for a second straight month in March, as investors seek safety from economic uncertainty and after prices plunged to a two-year low last month.

"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.

"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.

This Reuters story, filed jointly from Singapore and Beijing yesterday, was picked up by the Internet site...and it's definitely worth reading.  I thank Ulrike Marx for digging this news item up on our behalf.


China produces 90 tonnes, consumes 320 tonnes in Q1-2013

World's largest gold producer and second largest consumer China's total gold usage reached 320.54 metric tonnes in the first quarter, China Gold Association said.

According to CGA, purchases of gold bars surged 49% to 120.39 tonnes, while jewelry gained 16% to 178.59 tonnes.

Gold consumption in China soared 26% in the first three months of 2013 from a year ago amid strong bullion sales and rising jewelry demand.

The Association added that country's gold production gained 11% in the same period to 89.91 tonnes.

Here's another must read story...this one was posted on the Internet site yesterday afternoon IST...and even if you don't read the article, which is very short, the photo alone is worth the trip!  I thank Ulrike Marx for our last news item of the day.



¤ The Funnies

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¤ The Wrap

A little knowledge that acts, is worth infinitely more than much knowledge that is idle. -- Kahlil Gibran

Another day...and another engineered take-down in the precious metals.  Although volume was high, it was mostly of the HFT variety...and with almost non-existent liquidity on the Comex, it's not hard to manage prices.  JPMorgan Chase et al were certainly out and about yesterday.

I'm not sure how many short contracts they managed to cover, but it wouldn't have been many, as they would have to set new low prices for this move down...and I'd be prepared to bet a good chunk of money that the spike low of April 16th will not be revisited.

As silver analyst Ted Butler said in his Saturday missive..."I don't doubt for a minute that JPMorgan Chase would like their current short position in silver [around 18,000 contracts] to be even lower.  But I'm hard pressed to imagine who the selling victims might be, given the extent of speculative selling that has already occurred on the price carnage to date."

I echo those sentiments.

Yesterday was the cut-off for this Friday's Commitment of Traders Report...and this month's Bank Participation Report.  Based on the price action over the reporting week, I'll stick my neck out and speculate that we'll see some more improvement in the Commercial net short position in both gold and silver, but it won't be a lot.

I'm still pondering the continuing out-flow from GLD.  Except for one, or maybe two days at the most, this ETF has been in continuous decline since December 7th...Pearl Harbor Day...with no respite, even with the rally off the April 16th low.  This is not at all normal...and certainly hasn't been the case in SLV.

My records show that the gold ETF over at Switzerland's Zürcher Kantonalbank began to decline during the first week of 2013...and it, also, has shown no signs of ending.  But their silver ETF is unchanged over the same period.

Questions with no answers.  But as I've said before, maybe I'm looking for black bears in a dark room that aren't there...but I don't think so in this particular case.

As I've said on several occasions lately, something appears to be afoot, but I just can't put my finger on it. But whatever it is, it will change things quickly, as this bifurcated market cannot continue forever...or for much longer.  So we wait.

Not much happened in Far East trading on their Wednesday...and the same thing can be said about the first thirty minutes of trading in London, which is where we're at as I type this paragraph.  Volumes in both gold and silver are considerably reduced from their levels of Tuesday morning...and the dollar index is down about 11 basis points, not that it matters.

And as I hit the 'send' button on today's column, not much has changed during the last couple of hours.  Gold is currently up a couple of bucks...and silver is down about 20 cents.  Volumes have changed very little...and the dollar index is still down the same 11 basis points.

I hope your day goes well...and I'll see you here tomorrow.