Casey Research Publication
Gold & Silver Daily
"Malls witnessing gold rush as Chinese shoppers fear inflation. Silver: An Important History.Upside Blowout in Gold, Destabilization in Silver: Rick Rule...and much more."
 

¤ Yesterday In Gold & Silver

The gold price didn't do much on Tuesday until the London a.m. gold fix was in at 10:30 a.m. local time...5:30 a.m. Eastern.  From that point it was up, up...and away until precisely 4:00 p.m. in New York trading...when someone tapped on the brakes.  Then the gold price basically traded sideways for what was left of the New York electronic trading session.  The 4:00 p.m. on-the-button price was also gold's high tick of the day at $1,436.20 spot...a new record high close.

Silver basically traded sideways until 1:00 p.m. Hong Kong time...and then it, too, began moving higher...reaching its zenith about forty-five minutes before the close of electronic trading in New York.  The high tick was $34.76 spot...a new record high close for the last 30+ years.  Can $50 be too far away?

Despite the wonderful gains in these two precious metals...and the wonderful looking charts above...platinum and palladium were the biggest percentage gainers yesterday, as they were up 2.68% and 2.39% respectively.  Gold was only up 1.56%...and silver was up 2.09%.

The dollar didn't do a lot yesterday.  It's low of the day [around 76.77] came around 10:20 a.m. in London...and then gained about 30 basis points going into the close of New York trading...closing a hair above 77 cents...and up a tad from Monday's close.  Nothing to see here...and it's obvious that the dollar's price action was not a factor in yesterday's big run-ups in all the precious metals.

  

The precious metals stocks gapped up about a percent at the open...and remained up all day long...but the HUI, surprisingly, did not close on its high...which came shortly before 3:00 p.m. Eastern.  However, the HUI finished up 1.90% on the day...and probably would have done better if the rest of the equity markets hadn't crashed and burned.

  

A lot of the silver stocks were on fire yesterday...and a handful of the little silver producers that I own were up double digits.  What few gold stocks I have left are now a drag on my overall precious metals portfolio...as the gains in silver have been so strong over the last couple of years, that what gold stocks I do own, now constitute a tiny fraction of my overall stock portfolio.

Well, after a poor start to the March delivery month in silver, I was expecting big things when I checked the CME's website late last night.  They posted exactly one [1] gold contract...and nine [9] silver contracts for delivery tomorrow.  This is amazing...and unprecedented.  Words fail me.  One has to wonder what the rest of the delivery month will be like.  This situation is worth watching closely...and the link to this lack of activity is here.

The GLD ETF had no report yesterday, but over at the SLV ETF they reported taking in 878,759 troy ounces of silver.

The U.S. Mint had no report yesterday.

There was a fair amount of in-out activity at the Comex-approved depositories on the last day of February...but by the time the day was over, a tiny 27,170 ounces of silver were added to their warehouses...and the link to that action is here

I have some interesting news from the Royal Canadian Mint.  It seems that their new 1-ounce silver coin, the grizzly bear, is missing in action at the moment.  All the major suppliers in both Canada and the United States have their orders in, but the scuttlebutt yesterday was that the mint was having trouble getting the silver to make them...and the suppliers were going to be allocated much smaller amounts than they had originally ordered when they finally are made.  The suppliers I'm talking about are the likes of Tulving and A-Mark.  I'll keep you posted.

The "usual New York gold commentator"...someone I haven't heard from in many a moon...sent me an e-mail yesterday.  He was passing on what his old friend Martin Pring had to say about silver in his latest commentary..."On a relative basis, we prefer silver because it has already reached a new bull market high as shown in Chart 47. More importantly, the ratio between silver and gold, shown in Chart 48, has recently broken out from a 30-year trading range. That strongly indicates that silver will continue to out-perform gold for many years to come."  Everybody is starting to sound like Ted Butler, now.

Just as a matter of interest, Ted's plea for people to write in and comment to the CFTC on the 1,500 contracts position limit in Comex silver futures has already garnered 2,833 comments as of this writing.  My short and to-the-point comment to Gary Gensler and the gang is linked here.

Before leaving the discussion on silver, here's a 1-month chart that might be of interest.  You will note that silver is in the number one position.  Get used to seeing it in that position [or close to it] for a very long time.

  

Click here to enlarge.

Before I get to today's list of stories, here's another couple of graphs that were sent to me by Washington state reader S.A. yesterday.  The charts speak for themselves...and require no further explanation from me.

  

 

¤ Critical Reads

Libya's Bankers Exposed: Goldman, JP Morgan And Citi

Washington state reader S.A. provides the first of only two non-gold related stories I have for you today.  It should come as no surprise to anyone that the U.S.A.'s client state, Libya, would be fully wrapped up in the tentacles of Goldman Sachs et al...as that's just the way The Empire works.  The zerohedge.com piece is linked here.

Read more...

JPMorgan May Need Another $4 Billion For Legal Losses

Reader Thorsten Winkler sent me the following two stories in the wee hours of Tuesday morning just before I filed yesterday's column...but it was already full up...and I didn't wish to pile more on your plate, so here they are now.  The first one is posted over at cnbc.com.  According to Kate Kelly over at CNBC... “JPMorgan has been named as a defendant in about 10,000 different law suits.  And, as a result, they could end up needing an additional $4.5 billion on top of what they’ve already set aside for legal losses."  Why am I not surprised?  This is only a handful of short paragraphs...and its worth your time.  The link is here.

Read more...

Silver: An Important History

Here's my first precious metal-related story...and reader Thorsten Winkler's second offering of the day.  It's another posting from cnbc.com...and it's all about silver.  I never thought I'd live to see commentary like this in the main stream media...but this 2:31 video proved me wrong.  It's just more fuel on the silver bonfire.  It's a must watch...and the link is here.

Read more...

How High Will Silver Prices Go in 2011?

Here's another silver related story...and this one is courtesy of reader Roy Stephens.  It was posted over at finance.yahoo.com on Monday.  Bob Archer, president and chief executive officer of Great Panther Silver, told The Street that he expects silver prices could crest $40 in 2011.  Silver is, for the first time in a long time, starting to get in the mainstream of investor awareness," said Archer.  "It is a tiny, tiny market. The more money that flows into a tiny market, the more the price shoots up."  I think Bob [who I've know for years] is being a tad conservative. The story is worth the read...and the link is here.

Read more...

Upside Blowout in Gold, Destabilization in Silver: Rick Rule

Resources broker Rick Rule sounds increasingly radical in an interview yesterday with King World News. Rule finds an "upside blowout" in gold more likely and he muses about "force majeure" being declared in the silver futures market when that metal runs out.  Rick is sounding more and more like GATA in gold...and Ted Butler in silver...than he ever has.  That's what happens whey you hang around with Eric Sprott and John Embry for too long.  This blog is a must read...and the link is here.

Read more...

Malls witnessing gold rush as shoppers fear inflation

This story showed up as a GATA release yesterday...and was posted in the Monday edition of the China Daily.  Jewelers at shopping malls across the capital are witnessing a gold rush as residents spooked by inflation fears look to protect their money.  Statistics from Beijing Caibai, the city's largest jewelry store, show sales of gold and other jewelry have totaled about 4 billion yuan so far this year, a 70-percent increase year-on-year.  This is another story that you can add to your must read list today...and the link is here.

Read more...

Gold Buying in China Jumps as Inflation Flares, Boosting Demand, UBS Says

Reader Scott Pluschau slid this into my in-box just before I was about to hit the send button.  It's a post over a Bloomberg this morning...and it was filed from Singapore.  Gold purchases in China, the world’s largest producer, climbed to 200 metric tons in the first two months of 2011 as faster inflation boosted consumer demand.  I'd suggest that this is worth the read...and the story is linked here.

Read more...

Not enough metal to put dollar back on gold, Bernanke says

This GATA release is a story from yesterday's edition of The Wall Street Journal.  Federal Reserve Chairman Ben Bernanke defended the central bank's effect on the dollar Tuesday, pushing back at the idea that policy makers should consider alternative proposals like the gold standard.  Bernanke, who has studied the issue, said a return to the gold standard wouldn't work.  Ben is telling another fib here.  There's certainly enough gold...it's just a matter of what it's priced at.  This story is also worth you time...and the link is here.

Read more...

Italian Banks Pushing For Mark-To-Market To Benefit From Surging Price Of...Gold

Not every central bank in the world is stupid enough to believe what Bernanke has to say about a return to the gold standard.  Italian banks, which by a quirk of law are shareholders in the country’s central bank, are lobbying to have their stakes in the Bank of Italy marked-to-market on the back of surging gold prices in an attempt to ease regulatory pressure on them to raise capital in advance of this summer’s stress tests.

Australian reader Wesley Legrand sent me this zerohedge.com piece that ended up as a GATA release as well.  As I've said countless times in this column over the years, all that the worlds' central banks have to do is raise the price of gold to some rather large five digit number...and the entire world's financial system would be recapitalized in a heartbeat.

The zerohedge.com piece, based on a story out of Monday's Financial Times, is linked here...and is a must read as well.

Read more...

Dimitri Speck: The three phases of secret gold policy

This is a story that I stole directly from a GATA release yesterday...and is your long [and last] read of the day.  I'm just going to steal Chris Powell's preamble...and post the link.

At the International Precious Metals and Commodities Fair in Munich last November, market analyst Dimitri Speck, editor of the Seasonal-Charts.com Internet site, author of the book "Geheime Goldpolitik" ["Secret Gold Politics"], and consultant to GATA, reviewed what he calls the three phases of secret central bank gold intervention policy. Speck's presentation has been translated into English and was posted at the financialsense.com website...and the link is here.  I thank reader U.D. who was the first to bring this story to my attention.

Read more...

 

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¤ The Wrap

Yesterday's price action was very positive...and, for once, not all of the action occurred during the Comex trading session.  But I would suspect that the U.S. bullion banks were active on the Globex trading system throughout Far East and London trading yesterday...and they certainly made their presents felt at precisely 4:00 p.m. in the gold market in New York yesterday afternoon.  Whether they just stopped covering their short positions...or actually tapped on the brakes...is impossible to tell.

Gold volume was a quite a bit heavier than it was during the Monday trading session...and the preliminary open interest numbers do not make for happy reading...as it's reasonably obvious that this gold rally is not going unopposed.  But, whatever these numbers are, they will be in Friday's Commitment of Traders report, because yesterday was the cut-off for it.  Without doubt, there will be more deterioration in gold o.i. when the final numbers are posted later this morning.  It's just a matter of how bad they will be.

Monday's final open interest number in gold showed an increase of 3,824 contracts...which is a bit of a surprise, since not much happened price-wise.  I suppose it could have been spread trades being put on...but we won't get any indication of that until Friday's COT report.

Silver's volume on Tuesday was average...and preliminary open interest numbers are shockingly small for such a big run-up in the price.  Based on that, I'm guessing that a large part of yesterday's price rise in silver was short covering.  It's possible that the final o.i. numbers will show another decline when they're posted later this a.m.  If that's the case, then the silver open interest numbers in Friday's COT report should be quite a sight.

Monday's trading day in silver showed a smallish increase in open interest of only 735 contracts.  Silver had a decent, though not spectacular, gain on Monday...so this increase in o.i. is not overly worrisome...and is basically noise in the grand scheme of things.

Not much has changed on the silver backwardation front.  The spread in the front months is very flat all the way out to September 2011...and slides into backwardation from there.  By December 2015...the backwardation had settled at $1.13.  This is still a very fluid and dynamic situation...and can [and probably will] change in a heartbeat.

Here are a couple of 3-year charts for you.  The first is the 3-year gold chart...and the second, the 3-year silver chart.  As you can see, both are into overbought territory.  One has to wonder whether it means anything this time with all that's going on in the precious metals world...especially with silver.  In times past, I would be looking for the U.S.-based bullion banks to pull the lever and harvest all the technical fund longs that have been placed.  This is particularly true of the gold market, where the open interest has been building for quite a while.  Exactly the opposite situation exists in silver.

But, as you can tell from looking at the graphs, the market can stay overbought for a long time.  We'll have to wait and see how all this turns out...but like I've said before, we are in totally uncharted territory here and, as the saying goes, this time it may be different.  We'll see.

  

Click here to enlarge.

  

Click here to enlarge.

Not much happened in Far East trading during their Wednesday session.  Gold is down about four bucks...and silver is down twenty cents, as of 4:52 a.m. Eastern.  London has been open a couple of hours already...and not much is happening their, either.  Volume is light in both metals...and the dollar is hovering just above 77 cents...basically unchanged from Tuesday's close.

I have no idea as to what might happen during the New York trading session today, but I'm ready for whatever comes.

See you on Thursday.