Casey Research Publication
Gold & Silver Daily
"Since gold hit its intraday high of around $1,938 on September 6th...the price has fallen about 7.8% as of its close yesterday...but the HUI is only down a hair under 5% from that date."
 

¤ Yesterday In Gold & Silver

The gold price was off to the races the moment that trading began on Sunday night in New York, but the fun was over in about thirty minutes, as a not-for-profit seller showed up.

From there, the price got sold off almost back to Friday's closing price by the time the equity markets opened at 9:30 a.m. Eastern time in New York on Monday morning.  And, at precisely that moment, a really serious selling in gold showed up...and, within an hour, the bullion banks had pealed $35 off the price.  Gold traded within about ten bucks of that 10:30 a.m. low for the rest of the New York session...with the absolute low coming at 1:15 p.m. Eastern in the New York Access Market.  The spot gold priced closed down $34 on the day.  Net volume was around 178,000 contracts, which is not overly heavy...but it wasn't exactly light, either.

Silver's price path was very similar to gold's on Monday.  It was up about a dime at the open...and hung in there pretty good until shortly after London opened at 8:00 a.m. BST.  By the time the New York equity markets opened in New York, silver had been sold down about 50 cents from its opening high.

Then, like gold, the big selling pressure showed up at 9:30 a.m. Eastern right on the button...and, from there, the price continued to work its way lower until the absolute bottom price of $38.88 spot, which came at 1:15 p.m. in electronic trading...the same as gold.

From its absolute high on Sunday night...to its 1:15 p.m. low in New York on Monday afternoon...silver was down about $1.80 spot.  But the rally after the low recovered some of those losses...and the silver price 'only' finished down $1.01 on the day.  Net volume was decent at around 44,000 contracts.

The New York equity markets got bombed at the open...but the gold shares went in the other direction...and were mostly in positive territory until early afternoon in New York...despite the shellacking that the metal itself was taking.  Then they got sold off a hair, but the HUI only finished down 0.68% on the day.  That's amazing!

There are very deep pockets scooping up virtually every gold share that weak hands are selling these days...and, as of tomorrow, this phenomena will have been going on for a full four weeks.

Since the silver price was more 'volatile'...a lot of the junior silver companies got hit.  But that certainly didn't apply to all the silver stocks...as I had lots of green arrows in my portfolio yesterday, despite the pounding that silver took.

That's reflected in Nick Laird's Silver Sentiment Index, which was only down 1.06%...so it's obvious that the smart money knows what's coming.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 78 gold and one whole silver contract were posted for delivery tomorrow.  Jefferies was the big short/issuer in gold...and, for a change, virtually all of the '8 or less' bullion banks were M.I.A.  The link to yesterday's Issuers and Stoppers report is here.

There were no reported changes in either GLD or SLV.

But the U.S. Mint had a sales report yesterday.  They sold 7,500 ounces of gold eagles and 236,500 silver eagles.  Month-to-date the mint has sold 32,000 ounces of gold eagles...5,000 one-ounce 24K gold buffaloes...along with 1,279,500 silver eagles.  September has been a very slow sales month so far.

The Comex-approved depositories reported receiving 303,351 troy ounces of silver...and shipped 395,135 ounces out the door.  Virtually all of the 'action'...such as it was...occurred at the JPMorgan warehouse.  The link to that action is here.

Here's another comment from reader Tariq Khan about bullion sales in his part of England...

"Following my last submission late last week, my bullion dealer did get some more Britannias, Maples, Nuggets and Philharmonics this morning, mainly from the secondary market. By this afternoon they have all been sold out. I got some 1 oz Britannias too. These are favourites with UK residents, being legal tender...and attracting CGT in the UK. He does have some gold bars available, but nothing much in silver other than the eagles which he is selling at 20% premium...plus another 20% on top for VAT. You can actually get them cheaper at my other coin dealer but still with a hefty 10% premium."

And here's a comment from reader Duane Zelinka in Vancouver, Washington about sales in his area...

"I go to my local coin dealer here on a regular (once/twice a week) basis to purchase silver. Every time I have gone in, there has always been a line of people selling. I usually sit back and listen to the conversations and watch the transactions.  The consensus of most sellers I see is they don't think prices are going up much further from here. Everyone is eager to sell (in and out, without a blink)."

"The store has been amassing a good collection of both gold and silver as I watch. I always ask them when I'm in, 'are you buying or selling more'? It's mostly selling environment they are in. I like this as while the masses are selling, I am buying. It will be interesting to see when that will change here...plenty of metal to be purchased right now."

Here's a couple of free paragraph from silver analyst Ted Butler's weekly review to his paying subscribers on Saturday...

"In gold, the COT structure has to be considered bullish, just as it was back in early July. That augers well for a rally and against a prolonged liquidation sell-off. But conditions are notably different today in some regards. For one, the technical funds don’t appear positioned to plow back onto the long side of COMEX gold futures at current or higher prices, having booked massive profits recently because they obviously felt the price was too high. I could easily see the tech funds buying gold after we go lower in price first down through the moving averages, with these funds then buying as the price reemerges through the averages to the upside. But we would first need a substantial price decline in gold for that to occur. On the other hand, the commercials do appear anxious to withdraw from the short side and after they get as much liquidation as they can manage on price declines, it’s hard for me to see where selling pressure then comes."

"I don’t like to talk out of both sides of my mouth, but nothing would surprise me in gold because what we’ve seen to date is so unusual in the commercial buying to the upside. COT interpretations are just that – subjective opinions. From what we have experienced over the past few months, it’s hard to speak with certainty. I can say with a high degree of conviction that we have suffered a dramatic loss of real liquidity. If big buying comes in on gold, we will fly in price. If big selling comes in, only continued commercial short covering will stem declines. Maybe we get a continuation of the volatile trading pattern within a fairly wide trading range."

Here's a link to a really neat interactive graph.  I ran one part of it in this column last week, but there was much more to it than was shown in that posting.  The graph is headlined "Euro zone bank exposure by country".  But, in a word, it's a PIIGS chart.  It shows what amounts and percentages of exposure each country in Europe has to the five little PIIGIES.

This is definitely worth the trip...and it's posted over at thomsonreuters.com.  I thank Washington state reader S.A. for sharing it with us...and the link is here.

I got the photo below from reader Andy Lawrisuk, along with the following comments..."Hi Ed, thought you might have use for this gold photo I took on a recent trip to Istanbul.  It is of one of the gold shops in the Spice (Egyptian) Bazaar there.  The economy (and metals market) is strong in Turkey!  I just got back from a trip to India and Singapore - other economies of Asia are also still going strong by the looks of it on the ground.

(Click on image to enlarge)

The 'click to enlarge' feature is more than worth it for this photo, as it certainly bears closer examination.

With what went on over the weekend, I've got lots of stories today...and I'll leave the final edit up to you.

 

¤ Critical Reads

Stock Fund Withdrawals Top Lehman at $75 Billion

Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks.

About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts.  Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman’s bankruptcy, the data show.

This Bloomberg story is courtesy of reader Scott Pluschau...and the link is here.

Read more...

A Greek Orderly Default Impossible: Kyle Bass

Here's an article from CNBC last week, along with an imbedded video clip of Kyle Bass laying it on the line regarding Greece.  He takes no prisoners here...and is, of course, absolutely right.  The article is a short read...and the film clip runs just under eleven minutes.

I thank reader Richard Vollertsen for sending this along...and the link is here.

Read more...

Greece's shadow economy raises fresh fears

In this world, nothing is certain apart from death and taxes – unless, that is, you live in Greece.

In a country where tax evasion is a way of life, many consider themselves outside the law when it comes to paying.

Figures compiled for The Sunday Telegraph by the world renowned expert Prof Friedrich Schneider of Linz University in Austria show that Greece's shadow economy – made up of the trade, goods and services, both legal and illegal where taxes are not paid – grew from 24.3pc of GDP in 2008 to 25.4pc in 2010.

With around half of the country's austerity measures reliant on tax and revenue increases, and a quarter of Greece's economy out of control, many question whether Greece's government will be able to keep its deficit-cutting promises in a country that is already struggling to stay afloat.

This amazing article was, as stated above, posted in The Sunday Telegraph...and I thank Roy Stephens for sharing it with us.  The link is here.

Read more...

Greek tax evasion: 'There is just such little incentive to be honest.'

With the medical profession at the forefront of the Greek financial crime squad's list of suspects, Alexis, a Greek doctor, keeps his books tight, which is not an easy feat.

Daily challenges come in the form of corrupt officials looking for a handout, local suppliers and workers trying to bargain the price of their products or services down in exchange for a lack of paper trail.

He also owns personal assets in the form of land and two family homes – which is where the lines start to blur.

According to Alexis, declaring items deemed as 'luxuries' by the tax man, such as a car with a higher horse power or a pool can far exceed the cost of buying the items in the first place.

This is from the 'You-can't-make-this-stuff-Up' filing cabinet...and is Roy Stephens second offering of the day.  It was also posted in The Telegraph on Sunday morning...and the link is here.

Read more...

Greeks Discuss Drastic Moves to Receive Aid

Greek leaders struggled through the weekend to agree to a set of radical budget reductions that would satisfy foreign lenders’ demands even as they tried to stave off mounting resistance to those cuts at home.

Reflecting the urgency of the situation, the prime minister of Greece, George Papandreou, canceled a planned trip to Washington this week and held talks with his cabinet on Sunday.

The Greeks face an October deadline to qualify for 8 billion euros, or $11 billion, in aid, without which Greece will certainly default on its growing debt. Over the weekend, European finance ministers issued stern warnings at a meeting in Poland that failure to meet financial targets would imperil the release of the payment.

This story from the Sunday edition of The New York Times was filed from Frankfurt...and is Roy Stephens third offering of the day.  The link is here.

Read more...

Hopes dashed as nothing emerges from talks on euro area debt crisis

The single currency’s finance ministers were the butt of jokes yesterday after their two-day meeting in Poland produced precisely nothing. Again.

While all observers of the unfolding disaster in the euro area cannot but have sympathy for those shouldering the responsibilities of governing at a time of potential economic collapse, it is becoming increasingly difficult to avoid the conclusion that leaders are not prepared to do everything possible to avoid such a collapse.

Indeed, it seems after this weekend that they are not prepared to do much at all to stave off disaster. History will excoriate them if it comes to the worst.

This story [thanks again, Roy] was posted over at the irishtimes.com website earlier this morning...and the link is here.

Read more...

Global stock markets braced for further turmoil after S&P downgrades Italy

The news came on Monday night after panic gripped global markets as a fresh showdown over Greece renewed fears that the eurozone will be plunged into crisis.

The rating for Italy, which has Europe’s second-largest debt load, was lowered from A+ to A, S&P said in a statement.

“In our view, Italy’s economic growth prospects are weakening and we expect that Italy’s fragile governing coalition and policy differences within parliament will continue to limit the government’s ability to respond decisively to domestic and external macroeconomic challenges,” S&P said in a statement. "The measures included in and the implementation timeline of Italy's National Reform Plan will likely do little to boost Italy's economic performance, particularly against the backdrop of tightening financial conditions and the government's fiscal austerity program."

This story was posted in The Telegraph shortly after midnight in London...and is another offering from Roy Stephens.  The link is here.

Read more...

A Run on the Banks: Siemens shelters up to €6 billion at ECB

Siemens withdrew more than half a billion euros in cash deposits from a large French bank two weeks ago and transferred it to the European Central Bank in a sign of how companies are seeking havens amid Europe's sovereign debt crisis.

The German industrial group withdrew the money partly because of concerns about the financial health of the bank and partly to benefit from higher interest rates paid by the ECB, a person with direct knowledge of the matter told the Financial Times.

In total, Siemens has parked between €4 billion ($5.4 billion) and €6 billion at the ECB's facilities, mostly through one-week deposits, this person said. Only a handful of large companies have the banking licences that allow them to deposit cash directly with the ECB.

This Financial Times story was posted in a GATA release...and the link is here.

Read more...

China reported likely to keep buying U.S. debt

China, the largest foreign holder of U.S. government debt, will keep buying U.S. Treasuries, the official People's Daily, the ruling Communist Party's mouthpiece, reported on Tuesday, citing government researchers.

In an article about the reasons for China's increased purchase of U.S. Treasuries, the newspaper cited Yan Xiaona, a researcher with the Chinese Academy of Social Sciences, as saying that the dollar "is relatively safer than the euro" because of the unfolding sovereign debt crisis in Europe.

This Reuters story was filed from Beijing late on Monday night their time...and I found it in a GATA release.  The link is here.

Read more...

China 'faces subprime credit bubble crisis'

Monetary tightening in China threatens to pop the $1.7 trillion (£1.07 trillion) credit bubble in local government finance and expose the country's simmering "subprime" crisis, according to the Communist Party's economic guru.

"The tightening policy is creating a lot of difficulties for local governments trying to repay debt, and is causing defaults," he told a meeting at the World Economic Forum in Dalian. "Our version of subprime in the US is lending to local authorities and the government is taking this very seriously."

This is an Ambrose Evans-Pritchard offering from the Saturday edition of The Telegraph...and is Roy Stephens final offering of the day.  The link is here.

Read more...

Exclusive: CFTC insiders blow whistle on position limit rule

Internal strife at the Commodity Futures Trading Commission over how to craft a workable rule to crack down on speculation in oil markets has prompted two internal whistleblowers to ask the agency's inspector general to step in.

The whistleblowers say the CFTC team working on the politically charged "position limits" rule has suffered staffing setbacks.

It has also struggled to harmonize the proposal with another rule, potentially forcing commissioners to vote in coming weeks on a doomed-to-fail measure.

This Reuters story was picked up by yahoo.com news late last week...and I thank Alberta reader B.E.O. for sending it along.  The link to this rather longish read, is here.

Read more...

ETFs have potential to become the next toxic scandal: Tom Stevenson

Who says regulators are only good for slamming the barn door after the horse has bolted?

Back in April, the Financial Stability Board (FSB), an international super-regulator, wrote a prescient if less than catchily-titled paper "Potential financial stability issues arising from recent trends in Exchange Traded Funds (ETFs)."

Its central warning -- that ETFs are not the cheap and transparent vehicles the marketers would have us believe -- was spot on. When UBS's $2 billion black hole hit the screens on Thursday, no one who read the FSB report was surprised to see the words "ETF" and "rogue trader" in the same sentence.

Gold and silver ETF investors should note the reference here to the use of exchange-traded funds to short their own markets.

I stole this story from a GATA release yesterday.  It's from Saturday's edition of The Telegraph...and the link is here.

Read more...

Dutch Socialist Party puts gold questions to treasury secretary

The Netherlands libertarian blog Vrijspreker reported Sunday that the Dutch Socialist Party, with 15 seats in the Netherlands Parliament, has put to the country's treasury secretary 10 impertinent questions about gold along the lines of the questions GATA has sought to put to Western central banks.

The list of questions, along with the link to the article, is contained in this GATA release...and the link to all is here.

Read more...

Jim Rickards tells King World News what to watch for in currency war

Here's another GATA release with two separate KWN blogs in it.  The first is from Jim Rickards, as mentioned in the headline...and the second is from fund manager Michael Pento about the revised class-action lawsuit against JPMorgan in silver.  Both are very much worth the read...and both are linked here.

Read more...

Is 'conflict gold' a problem worse than imaginary gold?

Here's a Reuters story posted from Montreal that bears the headline "Conflict Gold Guidelines 'No. 1 Priority' for LBMA".

The London Bullion Market Association is working out ways for refiners on its Good Delivery List to avoid falling foul of new regulations against conflict gold as a "No. 1 priority," LBMA chairman David Gornall told Reuters on Sunday.

Due diligence requirements for gold sourced from the war-torn Democratic Republic of Congo are currently under consideration by both the United States and the Organization for Economic Cooperation and Development.

This is another story that I 'borrowed' from a GATA release yesterday...and I thank Chris Powell for the headline.  The link is here.

Read more...

Hedge Fund Heavyweight Sees Gold at $2,200

Gold, platinum and Brent oil will lead gains in commodities as investors seek to protect their assets and shortages emerge, according to Tony Hall, the hedge- fund manager who earned 33 percent for his clients this year.

Gold may climb 21 percent to a record $2,200 an ounce by the end of 2011, platinum may gain 10 percent and Brent could rise 25 percent to $140 a barrel in six months, said the London-based chief investment officer of Duet Commodities Fund Ltd.

This Bloomberg story from yesterday was sent to me by West Virginia reader Elliot Simon yesterday...and the link is here.

Read more...

China’s Gold Investment to Top Record: Cheng

Gold investment demand in China is likely to top a record 200 metric tons this year, the World Gold Council said.

The country’s investment demand surged 70 percent in 2010 to an all-time high of 187 tons, said Albert Cheng, the Far East managing director at the World Gold Council.

China’s “investment demand has picked up exponentially,” Cheng said yesterday in an interview in Montreal. “The financial crisis has triggered people to be cautious of anything they don’t understand,” boosting demand for bullion as an alternative asset.

India is the world’s top bullion buyer followed by China. The two countries accounted for 54 percent of world gold consumption in the second quarter, Cheng said.

This short Bloomberg story from Sunday is another offering from Elliot Simon...and it's a must read.  The link is here.

Read more...

Central banks return as gold buyers

Mexico, Russia, South Korea, and Thailand have all made large purchases this year, in a move to reduce their exposure to the dollar. Globally, central banks are set to buy more gold this year than at any time since the collapse of the Bretton Woods system 40 years ago -- the last time the value of the dollar was linked to gold.

"We're going back to a time when gold is seen very much as money," Jonathan Spall, director of precious metals sales at Barclays Capital, told FT.com in a video interview. "It has been a complete reversal of the attitudes we saw during the 1990s."

This Financial Times story from Monday is printed in the clear in this GATA release...and the link is here.

Read more...

UK gold demand soaring

Here's a posting over at goldmoney.com that you might find of interest.

Europe’s sovereign debt crisis is leading to more and more Europeans buying gold. Baird & Co., the United Kingdom’s largest coin and bullion dealer, announced last week that its full-year profits had more than doubled to £4.3 million in 2010 compared with £2 million in 2009.

It's a very short read...and I thank U.K. reader Tariq Khan for sending it along.  The link is here.

Read more...

Venezuelan government will claim all domestic gold production

Venezuelan President Hugo Chavez today ordered the nationalization of the gold industry and gave companies 90 days to form joint ventures with the state as he seeks to boost control over the nation's metals producers.

The government will hold at least 55 percent of any joint ventures, according to a decree in today's Official Gazette. The decree sets a royalty rate of 10 percent to 13 percent and says that all Venezuelan gold production will be sold to the state.

This Bloomberg story from yesterday is headlined 'Chavez Decrees Nationalization of Gold Industry Amid Surging Bullion Price'...and was filed from Caracas.  I lifted it from a GATA release late last night...and the link is here.

Read more...

The Swiss National Bank Gives Up

The Swiss National Bank finally gave up.  For months it tried standing alone against all of the bad monetary policies being pursued by the ECB, the Federal Reserve, the Bank of England and indeed, nearly all of the central banks of the world, but it was a losing battle.  So last week the Swiss National Bank succumbed to these pressures and pegged the Swiss franc to the euro.

Consequently, as the euro is debased, the Swiss franc will head south with it.  The world’s last safe-haven national currency has finally disappeared, making the ownership of physical gold and silver all the more important.

This short item was posted by GoldMoney founder James Turk over at his Free Gold Money Report...and the charts are worth the trip all by themselves.  The link to this must read article is here.

Read more...

 

¤ The Funnies

(Click on image to enlarge)

Sponsor Advertisement

Goofy video about retiring...

I've made this new presentation for you about how you could retire.

You need little money and zero experience to get started. But the sooner you start, the better this works. So...

Whether you’ve already retired, or want to retire soon, I urge you click here to watch this video presentation now.


 

¤ The Wrap

The record of the high-profile pundits in calling short term tops and lows in the [gold] price action is abysmal. We graciously do not reproduce any of their inaccurate calls as evidence. It raises the question of why anyone would want to trade in the midst of a tectonic shift in global monetary arrangements. - John Hathaway, Tocqueville Asset Management...15 September 2011

As I said in my Saturday column, I wouldn't bet the ranch on the fact that we've seen the lows for this move down in either metal.  This engineered price sell-off in silver and gold can continue as long as the bullion banks can make it happen.

I certainly wasn't happy to see the price action when I turned my computer on yesterday morning...but neither was I entirely surprised.  As a matter of fact, in a rather morbid sort of way, I hope that today is either flat or down in both metals as well...and the reasons are purely selfish.  I want to see what this Friday's Commitment of Traders report will be like after the clean-out that began in earnest a week ago.  Most of it wasn't in last Friday's report, because it occurred after the Tuesday cut-off and, without doubt, there's been a huge improvement in both metals since then.

Based on last Friday's COT Report, Ted Butler is pretty bullish on both metals...but I'd bet that the internal structure of the COT Report has improved by quite a bit since last Friday's report.  Today, at the close of Comex trading, is the cut-off for this Friday's report.

The final open interest numbers for Friday's trading day looked pretty positive to me, but it's impossible to tell for sure what they really mean...and that won't be known until Friday.  Monday's preliminary numbers look pretty good as well...and the final numbers will be one of the first things I check when I get up later this morning.

But one has to wonder just how much tech fund long liquidation/bullion bank short covering is actually happening on this latest engineered price decline.  I would think not a lot, but it's hard to tell...and we won't know until it's all over.

The 50-day moving average in gold is still intact...and could still be a JPMorgan-led target.  But, as I keep saying...can they, or will they?  One thing is for sure, we are far closer to the bottom of this price move than we are the top.

Since gold hit its intraday high of around $1,938 on September 6th...the price has fallen about 7.8% as of its close yesterday...but the HUI is only down a hair under 5% from that date...and has actually had new intraday record highs as the gold price has fallen since then.  This is unprecedented.  Strong hands with very deep pockets know what's coming.

Here's the 1-month gold chart...

(Click on image to enlarge)

And here's the 1-month HUI...

(Click on image to enlarge)

I note that both gold and silver made new lows for this move down in the thinly-traded markets in the Far East...but have both rebounded smartly off those lows.  Gold is back above its Monday closing price in New York...up about $15 as of 5:10 a.m. Eastern time...but the silver price got squashed the moment that it broke above its New York closing price from yesterday afternoon.

Volume in gold is already over 40,000 contracts...and silver's net volume is getting up there as well.  I'm already looking forward to the New York trading day with great interest.

Today and tomorrow is the Fed's little wiener roast...and it will be interesting to see what 'miracle' they come up with tomorrow.  Actually, I really don't care what they do, as the world's current financial and monetary system is already a dead duck...and the only viable option left is a return to the gold standard.

I'm still 'all in'.

See you on Wednesday.