Casey Research Publication
Gold & Silver Daily
"It's impossible to tell whether yesterday's engineered price decline was the absolute low"
 

¤ Yesterday In Gold & Silver

Gold got sold down a bit when Thursday trading began...and the price held more or less steady until shortly before the London open.  Then the high-frequency traders went to work...and the rest as they, is history.

Yesterday's engineered price decline was identical to the one that was pulled in early Far East trading on Monday, April 15th...the last time that gold got creamed by JPMorgan et al.  The modus operandi were identical...spin the prices lower and then buy everything in sight as sell stops are hit and the long holder are forced to sell as the margin calls go out.  Ted Butler has been going on about this for a decade now.

The highs and lows on Thursday aren't worth mentioning.  Gold got smacked for $73.50...and closed at $1,277.80 spot.  Gross volume was an over-the-moon 390,000 contracts, so there was obviously massive long liquidation.

Of course it was silver that really got it in the neck...and the price pattern was the same, although the sell-off began an hour or so before the London open.  After that, it was all same.

Silver closed on its absolute low of the day, which was $19.60 spot...down $1.75 from Wednesday's close.  Volume, net of roll-overs out of the July delivery month, was an astonishing 72,500 contracts.

Platinum and palladium weren't spared yesterday, either.  Here are the charts...

Once the markets closed for the day on Thursday, Kitco recorded the damage as follows: Gold down 5.44%...silver down 8.18%...platinum down 3.83%...and palladium down 4.47%.  There was no news in the real world to account for this sell-off.  It was all "da boyz".

The U.S. Dollar Index closed on Wednesday afternoon in New York at 81.34.  Once Far East trading began on their Thursday, the index rallied to its high of the day...82.14...shortly after 10:00 a.m. in New York.  Within an hour or so, the index was back below the 82.00 mark, closing the day at 81.75...up 42 basis points on the day.

If you believe that what happened in the precious metals on Thursday was any way related to what happened in the currency markets, then I have a bridge just for you.

The gold shares opened down about 6 percent...and just kept heading lower...although they bounced a bit going into the close.  The HUI was crushed for 7.48%.

The silver stocks got it in the neck just about as bad...and Nick Laird's Intraday Silver Sentiment Index closed down another 7.27%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 70 gold and one silver contract were posted for delivery on Monday within the Comex-approved depositories.  The only two short/issuers were JPMorgan out of its client account with 38 contracts...and Jefferies with 32.  The long/stoppers were "all the usual suspects"...including JPMorgan Chase out of its in-house [proprietary] trading account.  The link to this activity is here.

Not surprisingly, there was another withdrawal from GLD yesterday.  This time it was 135,308 troy ounces.  There was also a smallish withdrawal from SLV...482,564 troy ounces.

Joshua Gibbons, the Guru of the SLV Bar List didn't have much to say in his weekly report..."Analysis of the 19 June bar list, and comparison to the previous week's list. No bars were added, removed, or had a serial number change. As of the time that the bar list was produced, it was over-allocated 222.7 troy ounces."  The link to his website is here.

There was no sales report from the U.S. Mint

Wednesday was a quiet day for silver over at the Comex-approved depositories.  They didn't report receiving any...and shipped a smallish 67,582 troy ounces of the stuff out the door.  The link to that activity is here.

It was even quieter in gold on Wednesday.  The depositories reported receiving 100 troy ounces...and shipped 257 troy ounces out the door.  If you want to see for yourself...here's the link.

I just knew it was going to be busy at the store yesterday, as the phone rang about a dozen times before the owner picked it up when I called in yesterday morning.  We were busy all day long.  Good silver orders...but the amount of gold we've been selling over the last couple of months continues to astound me.  Yesterday was no exception.

Since yesterday was the 20th of the month...and it fell on a week day...The Central Bank of the Russian Federation updated their website...including their new gold reserve numbers.  It was fourth month in a row that they added 200,000 troy ounces.  Their reserves, at least the ones they admit to, now total 32.0 million troy ounces.  Nick Laird's most excellent chart is posted below.

(Click on image to enlarge)

Here's a chart from McClellan Financial Publications that was sent to me yesterday by U.A.E. reader Laurent-Patrick Gally...and it's titled "SP500 Following in 1998's Footsteps".  The link to the associated commentary on it is here

It was pretty quiet on the Internet yesterday, as most people were probably in shock...and I was surprised at how few e-mails were in my in-box when I got up yesterday morning.  That has certainly affected the number of stories I have for you today, which aren't a lot.

 

¤ Critical Reads

Jobless Claims in U.S. Climbed More Than Forecast Last Week

More Americans than forecast filed applications for unemployment benefits last week, showing progress on reducing joblessness remains uneven amid slower growth this quarter.

Jobless claims climbed by 18,000 to 354,000 in the week ended June 15 from a revised 336,000 the prior period, the Labor Department reported today in Washington. The median forecast of 46 economists surveyed by Bloomberg called for 340,000. No states were estimated and there was nothing unusual in the data, a Labor Department spokesman said as the figures were released.

Employers will need to limit firings before the world’s largest economy can show bigger gains in payrolls. Federal Reserve officials announced yesterday that they would maintain the central bank’s $85 billion in monthly asset purchases until the expansion shows further signs of strengthening.

This Bloomberg news item was posted on their website very early yesterday morning MDT...and our first story of the day is courtesy of U.A.E. reader Laurent-Patrick Gally.

Read more...

Factories Struggle in June, Hiring Slows

U.S. manufacturing activity growth slowed slightly in June as the pace of hiring and overseas demand weakened, making the second quarter the weakest for the sector in the last four, a survey showed.

Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index fell to 52.2 in June from 52.3. A reading above 50 indicates expansion.

June's 52.2 reading was also the average for the second quarter, behind the 54.9 average in the first three months of the year and the worst showing since the third quarter of 2012.

This article appeared on the moneynews.com Internet site shortly after 9:00 a.m. EDT yesterday...and I thank West Virginia reader Elliot Simon for sending it.

Read more...

Matt Taibbi: The Last Mystery of the Financial Crisis

What about the ratings agencies?

That's what "they" always say about the financial crisis and the teeming rat's nest of corruption it left behind. Everybody else got plenty of blame: the greed-fattened banks, the sleeping regulators, the unscrupulous mortgage hucksters like spray-tanned Countrywide ex-CEO Angelo Mozilo.

But what about the ratings agencies? Isn't it true that almost none of the fraud that's swallowed Wall Street in the past decade could have taken place without companies like Moody's and Standard & Poor's rubber-stamping it? Aren't they guilty, too?

Man, are they ever. And a lot more than even the least generous of us suspected...and a new trove of embarrassing documents shows how they did it.

Matt Taibbi on another rant...and it has a "Pithy Prose" rating, so be forewarned!  This rather long essay was posted on the rollingstone.com Internet site on Wednesday...and it's definitely worth reading.  I thank reader U.D. for sending it our way.

Read more...

Protester killed, dozens injured as Brazil police face off with a million in 100 cities

Mass protests continued throughout Brazil Thursday as hundreds of thousands assembled in the main cities of Sao Paulo, Brasilia and Rio de Janeiro with no sign of subsiding even as governments reversed course on planned public transit fare hikes.

An 18-year-old protester was killed and dozens injured as massive protests continued across South America's largest country, with over a million people taking to the streets there on the day.

In addition to the one demonstrator killed, three more injured in the same incident after they were hit by a car in the town of Ribeirao Preto, Sao Paulo state. Witnesses say the car tried to break a human chain created by protesters.

This Russia Today story was posted on their website in the wee hours of this morning Moscow time...and it's Roy Stephens' first offering in today's column.

Read more...

Five U.K. Banks Must Raise Extra $21 Billion Capital

The five lenders, including Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, have already submitted plans to raise half the total, the London-based BOE said in a statement today. Lloyds must plan to raise an extra 7 billion pounds, while RBS and Barclays need 3.2 billion pounds and 1.7 billion pounds of additional capital.

The strength of Britain’s banking system is under scrutiny as the government considers selling its stake in Lloyds, which is 39 percent-owned by the state, and splitting up RBS. Chancellor of the Exchequer George Osborne said in a speech in London yesterday that the U.K. government would proceed only “if we get value for the taxpayer.”

The central bank, whose Prudential Regulation Authority unit took over as the U.K.’s banking supervisor from the Financial Services Authority this year, outlined potential losses for banks of 52 billion pounds in March. Lenders must “hold capital resources equivalent to at least 7 percent of their risk weighted assets,” with those losses taken into account, the BOE said.

This Bloomberg story was posted on their website in the wee hours of yesterday morning MDT...and I thank Laurent-Patrick Gally for finding it for us.

Read more...

ECB Bank Oversight Start Said to Be Delayed to Late 2014

The European Central Bank probably won’t take over as euro-area bank supervisor until the final months of 2014, further delaying the banking union that leaders wanted in place quickly to stem the sovereign debt crisis.

Late next year is now the timeline for the transition to the new banking supervision regime, in part because of German-caused procedural delays, according to two European officials who spoke on condition of anonymity because the preparations are ongoing. This contrasts with an initial goal of moving to the new system in March, later pushed back to July. 

As a result, postponing the new supervision regime could reopen questions about whether EU leaders will follow through on promises to break the link between banks and sovereigns. Over the past three years, five of the euro area’s 17 nations have sought bailouts and investors remain jittery that contagion could flare up again.

“It matters symbolically and sends out the message that the euro zone is not even able to fix the easiest part of banking union,” said Carsten Brzeski, senior economist at ING Belgium, said by e-mail.

Here's another Bloomberg story. This one was posted on their website during the Denver lunch hour yesterday...and it's worth skimming.

Read more...

Stocks Plunge as IMF Tells Greece to Plug Holes or it Pulls the Plug

The International Monetary Fund is preparing to suspend aid payments to Greece by the end of next month unless eurozone leaders plug a €3bn-€4bn shortfall that has opened up in Greece’s €172bn rescue programme, according to officials involved in management of the bailout.

The gap emerged after eurozone central banks refused to roll over Greek bonds they hold, and comes amid signs that even the scaled-back privatisation plan Athens agreed to last year is falling behind schedule.

This Financial Times story from yesterday was embedded in the clear in this Zero Hedge story from yesterday...and it's another offering from Laurent-Patrick Gally.

Read more...

Turkey announces plans ‘for gas’ and cyber security in face of Gezi protests

Turkey has announced plans to purchase 100,000 gas bomb cartridges and launch a central cyber security agency, local media report. This comes after protests across the country which also saw a series of attacks on government’s websites.

The order for the 100,000 new cartridges will be accompanied by an order for 60 water cannon vehicles, the daily local newspaper Milliyet reported, also stating that the excessive use of gas bomb cartridges meant that Turkish riot police used up some 130,000 units across the space of a mere 20 days.

The protests began in Istanbul, but nationwide demonstrations shortly followed suit, drawing thousands in support of the Gezi Park protesters suffering brutal police repressions. In one of the instances, a horrifying video emerged of a man in a wheelchair being fired at by a similar vehicle on June 11.

Here's a Russia Today story that was filed on their Internet site early yesterday evening Moscow time...and my thanks go out to Roy Stephens for sharing it with us.

Read more...

China Money Rates Retreat After PBOC Said to Inject Cash

China’s benchmark money-market rates retreated from records after the central bank was said to have made funds available to lenders amid a cash squeeze.

The one-day repurchase rate dropped 384 basis points, or 3.84 percentage points, to 7.90 percent as of 9:33 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That is the biggest drop since 2007. The seven-day rate fell 351 basis points to 8.11 percent. They touched record highs yesterday of 13.91 percent and 12.45 percent, respectively.

“The worst is over; the PBOC is likely to serve as a last resort and intervene to calm the markets and avoid such huge volatility,” said Chen Qi, a Shanghai-based strategist at UBS Securities Co. “Although a reduction in interest rates or reserve ratios is not likely in order to avoid confusing policy signals, we do think reverse repos are very likely to be resumed and PBOC will use window guidance as well. We expect liquidity tightness to persist.”

This story was filed from Singapore early Friday morning in the Far East...and posted on the Bloomberg website at 8:00 p.m. MDT last night  I thank Laurent-Patrick Gally for his final offering in today's column.

Read more...

CME Hikes Gold Margins By 25%

How very unexpected. And how, judging by today's massive selloff, it is almost as if someone knew in advance this would happen. Can JPMorgan just restock its vault with whatever gold it needs to meet its massive delivery demands (at three year low prices) so some normalcy can return to the market?

This tiny story, along with the corresponding charts from the CME's website, were posted on Zero Hedge late yesterday afternoon...and I thank Elliot Simon for finding it for us.

Read more...

Gold buying loses its sheen in the U.A.E.

Gold’s golden run in the UAE retail market seems to be over… at least for the moment. After setting off a frenetic round of buying when the price tumbled on April 11 and which continued for the better part of May, gold’s sheen seems to have come off in June.

Nowhere is it more apparent than in the higher end of the jewellery sales spectrum, averaging Dh20,000 and more (for 80 grams and over) per buy. Such transactions have dropped significantly since June as buyers hold back purchases on sentiments that prices would start treading even lower levels.

The only activity seems to be at the lower end, where average transactions are in the Dh4,000 a buy range.

“The drop in retail demand has more to do with continued uncertainty over where gold prices are headed next, with many projections placing it at going below $1,300 an ounce [it was $1,365 on June 19],” said Shamlal Ahmad, director of international operations at Malabar Gold.

This story showed up on the gulfnews.com Internet site at noon local time over there...and I thank "Jan from Denmark" for sending it our way.

Read more...

Gold plunges again: unleashes perfect storm for the bears

Some heavy selling following Ben Bernanke’s upbeat statement suggesting a cutting back of QE later this year, and a possible end next, hit gold hard overnight with the bullion price falling back close to $1300 before making a small recovery – and then falling back again in London to breach the $1300 level on the downside in a very volatile market.  There were renewed sales from the big SPDR gold ETF, GLD, taking it down below 1,000 tonnes for the first time since February 2009.

SocGen’s analyst Michael Haigh was predicting a fourth quarter gold price average of only $1200 while Nouriel Roubini would have been smiling given his recent prediction that gold would fall back to $1,000.  The U.S. dollar surged, seemingly yet another nail in gold’s coffin.  All in all something of a perfect storm for gold bears.  Could the downturn be turning into a rout?

The other factor to watch is whether some of the major short positions in gold and silver on the COMEX now get unwound at the lower prices.  If this happens gold and silver could both be set for a major upturn, regardless of China, as the big banks and hedge funds start to look for major profits on the upside.

This essay by Lawrence Williams was posted on the mineweb.com Internet site yesterday...and he cuts to the heart of the matter in the last paragraph that I cut and paste above.  This is what it's all about.  Nothing else matters.

Read more...

 

¤ 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.

An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff  the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information, ir@freegoldventures.com


 

¤ The Wrap

After mulling over the situation for days, I have finally decided that, in deference to my subscribers, the best position for me is to have no position in the market. As soon as you buy stocks, the normal sentiment is to want the market to go up. I don't want to be in the position of wanting the market to go up or down. I want to be emotionally neutral and basically realistic. Therefore, the only position I will own will be gold. I have not added or subtracted gold from my position in a long time, nor will I. I treat gold like my home. It's a tangible asset, and I don't trade it. - Richard Russell...17 June 2013

If one could have had a peek at the Commitment of Traders Report for positions held at the close of Thursday trading in New York, I know what it would show.  It would show that JPMorgan is even more massively long the gold market than it was a week ago...and it's also a good bet that they're short position in silver is history.

Unfortunately, that data won't be available until next Friday...and the cut-off for that report is at the close of Comex trading on Tuesday...a lifetime away...as anything can happen between now and then.

And I'm not surprised by the fact that gold and silver bullion is flowing out of the various ETFs once again and, without doubt, it is being scooped up by very strong hands...the same hands that are buying all the mining shares that are falling off the table as well.

They have to be strong hands with almost infinite financial resources, because the general public is basically out of the market at this point...and there was a buyer [not just a seller] for every share/Comex futures contract/and troy ounce of physical metal sold during this entire ordeal.

It's impossible to tell whether yesterday's engineered price decline was the absolute low or not...but as Ted Butler has already pointed out on several occasions, there is a limit to how much further speculative long liquidation is possible...and how much financial effort has to be expended by JPMorgan et al to get it, because there's a finite limit to how short the technical funds, and others, are prepared to go.  But...like horseshoes, hand grenades and atomic bombs...close is sometimes good enough...and that's where I believe we are now.

Here are the 3-year weekly charts for both gold and silver...and from the data presented here, if the bottom isn't in...it's close.  It only remains to be seen what JPMorgan and the rest of the powers that be do when the inevitable rally begins once they're through pounding the precious metal prices into the dirt.  They are now in total control on the long side in every respect...and what happens from here is entirely up to them...which was pretty much the case when they were in control on the short side.  But now positioned on the long side, it may turn out to be whole ball game...and I expect that will be the case.  All we can do at this point is wait it out and see what their plans are.

(Click on image to enlarge)

(Click on image to enlarge)

The other thing that Ted pointed out when we were talking on the phone yesterday was that JPMorgan et al most likely have a record long position back on in copper...and a record short position in the U.S. dollar index.  As we've all discovered in the past, "da boyz" never make bets this size unless they expect to cash in big at a later date...but what day that "later date" is...is only known to them.

In Far East trading on their Friday, all four precious metals got sold down to new lows by around 9:30 a.m. Hong Kong time.  All metals then rallied, but gold and silver's respective attempts to break through the $1,300 price mark in gold...and $20 in silver...were quietly turned aside at the London open. As of 4:08 a.m. EDT, gold's gross volume is already north of 60,000 contracts...and silver's net volume is a hair over 10,000 contracts.  Considering the price action, these are big numbers.  The dollar index, which had slid a bit in Far East trading, has now rallied back to almost the 82.00 mark once again...and is up 12 basis points at the moment.

We get the latest Commitment of Traders Report at 3:30 p.m. EDT today...and there shouldn't be much in it. It's what happened on Wednesday...and particularly Thursday...that really matters...and all that activity occurred after the cut-off for this report.  This is another trick that "da boyz" like to use when they want to hide their actions from prying eyes for as long as possible...and the price action of the last few days is a textbook example of this.

And as I hit the 'send' button on today's column at 5:15 a.m. EDT, gold is up about seventeen bucks...and silver is up 12 cents from Thursday's close in New York.  Neither metal has challenged the $1,300 or the $20 price marks since the London open.  Gold's gross volume is now north of 70,000 contracts...and silver's net volume is over 12,000 contracts.  The dollar index is still up 12 basis points.

I haven't the foggiest notion as to what might happen during the Comex trading session in New York today...but since it's Friday, nothing would surprise me.

Enjoy your weekend...or what's left of it if you leave west of the International Date Line...and I'll see here tomorrow.