Gold & Silver Daily
"One has to wonder why the sell-off occurred in the first place, especially in silver"

¤ Yesterday In Gold & Silver

After the gold rally in Far East trading got capped, the high-frequency traders went to work at 1:45 p.m. Hong Kong time on their Tuesday afternoon, and shortly before the London open they had gold down about fifteen bucks from Monday's close in New York.

But after that low was in, gold rallied right up until shortly after the London p.m. gold fix, and then it got sold down a bit as the rest of the New York trading session unfolded.  The high tick came around 10:15 a.m. EDT, and Kitco recorded that as $1,379.50 spot.

Gold finished the day in New York at $1,371.00 spot, up $5.40 from Monday's close.  Volume was 144,000 contracts, with 40,000 of that occurring before the London open.

And as I pointed out in The Wrap yesterday, silver really got bombed at 1:45 p.m. in Hong Kong, down 70 cents in less than fifteen minutes.  The subsequent rally ran into a willing seller ten minutes after the 8:20 a.m. EDT Comex open, and the high tick of the day also came at the same time as gold, at 10:15 a.m. in New York.  Kitco recorded that as $23.44 spot.

The lowest price I saw came shortly before 3 a.m. EDT, and that was $22.32 spot, so silver had an intraday price move of over a buck.

Silver closed the day at $23.025 which was down 16.5 cents from Monday's close.  Net volume was 42,000 contracts, with 14,000 of that coming before the London open, so the rest of the day's volume was not overly heavy.

It was virtually the same chart patterns in platinum and palladium.  Platinum finished up $11 on the day and palladium finished down four bucks.  Here are the charts.

The dollar index closed in New York late Monday afternoon at 81.28, and when it opened in the Far East on their Tuesday morning, it rallied to its high of 81.33 shortly after 10 a.m. in Hong Kong trading.  It was all down hill from there, with the low tick of 80.76 coming minutes after the 9:30 a.m. EDT open of the equity markets in New York.

The subsequent rally didn't have a lot of steam behind it, and the index closed the Tuesday trading session at 80.94 which was down 34 basis points from Monday's close.

As you've probably already figured out for yourself,  the engineered sell offs in all four precious metals in afternoon Hong Kong trading had zero to do with the action in the currency market.

The gold stocks were in rally mode right from the open on Tuesday, and rallied strongly until the gold price peaked at 10:15 a.m. EDT.  But from there, despite the fact that gold sold off gently for the rest of the day, the equities continued to work their way slowly high right into the close.  The HUI finished up 3.57%.

The silver stocks put in a decent performance as well, which is amazing considering the price action in the silver market yesterday.  Nick Laird's Intraday Silver Sentiment Index closed up 3.64%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that only 11 gold contracts were posted for delivery within the Comex-approved depositories tomorrow, and JPMorgan Chase was the long/stopper on 10 of those contracts.  The link to yesterday's Issuers and Stoppers Report, is here.

The GLD ETF showed an increase yesterday, as an authorized participant deposited 57,951 troy ounces.  And as of 10:05 p.m. EDT, there were no reported changes in SLV.  However, when I was editing this paragraph at 2:54 a.m. EDT, I noticed that the SLV website had been updated.  What it showed was that an authorized participant had deposited 964,320 troy ounces of the stuff.

The U.S. Mint had a smallish sales report yesterday.  They sold 2,000 ounces of gold eagles, along with another 1,000 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Monday, there were no reported gold movements, either in or out.

But, as usual, there was activity in silver.  They reported receiving 120,496 troy ounces, and shipped 458,799 troy ounces out the door.  The link to that activity is here.

Since yesterday was the 20th of the month, and it fell on a week day, The Central Bank of the Russian Federation updated their Internet site with their July numbers.  It showed that they purchased another 200,000 troy ounces of gold for their reserves, which now total 32.2 million ounces.  Here is Nick Laird's most excellent chart.

(Click on image to enlarge)

I have a more reasonable number of stories for you today, so I hope you can find the time to wade through them all.


¤ Critical Reads

Obama Presses for Action on Bank Rules

President Obama urged the nation’s top financial regulators on Monday to move faster on new rules for Wall Street, telling them in a private White House meeting that they must work to prevent a repeat of the 2008 financial crisis.

Administration officials and some lawmakers have expressed frustration that critical parts of Mr. Obama’s overhaul of the financial system, which was voted into law three years ago and is known as the Dodd-Frank act, remain unenforced as an alphabet soup of federal agencies wrangle over how to adopt it.

In particular, top presidential aides have highlighted the failure in putting the Volcker Rule into effect. It would prohibit banks from risking institutional money in certain speculative investments. Last month, Jacob Lew, the Treasury secretary, complained in a speech that the regulators were moving too slowly to confront the dangers of banks that are so large that governments cannot allow them to fail for fear of bringing down the economy.

This news item was posted on The New York Times website late on Monday...and is definitely worth reading.  I thank Roy Stephens for today's first story.


What Was Really Behind President Obama’s Meeting With Wall Street Regulators

The White House issued a statement yesterday on the President’s meeting with the federal agencies that regulate Wall Street. Curiously, the phrase used to describe the agencies was “independent regulators.” The President’s Deputy Press Secretary, Josh Earnest, held a press briefing with reporters yesterday, taking questions on the meeting. In that briefing, Earnest referred to the regulators as “independent” seven times.

If the President now finds it necessary to attempt to brainwash the American public through endless repetition of the word “independent” to shore up sagging public doubt that there are any real cops on the beat when it comes to policing Wall Street, he has no one to blame but himself.

When President Obama appointed Mary Jo White to head the Securities and Exchange Commission (SEC), Jack Lew for U.S. Treasury Secretary, and has floated the idea for weeks that Larry Summers could become Chairman of the Federal Reserve, he critically undermined the already low disregard the public holds toward Wall Street’s regulators.

This story also falls into the must read category.  It was posted on the Internet site yesterday...and I thank Manitoba reader Ulrike Marx for her first story of the day.


Dick Bove: U.S. Assault on JPMorgan Is 'Coordinated from Above'

The various government legal moves against JPMorgan Chase represent a coordinated assault on the nation's biggest bank, says star bank analyst Dick Bove, vice president of research at Rafferty Capital Markets.

Given that eight government agencies are now suing JPMorgan over various issues, apparently including four to six lawsuits from the Justice Department, you have to ask yourself why, he tells Newsmax TV in an exclusive interview.

"What is it about this company which makes it unique relative to all other American companies, that all of these agencies come down on this company at the same point in time?" Bove said.

"This has to be coordinated by someone, and it has to be coordinated by someone above each one of the individual agencies," Bove said.

I hate to make it three must reads in a row, but that's what I'm doing.  Ted Butler has been talking about this assault on JPMorgan for about a week now...and this story from late Monday afternoon pretty much stamps 'paid' on that idea.  I thank West Virginia reader Elliot Simon for sending us this story.


Is 'chaos' ahead? Some truths about Fed policy

Though Bernanke has been clear that the asset purchases will unwind well in advance of an increase in interest rates, the market hasn't listened.

Instead, it has pushed up the 10-year Treasury note yield past 2.8 percent from 2.33 percent when Bernanke delivered the first tapering comments. Yields also have risen in other global markets in response to the Fed's anticipated course, with the decline in India's rupee currency of particular concern.

This is the main danger with Fed policy—that day when the central bank begins to lose control of the rate structure and the market takes over.

No!  Really?  But that's what [free] markets are for, to set things right...and heaven help us all the moment that happens...but the day is coming.  This very interesting commentary was posted on the CNBC website early yesterday afternoon EDT...and it's another contribution from Elliot Simon.


Capital Flows Back to U.S. as Markets Slump Across Asia

Asia’s role as the world’s growth engine is waning as economies across the region weaken and investors pull out billions of dollars.

The Indian rupee fell to a record low today, Thailand is in recession and Indonesian stocks have slumped about 20 percent since their peak. Chinese banks’ bad loans are rising and economists forecast Malaysia will post its second straight quarter of sub-5 percent growth this week.

The clouds forming in Asia as liquidity tightens and China’s slowdown curbs demand for commodities and goods are fueling a sell off of emerging-market stocks, reversing a flow of money into the region in favor of nascent recoveries in the U.S. and Europe. Emerging markets from Brazil to Indonesia have raised borrowing costs in 2013 to try to aid their currencies as the prospect of reduced U.S. monetary stimulus curbs demand for assets in developing nations.

“The eye of the storm is directly above emerging markets now, two years after it hovered over Europe and four years after it hit the U.S.,” said Stephen Jen, co-founder of hedge fund SLJ Macro Partners LLP in London and former head of foreign-exchange strategy at Morgan Stanley. “This could be serious for Asia.”

U.A.E. reader Laurent-Patrick Gally sent me this Bloomberg piece [filed from Singapore...and posted on their website in the wee hours of yesterday morning Denver time] just as I was about to hit the 'send' button on yesterday's column...and since i was already full up, it had to wait until today.


Book TV at FreedomFest 2013: Doug Casey..."Totally Incorrect"

Doug Casey discussed his latest book, "Totally Incorrect."  Mr. Casey opines on such topics as the TSA, WikiLeaks, the Catholic Church, and Dick Cheney.  Book TV spoke to Mr. Casey at FreedomFest, a libertarian conference held annually in Las Vegas.

This video interview with Doug was posted on the Internet site earlier this week...and it's definitely worth watching.


Ta-ta UK freedoms! Miranda matter outs vindictiveness of wounded police state

As the definition of terrorism has expanded to cover activists, placard wavers, protesters and now, apparently, the partners of journalists, the arrest of Glenn Greenwald's partner is just another nail in the coffin of British Freedoms.

David Miranda had just spent a week in Berlin before flying back to his home country, Brazil, via London's Heathrow airport. As he attempted to transit on to his flight home - not enter the UK, mind you, just make an international connection - he was pulled to one side by the UK's border security officers and questioned for nine hours, as well as having all his technical equipment confiscated.

He was detained for the maximum period allowed under the draconian terms of Schedule 7 of the UK's Terrorism Act (2000). His apparent "crime"? To be the partner of campaigning journalist Glenn Greenwald, who broke the Edward Snowden whistle blowing stories. Miranda's detention has caused outrage, rightly, around the world. Diplomatic representations have been made by the Brazilian government to the British, UK MPs are asking questions, and The Guardian newspaper (which is the primary publisher of Greenwald's stories), has sent in the lawyers. This episode is troubling on so many levels, it is difficult to know where to begin. Firstly, the Terrorism Act (2000) is designed to investigate…terrorism - at least, so you would think.

However it is all too easy for mission creep to set in, as I have been saying for years. The notion of terrorism has developed to cover not only terrorists themselves, but also activists, placard wavers, and protesters. And now, apparently, the partners of journalists have also joined the ranks. The old understanding of due legal process is merely yet another quaint, British artifact like the Magna Carta and habeas corpus.

This commentary by Annie Machon, a former intelligence officer for the U.K.'s MI5, was posted on the Russia Today website late Monday evening Moscow time...and it's the second contribution of the day from Roy Stephens.


Roger Cohen: The Egyptian Debacle

Of all the promise of the Arab Spring — for citizenship and agency in the lives of peoples long subjected to servility and humiliation — perhaps the greatest was the idea that the region could escape the paralyzing political trap that offered Western-backed dictatorship or radical Islamism as its only alternatives.

For decades, since the Iranian Revolution of 1979, the Middle East has been caught in this crippling vise. All the ousted strongmen, from Hosni Mubarak in Egypt to Tunisia’s Zine el-Abidine Ben Ali, were insistent that only they stood between their nations and jihadist takeover. This was the currency of their argument to the West. From Washington to Paris, the appeal worked. Money and backing flowed.

In fact, of course, these repressive Arab societies — so illustrative of Western hypocrisy in their power structures, so deadening to the hopes of the young, so shot through with nepotism and cronyism, so distant from a glimpsed modernity — resembled factories for militant Islam rather than bulwarks against it.

This very reasoned op-ed piece found a home on The New York Times website on Monday...and it's definitely worth reading if you have the time.  My thanks go out to Washington state reader S.A.


Egyptian Democratic Coalition Responds to Obama

The National Salvation Front, a coalition of pro-democratic and secular parties in Egypt, set out its objections to remarks made by President Barack Obama Thursday on the escalating violence in Egypt.

Led by Ahmed Said of the Free Egyptians Party, the group issued the following letter:

"Like most Egyptians, we listened with attention to your statement on Egypt's latest developments. As representatives of the non-Islamic political forces in Egypt, we believe in the same fundamental values on which the U.S. was founded. Be we also have 7,000 years of civilization and history that give us a special identity that we are fighting to keep since the Muslim Brotherhood came to power.

"Let us first inform you about who the Muslim brothers are: They’re an unlawful organization operating outside the realm of Egyptian law, receiving foreign funding and laundering money in a flagrant breach of international law. Their aim is to rule the world through a so-called Islamic Caliphate as they believe in their absolute supremacy.

This very interesting response to last Thursday's speech by President Obama found a home over at the Internet site late last Friday afternoon...and even though it's almost a week old, it's definitely worth reading, especially if your a student of the New Great Game.  It's another offering from Roy Stephens.


Turkey's Investors Getting Nervous: Erdogan's Witch Hunt Endangers Economy

Turkish Prime Minister Recep Erdogan has begun scouring the financial industry for scapegoats to blame for the political unrest in his country. Banks and industrialists are being controlled and intimidated, and foreign investors are being scared off.

In a café some distance from the [Istanbul's Levent financial district], Umut Keles, a Turkish analyst with an American investment bank, removes the battery from his mobile phone, afraid of being wiretapped by the Turkish government. He is speaking with us under two conditions: That we not use his real name or that of his employer. The investment banker believes that the government would take action against him if it knew his identity. "There's a witch hunt underway here at the moment," he says.

Levent is Turkey's financial center, home to the offices of banks like HSBC and Deutsche Bank, as well as several corporations. They helped finance the Turkish economic boom in recent years, but now the government suspects them of supporting putschists and terrorists. "We're all afraid," says Keles. Some of his colleagues are thinking about leaving the country for good.

For more than two months now, people in Turkey have taken to the streets to protest against the government of Prime Minister Recep Tayyip Erdogan. The police have brutally crushed the protests, which began as a campaign against the removal of trees in Istanbul's Gezi Park. At least five people have already died in the demonstrations, and about 8,000 have been injured. But Erdogan says the violence wasn't caused by his government or the security forces. Instead, he claims that the unrest is the work of domestic provocateurs and their foreign collaborators.

This 2-page essay was posted on the German website very early yesterday evening Europe time...and it's another contribution to today's column from Roy Stephens.


Indian central bank intervenes on rupee

The Indian rupee slid to a record low on Tuesday, falling past 64 to the dollar, amid a wider sell-off from emerging market assets ahead of an expected tapering of US stimulus.

But the currency reversed most losses as the Reserve Bank of India was cited selling dollars both in the spot and forwards markets, which helped the rupee recover from a fall of 1.6pc, after a 2.3pc rout on Monday.

The rupee remains the worst performer among the major Asian currencies as emerging market current account gap economies like India and Indonesia get hammered as an outflow of capital will put the funding of their deficit in doubt.

The central bank's suspected intervention on Tuesday came after it was largely seen as staying away during the rupee's rout on Monday.

This news item was posted on the Internet site early yesterday afternoon BST...and I thank Roy Stephens once again.


'Liconomics': China's Green Revolution Arrives

This August, China's leaders withdrew to Beidaihe, a bathing resort on the Bohai Sea where they have gone to calmly debate issues of power and personnel since the days of Mao. Politics, or so it seemed, had gone on a summer holiday.

But that's where, on Sunday, August 11, the government released a guideline with the modest title "Opinions of the State Council on Accelerating the Development of Energy-Saving and Environmental Protection Industries." According to the document, the government is upgrading the environmental sector to the rank of a "key industry," a title that had been reserved for the steel and pharmaceutical industries, as well as biotechnology. Under the new guideline, the sector is expected to earn a massive $728 billion (€545 billion) by 2015, and to grow at twice the rate of the rest of the economy.

Beijing wants to boost manufacturers of energy-efficient power plant equipment, significantly increase the number of cars and buses running on liquefied natural gas and further expand the number of wind and solar farms, as well as nuclear power plants.

The government plans to achieve all of this using investments, tax breaks and direct subsidies -- from which companies with foreign investors are expressly to benefit as well.

Of course all of this will required thousands of tonnes of everything...including this fact alone elevates this story from yesterday into the must read category...and I thank Roy Stephens for his final contribution to today's column.


Three King World News Blogs

The first one is with John Embry...and it's headlined "We Are Now on the Verge of an Historic Meltdown and Collapse".  The second interview is with Hong Kong hedge fund manger William Kaye...and it's entitled "Secret Central Bank Activity in the Gold Market Exposed".  The third and final interview is also with William Kaye.  It bears the title "A 2008-Type of Event Will Plunge the World Into a Panic".


Gold, silver, LIBOR, energy -- and now even beer is rigged

Bosses of large breweries in the country have admitted to investigators that a number of firms arranged to raise prices of their premium beer brands, according to reports in German magazine Focus.

The agreements would be struck over the telephone or at the sidelines of industry meetings, the companies were reported to have said.

While details of the investigation into the alleged beer cartel have been emerging for some time, the latest reports highlight the breadth of the alleged collusion.

Documents seen by Focus reveal that during an interrogation in January, Volker Kuhl, head of the Veltins brewery, said large breweries would pass the price-rising agreements along to smaller producers.

I found this story from yesterday's edition of The Telegraph embedded in a GATA release late last night...and Chris Powell figures that once we have the gold/silver price management scheme done with, we'll reinvent ourselves as BATA...Cheers!


Germany plans tax on bitcoin after virtual currency recognised as 'private money'

The German Finance Ministry ruled that Bitcoin is a “unit of account”, and therefore 'mining' them is a form of “money creation”.

This means that, like stocks or shares, any profit from them is subject to Germany’s capital gains tax, at 25pc – unless they are held for more than a year, according to German newspaper Frankfurter Allgemeine Zeitung.

However, the ruling may prove difficult to enforce, as Bitcoin are traded anonymously, and therefore cannot be traced.

In June, America's Internal Revenue Service (IRS) said it was examining the use of virtual currencies such as bitcoins amid fears that Americans are using them to evade taxes.

This article was posted on the Internet site early yesterday afternoon...and is a story that didn't make the cut for yesterday's column.  I found this particular copy of it embedded in another GATA release.


World’s Largest Silver Producing Company Reports Big Decline in Production

The world's largest silver producer saw its production decline substantially in the first half of 2013. Many assume this decline came from Fresnillo, which is known as the largest primary silver miner in the world. However, it was recorded by Poland's KGHM Polska Miedź S.A., the largest by-product silver producer on the planet whose annual silver production was 41 million oz in 2012.

Silver production at KGHM Polska Miedź S.A. declined a whopping 17% from 653 tonnes in 1H 2012, to only 544 tonnes 1H 2013.

According to KGHM Polska Miedź S.A.'s 1H 2013 presentation, the decline in silver production was due to lower silver content in processed concentrate, lack of delivery of purchased concentrate with higher silver content and to a change in the schedule for the maintenance shutdown of the Precious Metal Plant.

The decline in silver production was not confined to just the second quarter, it also fell 17% during the first quarter of 2013.

This commentary, with embedded charts, was posted on the Internet site yesterday...and it's definitely worth reading.  I thank Elliot Simon for sharing it with us.


Dubai’s gold trade waits on India windfall

UAE’s gold and jewellery trade aims to be a direct beneficiary as India imposes further controls on domestic consumption of the metal in all its forms. India has just raised import duty on bullion from 8 per cent to 10, which would further raise retail prices for shoppers in India.

This is where opportunity exists for Dubai’s jewellery retailers. Already a substantial gap has built up between prices here and what the same would cost in India. (For instance, a no-frills 10-sovereign gold chain will cost Dh2,800-Dh3,000 less if bought in the UAE as compared to what it would be in the southern state of Kerala, where there is a sales tax of 5 per cent. Sales tax varies from state to state; for instance Gujarat’s is lower at 1 per cent.)

But the spin-off for local jewellers will not be confined to tapping demand from Indian shoppers who want to make use of the growing price differential. “We have heard reports about new controls on gold purchases in Pakistan and higher taxes elsewhere in south-east Asia, all of which significantly raises the attractiveness of buying jewellery here and then taking it back to their home countries,” said Shamlal Ahmad, director of international operations at Malabar Gold and Diamonds.

“Authorities at Indian airports are lenient in letting through what Indian expats can bring into the country,” Ahmad said.

This gold-related story, filed from Dubai, was posted on the Internet site early Monday afternoon local time...and I thank reader 'Jan in Denmark' for sending it along.


No Peace at Mines Exacerbates Risk: South Africa Credit

More than a year after South Africa's worst mining violence since the end of apartheid, platinum mines are still striving to restore peace, a factor driving up the nation’s default risk faster than for emerging-market peers.

Contracts insuring South Africa debt against non-payment for five years have increased 109 basis points to 244 since Aug. 16, 2012, when 34 people died as police opened fire on protesting mineworkers at Longmin Plc’s Marikana mine. That’s a bigger jump than for any investment-grade country, according to data compiled by Bloomberg. Contracts for Mexico, which has a similar credit rating, climbed 13 basis points, or 0.13 percentage point, to 125 in the same period.

Labor unrest that began last year at Marikana spread across Africa’s largest economy, prompting Fitch Ratings, Standard & Poor’s and Moody’s Investors Service to downgrade South Africa for the first time since white minority rule ended in 1994. Wage disputes continue at platinum and gold mines, while a strike by 30,000 workers shut production at car makers including General Motors Co., Toyota Motor Corp. and Bayerische Motoren Werke AG.

“Investors are waiting to see how South Africa resolves the labor issues,” Victor Mphaphuli, a portfolio manager at Stanlib Asset Management, which oversees the equivalent of $50 billion, said by phone from Johannesburg yesterday. “It’s something that still sits there, that’s hanging over our market.”

This Bloomberg story, filed from Capetown, was posted on their website very early yesterday morning MDT...and I thank Ulrike Marx for bringing it to our attention.


India mulls leasing of IMF-bought gold

The Indian government is deliberating whether or not to lease the 200 tonnes of gold it bought from the International Monetary Fund  in the international market to earn dollars.

The Reserve Bank of India (RBI) purchased the gold from the IMF for an estimated price of around $6.70 billion in 2009, and under the IMF’s limited gold sales programme.

"The deal was misinterpreted by many at that time, that it could further inflate the gold price, when the price was already at a ruling high. India’s purchase of gold was a reserve management strategy,'' a banking official told Mineweb. He added that globally, central banks were showing an increased interest in diversifying their holdings, to protect against a slumping dollar.

This story was posted on the Internet site earlier this morning...and I happened on it just before I hit the 'send' button on today's column.


Will the new gold iPhone lead to an unexpected windfall for Apple in China and India?

Amid all the head-scratching about the apparently confirmed (but not by Apple) rumor of a forthcoming gold iPhone, one observation has come up again and again: It’s likely to be quite popular in China and India.

In China, “[N]othing trumps gold as a symbol of wealth and privilege,” Simon Cousins, CEO of China-focused PR company Illuminant told Gizmodo. All Things D, among others, has reported that the gold coating would be an option on the iPhone 5S. Other rumors suggest that Apple is releasing a high and a low-end model of the model of the iPhone in September, so it’s possible that a gold-anodized finish on higher-end iPhones will help differentiate them from the lower-end model in emerging markets, and make it an object of desire.

Some people have more money than brains...and this news item proves my point.  However, the photo is worth the trip...and they don't charge for just looking at the picture, yet.  My thanks to Ulrike Marx for her last story in today's column.


China Gold-Mine Deals at Record After Price Plunge

Acquisitions by China’s gold mining companies reached a record this year as the metal’s steepest quarterly drop in more than nine decades slashes mine values and sidelines Western rivals laden with debt.

Takeovers and asset purchases by producers based in China and Hong Kong rose to a record $2.24 billion this year, beating last year’s record $1.96 billion, according to data compiled by Bloomberg. Zijin Mining Group Co., the world’s seventh-largest gold company by market value, and Zhaojin Mining Industry Co. are among companies looking to strike after the share prices of targets fell an average 53 percent since bullion peaked in 2011.

“The gold declines are good for key Chinese producers to buy overseas assets,” Chen He, head of overseas resources development at Zhaojin Mining, China’s fourth-largest producer, with a $2.3 billion market value, said in an interview. “This year our main task is to closely watch potential targets as prices in 2014 are forecast to be lower.”

This Bloomberg news item, filed from Melbourne on their Wednesday morning, was posted on their Internet site on Tuesday evening MDT.  It's worth reading...and I thank reader Ken Hurt for sending it our way.


Gold Will Continue to Flow from West to East: Brien Lundin, Gold Newsletter

“We talk about this war of the West versus the East, and ‘paper’ gold versus ‘real,’ physical gold — we said that there was a huge discrepancy between these two markets. Traders retorted that it didn’t really matter who was buying the gold or who was selling. When gold was falling, it didn’t matter why. The only thing that mattered was the price.”

“But now, I believe equilibrium must be reached between the two markets – and I believe this should drive the price of gold higher than where it is today,” Lundin explains.

How are Western “paper” markets clashing with Eastern “real” gold markets?

“Half of the world has been driving gold down, selling it hand over fist,” says Lundin. “The other side, in India and Asia, is buying just as vigorously and is also willing to buy at much higher prices. Since the June 27 low, the price of gold has moved upwards towards equilibrium between these two forces.”

This edition of Sprott's Thoughts was written by Henry Bonner and posted on the Internet site yesterday.



¤ 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,



¤ The Wrap

I feel like the proverbial man who screamed fire in a crowded theater. Only instead of there being no fire, there are two fires – the long market corner in COMEX gold and the short market corner in COMEX silver both being run by the same crooked bank, JPMorgan. And instead of a panic resulting from screaming fire, the regulators at the CFTC and the CME, as well as the crooks at JPMorgan are pretending that a 23% or 15% market share by one entity is not the market corner it always has been in the past. But along with the pretending comes something else - silence in terms of a rebuttal. My greatest fear is in publicly humiliating myself with false analysis, and my second greatest fear is getting caught up in a legal tangle with the crooks at JPMorgan and the CME for incorrectly calling them crooks. The lack of a rebuttal to my allegations of JPMorgan cornering two markets does diminish my two fears. - Silver analyst Ted Butler, 17 August 2013

The sell-offs in the early afternoon in Hong Kong on their Tuesday amounted to nothing, as most of the precious metals finished more or less unchanged from where they closed on Monday.  I was expecting some rather unhappy price action in New York as some sort of follow-through, but that didn't happen either.  So one has to wonder why the sell-off occurred in the first place, especially in silver which got smoked for almost three percent in about ten minutes.

In the thinly-traded Far East markets it had to be JPMorgan's high-frequency traders, as volume went from next to nothing to monstrous in the space of an hour, and they still have that short-side corner on the silver market that they can't get rid of.

As I said on Saturday, it's a mug's game trying to second guess what "da boyz" are going to be doing from one minute to the next, and yesterday's price action makes that abundantly clear.

However, with JPMorgan under legal assault from all directions, it will be interesting to see if their precious metal price management scheme is one of casualties.  If it is, it can't happen soon enough to suit me.

Not too much happened price wise in all four precious metals up until 1:45 p.m. Hong Kong time on their Wednesday, and at that time once again, a willing seller showed up in the silver market, however they only dropped the price by two bits this time.  But the night is young, and London open is thirty minutes away as I write this paragraph.

And as I hit the send button on today's effort at 4:46 a.m. EDT, I note that all four precious metals are trading down from their Tuesday close in New York.  Gold is off about eight bucks, and silver is down about 20 cents.  Volumes are heavier than I like to see at this time of day, but virtually all of it is of the high-frequency trading variety.  The dollar index is up 14 basis points.

Before heading off to bed, I'd like to mention something that's cooking over in the energy department at Casey Research.  This is Marin Katusa's bailiwick, and his commentary is entitled "The World's Next Monster Energy Play.”  It certainly sounds interesting, and if energy is something that you have a keen interest in, this commentary/offer is something you should consider.  It doesn't cost a thing to read about it, and you can find out more by clicking here.

That's all I have for today, and I'll see you here tomorrow.