Casey Research Publication
Gold & Silver Daily
"We know what should happen...and why. But will it...and if so, how soon?"
 

¤ Yesterday In Gold & Silver

The gold price didn't do much in Far East and early London trading on their Thursday, but the HFT volume was pretty heavy in early Far East trading, and I'm sure that's why the tiny rallies in gold didn't get too far.

By the time Comex trading began at 8:20 a.m. EDT in New York, gold was down a dollar and change from Wednesday's close, and at 8:30 a.m. a not-for-profit seller [read high-frequency trader] hit gold for about fifteen bucks in less than ten minutes, it's low tick of the day.

From there, the price moved quietly higher until about 12:45 p.m. EDT, and then a big price spike occurred which had all the hallmarks of a short-covering rally.  That ended/got capped less than ten minutes later, and from there the gold price moved slowly higher right into the 5:15 p.m. electronic close.

Both the low and high ticks occurred in New York.  Kitco recorded the low tick as $1,318.00 spot, and the high tick at $1,371.40 spot.  The high came in a tiny price spike around 2:15 p.m. in electronic trading.

Gold closed at $1,366.10 spot, up $29.60 on the day.  Volume was immense, 237,000 contracts net of August and September.

Here's the New York Spot Gold [Bid] chart on its own, so you can see the New York price action more clearly.

The price pattern in silver yesterday was pretty much the same as gold's, so I shan't go into the details.

The low and high price ticks were $21.66 and $23.32 spot, a big intraday move.

Silver closed at $23.01 spot, up $1.135 from Wednesday's close.  Net volume was an eye-watering 73,000 contracts.

With some minor variations, the platinum and palladium charts look almost identical to the gold and silver charts, and here they are,

The dollar index was very 'volatile' yesterday, and that's being kind.  It closed late Tuesday afternoon in New York at 81.71, traded sideways until 10 a.m. Hong Kong time before falling off a 20 basis point cliff in about fifteen minutes, hitting an interim low of 81.47.  From there it traded sideways until the 8:20 a.m. Comex open, and then rose sharply to its 81.93 high that came at the 10 a.m. EDT London p.m. gold fix.  It was all down hill from there, with the low tick of 81.10 coming at the 4 p.m. close of the equity markets in New York.  From there it more or less traded sideways into the close, finishing the Thursday session at 81.17, down 54 points on the day.

If you check the gold chart vs. the dollar index chart, you won't see much correlation at all.  If you find some, please let me know.

Not surprisingly, the gold stocks opened in the red, and the open was the low for the day.  The stocks were in positive territory to stay by 11:30 a.m. EDT, and away they went to the upside, with a big boost from the short covering rally that started at 12:45 p.m.  The stocks peaked at 2:15 p.m, and then chopped sideways into the close.  The HUI finished up 6.14%.

The silver stocks were on fire as well, but because Pan American Silver didn't do well on the day, Nick Laird's Intraday Silver Sentiment Index only closed up 4.77%.  Almost all of the junior producers did much better than that.

(Click on image to enlarge)

The CME's Daily Delivery Report was a no-show yesterday, the second time in about a month, as they didn't update their website with yesterday's data, and I checked right up until I had to file at 5:20 a.m. EDT this morning.

Surprisingly enough, GLD showed a small decline yesterday, as 10,092 troy ounces were reported withdrawn.  I'd guess that this would represent a fee payment of some kind.  It seems to be, at least based on the price action over the last few day, that GLD is owed a fair chunk of gold.  Maybe I'm being impatient, so we'll see what today's report shows.  As far as SLV was concerned, there was a very large deposit reported yesterday, as an authorized participant[s] deposited 2,314,493 troy ounces of the stuff.

Joshua Gibbons, the Guru or the SLV Bar List, has updated his website with the in/out activity over at SLV for the week ending, Wednesday, August 14th.  Here is what he had to say:  "Analysis of the 14 August bar list, and comparison to the previous week's list: No bars were removed, added or had a serial number change. As of the time that the bar list was produced, it was over-allocated 501.5 troy ounces. This was a rare week of no movement in SLV."  The link to his website is here.

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

Over at the Comex-approved depositories on Wednesday, they reported receiving 31,940 troy ounces of gold, and shipped out a couple of good delivery bars totaling 199 troy ounces.  All of the gold received ended up in the vault of HSBC USA.  The link to that 'action' is here.

In silver, these same depositories reported receiving 595,982 troy ounces of silver, and that all went into the depositories of Canada's Bank of Nova Scotia.  There was a small withdrawal of 4,977 troy ounces reported.  The link to that activity is here.

I have a fair number of stories for you again today, and the final edit is yours once again, dear reader.

 

¤ Critical Reads

DOJ, FBI admit they inflated claims about mortgage fraud crackdown last year

The Justice Department and FBI have quietly acknowledged they grossly overstated the scope of a mortgage fraud crackdown, which the administration heralded with much fanfare a few weeks before last year's presidential election. 

According to a memo circulated by the FBI and a correction posted online by the Justice Department, the number of defendants, the number of victims and the size of the losses are, in reality, a fraction of what officials claimed last October. 

The DOJ and FBI had long been dogged by claims that their numbers were inflated. Bloomberg has been reporting since October that the cases cited by Holder included charges filed during the George W. Bush administration. 

Bloomberg continued to press for clarification. The administration went dark on the issue until Friday, when the FBI acknowledged in a memo that it had conducted an "extensive review" and found problems. The original figures included defendants who "were the subject of other prosecutive actions," as well as defendants charged in cases that did not fall under the anti-mortgage fraud program in question, according to the memo, obtained by FoxNews.com.

So they lied about it!  That's shameful.... wink))  At least they owned up to it in the end when they finally got caught red-handed...but it took a while.  This story was posted on the foxnews.com Internet site on Thursday...and it's a story I found in yesterday's edition of the King Report.

Read more...

More Car Loans Than Mortgages in U.S.

There are now more auto loans than mortgages in the U.S., but most of them are going to older Americans, according to new data from the Federal Reserve Bank of New York.

Americans were holding 84 million auto loans in the second quarter of 2013, compared with 80.6 million mortgages, the New York Fed’s Household Debt and Credit Report showed. Borrowing for vehicles reached $814 billion in the second quarter, an increase of $20 billion from the previous quarter. The 2.5% jump was bigger than any other loan category in the quarter.

Most auto loans go to older borrowers, with the greatest share going to people aged 30 to 49. That trend predated the recession, but the recovery has come faster for older Americans. The only group originating more loans than before the recession are people over 50, likely a result of aging Baby Boomers.

This article showed up on The Wall Street Journal website at noon on Wednesday...and it's another story I found in yesterday's edition of the King Report.

Read more...

Retail Expert Davidowitz: Wal-Mart's Woes Stem From Economy in 'State of Collapse'

Wal-Mart issued weak earnings news Thursday, but the company isn't doing anything wrong, says Howard Davidowitz, chairman of retail consultant Davidowitz & Associates. It's merely suffering from a weak economy.

"Wal-Mart is a terrific operator," Davidowitz tells Yahoo. "They didn't suddenly become stupid. ... The economy is in a state of collapse. That's what's going on."

The world's biggest retailer cut its full-year profit forecast after second-quarter profit came in below analysts' expectations.

The employment situation illustrates the weakness of the U.S. economy. Of the new jobs generated this year, 75 percent are low-wage, part-time, Davidowitz explains.

Nice to see someone call a spade a shovel.  This must read story was posted on the moneynews.com Internet site early yesterday afternoon EDT...and I thank West Virginia reader Elliot Simon for sending it our way.

Read more...

Gartman: I timed the market wrong...I'm going to the sidelines.

This 4:13 minute video interview was posted on the CNBC website shortly after the markets closed in New York yesterday.  But Dennis mentions that his long gold position is doing well...and he'll be keeping that.  This is the second commentary in a row from Elliot Simon.
 

Read more...

China, Japan Sell Most US Paper In Years; Foreign Treasury Holdings At 2013 Lows

And the bid hits just keep on coming.

While previously we reported the foreigners as an aggregate class sold the most gross US securities ever in the month of June, we also learned that in June the biggest selling came from America's two largest creditors: China and Japan (excluding the Fed of course, whose P&L losses are now approaching $300 billion in the past 3 months, or would if the Fed marked to anything but unicorns).

In June, the two countries combined sold $42 billion, with each selling over $20 billion: the most in years.

The reality is that America's creditors are saying goodbye just at a time when Bernanke is preparing to taper. The bottom line: Grand total foreign TSY holdings dropped to just over $5.600 trillion, down $57 billion in one month, and the lowest total in 2013.

This very short Zero Hedge piece from yesterday has two embedded graphs that make it a must read.  I thank Manitoba reader Ulrike Marx for her first contribution to today's column.

Read more...

Unreliable Guesswork in Valuing Murky JPMorgan Chase Trades

On Wall Street, bets worth hundreds of billions of dollars are valued using a considerable amount of guesswork.

The dangers of that approach were revealed on Wednesday in the government’s criminal complaints against two former JPMorgan Chase traders.

Their trading didn’t take place in a market where large numbers of transactions produced transparent and public prices through the day, like the stock market. Instead, the traders made bets with derivatives, financial contracts that often trade sporadically and in the shadows of Wall Street. They focused on so-called credit derivatives, which allow traders to bet on the perceived creditworthiness of companies. In particular, they took large positions in a credit derivatives product called CDX. NA. IG9, which represents a basket of companies.

In its lawsuits, the government says that the traders deliberately valued such bets to make their losses look lower than they actually were in the early months of 2012.

This story appeared on The New York Times website after the markets closed on Wednesday...and it's courtesy of Phil Barlett.

Read more...

Former Marine Colonel To Town Council: 'You're Building A Domestic Army; Are You Blind?'

In a rousing confrontation at a local council meeting in Concord, NH...he calls out his government for facilitating what he feels is a needless militarization of a domestic force.

And he should know, he helped build one in Iraq.

"What we're doing here, and let's not kid about it, is we're building a domestic army and shrinking the military because the government is afraid of its own citizens ... "

"We're building an Army over here and I can't believe people aren't seeing it, is everybody blind?"

This story, posted on the businessinsider.com early yesterday morning, is an absolute must read for all American citizens...and I thank Roy Stephens for bringing it to our attention.

Read more...

That Latest Bank of England Press Conference in Full

If John Cleese and Michael Palin of "Monty Python's Flying Circus" fame were doing a skit on the latest report out of the Bank of England...it would read as written in this "report" by PFP Wealth Management  out of the U.K.  Very British...very tongue in cheek...and I thank London reader Jonathan Lavy for today's humour.
 

Read more...

Egypt vows lethal response ahead of nationwide ‘March of Anger’

The bloodiest in decade’s violence in Egypt has been condemned by the UN Security Council. Meanwhile Egyptian law enforcement has been ordered to use deadly force to prevent further riots as the Muslim Brotherhood is bracing for a “March of Anger.”

“The view of council members is that it is important to end violence in Egypt and that the parties exercise maximum restraint,” Argentine UN Ambassador Maria Cristina Perceval told reporters after an emergency closed session of the body. “There was a common desire on the need to stop violence and to advance national reconciliation.”

The bloodiest in decade’s violence in Egypt has been condemned by the UN Security Council. Meanwhile Egyptian law enforcement has been ordered to use deadly force to prevent further riots as the Muslim Brotherhood is bracing for a “March of Anger.”

According to the latest figures from the Egyptian Health Ministry at least 638 people were killed and 3,994 injured after authorities levelled pro-Morsi protest camps on Wednesday. At least 43 of those killed were security personnel. 

The opposition however says that at least 4,500 were killed in that massacre. Activists claimed that authorities were raiding mosques and pressuring the relatives of the victims to admit they had committed suicide and refusing to include bodies mutilated by fire into the official death toll.

This Russia Today news item was posted on their website in the wee hours of this morning Moscow time...and I thank Roy Stephens for his second offering of the day.

Read more...

Iranian Electoral Candidate Disqualified for Being Too Attractive

Today in backhanded compliments, a female city council candidate in Qazvin, Iran has reportedly been barred from taking the seat because she is considered too attractive.

27-year-old Nina Siahkali Moradi received 10,000 votes during the city's most recent election, placing her 14th out of the 163 candidates, which landed her the title of "alternate member of council." However when one of those ranked above her was elected as mayor, Moradi was instead disqualified. A senior office in Qazvin has been quoted as saying, "We don't want a catwalk model on the council."

Moradi, a graduate student in architecture ran what many consider a successfully forward-leaning and high-profile election campaign, leading many to cite her disqualification as another blatant example of Iran's sexist policy and Islamic fundamentalism of the highest order.

It's stories like this that really makes the Iranian government look bad.  And as Roy Stephens said in the e-mail to me yesterday..."You can't make this stuff up."  He's right about that.  This article was posted on the alternet.org Internet site yesterday...and it's Roy's third and final offering in today's column.

Read more...

Mark O'Byrne: Market manipulation explains gold price plunge amid soaring demand

In his daily commentary at GoldCore, Mark O'Byrne contrasts the recent plunge in the gold price with the explosion in metal demand and explains the paradox this way:

"All available data shows very strong supply-and-demand fundamentals and yet a huge, historic 35 percent price fall in the quarter. This lends credence to the allegations of market manipulation put forward by the Gold Anti-Trust Action Committee, whistle blower Andrew Maguire, Max Keiser, Zero Hedge, and many others in the blogosphere."

Mark's daily blog was posted on the goldcore.com Internet site yesterday...and I found it, along with Chris Powell's two paragraphs of introduction, in a GATA release yesterday.  It's an absolute must read.

Read more...

WGC: Consumer demand for gold up 53% in Q2 2013 led by strong growth in China and India

The previous goldcore.com story mentions [and quotes from] the World Gold Council's press release from yesterday.  Here's the press release in its entirety...and I thank Manitoba reader Ulrike Marx for finding it for us.

Read more...

CNBC: Investor Sentiment in Gold May Be Turning Positive

Investor sentiment toward gold may be shifting to the long side, as gold prices have risen sharply in recent weeks, CNBC reported.

Gold has jumped 13 percent since nearly hitting a three-year low in June, and was at $1,337 in early trading Thursday.

The precious metal has benefited from short covering and heavy buying especially from China, according to CNBC. The China Gold Association reported gold consumption rose 54 percent in the first half of 2013.

"The physical demand for gold is robust and we're seeing premiums in Asia that you don't see in other parts of the world," Barry Dawes, head of resources at Paradigm Securities, told CNBC.

This is the closest the main stream media can get to a positive story about gold these days...and even in this one they had to throw in a few disparaging bits of nonsense.  It was posted on the moneynews.com Internet site early yesterday morning...and my thanks go out to Elliot Simon once again.

Read more...

Jeff Nielson: World Gold Council can't spell 'decoupling'

With its latest report on gold demand, the World Gold Council is trying to conceal the distinction between paper gold and real metal, Jeff Nielson of Bullion Bulls Canada writes today. Gold demand can be said to have declined lately, Nielson notes, only if paper gold ownership is counted as the gold council counts it. But if only ownership of real metal is counted, demand is off the charts, he adds. That is, the world is figuring out what the World Gold Council can't admit: that paper gold is a fraud, a claim against metal that doesn't exist.

This rant by Jeff was posted on the bullionbullscanada.com Internet site yesterday...and I found it embedded in a GATA release...and I thank Chris Powell for wordsmithing the introductory paragraph, thus saving me some time.  It's worth reading.

Read more...

Late's diner offers 1964 prices to customers paying with silver coins

Late’s diner on S. Ninth Street [in Manitowoc, Wisconsin - Ed] is giving people a reason to break open their piggy banks and empty out their pockets for loose change.

Late’s Burgers — known for their deep-fried cheese curds and burgers — is offering customers 1964 pricing if they come in and pay with coins minted before 1965.

Birkenstock has been at the diner for 14 years. He wanted to show people how the value of their dollar is changing, causing the prices to presumably “rise,” but it’s essentially the same.

“I decided to illustrate that by taking all of our prices and applying what the cost of it would be if you were paying in the currency of the ‘olden days,’ being 1964 or before, with silver coins,” Birkenstock said.

This very interesting story appeared on the htrnews.com Internet site on Wednesday...and I thank Elliot Simon for bringing this story to my attention...and now to yours.  It's his last contribution to today's column.

Read more...

Russia Today fans suspicion about Fed's gold custodianship

On Thursday, the Russia Today television network spent a few minutes fanning the increasingly reasonable suspicion that the Federal Reserve has been less than an honest custodian of foreign central bank gold. The segment includes brief commentary from GATA's good friend, Peter Boehringer, chairman of the German Precious Metals Association.

I borrowed the headline and the introductory paragraph from a GATA release yesterday, but the first person through the door with this video clip was reader "David D", for which I thank him.  The segment is less than five minutes long and is posted on the youtube.com Internet site.

Read more...

Eric Sprott sneaks GATA into the Toronto Globe and Mail

This was a question and answer session between G&M readers and Eric Sprott.  There is a long list of questions...and Eric, to his credit, pulls no punches.  It's definitely worth the read...and I found this posted in another GATA release yesterday evening.

Read more...

 

¤ The Funnies

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¤ The Wrap

As I mentioned at the top of this column, yesterday's spike in all four precious metals had the hallmarks of a short covering rally.  However, the volumes in gold and silver were really over the top, and I'm not sure what to make of it.  The preliminary open interest numbers in silver and gold, although higher, are rather subdued considering the magnitude of the price move, and I'm rather happy about that.

This is another case where we'll have to wait for next Friday's Commitment of Traders Report to get some sort of clue as to what is going on internally with the traders in the both gold and silver.

Talking about COT Reports, we get one today at 3:30 p.m. EDT.  It's for the reporting week ending at the 1:30 p.m. EDT close of Comex trading on Tuesday, August 13th.  Needless to say, I'll be more than interested in what's in it, and even more than that, what Ted Butler's take on it is.  I'll let you know what I find out in this space on Saturday.

Here are the 6-month charts for both silver and gold.  We are nowhere near overbought in gold, but certainly are in silver.  I will not hazard a guess as to what this may, or may not, mean for these metals going forward, but I will venture a guess that any 'correction' will be short-lived before we continue to power higher.

(Click on image to enlarge)

(Click on image to enlarge)

Once again there was no follow-through rally in Tokyo or Hong Kong after yesterday's big up day in New York, as it was as quiet as the proverbial church mouse in Far East trading on their Friday, and not much has changed now that London has opened for business.  As I write this paragraph at 3:46 a.m. EDT, London has been open forty-five minutes, and gold's gross volume is already north of 38,000 contracts, and silver's net volume is over 10,000 contracts.  As usual, it's all of the HFT variety.  After a wild Thursday, the dollar index is not doing a thing.

And as I hit the send button on today's column at 5:20 a.m. EDT, gold is down about four bucks, and silver is down fifteen cents.  Gold volume is now up to a bit over 43,000 in gold, and 12,000 in silver.  These are huge numbers for little or no price movement.  The dollar index is now up a handful of basis points.

Today is Friday, and I'm wide open for any price scenario I find when I switch my computer on later this morning.  The truth is that nobody knows what's going to happen next.  All the precious metal 'analysts', including me, are making this up as we go along.  We know what should happen, and why.  But will it, and if so, how soon?

Like Ted Butler, I vote for right here and now, but the fact of the matter is that only JPMorgan Chase has a clue, as they are in the golden driver's seat.

Before heading off to bed, here's a little something that I'd like you to read, and spend a few minutes on, if you're so inclined.

As many of you have seen, Casey Research has put a bit of its weight behind the Hard Assets Alliance as a great way to buy gold and silver.  And, as you know, I'm not a fan of any form of paper gold.  It's just too easy for it to be substituted for something else.  But, I can't deny its become quite popular because its just more convenient.  Well, the guys behind Hard Assets Alliance say their solution is just easy as GLD, but is real ownership: direct delivery and allocated storage, outside the banking cartel.  

But, in this world of complex schemes, before I buy into anything "new" with gold, I prefer to really understand what I'm getting into, and to ensure it is 100% my asset.  Which is why I'm actually excited that Ed D'Agostino, HAA's general manager, has agreed to sit down and answer any of my and your questions about the program.  If you haven't checked it out yet, now would be a good time to do so.

Then, send any questions you have to HAAquestions@caseyresearch.com.  Our customer service folks will compile them, and then we'll sit down with Ed for a video interview to get them all answered, which I'll share just as soon as it is ready.  So, here's your chance -- one I'd sure like to get with the guys from GLD or JP Morgan Chase, albeit for different reasons -- to ask any question you want of the folks behind the Hard Assets Alliance.

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