Casey Research Publication
Gold & Silver Daily
"JPMorgan et al pulled their bids and ran the stops. The result was another waterfall price decline in both gold and silver."
 

¤ Yesterday In Gold & Silver

Gold got sold off a bit in very light Far East trading yesterday...and was down about fifteen bucks when London opened for business on Thursday morning.  But a rally of sorts began at that time...and by 8:30 a.m. Eastern time in New York, gold was back in positive territory from Wednesday's close.

But that turned out to be the high of the day, at $1,776.60 spot.  Gold traded flat from there until the equity markets opened in New York at 9:30 a.m...and, as we've seen quite a few times in the last several months, a not-for-profit seller was there to drive it down to its low of the day [$1,734.60 spot] which came a few minutes after 10:30 a.m. Eastern.

The gold price recovered a bit from that low, but wasn't allowed to rally back to Wednesday's closing price...although it certainly showed signs of wanting to do exactly that...and once it hit $1,760 spot, it traded virtually ruler flat until the close of electronic trading at 5:15 p.m. in New York.

The gold price closed at $1,758.00 spot...down $10.60 on the day.  Net volume was around a 146,000 contracts.

Silver's price action on Thursday was very much a derivative of the gold price.  Silver's high tick in New York [$34.44 spot] came at 9:00 a.m. Eastern time right on the button...the low [$33.05 spot] came at the same time as gold's low price...10:32 a.m. Eastern time.

Silver definitely wanted to blast well into positive territory from there...and made into the plus column for a few minutes, but then ran into a willing seller shortly before the Comex close at 1:30 p.m. in New York.

Silver closed at $34.03 spot...down a penny from Wednesday's close.  Net volume was about 36,000 contracts.

Platinum was also hit...but palladium was hardly touched.  The dollar was not a factor.

The gold stocks followed the gold price around like a shadow once again...and the HUI looked identical to the gold chart while the New York equity markets were open...finishing down 0.70% on the day.

Although the silver stocks were mixed yesterday, a couple of the major companies that form a fairly large chunk of Nick Laird's Silver Sentiment Index got hit pretty hard...one on a downgrade and the other on bad news.  The index closed down 4.06% on the day.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that zero gold and 36 silver contracts were posted for delivery on Monday.  If you want to see what little action there was, the link to the Issuers and Stoppers Report is here.

For the fifth business day in a row, the GLD ETF reported taking in gold.  Yesterday they added 48,641 troy ounces of the stuff.  There was no reported change in SLV.

The U.S. Mint did not have a sales report yesterday.  This is turning into the slowest sales month they've had in years.

They had a rather busy day over at the Comex-approved depositories on Wednesday.  They received 599,873 troy ounces of silver...and shipped 564,778 ounce of the stuff out the door.  The link to that action is here.

Silver analyst Ted Butler had another new commentary posted at his website yesterday, this one about MF Global.  [Ted's background is in the futures market, having started as a commodity broker at Merrill Lynch some 40 years ago.  He hasn't traded futures for years, as is no way personally involved in the MF Global mess.  He's strictly an outside observer and independent analyst.]  Calling the MF Global debacle an unmitigated disaster, here are a couple of free paragraphs...

"The disaster is that for the first time in modern financial history, the main guarantee of the clearinghouse system has completely failed its most important constituent – the customer base. The underlying promise to every participant in the futures market is that your money and open positions are safe from theft and default. This is the very glue that holds the future market together, namely, that all market participants can depend upon strict regulation and oversight to safeguard against fraud and theft. That’s what has made the US organized futures exchange system the envy of the world. Until now.  For more than a week, almost all of the 50,000 commodity customers of MF Global are in limbo as to the access and status of their funds on deposit and open positions. This is unprecedented and beyond bad. For these 50,000 customers, it’s the equivalent of discovering your bank just went out of business and there is no assurance all your funds will be returned."

"Let me cut to the chase here and pinpoint the real problem – the CME Group. I know I have continuously criticized the CME, even calling it a criminal enterprise on many occasions, but in truth I may have understated the case. Yes, I would agree that the immediate cause of the MF Global bankruptcy was MF Global itself; but what turned it into a disaster of unprecedented proportions was the CME Group. The CME Group was the front line regulator for MFG, responsible for auditing and insuring the safety of customer funds and for guaranteeing those funds in a worst case scenario. The CME failed at every turn. Not only did its auditing fail miserably, the CME failed to step up to the plate to safeguard customer funds after it was discovered that $600 million was missing. This is like a case of paying premiums for years on an insurance policy only to be denied coverage when presenting a claim for the first time. I know that the federal commodity regulator, the CFTC, has been negligent in the case of MF Global as well, but that does not mitigate the CME’s failures."

I have the usual complement of stories today...and I must admit that it's always a relief to leave the final edit up to you.

 

¤ Critical Reads

Thanksgiving Meal Cost Jumps 13%

The cost of a Thanksgiving dinner in the U.S. will jump 13 percent this year, the biggest gain in two decades, as prices rose for everything from turkey to green peas to milk, the American Farm Bureau Federation said.

A meal for 10 people on the holiday, which falls on Nov. 24 this year, will rise to $49.20 from $43.47 last year, the biggest increase since 1990, based on foods traditionally served including stuffing and pumpkin pie, the farm group said today in a release. Turkey was the most expensive and had the biggest gain, with a 16-pound bird up 22 percent at $21.57.

Reader Scott Pluschau sent me this Bloomberg story from yesterday...and the link is here.

Read more...

MF Global Assets Have Left The Building: How, When, Where

Almost everyone wondering where the missing MF Global customer assets have gone, thinks they will show up eventually.

I believe the assets are long gone.

The mixed bag of marketable securities taken from customer segregated accounts, used most likely to meet margin calls and satisfy “important” customers closing accounts during the last days, will, in my opinion, never be seen again.

Too much time has passed for anyone to still reasonably expect that the “discrepancy” is just a timing difference or a misallocation between accounts, according to several sources who prefer to remain anonymous because of the sensitivity of the situation. All of the statements made on the record by those in a position to know point to assets taken out of the firm and now gone for good.

This incredible must read article was posted in Forbes on Wednesday...and I borrowed it from yesterday's King Report.  The link is here.

Read more...

MF Global’s Missing Funds May Be ‘Massive’ Ploy: CFTC’s Chilton

The $593 million shortfall in client money at MF Global Holdings Ltd., the broker that filed for bankruptcy on Oct. 31, appears to result from a “massive hide- and-seek ploy,” Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission, said today.

The agency took the rare step of publicly announcing its investigation, which began on Oct. 31, saying it was in the public interest to confirm the enforcement action.

“This isn’t just a lost and found inquiry; it’s a full-on effort to get to the bottom of what appears to be a massive hide-and-seek ploy,” Chilton, a Democrat, said in an e-mail.

“It’s a distinct possibility, some would say probability, that somebody has done something with the money, and that it’s not going to be ‘all of a sudden discovered’ with an innocent explanation,” Chilton said. “If that’s the case, it’s patently illegal. I don’t know yet. Our investigation will uncover that, and we’re aggressively pursuing this.”

I hope the CFTC does a better and faster job of this than they're doing with the now 3-year old investigation into the rigging of the silver price.  West Virginia reader Elliot Simon sent me this Bloomberg story late yesterday afternoon...and the link is here.

Read more...

MF Global Trustee to Delay Return of Collateral Until End of Investigation

MF Global Inc.’s liquidator, fielding requests from commodities customers, said he can’t let any more of their collateral go until a probe into the “complex cash movements” at the defunct brokerage establishes the size of any shortfall.

James W. Giddens, the trustee handling the liquidation, has said he has “substantially” finished transferring 50,000 commodity accounts to other brokers, releasing $1.6 billion in collateral. Under bankruptcy law, he must hold back enough collateral to cover a pro rata distribution of claims he estimates will be filed, and must determine the amount of all claims before more money can be released, he said to the commodities customers in a message on his website.

“The law requires that all commodities customers be treated fairly, and on a pro rata basis,” he said. “While we have received many requests for individual transfers, we must treat all customers equally and fairly, and do not have authority to make such transfers” under U.S. bankruptcy law.

This is the second Bloomberg story in a row from reader Elliot Simon...and this one is worth your time as well.  The link is here.

Read more...

Finally, a Judge Stands up to Wall Street

Federal judge Jed Rakoff, a former prosecutor with the U.S. Attorney’s office here in New York, is fast becoming a sort of legal hero of our time. He showed that again yesterday when he shat all over the SEC’s latest dirty settlement with serial fraud offender Citigroup, refusing to let the captured regulatory agency sweep yet another case of high-level criminal malfeasance under the rug.

The SEC had brought an action against Citigroup for misleading investors about the way a certain package of mortgage-backed assets had been chosen. The case is very similar to the notorious Abacus case involving Goldman Sachs, in which Goldman allowed short-selling billionaire John Paulson (who was betting against the package) to pick the assets, then told a pair of European banks that the “designed to fail” package they were buying had been put together independently.  

This case was similar, but worse. Here, Citi similarly told investors a package of mortgages had been chosen independently, when in fact Citi itself had chosen the stuff and was betting against the whole pile.

Matt Taibbi is up on his high horse in this very long must read blog posted over at Rolling Stone magazine yesterday morning.  I thank Roy Stephens for providing this story...and the link is here.

Read more...

The new feudalism isn't new...and is really the norm

Here's a very short, but very excellent essay that's posted over at the rather obscure website prairie2.com...and how Roy Stephens found this, I haven't a clue.  It's only five paragraphs long...and an absolute must read.  The link is here.

Read more...

Morrisons says customers have run out of money

A third of Wm Morrison Supermarkets' customers have run out of disposable income by the end of the month, according to the supermarket's chief executive.

"It's tough out there and one third of our customers have no disposable income left at the end of the month."

He said this lack of money had been proved not just by anecdotal evidence, but by full research of its customers. The supermarket group has, as a result started to offer particular promotions at the end of the month when they know most people have received their pay packets.

Wal-Mart has spoken at length about this situation in the USA...and now this story about Britain's grocery shopping habits popped up in The Telegraph yesterday evening.  I thank Texas reader David Ball for sending this story along...and the link is here.

Read more...

Merkel’s Greek Strategy Risks Backfiring as Euro’s Exit Routes Are Mapped

Germany and France’s drive to force Greece to honor its euro commitments risks backfiring on Chancellor Angela Merkel and President Nicolas Sarkozy.

A week after the currency’s guardians declared for the first time that countries can be ejected from the 17-nation bloc, U.S. stocks tumbled on concern German politicians are already creating exit chutes for the weakest members.

The sell-off suggests Europe’s crisis is spiraling into a new stage as investors bet on which countries are most likely to quit the euro, starting with Greece. The risk is that this will make it harder for debt-laden countries to convince investors they can get their finances in order and for policy makers such as Merkel, Sarkozy and European Central Bank President Mario Draghi to bolster the euro’s defenses.

This Bloomberg story is another offering from West Virginia reader Elliot Simon...and the link is here.

Read more...

The euro is being held together only by fear

There has been a lot of "thinking the unthinkable" over the past week. If the euro is ultimately unsustainable, why not just face up to reality and let this grand exercise in political hubris go?

But in threatening effective expulsion, they also broke an unspoken taboo; they admitted that countries can opt out if they want to. In so doing, they invited speculation on just such an outcome.

Since then, the waters have been further muddied by the suggestion that German and French officials are already working on plans for a two-speed Europe, involving closer union for a smaller euro core. Those unable or unwilling to meet the requirements would be thrown out.

In any case, the principle has now been openly acknowledged. Divorce is possible. The difficulty occurs because for the time being none of these countries actually wants to leave. Even the Greeks seem to have decided, for now, that getting out is not a solution. The same is broadly true of Ireland, Portugal, Spain and Italy. In none of these countries is there a credible political force that advocates exit.

This Roy Stephens story from yesterday's edition of The Telegraph is linked here.

Read more...

Eurozone crisis: who is pulling the strings in Europe?

As the escalating eurozone crisis has toppled governments in Italy and Greece, decision-making is increasingly being driven by France, Germany and a powerful group of Brussels officials.

It has been dubbed Europe's Politburo: a "self-appointed body of powerful individuals prepared to topple national governments if they fail to toe the line."

The so-called Groupe de Francfort came together last month at a party for the retiring chief of the European Central Bank, Jean-Claude Trichet.

They met four times at the margins of the G20 summit - and marked themselves out by sporting GdF lapel badges. But who are the "Groupe de Francfort"?

This is a rather formidable looking list of both elected and appointed bureaucrats...and it's certainly worth skimming, as it's brief glimpse of the budding New World Order crowd.  I thank Roy Stephens once again for providing this story that was posted over at The Telegraph early yesterday afternoon...and the link is here.

Read more...

Savage recession looms as EC warns of slower growth in Europe

As Italy and Greece struggled to agree new governments, the impact of the chaos was laid bare when the European Commission cut the eurozone's growth outlook next year from 1.8pc to 0.5pc.

Olli Rehn, Europe's economic affairs commissioner, said the economy was being sucked into a "vicious circle" of sovereign debt problems, vulnerable banks and collapsed spending. "Growth has stalled in Europe, and there is a risk of a new recession," he said. "GDP is now projected to stagnate until well into 2012."

Britain's economy will stagnate until the summer at least and faces the risk of a double-dip recession, the report said.

No surprises in this piece.  Once again I thank Roy Stephens for this story from late last night in The Telegraph...and the link is here.

Read more...

Defaults & Disorderly Contagion Around the World: Rob Arnott

“It’s astonishing to me that people didn’t notice Italy early on in this because Italy is not a big country.  It’s not a huge economy and yet it’s got the third largest debt burden on the planet.  Only the US and Japan are larger.  But what we are going to see is defaults.  The question is not whether there will be defaults, but whether the defaults will be orderly or disorderly and will they have contagion effects around the world or not?

This blog is posted over at King World News and is well worth the read.  The link is here.

Read more...

Bud Conrad: China–The Coming Domino in the Global Financial Crisis

Casey Research's own Bud Conrad is interviewed by Jim Puplava...and it's posted over at the financialsense.com website.

Bud also has a lot to say about China in this month's edition of The Casey Report which was just issued yesterday. This month's edition is headlined "Danger Ahead from the Excesses of China's Success".  It's mostly about China's real estate bubble...and includes 20 charts.

The link to the Puplava interview is here.  It runs about 30 minutes...and is well worth the listen.

Read more...

Financial War Games: Jim Rickards/James Grant on Fed Policy, U.S. Economy, Gold Standard

Here's an excellent 10:39 minute video interview with Jim Rickards and James Grant.  As you know, I have all the time in the world for whatever Jim Rickards has to say...and having James Grant in the same interview is a huge bonus.

This absolute must watch Bloomberg video was sent to me by reader Jack Anderson...and I thank him profusely on your behalf.  The link is here.

Read more...

Negative interest rates in India driving record demand for gold

Investors in India are withdrawing from government bonds and national-savings schemes to pour record amounts into gold.

Funds that invest in sovereign debt shrank 4 percent from a month earlier to 30.2 billion rupees ($606 million) in September and those that buy gold rose 8 percent to an all-time high of 81.73 billion rupees, according to the Association of Mutual Funds in India that is also known as AMFI. Individual investors withdrew 78.7 billion rupees between April and September from small-savings deposit plans such as those run by post offices, the most since at least 2000, government data show.

"There is asset switching, and people are betting more on gold as it is a safer asset and offers a hedge against India's high inflation and the economic uncertainty affecting the world," Debasish Mallick, the Mumbai-based chief executive officer at IDBI Asset Management Ltd. that oversees about $1 billion, said in an interview on Nov. 9. "Investing in gold is a very prudent asset-allocation strategy."

This is a Bloomberg story filed from New Delhi yesterday that I lifted from a GATA dispatch...and the link is here.

Read more...

Gold Stocks are dirt cheap

Despite the pullback this fall, gold has been performing well this year. The price of the yellow metal is up 28% YTD, driven in large measure by strong demand in Asia and the dim economic outlook in the west. Gold miners are reporting good third-quarter bottom lines. In this ointment, however, there is a fly: gold stock performance, which has massively lagged the underlying commodity price surge over the year. This has been ongoing for months, now bringing us to the point where gold mining stocks look notably undervalued.

Technically, we might say, they look dirt cheap. Even Doug Casey, who's a serious bottom feeder, is admitting that compared to the metal itself, gold stocks are looking cheap again.

Alena Mikhan and Andrey Dashkov of Casey Research fame included this essay in yesterday's edition of Casey's Daily Dispatch.  It's well worth the read...and includes some very excellent charts.  The link is here.

Read more...

Can gold miners offer a safe haven?

Gold miners may be a means of escape from the financial chaos.

There’s no doubt that gold is perceived as a safe haven, but opportunity in gold-mining shares is screaming for attention — and the sector may be transforming into one of the best means of escape from the economic and financial chaos investors find themselves in today.

Considering the frequent bloodbaths in global stock markets, gold-mining stocks have held up well, generally trading higher for the month to date, with mostly double-digit percentage gains for the quarter so far.

It's not often that I see a positive gold story from this particular reporter over at marketwatch.com...but this is one of them.  I thank Florida reader Donna Badach for sending us this article...and the link is here.

Read more...

Swiss brokerage adopts GATA's view of imaginary 'paper gold'

Chris Powell has already wordsmithed the introduction to this story, and I'm not about to re-invent the wheel at this point, so I'll let Chris do the honours...and the link to this GATA release is here.

Read more...

Price irregularities in the silver market: Dimitri Speck

Market analyst and GATA consultant Dimitri Speck, writing at the safehaven.com website this week, charts intervention in the gold and silver markets back to 1993, this time with an emphasis on silver.

This short, absolute must read commentary, is linked here...and the graphs alone are worth the trip.

Read more...

 

¤ The Funnies

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¤ The Wrap

There are no markets anymore, only interventions - Chris Powell, GATA

After showing some signs of strength in early European trading yesterday, it was obvious that the U.S. bullion banks were determined to put the precious metals in their place again yesterday, as once they started the ball rolling down the hill at 9:30 a.m. Eastern time, sell stops got hit...then JPMorgan et al pulled their bids and ran the stops. The result was another waterfall price decline in both gold and silver.   And it was just as obvious that the subsequent rally met with a not-for-profit seller on several occasions during the Comex trading session.

The preliminary open interest numbers for Thursday looked pretty impressive in both gold and silver, so there's no doubt in my mind that the bullion banks were very successful in getting new speculative longs blown out of their positions...and 'da boyz' were buying every long contract that fell off the table, or were covering some of their short positions...but it was probably a combination of both.

The final open interest numbers for Wednesday's trading day came in much better than the preliminary numbers indicated they might.  Too bad that none of this will be in today's Commitment of Traders Report.  However, on sober second thought, there may not be a report today because it's Veteran's Day in the U.S.A...and Remembrance Day here in Canada.  We'll find out at 3:30 p.m. Eastern time this afternoon.

If you read the Dimitri Speck piece further up...and spent some time looking at his imbedded graphs, then the gold graph below should look familiar.  This is basically the same graph Dimitri produced, but this is one that Nick Laird cooked up for me.  The 'click to enlarge' feature is a must here, as it's a monstrous chart.

(Click on image to enlarge)

As I hit the 'send' button at 5:04 a.m. Eastern time, I see that after getting sold off about ten bucks in the New York Access Market around 6:30 p.m. last night, gold rallied a bit in Far East trading before flat-lining into the London open...and it's not doing much there, either.  Silver's price path was similar.  Gold volume is very light...and silver volume is still M.I.A., as the CME has been having problems with the silver volume web page all week.

I'm not sure if the gold market is open in North America today.  But, whether it is or not, I'll still have a column on Saturday, but it won't be a big one.

I hope your Friday goes well and that you spend a minute at 11:00 a.m. remembering those who gave all in wars past...and present.  My grandfather fought in Belgium and France in the Great War...WWI...and I always think of him on this date.  I wonder how he'd feel if he knew that everything he fought for is now circling the drain.  May he...and all his brothers-in-arms...rest in peace.

See you tomorrow.