Gold & Silver Daily

¤ Yesterday In Gold & Silver

The gold price didn't do much in Far East or early London trading on their Tuesday.  The low came at, or close to, the 10:30 a.m. BST London a.m. gold fix---and it rallied quietly and unsteadily until the 1:30 p.m. COMEX close.  From that point, it sold off a hair into the close of electronic trading at 5:15 p.m. EDT.

The low and high ticks are barely worth looking up, but the CME Group recorded them as $1,185.80 and $1,196.40 in the August contract.

Gold finished the trading day in New York yesterday at $1,192.70 spot, up only $3.90, which was a disappointment, because the dollar got taken out to the woodshed and had the hell beat out of it.  I'll have more on that later. Net gold volume wasn't overly heavy at 106,000 contracts.

The silver price action was pretty much the same as gold's, with the only real difference being that silver's low came either around 11 a.m. in London, or shortly before 9 a.m. in New York.  You can decide for yourself from the Kitco chart below, but in the grand scheme of things, it doesn't really matter.

Silver traded in a 20 cent range all day Tuesday---and the highs and lows definitely aren't worth my effort to look up.

Silver closed yesterday at $16.745 spot, up 4 cents from Monday---and Monday's gain was only 0.5 cents after "da boyz" were through with it.  In the face of a crashing dollar index, I'm underwhelmed. Net silver volume was 33,000 contracts.

The platinum price traded flat until shortly after 1 p.m. Hong Kong time---and then began to chop unsteadily higher from there.  Like gold and silver, the rally---such as it was---came to an end at the 1:30 p.m. EDT COMEX close.  Platinum finished the Tuesday session at $1,110 spot, up 9 bucks on the day---gaining back everything it 'lost' on Monday.

After trading down about four bucks by the noon Hong Kong time, the palladium price also began to chop unsteadily higher.  It's high tick came shortly after 1 p.m. in Zurich---and the New York traders stepped in shortly before 11 a.m. EDT---and took the price down to its $764 low.  It rallied a few dollars higher before trading flat into the close.  The metal closed at $766 spot, down 8 dollars from Monday's close.

The dollar index closed late on Monday afternoon at 97.43---and began to slide almost immediately when Far East trading began on their Tuesday morning.  It bounced off the 97.00 low just once---and the next time it rolled over a couple of hours after that, the 'gentle hands' I spoke of yesterday were nowhere to be seen.  The 95.68 low tick came moments after 1 p.m. in New York---and it rallied a bit into the close, finishing the day at 95.95---down an eye-watering  147 basis points.

And not a thing out of the precious metals.  After the out-of-left-field-for-no-reason rallies on Monday, the precious metals had a bona fide reason to rally yesterday, but did nothing.

Here's the 6-month U.S. dollar index chart so you can see how yesterday's trading action fits into the grand scheme of things---and as you can tell, it took out its 50-day moving average to the downside with some authority.  I'm careful not to read too much into this for moment, as I'm always cognizant of Chris Powell's infamous quote---"There are no market anymore, only interventions."  So we'll see how this shakes out in the days ahead, but I'd guess there are still 'gentle hands' out there that will show up at some point if things really start to get out of hand---and they may have put in a brief appearance minutes after 1 p.m. EDT yesterday.

The gold stocks opened up a bit---and rallied fairly strongly until shortly before 10:30 a.m. EDT.  They didn't do much of anything after that, as the HUI closed up 1.57 percent.

The silver equities had a similar shape to their rallies on Tuesday as the gold shares---and Nick Laird's Intraday Silver Sentiment Index closed up 1.61 percent.

The CME Daily Delivery Report for the Tuesday session showed that 74 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  The only stand-out number, which is barely worth mentioning, was that HSBC USA stopped 49 contracts in its client account. The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that June's open interest in gold declined a very chunky 3,026 contracts, but most of that was the 2,500-odd that are being delivery today that were posted yesterday.  There are 2,062 gold contracts still open.  Silver's June o.i. was unchanged at 33 contracts.

Another day---and another withdrawal from GLD.  This time it was 134,254 troy ounces, which is a pretty decent amount considering the fact that the gold price hasn't been allowed to go anywhere from a price perspective for the last five trading days in a row.  Then to add to that mystery, there was a deposit into SLV yesterday, as as authorized participant added 1,104,807 troy ounces.  Go figure!

There was another sales report from the U.S. Mint yesterday.  They sold 2,000 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and another 375,000 silver eagles.  In the last three business days the mint has sold 1,152,000 silver eagles---and only a small portion of that was buying by the retail public.  Could Ted Butler's big buyer---JPMorgan---still be around?  He has his mid-week column today---and I'm expecting he'll have something to say about it.

It was a decent in/out day for gold over at the COMEX-approved depositories on Monday, as 32,001 troy ounces were reported received---and 16,075 troy ounces were shipped out the door.  The link to that activity is here.

It was pretty quiet in silver, as only 22,054 troy ounces were received---and 145,748 troy ounces shipped out.  The link to that action is here.

There was a decent amount of activity at the gold kilobar COMEX-approved depositories in Hong Kong on their Monday, as 3,132 kilobars were received---and 5,262 kilobars were sent out the door.  The link to that activity, in troy ounces, is here.

I don't have all that many stories today, so I hope you can find a couple you like from the limited selection below.


¤ Critical Reads

Factory Orders Scream Recession, Drop 6% From Year Ago in Sixth Consecutive Drop

Following this morning's disappointing tumble in ISM New York (with 5 of the 6 components plunging), Factory Orders tumbled 0.4% MoM in April (against expectations of a modest 0.1% decline).

This comes after March's exuberance-inspiring upwardly revised 2.2% MoM surge (which ended a 7 month streak of MoM drops). Down 6.4% against 2014, this is the 6th month in a row of YoY declines in Factory Orders - something not seen previously outside of a recession. Stocks love this terrible news (for now).

This chart-filled Zero Hedge article was posted on their website at 10:03 a.m. EDT yesterday morning---and it's certainly worth a minute or so of your time.  I thank Dan Lazicki for today's first story.


Roubini: 'Combination of Macro Liquidity, Market Illiquidity a Time Bomb'

While massive central bank easing has created huge pools of liquidity in the financial systems of developed economies in recent years, liquidity in their financial markets has shrunk, notes economist Nouriel Roubini of New York University.

And that paradox carries ominous implications, he writes in an article for Project Syndicate.

"Policy interest rates are near zero in most advanced economies, and the monetary base has soared. This has . . . lifted many asset prices," Roubini points out. The Federal Reserve's balance sheet now totals a whopping $4.5 trillion.

"And yet investors have reason to be concerned," he explains. Roubini cites the May 2010 "flash crash" for stocks and the October 2014 flash crash for Treasurys as examples.

"This combination of macro liquidity and market illiquidity is a time bomb," he warns.

This piece appeared on the website at 6:00 a.m. EDT yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.


New York Sun: Jeb Bush on the dollar and currency manipulation

We were just sitting down at the typewriter to tap out an editorial on the failure of any of the Republican contenders to address the crisis in respect of the dollar when an e-mail hit our screen from the editor of the Future of Capitalism about the remarks over the weekend by Jeb Bush. The former governor of Florida was making an appearance at WMUR television at New Hampshire when he was asked whether, as FoC characterized the question, “foreign currency manipulation had put American manufacturers at a disadvantage.

Mr. Bush responded that there might be some manipulation by foreigners. But, he added, “you can make a case that in the last few years, given our monetary policy, that we’ve been manipulating our currency. We’ve never had a time where our central bank is just printing money like nobody’s business. And that depreciates our currency. It lowers our interest rates and depreciates our currency.” Mr. Bush acknowledged that there exist some protections against foreign currency manipulation already and noted that an eventual trade pact may yet add more.

One swallow mightn’t make a spring, but it’s terrific to hear a potential presidential candidate — Mr. Bush seems to be moving in that direction, though he’s yet formally to declare — open up this issue. By our lights, monetary policy will be the most important economic question before the voters in 2016. We haven’t had a real donnybrook on the question since 1896, when William Jennings Bryan ran on a campaign of the free coinage of silver — meaning inflation — against William McKinley, who ran on the gold standard and won.

This interesting story showed up on The New York Sun website yesterday---and I found it in a GATA release.


Dollar Flash-Crashes on Sudden EUR Spike Amid Carnage in Bunds

Driven by no immediate fundamental or news catalyst, EUR/USD is spiking (running stops to almost 1.1200) sending the USD index into yet another flash-crash this morning... as the carnage in bunds continues (+11bps to 65bps)...

USD Index is tumbling suddenly...driven by a spike above 1.1100 in EUR/USD... (highs at 1.1196! - 200 pips off lows).

This is another short, chart-filled Zero Hedge column from yesterday morning EDT---and it's worth a quick look as well.  It's the second offering of the day from Dan Lazicki.


HSBC Preparing Job Cuts That May Target 20,000 Workers, Sky Says

HSBC Holdings Plc, Europe’s largest bank, will announce a plan next week to cut thousands of jobs, Sky News reported, citing unidentified people close to the matter.

Chief Executive Officer Stuart Gulliver will disclose a target when he updates shareholders on the bank’s strategy on June 9, laying out a reduction that will probably affect 10,000 to 20,000 people, according to Sky. The number is still being worked out, it cited one person as saying.

Heidi Ashley, a spokeswoman for HSBC in London, declined to comment on the report. The company employed almost 258,000 people at the end of last year.

Gulliver, 56, is striving to reduce costs and sell businesses to bolster earnings, while spending billions of dollars to boost internal compliance. The job-cutting target will exclude the potential impact of selling businesses in Brazil and Turkey, as well as the possible separation of HSBC’s U.K. arm to meet a requirement to separate the consumer and investment banking businesses, Sky said.

This news item appeared on the Bloomberg website early Monday afternoon MDT---and it's something I 'borrowed' from yesterday's edition of the King Report.


E.U. regulators tell 11 countries to adopt bank bail-in rules

The European Commission on Thursday gave France, Italy and nine other EU countries two months to adopt new E.U. rules on propping up failed banks or face legal action.

The rules, known as the bank recovery and resolution directive (BRRD), seek to shield taxpayers from having to bail out troubled lenders, forcing creditors and shareholders to contribute to the rescue in a process known as "bail-in".

The Commission drafted the rules in response to the financial crisis which started in 2008, giving the 28 countries in the European Union until the end of last year to apply them.

It said Bulgaria, the Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Malta, Poland, Romania and Sweden had yet to fall in line.

"If they don't comply within two months, the Commission may decide to refer them to the E.U. Court of Justice," the E.U. executive said in a statement, referring to Europe's highest court based in Luxembourg.

The above five paragraphs are all there is to this brief Reuters article that was filed from Brussels early last Thursday morning EDT.  The article is definitely worth reading---and I thank reader 'David in California' for his first of two contributions to today's column.


Germany dominance over as demographic crunch worsens

Germany’s birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan's by the early 2020s, seriously threatening the long-term viability of Europe’s leading economy.

A study by the World Economy Institute in Hamburg (HWWI) found that the average number of births per 1,000 population dropped to 8.2 over the five years from 2008 to 2013, further compounding a demographic crisis already in the pipeline. Even Japan did slightly better at 8.4.

“No other industrial country is deteriorating at this speed despite the strong influx of young migrant workers. Germany cannot continue to be a dynamic business hub in the long-run without a strong jobs market,” warned the institute.

The crunch is aggravated by the double effect of a powerful post-war baby boom followed by a countervailing baby bust – the so-called “Pillenknick”. The picture in Portugal (nine) and Italy (9.2) is almost as bad.

This very interesting, but not shocking Ambrose Evans-Pritchard commentary from Monday evening BST is definitely worth reading if you have the interest---and I thank Roy Stephens for sending it our way.


Greece urges international creditors to be realistic

Greece has said it had sent a comprehensive reform proposal to its international creditors, urging them to be realistic and accept the plan to clinch a long delayed deal to release frozen aid before Athens runs out of cash.

The announcement by Prime Minister Alexis Tsipras came hours after leaders of Germany, France and the lending institutions held emergency talks on the Greek debt crisis in Berlin in a sign of top-level concern about the impasse.

It appeared to be an attempt to preempt a take-it-or-leave-it offer by the creditors and to show Greek voters that Athens, too, is putting forward proposals.

This Greece-related news item appeared on the Irish Times website at 2:01 p.m. BST on their Tuesday afternoon, which was 9:01 a.m. EDT---and it's the second offering in a row from Roy Stephens.


Greek default draws closer as opposing sides swap ultimatums

Greece and its European creditors have both issued “last ditch” demands in their bail-out talks that appear incompatible, raising the stakes in an increasingly dangerous showdown.

The eurozone’s negotiators and the International Monetary Fund have been putting the finishing touches on what amounts to a package of take-it-or-leave-it conditions that offer scant leeway on Greece’s austerity or debt relief.

It is understood that the proposals offer no real concessions on Greece’s “red lines” on pensions and labour rights. The creditors have promised a degree of flexibility but continue to insist that the far-Left Syriza government comply with the chief sticking points of the old EU-IMF Troika”Memorandum”.

Alexis Tsipras, Greece’s prime minister, pre-empted the move by rushing through his own set of proposals, more or less conceding in advance that his plans will not be accepted by the technocrats.

This commentary by Ambrose Evans-Pritchard appeared on the Internet site at 7:51 p.m. BST yesterday evening---and it's courtesy of Roy Stephens as well.


Greece to invest $2 billion in Turkish Stream, will sign memorandum asap - Energy Minister

Greece plans to sign a document on political support for Gazprom’s Turkish Stream project at the St. Petersburg International Economic Forum in June, its Energy Minister announced on Monday. The country plans to invest $2 billion in its construction.

A memorandum on political support for the gas pipeline project will be prepared by June 18-20, when the International Economic Forum (SPIEF-2015) will be held in Russia’s St. Petersburg, Greek Energy Minister Panagiotis Lafazanis announced on Monday.

Right there we will try to sign an agreement, a so-called ‘memorandum’ on the political support of the said gas pipeline between Greece and Russia,” the minister said, as quoted by TASS. Greece “will be proactively drafting a document,” the official added.

Greece’s part of the pipeline, which will be delivering Russia’s gas on from the Turkish border, will cost some $2 billion, Lafazanis said in an interview with the Rossiya24 channel. The minister said that a Greek state company will be involved in the project, adding that there has been “big interest” from many companies wishing to take part in the construction and future operation of the pipeline.

This news item put in an appearance on the Russia Today website at 7:42 p.m. Moscow time on their Monday evening, which was 12:42 p.m. EDT in Washington.  I thank reader 'David in California' for passing it around yesterday.


The South China Sea word war -- Pepe Escobar

As Cold War 2.0 between the U.S. and Russia remains far from being defused, the last thing the world needs is a reincarnation of Bushist hawk Donald “known unknowns” Rumsfeld.

Instead, the — predictable — “known known” we get is Pentagon supremo Ash Carter.

Neocon Ash threw quite a show at the Shangri-La Dialogue this past weekend in Singapore.

Beijing is engaged in reclamation work in nine artificial islands in the South China Sea; seven in the atolls of the Spratlys, and two others in the Paracel archipelago. Ash virtually ordered Beijing to put an “immediate and lasting halt” to the expansion; accused it of behaving “out of step” with international norms; and capped the show by flying over the Strait of Malacca out of Singapore in a V-22 Osprey.

Washington never ceases to remind the world that “freedom of navigation” in the Strait of Malacca – through which China imports a sea of energy – is guaranteed by the U.S. Navy.

This short essay by Pepe showed up on the Asia Times website yesterday---and certainly falls into the must read category for any serious student of the New Great Game.  It is, of course, courtesy of Roy Stephens.


Anthem Vault, Inc. Raises $3.2 Million Ahead of HayekGold Launch: Liquid, Spendable, Digital Gold

Anthem Vault, Inc., a provider of retail gold and silver bullion and vaulting services, today announced that it has raised a combined $3.2 million — both a Founders' Seed Round of $1.6 million and matching Series A Financing of $1.6 million of its equity securities under Regulation D, Rule 506(c) from accredited investors in the pharmaceutical, healthcare, financial services, retail, datacenter, telecommunications, government and entertainment sectors - for the launch of HayekGold, a global open digital gold payment platform powered by the Bitcoin block chain.

Introduced on Memorial Day, HayekGold is a gold-backed digital currency with unparalleled stability and intrinsic value; each is backed by one gram of vaulted and insured gold bullion.

"Bitcoin was a trailblazer in the arena of global digital currency and HayekGold builds on that foundation," said Founder & CEO Anthem Hayek Blanchard. "Gold combined with a stable cryptocurrency forms a perfect union — a free, instant, secure and reliable payment system for goods and services anywhere in the world simply, swiftly and safely."

This gold-related news story appeared on the Internet site at late Monday afternoon EDT---and I thank reader Dave Malek for sending it our way.


U.S. Government Lost 7 Fort Knox Gold Audit Reports

Every year the gold in Fort Knox is ‘audited’ by checking the official joint seals that were placed on all vault compartments during the continuing audits of U.S.-owned gold from 1974 until 1986, when allegedly 97 % of the gold was inspected. However, a Freedom Of Information Act request I’ve submitted in order to obtain all audit reports could not be honored. Seven reports are missing.

From at least 1944 the world reserve currency is the US dollar, which was backed by gold until 1971 and supported by gold ever since. There can be no world reserve currency without appropriate gold reserves supporting it, providing essential confidence and credibility. The US official gold reserves are the world’s greatest by far at 8,134 metric tonnes. The fact that 7 audit reports that should grant the existence of these reserves appear to be missing is problematic.

At the congressional hearing of the Gold Transparency Act (H.R. 1495, not enacted) in 2011 the Inspector General (IG) of the Treasury presented a case ‘all is fine’, but all is not fine. And the problem goes far beyond missing audit reports. In a series of posts we’ll continue to examine all there is to find regarding the audits of US official gold reserves.

This very long commentary by Koos is the third in a series of reports on U.S. gold reserves.  It was posted on the Internet site yesterday---and I must admit that I haven't had the time to read it yet.


Here’s What the Next Gold Bull Market Will Look Like -- Jeff Clark, Casey Research

We measured every bull cycle of gold stocks and found there have been eight distinct upcycles since 1975.

We also discovered something exciting: Only one was less than a double. (A second was 99.9%.)

Even more enticing is that the biggest one—a 601.5% advance in the early 2000s—occurred just after a prolonged bear market---and our current bear market is longer than that one.

To get a sense for the potential upside, we applied the percentage gain from each of those upcycles to our recommended BIG GOLD picks.

Of course this bull market will only occur when JPMorgan et al allow it, or are over run.  But either way, it's coming---and only the timing is unknown.  This commentary by Jeff appeared on the Casey Research website yesterday.


Swiss slammed for closing DRC 'dirty gold' case

Activists on Tuesday accused Swiss authorities of encouraging impunity, after prosecutors shut a case against a company suspected of laundering gold pillaged by armed groups in Democratic Republic of Congo.

The Swiss attorney general's office decided in March to close a case against Argor-Heraeus, which faced allegations of "complicity in war crimes and pillage" after it, refined three tonnes of gold ore pillaged from the conflict-torn country in 2004-2005.

In its ruling, which was quietly made public a month later, the prosecutor's office said there was not enough evidence that the Swiss firm, one of the world's largest processors of precious metals, was aware of the illegal origin of the gold.

The gold, believed to have been illegally mined by a group called the National Integrationist Front (FNI), was sold through a Uganda-based company and on to British Hussar Limited before reaching Argor.

This interesting news item, filed from Geneva, showed up on the South African Internet site yesterday at 12:32 p.m. SAST---South Africa Standard Time.  And it's fitting that South African reader B.V. sent it our way.


Turkey gold imports slip to 10-month low

Turkey’s highest gold price in more than three years is cutting appetite for the metal in the fourth- biggest buyer.

The country imported 1.65 metric tons of bullion in May, 21 percent less than a month earlier and the least since July, the Istanbul Gold Exchange’s website showed on Tuesday. Turkish first-quarter consumer demand for bullion slid 42 percent from a year earlier, according to World Gold Council data.

Local prices rallied 21 percent in the past year as the lira weakened against the dollar. The currency’s slump is the second-biggest in emerging markets this year on concern government gridlock will prevent legislation needed to bolster the economy. Turkey will hold national elections on June 7 and polls suggest a coalition government will be elected.

“A decline in the Turkish lira has made it more expensive for people to buy gold,” Cagdas Kucukemiroglu, a consultant for researcher Metals Focus Ltd., said by phone from Istanbul on Tuesday. “This is the continuation of a trend, we have seen weak demand in the first quarter and we expected it to carry through to the second quarter.”

This Bloomberg article from yesterday found a home on the Internet site.


Gold for No Money: Mandela, Zuma Heirs Await Fraud Ruling

Fifteen years after their relatives helped free South Africa from apartheid, scions of two of the nation’s most famous families met in a hotel overlooking the Indian Ocean to start a business together.

Zondwa Mandela and Khulubuse Zuma, accompanied by an entourage of friends and advisers, decided at the five-star Beverly Hills Hotel in Durban in March 2009 to set up a company that would take advantage of laws favoring black investors in mining. They didn’t put up any money.

Six years later, Nelson Mandela’s grandson and President Jacob Zuma’s nephew are fighting claims alleging fraud amounting to almost 2 billion rand ($164 million) in a civil case after gaining access to two mines near Johannesburg without paying for them. About 5,000 workers have lost their jobs, operations ceased five years ago, equipment has been sold for scrap -- and almost $10 million of gold is missing, court documents show.

Mandela and Zuma “are still enjoying luxurious lifestyles despite workers suffering with no food, water or electricity,” said Joseph Montisetse, a regional secretary for the National Union of Mineworkers. “They have tarnished the image of our political leaders.”

This long, but very interesting [and somewhat convoluted] story was posted on the Bloomberg Internet site late Monday afternoon Denver time---and I thank Elliot Simon for his second contribution to today's column.


Traders may get cash-settled gold and silver futures on Indian commodity exchange

Domestic punters and hedgers in gold and silver futures might soon be able to play similar contracts that are traded on CME Group, the world's largest derivatives marketplace, but denominated in rupees on the Multi-Commodity Exchange (MCX), the country's largest commodity bourse, subject to regulatory approval.

Unlike existing gold and silver contracts that are compulsorily settled at the average of three days' spot price in Ahmedabad, the new contracts will be cash settled at the CME relevant rate multiplied by the rupee exchange rate, said two persons aware of the development. "This will be helpful to those who don't want delivery but just to hedge or speculate. Approval of Forward Markets Commission, or FMC, is awaited," they added.

On MCX the kilo gold contract is settled once in two months. The contract enters the delivery period on the first of the expiry month while delivery takes place on the fifth. However, once the contract enters delivery period, the margin to trade jumps to 25 per cent of open position, which is substantial, leading to many hedgers and punters simply rolling over their positions or squaring off pre-delivery. In the new contract, this might not be the case since it is cash-settled.

As interesting as this story may be, it's also irrelevant when it comes to India's physical demand, as futures trading such as this will have zero impact on the physical market, so they can trade away to their heart's content.  This news story appeared on The Times of India website at 2:31 a.m. IST on their Wednesday morning--and I found it on that Internet site.


First Majestic Silver Puts the CFTC on Notice Regarding the Silver Price Management Scheme

In a letter crafted by silver analyst Ted Butler, First Majestic Silver Corp. President & CEO Keith Neumeyer became the first primary silver producer to put their marker down on the CME-condoned silver price management scheme by JPMorgan et al.

They may not dignify his request for action with the courtesy of a reply, but the fact that a miner has gone on the public record on this issue speaks volumes about Keith & Co. over at First Majestic.  I've been a shareholder for many years---and I'm delighted [as is Ted] that he had the courage to step up to the plate on this issue.

I know that Ted will have something to say about it in his mid-week column to his paying subscribers this afternoon.

The letter, in full, is a must read---and I urge you to send your personal thanks to Keith via their Investor Relations guru, Mr. Todd Anthony at


Is gold demand/supply balance crunch already here? -- Lawrence Williams

The chart also shows the inexorable rise of China’s gold consumption to overtake India in 2013 as the world’s leading gold consumer – India had held this position for many years beforehand.  It can be seen how Indian imports fell away so sharply during 2013 when the then Indian government imposed significant gold import duties and introduced other measures to try and control the very substantial gold flows into the nation to counter the significant effects Indian gold imports had been having on its Current Account Deficit.  It may be seen though that since last year Indian gold imports have been beginning to pick up again despite the 10% import duty imposed.

Given that China and India are not the only net gold consuming nations – the World Gold Council suggests around 545 tonnes was consumed by other nations last year – and that some central banks, notably Russia and Kazakhstan, have been taking gold into their reserves month in, month out amounting to 477 tonnes last year and one may well ask where all this gold is coming from.  Scrap will account for most of this.  Overall, scrap supply last year was largely balanced out by the central bank purchases plus other nations’ demand.   But scrap supplies have been falling along with the gold price and if China and India keep on absorbing gold at the current rate. Then demand will be exceeding apparently available supply so where will this come from?  ETFs could be a source, but at the moment sales out of and purchases into these seem pretty much in balance.

Ed Steer in his Gold and Silver Daily newsletter says that any balance of global demand over supply must be coming out of Central Bank vaults as the only other available unaccounted-for source.  It is hard to disagree with this suggestion, but this would presumably be in leased gold which enables the banks to keep it in their books, although in reality the chance of this ever being repaid as bullion look increasingly slim, given the physical gold flows into firm eastern hands.

This commentary, plus embedded chart, certainly falls into the must read category---and it showed up on Lawrie's website yesterday.  Dan "The Man" Lazicki found it before I got to it---and I thank him for his final offering in today's column.



¤ The Funnies

The first photo is of your standard utility grade magpie.  It's difficult to photograph these things, as they fly away long before you get within decent range.  But, like every other bird, if you just sit quietly for long enough...

This Canada goose has a very interesting colour variation from the normal---and that's the only reason I took the shot.

Arena Minerals has adopted a project generator model which will greatly reduce potential dilution and allow the company to deploy budget and expertise of exploration that it could not have achieved on its own. Recently, the Company has partnered with B2Gold for a commitment of $20M in exploration and is working on other joint ventures for other parts of the property, which is located in Chile in the hearth of the world’s most prolific mineral belt. The land has been in the hands of an industrial mineral conglomerate for a century and hasn’t been explored for metallics. Several high potential targets have already been identified. Please follow us for continual updates on drilling activity.


¤ The Wrap

The single biggest key to the silver manipulation has always been if the concentrated short position increases on any price rally and that is exactly what occurred on the latest (snuffed out) rally. The concentrated short position of the 8 largest traders in COMEX silver is now 75,529 contracts, or 377,645,000 million oz, the most in six years. Eight traders, not one of them a miner or representing miners is short almost 50% of what the CPM Group claims is world annual silver mine production (790 million oz). No other commodity has such a concentrated short position and this is why silver miners everywhere should be complaining and screaming with the loudest voices possible.

I haven’t done so in a while, but let me point out something I used to bring up in the past that is more relevant today. As crazy as it is that COMEX silver has the largest concentrated short position of any commodity traded in terms of actual world production, it’s even crazier than that. Not only is the concentrated short position in COMEX silver so large as to be impossible to justify economically, the concentrated short position is almost double the size of the concentrated long position, a situation not witnessed in any other metal and few other commodities in general. -- Silver analyst Ted Butler: 30 May 2015

As I mentioned further up, I was very surprised that the precious metals prices didn't do better in the face of the U.S. dollar index face plant yesterday.  The precious metals blasted off [and got squashed] for no good reason on Monday, but the moment there was a reason to blast skyward, they didn't.  Volumes in gold and silver weren't particularly heavy yesterday, so the lack of a rally can't be blamed on "all the usual suspects" this time.  Ted was surprised as well.

Here are the 6-month charts for all four precious metals as of the close of trading yesterday---and it certainly appears that gold and silver are being held in a trading range.  However, for Commitment of Trader reasons, I'm afraid that they're going to follow the current price trends of both platinum and palladium at some point.

And as I write this paragraph, the London open is less than five minutes away.  Gold has been trading, or forced to trade, in a very narrow range through all of Far East trading on their Wednesday---and has a negative bias at the moment, and is currently down two bucks from Tuesday's close in New York.  Ditto for silver, which is down a nickel.  Nothing to see here, at least for the moment.  Platinum and palladium have been chopping around unchanged as well.

Gold volume is around 12,200 contracts, with 99.9 percent of that amount trading in the August contract, so it's certainly of the HFT variety---and has zero to do with supply and demand.  Silver's net volume is only 2,500 contracts, with only a handful of contracts due to roll-over activity out of June.

The dollar index, which peaked at 96.06 at 8:30 a.m. Hong Kong time, has been heading lower since then---and is currently down 21 basis points.

As I mentioned in yesterday's column, the cut-off for Friday's COT Report was at the end of COMEX trading yesterday---and based on the price action, it's a reasonably safe bet that this week's report should contain all the pertinent data.  As to what that report might show, both gold and silver have been forced to trade in a very tight price range during the reporting period---and as Ted Butler pointed out, the shenanigans on Monday will most likely determine the overall content of the report.

But all eyes should be on silver, as the short position of the Big 8 traders sits at 6-months of world silver production according to Nick Laird's chart---and Ted's comments in today's quote.

And as I send today's effort off to Stowe at 5:25 a.m. EDT, I see that both silver and gold are continuing their downwards price decent.  Gold is now down 5 bucks---and silver is down 15 cents.  Platinum is unchanged---and palladium is trading 6 dollars lower.

Gold's net volume is a hair under 20,000 contracts---and all of the HFT variety in the current front month.  Exactly the same can be said about silver, whose net volume is now up to 4,700 contracts.  The dollar index is back in rally mode---and is now up 32 basis points vs. down 21 basis points about two and a half hours ago.

As for today's expected price action, I haven't a clue.  But the COT structure, especially in silver, is still as ugly as sin---so there's still lots of pain left to go the downside.  It's just a matter of 'when' before JPMorgan et al pull the trigger on it.

See you tomorrow.

Ed Steer