Gold & Silver Daily
"Well, yesterday's price action in both metals certainly didn't pass the smell test as far as I was concerned."

¤ Yesterday In Gold & Silver

The gold price rose in fits and starts during Far East trading on their Wednesday...and minutes before 9:00 a.m. in London, gold was up about ten bucks from Tuesday's close.

Then the price jumped about eight or nine dollars in just a few minutes...and gold was sitting around the $1,636 spot mark.  From there it basically traded sideways until precisely 1:00 p.m. in New York.  From that point a not-for-profit seller showed up and engineered the price lower...and in less than two hours they had gold down to almost unchanged from Tuesday's close, with most of the damage coming in the thinly-traded electronic market.

The high tick of the day [$1,642.20 spot] came about fifteen minutes after Comex trading began in New York...which was $26 higher than Tuesday close.  By the end of electronic trading in New York, gold closed up only $2.80 at $1,619.70 spot.  Net volume was very heavy at 175,000 contracts.

As I said in 'The Wrap' yesterday, it was obvious that JPMorgan et al were the short sellers of last resort in order to prevent the gold price from blowing sky high...both in London and New York.

Silver did very well for itself yesterday...and by 12:50 p.m. Eastern time it had hit its high tick of $30.01 spot.  Ten minutes later, silver got the same treatment as gold...and I'd bet serious money that the not-for-profit seller was the same as well.

By 2:15 p.m. Eastern, silver was down about 70 cents from its high less than two hours earlier.  From there the silver price recovered a bit into the close.  Silver finished the day at $29.43 spot...up only 90 cents.  At its high, silver was up $1.48 from Tuesday's close.  Net volume was very chunky as well...about 50,000 contracts.

The dollar index was under pressure right from the Far East open on Wednesday morning.  It dropped about 40 basis points and hit an interim low [82.44] right at the London open...and then moved quickly to its high of the day [82.82] which was a few minutes before 9:00 a.m. in New York.

From there it headed south with a vengeance...and the low tick [82.14] coming at 5:00 p.m. Eastern time...although most of the decline was in by 12:30 p.m.

One would think with such precipitous decline in the dollar index over such a short period of time, that the gold price would have reacted positively.  As you can see from the Kitco gold chart above, that was hardly the case.  All of the price decline in gold and silver came after the big decline in the dollar index, which closed down about 65 basis points.

Aren't free markets wonderful things?

The gold stocks gapped up at the open...and their high of the day came around 10:45...and then they rolled over a bit from there...with most of the HUI's decline coming when gold got hit between 1:40 and 2:15 p.m. Eastern time.  From there, the gold stocks managed to dig their way out of negative territory and finished positive on the day.  The HUI finished up a miniscule 0.23%.

At one point the HUI was up a bit more than two percent...but that was before the engineered price declines began at 1:00 p.m. in New York.

The silver stocks did much better of course...but would have closed even higher if JPMorgan et al hadn't shown up early in the New York afternoon.  As it was, Nick Laird's Silver Sentiment Index finished up a chunky 3.25%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 118 gold and 1 lonely silver contract were posted for delivery on Friday.

There was metal deposited in both ETFs yesterday.  The gold ETF added 29,118 troy ounces...and an authorized participant added 970,184 ounces of silver to SLV, which was within twelve ounces of the amount of silver added on Tuesday.

The U.S. Mint sold another 75,000 ounces of silver eagles yesterday...and that was all.

Tuesday was another busy day over at the Comex-approved silver depositories.  They reported receiving 1,431,832 troy ounces...and shipped 835,039 ounces out the door.  The link to that activity is here.

Silver analyst Ted Butler had a few things of great interest posted in his mid-week commentary...and one of them is contained in these three paragraphs below...

"A subscriber asked me to comment on an Internet posting that included an email response that CFTC Commissioner Bart Chilton had agreed be made public.  Coincidently, when I received the subscriber’s email, I had been going through a long overdue clean up of old papers on my desk that had accumulated for the past few years. (Yes, I had been ordered to do so). I ran across copies of email correspondence I had with Commissioner Chilton back in March thru May 2008. That correspondence was requested by him to be off the record back then, so I will honor that request and not reveal the details. But the past and present email exchanges contributed to a strong sense of déjà vu."

"In the post referenced above, Chilton indicates that he expects a resolution of the almost four year old silver investigation in the next few months. Similarly, the old email exchange I had with the commissioner occurred just prior to the May 13, 2008 release of the Commission’s 16-page public denial of a silver manipulation. I had first contacted Commissioner Chilton in November of 2007 about issues related to silver manipulation and that had resulted in a private email exchange with him until the May 2008 public letter. After that, there was no further private exchange."

"In addition to the sense of déjà vu in reading what was basically the same message both now and back then, I also had a moment of clarity. Not only had I seen this movie before, I remembered how it ended, namely, with another whitewash report from the CFTC that everything was fine in silver and allegations of manipulation were unfounded. It seems to me that there can be no other outcome this time. There is no way that the agency ever comes out and admits what many thousands of observers know to be true – that the price of silver is manipulated and has been for the past three decades. In other words, it’s time to face reality."

I have slightly fewer stories today, but quite a few of them are worth wading through.


¤ Critical Reads

Senate Democrats blast national security leak about cyberattack against Iran

Senate Democrats on Tuesday blasted leaks to the press about a cyberattack against Iran and warned the disclosure of President Obama’s order could put the United States at risk of a retaliatory strike. 

Sen. Dianne Feinstein (D-Calif.), chairwoman of the Intelligence Committee, said the leak about the attack on Iran’s nuclear program could “to some extent” provide justification for copycat attacks against the United States.

“This is like an avalanche. It is very detrimental and, candidly, I found it very concerning,” Feinstein said. “There’s no question that this kind of thing hurts our country.”

This story was posted at website on Tuesday...and is worth the read, as is the next story on this issue.  I borrowed this from yesterday's King Report.  The link is here.


'End of the world as we know it': Kaspersky warns of cyber-terror apocalypse

After his eponymously-named lab discovered Flame, "the most sophisticated cyber weapon yet unleashed," Eugene Kaspersky believes that the evolving threat of “cyber terrorism” could spell the end of life on Earth as we know it.

­Doomsday scenarios are a common occurrence in 2012, but coming from a steely-eyed realist like Eugene Kaspersky, his calls for a global effort to halt emerging cyber threats should raise alarm bells.

A global Internet blackout and crippling attacks against key infrastructure are among two possible cyber-pandemics he outlined.

"It's not cyber war, it's cyber terrorism, and I'm afraid the game is just beginning. Very soon, many countries around the world will know it beyond a shadow of a doubt,” Kaspersky told reporters at a Tel Aviv University cyber security conference.

This story was posted over at the Russia Today website early yesterday evening...and it's Roy Stephens first offering of the day.  The link is here.


Two Fed officials cool to more monetary easing

Two top Federal Reserve officials on Tuesday suggested the U.S. central bank is not preparing to ease monetary policy at a meeting later this month, saying the economic outlook had not deteriorated to the point where action was warranted.

Both James Bullard, president of the St. Louis Federal Reserve Bank, and Dallas Fed President Richard Fisher were cool to the idea of new monetary stimulus in response to weak U.S. economic data and boiling financial tensions in Europe.

"The outlook for 2012 has not changed significantly so far," Bullard told a conference in St. Louis. "A change in U.S. monetary policy at this juncture will not alter the situation in Europe."

This Reuters story was picked up by on Tuesday...and I lifted it from yesterday's King Report as well.  The link is here.


Eurozone crisis starts to bite for small firms

Crisis in the eurozone is hitting small companies’ confidence and cash flow, experts have warned, with European suppliers demanding cash up front for orders while exporters are being caught by customers delaying payment.

In the first quarter of 2012, an average of 31pc more currency exchanges were made during the last five days of the month than those made over the first five days, more than double the level the company considers normal.

David Sear, chief operating officer of Western Union Business Solutions, also noted the average transaction value in the company’s payments business had shrunk in the first quarter. “There’s a reluctance to place large orders. Companies don’t want to hold inventory because they don’t know where the market will be. There are also longer periods of time between customers trading.

This story was posted in The Telegraph around their lunchtime yesterday...and is Roy Stephens second offering of the day.  The link is here.


The euro now equals poverty and deflation

Eurocrats see the survival of the euro as more important than the prosperity of its users, says Daniel Hannan. 

To grasp the sheer unfairness of the euro system, consider Slovakia. For a few days last October, this nation of five million defied the might of Brussels. Its MPs refused to approve the bail-out fund, arguing that it was wrong for prudent countries to be fined so as to reward profligate ones. The EU promptly turned its hideous strength against the plucky Carpathian republic. Within five days, the government had fallen and parliament had ratified the fund.

When we read of the latest euro-calamities – three Portuguese banks bailed out yesterday, Cyprus on the point of bankruptcy, retail sales across the eurozone far lower than expected – we feel sympathy rather than panic. Countries in the single currency have no such luxury.

This piece by Daniel Hannan showed up early yesterday morning in The Telegraph...and it's certainly worth reading.  It's another article from Roy Stephens...and the link is here.


The World from Berlin: Spain's Bailout Refusal Is 'Kamikaze Politics'

Pressure is growing for Spain to tap into European Union bailout money to stem its banking crisis, but the country has stubbornly refused. Instead, Madrid hopes to get around bailout conditions with direct aid to its banks. German commentators on Wednesday say that the time for pride has passed.

All eyes are on Spain as the euro crisis seems to deepen by the day. The country's banks are in dire need of capital, which Madrid is unable to easily provide. Yet the government continues to resist outside pressure to accept bailout money from their euro-zone partners. Instead, in an effort to avoid submitting to conditions that would be imposed in exchange for a bailout, Madrid has turned to the financial markets, an approach widely considered to be both unsustainable and a grave risk to the health of the euro zone.

Spanish Treasury Minister Cristobal Montoro revealed how dire the situation has become on Tuesday. "The risk premium says Spain doesn't have the market door open," he told Onda Cero radio. "The risk premium says that as a state, we have a problem in accessing markets, when we need to refinance our debt."

This story was posted on the German website yesterday...and is another item courtesy of Roy Stephens.  The link is here.


European Bailout Possible Deal Takes Shape on Aid for Spain's Banks

Spain needs help, that much is clear. The country's banks are teetering under billions of euros in bad real estate loans with experts estimating that between €75 billion and €100 billion are needed to recapitalize them.

Just what that help might look like, however, has been a matter of some debate. Europe, led by Germany, has insisted that the euro backstop funds not be allowed to provide direct funding to banks, preferring instead to deal with national governments only. Yet Spanish Prime Minister Mariano Rajoy has been reluctant to ask for such aid, wary of the conditions that come attached. A situation similar to the one in Greece, with a public outraged at deep cuts and painful reforms, is one he would like to avoid.

Now, a compromise to the standoff appears to be taking shape. According to the center-left daily Süddeutsche Zeitung on Wednesday, European leaders are currently considering a plan which foresees euro bailout money being provided to Spain's "Fund for Orderly Bank Restructuring", or FROB, a bank bailout fund set up in 2009. In return, Spain would pledge to restructure its financial sector, but would not be forced into extensive economic reforms and austerity measures of the kind that have been imposed on Greece.

This is another Roy Stephens offering from yesterday...and the link is here.


The euro’s 'guilty men’ are now steering Europe to catastrophe

More than six months have passed since Frances Weaver and I published our pamphlet, Guilty Men, identifying those financiers, politicians and propagandists who advocated the creation of the European single currency 15 years ago, and exposing the dishonest or even brutal methods they used.

Our pamphlet was not an exercise in academic point-scoring. As Winston Churchill told the House of Commons, in the context of appeasement in 1936: “The use of recriminating about the past is to enforce effective action at the present.” Our task was no less ambitious. We wanted to silence and, if possible, to shame those voices in British and European public life who have been responsible for the tragedy of the euro, and therefore enable the resurrection of sensible and humane economic policies.

We failed. It must be acknowledged this week that the main reason for the depth and longevity of the economic and financial catastrophe striking Europe is that all the policy-makers who are dealing with the crisis were advocates of the euro right from the beginning. In other words, the very people who caused the conflagration in the first place are in charge of putting it out.

This story was posted over at the website last evening...and is another article courtesy of Roy Stephens.  It's certainly worth reading...and the link is here.


Barrick Gold ousts CEO Aaron Regent

Barrick Gold Corp. has abruptly replaced its chief executive and installed a former U.S. investment banker as co-chairman of its board of directors, saying they will help the company restore its lacklustre stock price.

Jamie Sokalsky, who was the Toronto-based company's chief financial officer, has replaced Aaron Regent as Barrick's chief executive and president -- effective immediately.

At the board of directors, John Thornton -- a former president of Goldman Sachs, the U.S. investment banking giant -- will join Barrick founder Peter Munk as co-chairman.

Munk, 84, who is one of Canada's best-known businessmen, issued a statement thanking Regent for his efforts but making it clear they weren't enough.

As the past 'bad boy' of the gold world, investors still have long memories of when Barrick was firmly aligned with the dark side of The Force...a.k.a. JPMorgan.  I plucked this Canadian Broadcasting Corporation story from a GATA release yesterday...and the link is here.


Russian central bank won't answer gold questions

If you doubt that national gold reserves, far from being quaint antiques, are assets even more strategic than nuclear weapons, and if you doubt that the gold market, far from being just another commodity market like soybeans, is actually the primary battlefield of a world war, the currency war, consider the questions recently put to the Bank of Russia by our friend the German freelance journalist Lars Schall, and the Bank of Russia's refusal to answer this week.

The rest of Chris Powell's preamble...along with the link to the Lars Schall piece in this GATA release...and the link is here.


Three King World News Blogs

The first blog is with 33-year veteran John Gray from Investors Intelligence.  It's headlined "This is Where Major Markets are Headed Right Now".  The second one is with "legendary technical analyst" Louise Yamada.  It's entitled "Gold & Silver at Crucial Points in This Cycle".  And lastly is this Michael Pento blog headlined "Fed & ECB Petrified, This is Exactly What Will Trigger More QE".


Max Keiser: Soros gets gold advice from Keiser Report

The Eurozone debt crisis is getting dangerously close to the monetary union's powerhouse - Germany. Moody's has cut the ratings of several German banks, including the country's second biggest lender. Austria is also affected. Max Keiser, RT's financial guru and host of The Keiser Report smells a rat in all this.

This 6:23 minute Russia Today interview was posted over at yesterday...and it's worth listening to if you have the time.  I thank reader 'André' for sending it along.  The link is here.


Gold Bugs Defy Bear-Market Threat With Soros Buying

This rather longish Bloomberg articles was posted in their Internet site early yesterday morning...and was obviously written by two 'reporters' who have little or no understanding of the gold market...and for the most part it's the usual main stream media drivel.

But there's enough new information in it to make it worth skimming...and I thank West Virginia reader Elliot Simon for digging it up on our behalf.  The link is here.


Going for Gold in a Dangerous World: Interview

Simon Mikhailovich knows a thing or two about financial weapons of mass destruction. With a wealth of experience in structured credit, he co-founded Eidesis Capital in 1998 with Michael Sollott, after they completed a buyout of the collateralized-debt-obligation business of St. Paul Travelers.

The new firm focused on distressed CDO investing. Its latest such private equity-style fund, the $180 million Eidesis Special Opportunities III, had a net internal rate of return of 17% from July 2009 through June 2011, when it decided to lock in gains and return most of investors' capital.

Mikhailovich, who emigrated to the U.S. from the Soviet Union in 1979 with just $100 in his pocket, issued early warnings in 2007 about the impending collapse of the derivatives market, and the coming financial crisis. Convinced the worst is yet to come, Eidesis, which also is managed by Jim Wang, now invests mostly in gold bullion in various locations around the world outside of the banking system. To understand why, read on.

This story was posted in Barron's on Saturday...and is worth the read if you have the time.  I thank Roy Stephens for sending it...and the link is here.


James Rickards: The US Is the Biggest Currency Manipulator

Yesterday's edition of Conversations with Casey contains a 24-minute video interview with Jim Rickards...and the host is Casey Research's own Alex Daley.  I'm always interested in what Jim has to say...and if you are too, the link is here.


Fed Chairman Burns' letter on controlling gold market is translated into German and French

In support of the campaign for Germany to repatriate its gold reserves from foreign central banks, the Bavarian chapter of the German Taxpayer Association has translated into German and French the June 1975 letter from Federal Reserve Chairman Arthur Burns to President Ford confirming a secret agreement with the German chancellor about surreptitiously controlling the gold market.

The translations are posted at the Internet site of German freelance journalist Lars is the link to the original English version.  I borrowed the headline...and the above introductory paragraph...from a GATA release yesterday...and the link to this must read commentary is here.



¤ The Funnies

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¤ The Wrap

A few words on Wednesday’s price action, aside from up feels much better than down. I don’t know how it’s possible to explain silver and gold suddenly trading at multi-week highs in terms other than related to the COT market structure. If there is another explanation to account for the rally, I am not remotely aware of what it might be. As I tried to explain in Saturday’s report, this move has everything to do with technical fund buying (both short-covering and new buying) and commercial selling. The unusually low commercial net short and speculative net long position in COMEX gold and silver set the stage for this rally, which began on Friday. If past is prologue, the move will end, perhaps only temporarily, when the commercials decide they have permitted as much technical fund and speculative buying as the commercials will allow. There is no way of knowing in advance just how much speculative buying will be tolerated by the commercials, particularly in how much JPMorgan will add to existing short positions. All we can do is monitor COT changes as they occur and are reported. As always, big deterioration will only come on higher prices. - Silver analyst Ted Butler, 06 June 2012

Well, yesterday's price action in both metals certainly didn't pass the smell test as far as I was concerned.  First, a falling dollar right in the middle of the New York trading session had no effect on the gold price at all...and then after the big decline in the dollar, both gold and silver got sold off hard in the thinly-traded electronic market.

Yesterday's price action in gold took it comfortably above its 50-day moving average...and it was obvious that the technical funds were pouring back into the market...and it was just as obvious that 'da boyz' were there to meet them.  Silver also came within two bits or so of taking out its 50-day moving average as well.  It will be interesting to see if these current rallies will 'fail' to break through this barrier on this attempt.  If the do, it certainly will have nothing to do with free-market forces.

(Click on image to enlarge)

(Click on image to enlarge)

Also the volumes were through the roof...and as I mentioned at the top of the page, it was obvious that the U.S. bullion banks were going short against all comers.  It's unfortunate that this data won't be in this Friday's Commitment of Traders Report.  So sooner or later, as Ted Butler mentioned above, this rally will end in the same manner as every other rally has during the last couple of decades.

Not much happened during Far East trading during their Thursday...and as I hit the 'send' button at 4:47 a.m. Eastern time, the gold price is basically unchanged from Wednesday's New York close...and silver is down about two bits.  The dollar index is up about 12 basis points...and net volumes are half of what they were this time yesterday.

That's all I have for now...and it will be interesting to see what happens to the precious metals when Bernanke opens his mouth later today in Washington.

I hope your Thursday goes well...and I'll see you here tomorrow.