Casey Research Publication
Gold & Silver Daily
"Silver and gold obviously want to break above these price levels, but it's just as equally obvious that they're not being allowed to."
 

¤ Yesterday In Gold & Silver

Starting in early morning trading in the Far East yesterday, gold got sold off about fifteen bucks...with the low of the day coming shortly after 9:00 a.m. in London.  That low was re-tested shortly before lunchtime local time...and then a rally of some substance developed from there.

This rally ran the price up about twenty-five dollars to its high of the day...and the price got capped at what might have been an early London p.m. gold fix around 9:45 a.m. Eastern time.  The gold price struggled to advance from there...and finally gave up the ghost about 10:50 a.m. Eastern time.  Gold then got sold off back to its Comex opening price by 11:35 a.m.

Then another bit of a rally developed...and that came to an end at 1:00 p.m...and from there the price more or less traded sideways into the close of the New York Access Market at 5:15 p.m. Eastern time.

The gold price closed at $1,781.10 spot...up the magnificent sum of eighty cents from Monday's close.  Tuesday's net volume was almost double Monday's volume...around 111,000 contracts.

It was pretty much the same story in silver, with only slight differences in timing.  For instance, silver's low came around 10:00 a.m. GMT in London...and the big rally started about an hour after that.  Silver's rally was far more substantial as well...but it, too, ran into a not-for-profit seller at the early London p.m. gold fix.

Silver then got sold off for 70 cents during the next two hour time period...and, like gold, gave up every penny of its gains from the Comex open at 8:20 a.m. Eastern time.  The subsequent rally that followed ended at 1:00 p.m. Eastern, just like gold's secondary rally.  Silver also traded sideways from there into the close of electronic trading.

Silver closed at $34.57 spot...up thirty-three cents on the day.  Net volume was around 33,000 contracts.

Here's the New York Spot Silver [Bid] chart, so you can see the trading day in more detail.  Note how silver got sold off for every penny of its 70 cent gain that occurred between 8:20 and 9:45 a.m.

The New York Spot Gold [Bid] chart looks virtually the same.

The dollar gained about 40 basis points during the Tuesday trading day...and just a cursory glance at the chart below shows that the dollar price action had no bearing on what the precious metals did [or wanted to do] yesterday.

The gold stocks pretty much followed the price of the metal itself...and the HUI finished up a smallish 0.32%.

Even though silver finished up about a percent on the day, the associated stocks turned in a very mixed performance...and Nick Laird's Silver Sentiment Index closed down 0.45%.

(Click on image to enlarge)

The CME's Daily Delivery Report was another yawner, as only 30 gold and 1 silver contract were posted for delivery on Thursday.

There were no reported changes in either SLV or GLD yesterday...and the U.S. Mint reported selling only 500 ounces of gold eagles.

There was some activity over at the Comex-approved depositories on Monday, as they only reported receiving 75,628 ounces of silver...but shipped 836,762 ounces out the door.  The link to that action is here.

Yesterday I discussed the 50-day moving average in silver in 'The Wrap' section of this column...and the obvious [and successful] attempts to keep the price below that critical moving average.  Silver analyst Ted Butler wrote a few paragraphs about this in his Saturday column...and here's one of them...

"Leaving aside the fact that silver is more manipulated than gold for a moment, there are some ready explanations for why silver has been somewhat of a relative drag recently. For one thing, since the September price smash, silver has not been able to penetrate to the upside its important moving averages (50 and 200 day), while gold has been able to climb or remain over all its important moving averages. I’m not a technician or chartist, but many market participants are heavily influenced by such indicators. That makes it important to be aware of what these technical traders are up to. The fact that silver is below the moving averages while gold is above keeps these technical traders from buying silver and encourages them to buy gold. I think this explains, more than anything, the recent relative punk price performance in silver compared to gold. But the nature of this technical moving average approach portends changes ahead."

I have slightly fewer stories for you today than on Tuesday, so I hope you're able to at least read what I've cut and paste from each one so you can get a flavour for each article, even if you don't have the time [or inclination] to read the whole thing.

 

¤ Critical Reads

Congress: Trading stock on inside information?

Steve Kroft reports that members of Congress can legally trade stock based on non-public information from Capitol Hill.  Why am I not surprised.

This 15:20 minute story was on the CBS News program 60-Minutes on Sunday.  I thank reader Brad Robertson for sending me this video...and the link is here.

Read more...

Regulators Should Split ‘Behemoth’ Banks: Fisher

Federal Reserve Bank of Dallas President Richard Fisher said regulators should break up so- called too-big-to-fail financial institutions to curtail the risk they pose to financial stability.

“I believe that too-big-to-fail banks are too-dangerous- to-permit,” Fisher said in the text of remarks given in New York today. “Downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy.”

I'll believe it when I see it.

This Bloomberg story is courtesy of West Virginia reader Elliot Simon...and the link is here.

Read more...

'Only massive debt restructuring can save EU' - Kyle Bass

Kyle Bass is a hedge fund founder who saw the financial crisis coming and made a fortune from it - first from America's sub-prime mortgage crisis and then from betting that Greece would default.

Mr. Bass told the BBC's Sarah Montague that Germany cannot be expected to bail out the PIIGS countries - Portugal, Ireland, Italy, Greece and Spain, and that only a massive write-down in those countries' debts will solve the crisis.

This short 2:50 minute BBC video clip is a must watch.  As usual, Kyle takes no prisoners.  I thank Washington state reader S.A. for sharing it with us...and the link is here.

Read more...

Truth SHOULD be a high duty of central banking, ex-Fed Governor Alan Blinder says

For years many Internet sites have attributed to the economist Alan Blinder, now a professor at Princeton University in New Jersey, a provocative comment reportedly made on a Public Broadcasting System program in 1994 during his service as a member of the Board of Governors of the Federal Reserve System:

"The last duty of a central banker is to tell the public the truth."

Alan Binder sets the record straight in this GATA release from yesterday evening.  This is well worth reading...and the link is here.

Read more...

Saving the Euro: Germany's Central Bank against the World

Jens Weidmann, the new president of Germany's Bundesbank, is strongly opposed to making the European Central Bank the lender of last resort in efforts to prop up the common currency. It's a lonely fight, however, and the pressure from Germany's European partners is intense. Some warn that Weidmann's course could end up destroying the euro.

This very important 3-page essay was posted over at the German website spiegel.de yesterday...and it's well worth your time if you have it.  I thank Roy Stephens for sending it along...and the link is here.

Read more...

'Now Europe Is Speaking German' - Merkel Ally Demands that Britain 'Contribute' to EU Success

Many EU countries are unhappy about Germany's growing dominance in the euro crisis. Some in Chancellor Angela Merkel's party, however, seem unaware of such concerns. Volker Kauder, a senior member of the Christian Democrats, declared in no uncertain terms on Tuesday that Germany should be a model for Europe.

"Britain also carries a responsibility for the success of Europe, " he said.

"Just looking for their own advantage and not being prepared to contribute -- that cannot be the message we accept from the British," Kauder said, referring to Britain's opposition to the financial transaction tax that Germany has been lobbying for in order to raise revenue for future bank bailouts.

This is the second of four stories in a row from spiegel.de that are courtesy of Roy Stephens...and the link to this one is here.

Read more...

Accidental Downgrade or Glimpse of Future? - Why France Should Be Worried About Its Rating

In the best-case scenario, the Standard & Poor's analysts just made a stupid error [last] Thursday when they sent out an e-mail downgrading France's credit rating. In the worst-case scenario, they did it on purpose. But regardless of the motivation behind the email, the Standard & Poor's analysts may be simply anticipating reality.

The recent downgrade by Standard & Poor's may have been an error, but France is unlikely to be able to hold on to its top credit rating for much longer. The country's financial data indicates a loss of its AAA mark is likely in the not-too-distant future -- something that would spell yet more bad news for Europe.

The link to this third spiegel.de story is here.

Read more...

Bond Yields Soar: Speculators Bet Against Spain, Belgium and France

The situation on the European bond market worsened on Tuesday, with yields on 10-year French and Belgian government bonds rising to record levels. Risk premiums for Spanish and Italian securities also rose. The countries must now pay higher interest in order to refinance old debts.

With the situation already critical in Italy, investor doubts about France and Belgium are also increasing. Yields for new borrowing from the countries rose to record-high levels on Tuesday, with a sharp uptick on interest rates for Spanish government bonds too. Deutsche Bank is calling for the European Central Bank to take radical steps to reduce dangerously high bond yields.

This last spiegel.de story from Roy is linked here.

Read more...

Argentines get itchy amid new foreign exchange controls

Argentines withdrew $645 million in U.S. dollar-denominated deposits from private-sector banks in the first week after the government made it harder for individuals and companies to buy dollars.

The numbers, published by the Central Bank of Argentina late Friday, seem to confirm that the new currency controls have made Argentines nervous and led many to do what they typically do during times of crisis -- buy dollars or withdraw them from the banking system.

This story was posted in The Wall Street Journal on Saturday...and is posted in the clear in this GATA release...and the link is here.

Read more...

Talking Point: Euro Crisis and the New World Order

Here's an interesting video clip from the Australian Broadcasting Corporation on Sunday that was sent to me by reader 'David in California'.

I ran it by Australian reader Wesley Legrand to find out if this was the real deal or not...and it is.  As Wesley said in his e-mail to me..."It was Goldman Sachs et al that advised PIIGS how to hide debt and borrow more...therefore we are now seeing planned debt bombs by U.S. Inc. across Europe to make the Euro look worse than the USD."

You can view this 1:34 video by clicking on the "Play video [flash broadband]"...just above the spot where it says ALAN KOHLER, PRESENTER...or you can read the text at the linked page.  This is an absolute must watch...and the video is posted over at the abc.net.au website here.

Read more...

Paulson not seen deserting gold after $2 bln ETF sale

Hedge fund manager and long-time gold bull John Paulson's move to slash ETF bullion holdings by a third does not appear to be a sign that he is abandoning his upbeat view of the metal, industry sources and analysts said.

The move is likely a combination of two unrelated factors: end-of-year client redemptions equalling about 8 percent of his total holdings; and a desire to reduce his exposure to the regulated U.S. ETF in favor of less visible swaps, forwards or physical holdings that are not reported in quarterly 13-F filings, a person familiar with his thinking said.

This Reuters story, filed from London yesterday, was sent to me by Elliot Simon...and the link is here.

Read more...

China reduces 2012 silver exports by 5%, could boost prices

China has cut exports of silver by 283 tonnes [about 9.1 million ounces] from the 5,670 tonnes exported in 2011, traders suggest that less exports mean tighter markets that could eventually bolster prices.

Roughly 70% of China's silver demand comes from the industrial sector. Analysts say shipments are also set to decline with customs data showing a drop in exports. Chinese customs data showed export growth falling more than expected in September, while import growth also declined.

Silver imports into China fell by 39% year on year and 16% month on month to 264.7 tonnes in September, the lowest level since February. Silver exports too declined by 44% year on year to 83.5 tonnes, keeping China a net importer of the metal for two consecutive years on a monthly basis, data showed.

This story was filed from Mumbai yesterday...and is posted over at the mineweb.com website.  I thank reader Matthew Nel for sharing it with us...and the link is here.

Read more...

Gerald Celente hammers MF Global's "MF'ers" on Capital Account

Gerald Celente founder and director at Trends Research Institute and publisher of the Trends Journal tells us how he has become a casualty of MF Global's bankruptcy to the tune of six figures! And while MF Global went belly up due to bad bets on European sovereign debt, Celente says the eurozone is next to go.  This interview is rated 'M'...for mature audiences only!

This Russia Today interview runs 5:56...and is posted over at youtube.com.  I thank Edmonton reader B.E.O. for sending it to me...and the link is here.

Read more...

Gold bull has far to go, Agnico-Eagle's Sean Boyd tells King World News

Agnico-Eagle Mines CEO Sean Boyd told King World News last night that elected officials have no will to solve the problems of the world financial system, that investors generally have committed little of their money to gold and, as a result, gold's bull market has a long way to run and the metal's price could rise to unimaginable levels.

I thank Chris Powell for wordsmithing the introduction...and the link to the KWN blog is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

The free market is a bathroom scale.  We may not like what we see when we step on it, but we can't pass a law making ourselves weigh 165 pounds.  Liberals and leftists think we can. - P.J. O'Rourke

As has been the case lately, rallies that begin in London are capped shortly after Comex trading begins and, once again, silver broke through its 50-day moving average with some authority, but that wasn't allowed to last...and silver closed about a dime above it.

For about the last week or so, gold has not been allowed to closed above the $1,800 an ounce mark...and silver hasn't been allowed to break through the $35/ounce price level.  We're sort of in a holding pattern at the moment.  Silver and gold obviously want to break above these price levels, but it's just as equally obvious that they're not being allowed to.

Yesterday was the cut-off for Friday's Commitment of Traders report...and I hope that all of yesterday's price action in both gold and silver will be in it, but only if the Commercial traders report everything in a timely manner.

When I spoke to Ted Butler yesterday, he figures that we are market neutral in gold as far as the COT report is concerned...and still pretty much all cleaned out in silver.

How this is all going to work out over the balance of the year still remains to be seen.  The December delivery month looms large...and I'm sort of expecting that not too much will [or be allowed to] happen to the upside until we get into early December.  That's pure speculation on my part...but I can pretty much guarantee that if we get a down-side smack between now and then, it certainly won't be free-market forces at work, so we'll just have to wait it out.

I note that both silver and gold got sold off once again in the thinly-traded Far East market...with the lows being set shortly after 2:00 p.m. Hong Kong time.  Since that point, a rally has started in both metals that has carried on well past the London open...and it will be interesting to see how this develops as the Wednesday trading day progresses in both London and New York.

If the CME's gold volume numbers can be believed, volume is slighly higher than normal, but not too high...and silver shows no volume figures at all.  The dollar rolled over a bit shortly after 2:00 a.m. Eastern time...and is now down about 40 basis points as of 5:17 a.m. Eastern...so that may be having some influence on prices as well.

That's all I have for today.  I hope your Wednesday [or Thursday, if you live just west of the International Dateline] goes well...and I'll see you here tomorrow.