Gold & Silver Daily
"You can bet your last nickel that the Commercial shorts of all descriptions in the Comex futures market in gold and silver were either covering, or going long themselves yesterday."
 

¤ Yesterday In Gold & Silver

The gold price was up about twenty bucks when Comex trading began in New York at 8:20 a.m. Eastern time...and as I said in 'The Wrap' in my column yesterday, the bullion banks were still lurking about.  It was just a matter of whether they showed up during London trading, or when the Comex opened.

Well, the latter case turned out to be the correct one, as moments after the Comex open, the selling pressure began...and by the time that the Comex close came at 1:30 p.m. Eastern, the gold price was down almost a hundred bucks from the Comex open...and down $77.90 on the day.

Gold volume set a new record yesterday...and I'll have more on that further down.

Here's the New York Spot Gold Bid price so you can see all the New York action, which is the only price action that counted yesterday...and most other days as well.

The Kitco silver graph looks about the same as the gold graph, with 'da boyz' showing up at precisely the same time in silver...and by the close of Comex trading, silver was down three bucks from the Comex open.  The price recovered a bit in the thinly-traded New York Access Market...and silver finished down $2.11 spot on the day.  Volume was heavy, but nowhere near record volume territory.

Here's the New York Spot Silver Bid price chart as well.  Note the low price set at 1:30 p.m. yesterday afternoon at the Comex close.

For Wednesday, gold was down 4.26%...platinum down 3.22%...palladium down 1.72%...and silver, as always, got hit hardest...down 5.05%.

All these precious metals had intra-day loses in New York far in excess of the numbers posted in the above paragraph...with silver leading the pack by the widest margin...around 7.8% from its high to its low.  No other precious metal even came close.

I'm providing the U.S. dollar chart for entertainment purposes only, as it is no longer a pricing factor in the precious metals market.

The gold stocks certainly had a different kind of trading day.  After gapping down a bit at the open and making a feeble attempt to rally, they got sold off heavily...and by 10:15 a.m. were just about a their lows for the day.  The actual low came late in the New York lunch hour...and it wasn't much a low.  From there, the stocks rallied back strongly, gaining back two percent from the bottom.  This was an amazing performance considering the fact that gold suffered one of its biggest one-day losses ever...and declined throughout the entire time the equity markets were open.  The HUI only finished down 2.15% on the day.

One wonder who the buyers were that were in there catching a falling knife.  What do they know that we don't?  Just asking.

Although some of the smaller junior producers got whacked pretty good, there were a couple of green arrows in my tracking list yesterday.  A lot of the stocks that make up Nick Laird's Silver Sentiment Index actually fared much better than the average...and the index was only down 2.61% on the day.  It could have been far worse...as the 'catch a falling knife' buyer was obviously active in some of the large cap silver companies as well.

(Click on image to enlarge)

The question I always ask myself when I see this sort of counterintuitive activity in the stocks, is whether the big buyer is loading up to make a profit on the next price rise...or are they going to use these cheap shares to dampen share prices during the next rally.

John Embry, amongst others, has always said that someone is manipulating the share prices of gold and silver stocks...and this is one possible way they could do it.  I could also be looking for black bears in dark rooms that aren't there...so keep that in mind as well.  But, having said that, you have to ask yourself this one question...why have the shares done so poorly in the face of massively rising gold and silver prices?  Think about it.  We'll find out on the next rally in both metals.

The CME's Daily Delivery Report showed that 468 gold, along with 10 silver contracts, were posted for delivery on Monday.  The big short/issuer [388 contracts] in gold was JPMorgan in their proprietary trading account...and the biggest long/stopper [247 contracts] was JPMorgan in its client account.  Running close behind as a stopper was Goldman Sachs with 161 contracts received.

There shouldn't be too much left to deliver in gold this month...and whatever's left, has to be delivered by the end of the trading day on Tuesday.  Yesterday's issuers and stoppers report is worth a look...and the link is here.

There were big withdrawals from both GLD and SLV yesterday.  GLD showed another big decline, this time it was 876,288 troy ounces...which was an even bigger withdrawal then they reported on Tuesday.  SLV showed a withdrawal of 1,948,224 ounces...after adding about 4.1 million ounces on Tuesday.

The U.S. Mint had another sales report.  They sold 7,500 ounces of gold eagles...2,000 one-ounce gold buffaloes...and another 100,000 silver eagles.

On Tuesday, the Comex-approved depositories reported receiving no silver, but shipped 645,517 ounces of the stuff out the door...virtually all of it from the Bank of Nova Scotia...and the link to that activity is here.

I had an interesting comment from reader J.P. in Iowa yesterday about silver availability at the bullion store he trades at..."I read with interest the story of T.K. in the U.K.  I went to my usual dealer in Iowa to get some silver eagles and he was sold out. He said earlier that day a man came in and asked to buy all the stock the dealer had."

Silver analyst Ted Butler had his mid-week commentary to his paying subscribers yesterday...and here's a free paragraph...

"Since the weekly review a few days ago, the price volatility in gold and silver has been extraordinary. Gold first climbed by $60 and then plunged by $160. Over the same three days, silver first climbed by $1 and then crashed by more than $5. I have tried to explain why we climbed by more than $400 in gold from July 5 and why we might fall (or further explode). That explanation involved the massive bet on the short side by the COMEX commercial interests that went bad to the tune of almost $10 billion at the recent peak. Many are quick to claim that it was speculative buying that drove gold higher, but they are only partially correct. Technical funds and other speculators did buy and establish long positions on the way up, but such buying mostly ceased at about the $1,600 level. The speculative buying that drove prices the last $300 higher, from $1,600 to over $1900, was largely panic short covering by certain commercials. I postulated that the market would further explode if and as more short covering occurred and that if that commercial short covering was satiated, prices could crash. It looks like we got both."

Here are a couple of graphs that Nick Laird over at sharelynx.com sent me late last night.  They show the 'volatility' in the gold and silver markets going back to late 2000.

Here's the one for gold...and as you can see, yesterday's price action produced one of the biggest volatility spikes to the downside in the last ten years.

(Click on image to enlarge)

And here's the one for silver...and silver's volatility hardly stands out at all.

(Click on image to enlarge)

 

¤ Critical Reads

Moody's downgrades Japan, blames fractured leadership

The downgrade came as the government unveiled a $100bn loans programme to help companies deal with a strong yen that threatens the economy.

Moody's reduced the rating on Japanese government bonds to Aa3 from Aa2 less than a week before Japan is to select a new prime minister to become the nation's sixth leader in five years.

Gee, I don't suppose it would have anything to do with the massive public debt of 200% of Japan's GDP?  Nope, probably not!

I thank Roy Stephens for this story out of yesterday morning's edition of The Telegraph...and the link is here.

Read more...

CME raises gold margin requirements again

For the second time this month, the CME Group Inc., the parent company of the main metals and energy exchanges in the U.S., announced late Wednesday an increase in margin requirement to trade gold. It raised the amount of money needed to trade gold contracts by 27% to $9,450 per 100-ounce contract.

The move comes on the heels of a $104-an-ounce drop in gold futures prices, which some analysts had blamed partly on speculation that the CME would raise margin requirement again.

It's perfectly normal for the CME to raise margin requirements as the gold price rises sharply.  Well, that's not what they did.  They raised them as prices fell sharply...and announced it after the close of trading yesterday.  As Ted Butler has pointed out, they do this because it helps the Comex short holders at the expense of the longs.  This is precisely what they did in silver in the days that followed the drive-by shooting on Sunday, May 1st.

I thank reader Charley Orr for sharing this very short marketwatch.com story with us.  It's well worth skimming...and the link is here.

Read more...

We See Unprecedented Physical Gold Demand: Ben Davies

Here's a short King World News blog that Eric sent me late last night.  The headline pretty much says it all...and the link is here.

Read more...

Tie Central Bankers' Hands, Return to Gold Standard: James Grant

Here's a gold-related story from last week that slipped through the cracks...and I thank Pittsburgh reader Ross Paullet for digging it up for us.

Central bankers are in the business of "currency manipulation," James Grant, editor of Grant's Interest Rate Observer, told CNBC Thursday.

He wants a "modernized, 21st century gold standard that checks the capacity of central banks to print money."

"I am for more rope in regard to the government’s hands and less rope around the hands of people in enterprise," he said. The problems in the U.S. economy come from an "accumulation of government initiatives and the sum total gets you to $14.3 trillion in the debt crisis."

The story was posted over at cnbc.com on August 11th...and is well worth read.  The photo ain't too shabby, either...and the link is here.

Read more...

Merkel rejects ally's call to use gold as bailout loan collateral

German Chancellor Angela Merkel gave short shrift to a political ally’s call for the use of gold as collateral for all future euro zone bailout loans.

Labour minister Ursula von der Leyen’s suggestion yesterday caused ructions in Berlin and prompted an immediate denial that it represented government policy.

This idea obviously touched a few nerves in Berlin.  The story is posted over at the irishtimes.com website...and I thank Roy Stephens for sending it along.  This short piece is a must read in my opinion...and the link is here.

Read more...

Despite Pullback, Gold, Silver & Mining Shares Still a Buy: Peter Schiff

Here's another item that Eric King sent me last night.  This is an audio interview with Peter Schiff...and the above headline shows you the direction this interview is going.  The link to this KWN interview is here.

Read more...

How Much Gold Do You Need? - Casey Research

This short essay was posted in yesterday's edition of Casey's Daily Dispatch...and bears the above title.  This is a must read piece, but you have to scroll down a bit to get to it...and the imbedded graph clearly shows the reason why I'm personally 100% 'all in' the precious metals market.  The link is here.

Read more...

Take two Embries and call the doctor in the morning

This GATA release has two John Embry interviews posted in it...one from King World News...and the other with Mineweb.  I haven't had the time to read either, but it's a good bet they're worth your time...and the link is here.

Read more...

Precious Little to Halt Rising Fear Factor

It's not the price of gold that's going up. It's the price of fear.

And fear has just passed $1,900 an ounce. Gold prices have already risen 46% since the start of the year and a whopping 19% this month alone.

Behind these gains lies an intensifying fear that the monetary and fiscal authorities can get nothing right and everything wrong in their attempts to fix the fiscal problems in the world's ailing economies. "The fear component [of gold buying] is driven by the negative real interest rates, the excessive government debt, and the rising fear of a collapse of the system," reckoned Austrian-based Erste Group's Ronald-Peter Stoferle. "Gold remains an excellent hedge against worst-case scenarios," he added.

This most excellent article was posted in yesterday's edition of The Wall Street Journal...and was sent to me by Australian reader Wesley Legrand...and the link is here.

Read more...

Greenspan says that gold is not in a bubble

“Gold, unlike all other commodities, is a currency,” he said. “And the major thrust in the demand for gold is not for jewelry. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.”

Perceived?  Seems?  [Sir] Alan is one of the chief architects of the dollar's one-way ticket to oblivion.  The above quote is buried at the end of this Bloomberg article that's headlined Greenspan Says Euro 'Breaking Down'...and I thank reader 'Roger' for sending it along.  The link is here.

Read more...

Gold and Economic Freedom - Alan Greenspan

The kind reader that sent me the above Bloomberg story was incredulous at the fact that [Sir] Alan had uttered those words.  Roger is obviously a newbie gold bug, as anyone who has been around the gold world for the last ten years or so, has read [at least once] the famous article that he wrote back in 1966.

For those of you who are new to the world of precious metals, it might interest you to know that Mr. Greenspan has been a gold bug since birth...and was a disciple of Ayn Rand in his younger years.  The above headline came from a chapter that Alan contributed to Ayn's book Capitalism, the Unknown Ideal almost forty-five years ago.

For those of you who have never had the pleasure, I offer this absolute must read piece by Alan Greenspan before he was consumed by the dark side of The Force.  The story is posted over at usagold.com...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

Gold, unlike all other commodities, is a currency...and the major thrust in the demand for gold is not for jewelry. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating. - Alan Greenspan, August 23, 2011

Gold set a new record high net volume figure yesterday...an absolutely off-the-charts 477,000 contracts.  I suppose that supports the 'volatility' from yesterday that was so obvious in Nick Laird's chart posted further up in this column.

I've decided, as of right now, that I am no longer going to report the open interest numbers...either preliminary or final, in either gold or silver...as more and more they are painting a misleading picture of what's going on.  The preliminary and final o.i. numbers this week are cases in point.

From now on, the final word on open interest will be each Friday's Commitment of Traders Report when the numbers reported actually mean something.

Silver's gross volume was monstrous as well, but a lot of that was roll-overs out of the September delivery month.  The net volume was still a very healthy 52,000 contracts.

It's too bad that these volume numbers from yesterday...plus the associated changes in open interest...won't be in tomorrow's COT report.  But you can bet your last nickel that the Commercial shorts of all descriptions in the Comex futures market in gold and silver were either covering, or going long themselves yesterday.  That's what these engineered price declines in the precious metals were designed to do, as there was nothing free-market about what happened to gold, silver, platinum and palladium prices for most of this week.

Here's the 6-month gold chart...

(Click on image to enlarge)

And the 6-month silver chart...

(Click on image to enlarge)

As I said here yesterday, how long and how low depends entirely on how many tech fund leveraged longs 'da boyz' can get to puke up their positions.  I would say that silver is pretty close to being done...but there is probably more room to go in gold, if JPMorgan et al are determined to pursue it.

I note that London has now been open for about two and half hours.  Gold was under pressure initially...and then got shoved off a cliff at 10:00 a.m. BST...and is now down about $51 as of this writing at 5:33 a.m. Eastern...and silver followed suit and is now down 44 cents, after being down about 70 cents.  The bullion banks certainly aren't wasting a lot of time on this clean out.  Volume in gold is monstrous already...over 100,000 contracts...and silver's volume is getting up there as well...with lots of roll-over from the September to the December month...which is the next big delivery month for both silver and gold.

Despite the current price action in the Far East and London during their Thursday trading day, it's always what happens in Comex trading in New York that matters.  I suspect that we'll have another interesting trading session awaiting us when the fun begins at 8:20 a.m. Eastern time.

See you on Friday.