Gold & Silver Daily
"We are over $100 from the record high in gold...and we're already knocking on the door of the old record high in the gold stocks."

¤ Yesterday In Gold & Silver

Well, the Far East low I reported in this column yesterday proved to be the absolute low of the day on Tuesday.

The gold price rallied about $25 off that low, but then got sold off about fifteen minutes before the Comex open.  Then, like Monday, at precisely 9:30 a.m. the gold price rallied smartly...and within an hour was up around the $1,805 spot mark, where it pretty much stayed for the rest of the day. Gold closed up $26.40...and net volume was around the 163,000 contract mark.

It was pretty much the same with silver.  After the Tuesday low price, which occurred in Far East trading about an hour before London opened, the silver price rose until 9:00 a.m. BST.  Then silver got sold off...with the subsequent rally beginning shortly after 9:00 a.m. Eastern time. in New York...and shortly before the open of the U.S. equity markets.

The subsequent rally took gold up about $1.10 off its New York low by 11:00 a.m. Eastern...and from there it got sold off in a long, slow decline into the close of trading in the New York Access market at 5:15 p.m. Eastern time.  Silver closed up a rather unremarkable nine cents.  Net volume was around 41,000 contracts.

The gold stocks started in negative territory, but that state of affairs only lasted minutes, as the stocks were up about 4% within an hour...and were up about 5% by 2:00 p.m.  But then they, along with the general equity markets, began to slide into the close of trading...however, the HUI finished up a very respectable 3.13% on the day, as the Dow barely finished in positive territory.

Despite the less than impressive performance of the metal itself, most of the silver shares finished in positive territory...and Nick Laird's Silver Sentiment Index closed up a smallish 0.60%

(Click on image to enlarge)

The CME Daily Delivery Report showed only five gold contracts were posted for delivery tomorrow...and that was all.

A very tiny 9,734 ounces were add to GLD yesterday.  I have no idea what that was about, maybe it was an adjustment.  Over at SLV there was a significant reduction, as an authorized participant cashed in their shares and withdrew 1,119,798 troy ounces.

There was a smallish sales report from the U.S. Mint yesterday, as they sold another 125,000 silver eagles.

There was lots of activity over at Comex-approved depositories on Monday.  They received 1,277,802 ounces of silver...and reported shipping 730,180 ounces out the door.  The link to that action is here.

Yesterday was the 20th of the month...and that always means that The Central Bank of the Russian Federation updates their website for the previous month...and reports their gold purchases for that month.

In August, they purchased another 200,000 ounces, bringing their total reported stash up to 27.2 million ounces.  Here's Nick Laird's wonderful graph that shows it all.

(Click on image to enlarge)

While on the subject of Nick Laird's wonderful are two new ones that he just sent me while I was in the process of putting today's column together.

There are two for gold one for silver...and both cover the period from 1970 to 2011-to-date.  Here's the gold graph.  The top chart shows the percentage change in the gold price every year...and the lower one shows the U.S. dollar change in price every year.

(Click on image to enlarge)

Here's the silver chart...and it reads the same.

(Click on image to enlarge)

As you can see, there is no sign of a bubble, as it has been a very orderly rise in far.  Both charts are worthy of your time...and the 'click to enlarge' feature works perfectly for these, as they are pretty big charts.


¤ Critical Reads

US investigates insider trading prior to S&P credit rating downgrade

US authorities are said to be seeking information from hedge funds as they investigate possible insider trading just hours before America's credit rating was cut.

Financial regulator the Securities and Exchange Commission (SEC) is reported to have sent subpoenas to a number of firms and is focused on trades that bet on a fall in US stock markets.

The SEC is said to be working on the investigation with the Financial Industry Regulatory Authority, which examines the millions of trades made on Wall Street each day.

Roy Stephens sent me this story that was posted late last night in The Telegraph...and the link is here.


Eight Offshore Banks Under Grand Jury Investigation Over Taxes, U.S. Says

Eight offshore banks are under federal grand jury investigation for facilitating tax evasion by U.S. citizens as part of a probe the Justice Department said has dealt “fabled Swiss bank secrecy a devastating blow.”

The department disclosed the probes on a section of its website detailing the Tax Division’s Offshore Compliance Initiative. In 2009, prosecutors charged UBS AG, the largest Swiss bank, with aiding tax evasion by U.S. clients. UBS avoided prosecution by paying $780 million, admitting it fostered tax evasion, and giving the U.S. Internal Revenue Service data on more than 250 accounts. It later turned over data on another 4,450 accounts.

If there's anything in here that might apply to you, dear reader...I urge you to take the time to run through it.  I thank Washington state reader S.A. for sending this Bloomberg story along...and the link is here.


Lloyd's insurer sues Saudi Arabia for 'funding 9/11 attacks'

A Lloyd's insurance syndicate has begun a landmark legal case against Saudi Arabia, accusing the kingdom of indirectly funding al-Qa'ida and demanding the repayment of £136m it paid out to victims of the 9/11 attacks.

The Brighton-based Lloyd's 3500 syndicate, which paid $215m compensation to companies and individuals involved, alleges that the oil-rich Middle Eastern superpower bears primary responsibility for the atrocity because al-Qa'ida was supported by banks and charities acting as "agents and alter egos" for the Saudi state.

Well, if I were Lloyd's, that's not the country I'd be suing.  Anyway, I thank reader Ken Metcalfe for sending me this story out of The Independent on Monday...and the link is here.


Debt Downgrade: Berlusconi Furious at Standard & Poor's Rating

For months, Italy has been struggling to convince international financial markets that it was doing all it could to reduce sovereign debt and push through necessary labor market reforms. Late on Monday, it became apparent that there is more work to be done.

In an afternoon announcement in New York, the ratings agency Standard & Poor's indicated it was downgrading Italy's credit rating by one notch due to what it described as limited prospects for growth in the country. More damning, the research note released by S&P head David Beers also pointed to instability within Prime Minister Silvio Berlusconi's governing coalition.

This is Roy Stephens second offering of the day...and it's a posting from the German website  The link is here.


Resenting Greece: Slovakia Threatens Euro Rescue Package

Having suffered painful, self-imposed economic reforms, Slovakia doesn't see why it should help bail out euro-zone partners like Greece. Prime Minister Iveta Radicova is trying to talk her country into solidarity, but has become increasingly isolated in her position.

The government under the Prime Minister Iveta Radicova has turned the population against itself. Despite an impressive economic record, the country is still Europe's second poorest and in some regions one in three people are unemployed. The government leader has adopted a tough cost-cutting plan and can hardly dare asking for more from her people. But that's exactly what she must do: Slovakia is obligated to contribute some €7.7 billion ($10.9 billion) to the euro-rescue fund. It's a hefty sum for the formerly communist country with a mere 5.4 million inhabitants. At the moment it is highly unlikely that Radicova can rally a parliamentary majority to support the plan.

I thought I knew something about Slovakia, but this story was an eye-opener for me.  It's another Roy Stephens offering, of course...and this one was also posted over at yesterday.  I consider it a must read...and the link is here.


What Comes After 'Europe'? - The Wall Street Journal

What is now happening in Europe isn't so much a crisis as it is an exposure: a Madoff-type event rather than a Lehman one. The shock is that it's a shock. Greece was never going to be bailed out and will, sooner or later, default. The banks holding Greek debt will, sooner or later, be recapitalized. The recapitalization will be borne by German taxpayers, and it will bring them—sooner rather than later—to the outer limit of their forbearance. The Chinese will not ride to the rescue: They know not to throw good money after bad.

And then Italy will go Greek. Europe's crisis will lap on U.S. shores, and America's economic woes will lap on Europe's—a two-way tsunami.

This is not a particularly long op-ed piece...but I consider it well worth your time.  It showed up posted in the clear over at The Wall Street Journal on Monday.  I thank Washington state reader S.A. for sharing it with us...and the link is here.


Debt crisis: EU 'refusing to recognise China as a market economy'

China has signalled that the West must do more to recognise it as a market economy if Europe wants further help in fixing its debt crisis.

Beijing's warning comes as Spain, Portugal, Greece and Italy have all turned to the Asian superpower as a potential buyer of their debt.

Already the biggest foreign creditor to the US, the still strong economic growth enjoyed by China may hand it extra sway in trade negotiations with Europe. The Chinese government wants the European Union to recognise China as a full market economy under World Trade Organisation (WTO) rules, which would remove many restrictions for Chinese companies.

This is another story from The Telegraph late last night...and it's another Roy Stephens offering as well.  The link is here.


Switzerland Launches Referendum To Stop SNB Lunacy, Save Swiss Gold

According to an article in Swiss newspaper NZZ, the SVP party [Swiss People’s Party], launched a referendum to “protect” the 1,000 tonnes of gold owned by the Swiss National Bank [SNB]. Their aim is to: 1] make it unconstitutional to sell gold and, b] force the SNB to hold 20% of its assets in gold [currently 16%]

The SVP said the sale of 1,500 of the SNB’s 2,500 tonnes of gold was regrettable, especially given the Swiss population had no say in this.

For the referendum to be launched the action committee needs to collect 100,000 signatures from supporters of the measure. They have until March 20, 2013 to do so.

This is a very short read...and you've already read half of it here.  I thank reader Charley Orr for sending me this piece that was posted over at yesterday...and the link is here.


Asia will take whatever gold the West sells, London trader tells King World News

The London trader source for King World News reports that Western suppression of the gold futures price is building big premiums on Asian gold and setting up bigger moves of gold from West to East. The trader says: "There are massive orders for tonnage of gold, incredible amounts between $1,715 and $1,760. This has the effect of putting a physical floor under the price of gold.

I stole the headline...and the intro...from a GATA release...and the link to the KWN blog is here.


Maple Leaf silver coins seeing record demand

The Royal Canadian Mint is on track to raise sales of its silver bullion coins by around 30 percent to 25 million ounces this year and to match last year’s record gold sales of around 1 million ounces, an executive from the Mint said.

“In silver, we are 30 percent ahead of where we were last year,” he said. “We finished last year with 18 million ounces of silver (sales). We are looking at increasing those sales by about 30 percent to the end of this year, to around 25 million ounces.”

This very short story was posted in Canada's Financial Post yesterday...and it's well worth skimming.  I thank reader Matthew Nel for this...and the link is here.


Demand for real metal astonishes participants at LBMA conference in Montreal

The gold market is revving up to reach new record highs in excess of $2,000 an ounce in the next year, according to the average forecast of bankers, traders and investors at the gold industry's largest annual gathering.

The bullish prediction, if correct, suggests that the gold bull market remains intact, despite the price of the metal having already gained almost 30 per cent this year and 600 per cent over the past decade.

The widespread optimism at the London Bullion Market Association conference in Montreal, the largest gathering of the gold industry, comes as the gold market has been transformed from a backwater dominated by jewellery demand to one of the hottest investment assets.

This Financial Times story is printed in the clear in this GATA release...and I consider it a must read.  The link is here.


Am I Really going to Get Rich from Gold Stocks?

BIG GOLD editor Jeff Clark has a short essay bearing this headline posted in yesterday's edition of Casey's Daily Dispatch.  It's well worth the read...but you have to scroll down a bit to get to it...and the link is here.


HUI - Mining Shares surging towards a retest of all time high

Here's a blog from Dan Norcini that he posted on his website yesterday.  It pretty much confirms what I've been saying for a month now.  I'm not into technical analysis...and Dan uses it quite a bit here.  I've always had a tendency to toss TA out the window in managed markets such as silver and gold, as the bullion banks are very good at painting whatever chart they wish.

Very impressive strength in the mining sector was the feature of the day in the trading session.  The result was to set the index within striking distance of its recent all time high.

Newmont Mining shot to yet another all time high today.

Having a few days of price action under our belt allows us to get a better picture of where the buy orders and sell orders are coming in; in other words, defining where the "value" regions are located.

But, having said all that, the blog is worth the read anyhow...and I thank reader U.D. for sending it along.  The link is here.


Indian car makers Tata unveil £2.9m gold-plated Nano

Wow!  What can I say?

As their sales hit an all-time low, Indian car manufacturers Tata unveil a gold and jewel-encrusted car in Mumbai as a tribute to 5,000 years of Indian craftsmanship.

The video runs 1:07...and is an absolute must watch...and it's worth a second or third look as well.

I thank Roy Stephens for sending this along.  The video [along with a few paragraphs of text] was posted in The Telegraph yesterday...and the link is here.


King World News Interviews Rick Rule

This is an interview that Eric sent me on Monday night, that I just didn't have the space for in my already-overflowing Tuesday here it is now...and the link is here.


Bullion vaults run out of space on gold rally

Deep in the 7.4-acre Singapore FreePort next to Changi International Airport’s runways is the bullion vault of Swiss Precious Metals, behind seven-metric-ton steel doors built to survive a plane crash or earthquake.

The rooms are almost full after demand rose five-fold in the year since the Geneva-based company opened the facility. The firm plans an extension, and relocated Chief Executive Officer Jean-Francois Pages to Singapore last month to cope with the surge of investors willing to pay as much as 1 percent of the value of their holdings each year to keep them secure.

“The European debt crisis and its impact on the solvency of European financial players are driving European customers to find refuge in tangible values like physical gold and other precious metals,” Pages said. Demand “is totally compatible with the current financial and political global turmoil.”

This Bloomberg story is reader U.D.'s second offering of the day...and it's a must read from one end to the other.  The link to this longish article is here.


Gold inclusion as Tier 1 asset would be huge: LBMA

The London Bullion Market Association is supporting the gold sector's push to have bullion included by the Basel Committee on Banking Supervision in its recommendations of high quality liquid assets commercial banks should hold, which, if successful, will be one of the most significant events for the industry in recent years, the LBMA chairman said Monday.

"If the Basel III quest is successful, it could be one of the greatest changes in the modern day gold market," David Gornall, who is also global head of precious metals trading at Natixis, told delegates there. [Amen to such a move would be an admission by the worlds' central banks that gold is still money. - Ed]

This story, filed from Montreal, was posted over at their website on Monday...and I thank Roy Stephens for sharing it with us...and it's also his last contribution of the day.  It's a very short article...and you've already read two of the four paragraphs.  The other two are a must read as well...and the link is here.


As gold price suppression grows more brazen, maybe Asia will defeat it

Here's your long read of the day.  This was a speech given by Chris Powell, Secretary/Treasurer, of the Gold Anti-Trust Action Committee at the 18th CLSA Investors' Forum at the Grand Hyatt Hotel in Hong Kong earlier today.  Here's his opening paragraph.

The speaker following me, George Clooney, will be able to tell you what it's like to be handsome, talented, rich, and famous. I could tell you what it's like not to be. But instead the conference has asked me to talk about gold, which at least might make you rich, or help you preserve some of whatever you've got.

It nearly goes without saying that this is an absolute must read from beginning to end...and the link to the GATA release is here.



¤ The Funnies

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¤ The Wrap

Gold [in $US terms] has now been at or pretty near the top of its up channel for an entire month now. Each challenge to break ABOVE the channel has been met with an even bigger announcement from the global financial "powers that be" that they have the situation "under control". Thus far, they have managed to keep $US Gold within "bounds"...but they have not yet been able to produce a sell-off similar to the one which took place in the great deleveraging $US rally of late 2008. They are not going to stop trying. - Bill Buckler, Gold This Week, September 17, 2011

It was, as Ted Butler so succinctly put it, just another day off the calendar in the gold and silver market on Tuesday.  Yes, both metals rallied, but it certainly wasn't meaningful in any respect.  But the preliminary open interest numbers for yesterday were rather it may have been a short-covering rally by the bullion banks.  I'll be interested in looking at the final numbers later this morning.  Monday's final open interest numbers were not conclusive.

But, it doesn't really matter, because 'all of the above' will be in Friday's Commitment of Traders Report, as yesterday at the close of Comex trading was the cut-off for it.  Both Ted and I are expecting another improvement in the bullion banks' net short position...but we're not sure by how much.

Here's an interesting chart that was sent to me by reader Peter Degraaf yesterday...and these were his comments that came along with it... "Hi Ed, A few days ago you were looking for a GDX chart.  I've waited for the upside breakout and today the breakout occurred."

And as Peter says in the dialogue box..."GDX broke out at 64 again on September 20th.  A closing price above the green arrow will confirm the breakout and establish a target at 80."  This is very similar to what Dan Norcini was saying as well.

To tell you the truth, I'll be expecting the shares to perform much better than this.  We'll find out when the gold price makes its next major move to the upside...but the funny thing is, that we are over $100 from the record high in gold...and we're already knocking on the door of the old record high in the gold stocks.  I've been pointing this out for about a month now, as the shares are not confirming the price action in the metal during this engineered take-down in both metals.

Now that London has been open for a few hours, gold is up about five bucks from Tuesday's New York close...and silver is up about fifty cents.  Considering the lack of price activity, volume in both metals is getting up there as of 5:17 a.m. Eastern time.

I guess we hear from 'Helicopter' Ben this afternoon.  One has to wonder what he'll have to say when the smoke finally comes out the chimney.  But, as I said yesterday, it matters the world's current financial and monetary system is toast, regardless.

See you tomorrow.