Gold & Silver Daily
"This situation is still unresolved...and still the 800 lb. gorilla in the living room that refuses to go away."

¤ Yesterday In Gold & Silver

The gold price didn't do a lot in Far East or early London trading, but then got sold down a bit over ten bucks by around 1:00 p.m. local time in London...8:00 a.m. Eastern in New York.  Gold rallied a bit from there, but around 9:40 a.m. either a not-for-profit seller or a high-frequency trader showed up...and in just a couple of minutes had peeled about a percent off the price.

The low price tick at that point was $1,703.90 spot...and the subsequent rally lasted about ninety minutes before gold traded sideways for the rest of the New York session.

The gold price closed at $1,716.10 spot...down $11.50 on the day.  The gross volume was very chunky at 214,805 contracts, but once the roll-overs were subtracted from that amount, the net [real] trading volume was only around 149,000 contracts, which is still a pretty decent number.

Silver' price path was about the same.  Like Wednesday, silver's London low came about 12:30 p.m. GMT.  It rallied very decently from there to its high of the day [$32.90 spot] at 9:15 a.m. Eastern, before running into the same not-for-profit seller/high-frequency trader about twenty-five minutes later.

After the low [$32.10 spot] was in, the silver price made more than one attempt to rally during the rest of the New York trading session, but ran into a willing seller before it could get back above Wednesday's closing price.

Silver closed at $32.60 spot...down 14 cents.  Silver's gross volume was 69,800 contracts...but with the roll-overs subtracted, the volume netted out at around 40,500 contracts.

The dollar index traded in a tight range just above the 81.00 mark for the third day in a row...and closed on Thursday at 81.04...virtually unchanged from Wednesday...and Tuesday.

And for the fifth day in a row, the gold stocks were under selling pressure again.  This time the HUI finished down 2.43%.  In the last five trading days, the HUI is down 10.6%...which is a huge drop considering the fact that the bullion price is only down about a percent over that time period.

John Embry, amongst others, has always been of the opinion that "da boyz" are managing the share prices as well...and it's at times like this that I heartily agree with him.

It was the same story in the silver stocks...and Nick Laird's Silver Sentiment Index closed down another 2.97%.  Nick's SSI is down 7.6 percent over the last five trading days...and over that time period, the silver price has actually risen 8 cents!  So what gives???

(Click on image to enlarge)

Nick Laird says that..."if we get a meltdown like 2008, then for the hedge funds, it's an obvious short gold stocks/long gold play."  I guess that would apply to silver as well...and maybe that is what we're seeing at the moment.

The CME's Daily Delivery Report showed that 9 silver contracts were posted for delivery on Monday from within the Comex-approved depositories.

Surprisingly, the GLD ETF showed an increase on Thursday, as an authorized participant added 106,577 troy ounces of gold.  But it was a different story over at SLV, as an authorized participant withdrew 1,452,135 troy ounces...and shipped it off to parts unknown.

Over at Switzerland's Zürcher Kantonalbank for the Nov 5th to 14th reporting period, their gold ETF showed an addition of 34,537 troy ounces of gold.  But in their silver ETF, it was an entirely different story.  After a withdrawal of 2.47 million ounces between October 30th and November 5th...the latest ZKB reporting period up to and including Wednesday showed them receiving an eye-watering 3.40 million ounces!

And there's more!

Over at the Comex-approved depositories on Wednesday, they reported receiving 54,149 troy ounces of silver, but shipped 2,433,344 ounces of the stuff out the door!  The big shipments were out of HSBC USA...and Brink's, Inc.  The link to all this activity is here...and it's worth a peek.

I'm sure some of this activity has to do with the purchases by the Royal Canadian Mint and Sprott's Silver Bullion Trust [PSLV]...but it's still amazing to watch.  We're talking monstrous quantities of silver on the move everywhere.  Without doubt, Ted Butler will have a lot to say about this in his weekend commentary.

While Ted's name is ringing in your ears, here are a couple of free paragraphs from his comments to his paying subscribers on Wednesday...and they are a must read for sure.

"My reaction to the Russia Today interview with Bart Chilton is two-fold. First, I am elated that the subject of the silver manipulation has come to be so widely understood. As I need not remind you, this has been my main professional focus for more than 25 years. The main reason it obsesses me is that it is such a serious matter, as no market crime is more important than price manipulation. Since discovering that JPMorgan was the big silver short 4 years ago due to CFTC correspondence to lawmakers, I have tried my level best to convince others of JPM’s involvement. Considering how widespread has become the awareness that it is JPMorgan at the heart of the silver manipulation, I can also state that I am elated about that as well. While I am most grateful for the financial support from subscribers and from Investment Rarities that has enabled me to delve into and make known the manipulation, my chief motivation was always to end a market crime that I found most offensive. How could I not be ecstatic that so much has been accomplished?"

"My second reaction is different. I’m appalled that the CFTC and the CME Group have not dealt with this matter in a forthright and aboveboard manner. Concentration is an incredibly specific issue and JPMorgan holds a manipulative share of the COMEX silver market, currently over 32% on the short side. The Hunt Brothers were judged guilty of manipulating the silver market for holding a 20% share in 1980. Had there ever been a single participant that held 32% of the long side of COMEX silver since 1980, it is a certainty that the CFTC and the CME would not have rested until that position was eliminated. Yet for more than 4 years, the CFTC has only pretended to investigate while JPMorgan manipulated the silver market continuously." - Silver analyst Ted Butler...14 November 2012 

Here's a photo that Washington state reader S.A. sent my way...and shows a couple of reason why you shouldn't have your money in the bank.

I have the usual number of stories for a weekday...and I hope you have the time to go through them all.


¤ Critical Reads

BP settles criminal charges for $4 billion in spill; supervisors indicted on manslaughter

BP has agreed to plead guilty to 14 criminal counts, including manslaughter, and will pay $4 billion over five years in a settlement with the Justice Department over the April 20, 2010, drilling disaster in the Gulf of Mexico that killed 11 people and unleashed the worst offshore oil spill in U.S. history, officials announced Thursday.

The fine is the largest criminal payment in U.S. history, Justice Department officials said, but BP still faces even bigger penalties from federal civil charges, including those under the Clean Water Act.

The Justice Department also sought to attach faces to the disaster, filing manslaughter charges against two BP rig supervisors and obstruction charges against a BP executive who allegedly lied to Congress. The three are not covered by the BP settlement.

This story was everywhere yesterday...and this particular 3-page version showed up on The Washington Post website.  I thank Donald Sinclair for being the first through the door with this story...and the link is here.


FHA close to running out of reserves: report

The Federal Housing Administration is expected to report later this week that it could exhaust its reserves because of rising mortgage delinquencies, The Wall Street Journal reported, citing people familiar with the matter. That could result in the agency needing to draw on taxpayer funding for the first time in its 78-year history, the report said. The decision won't be made until February, and Congress would not need to authorize any funding because it has "permanent and indefinite" budget authority, the report added.

That's all there was to this 1-paragraph story from Wednesday that reader 'David in California'  sent me yesterday.  This should pretty much lay to rest any of the b.s. out there about a recovery in the U.S. residential real estate market.  The link to the hard copy is here.


U.S. Postal Service on a ‘Tightrope’ Lost $15.9 Billion

The U.S. Postal Service said its net loss last year widened to $15.9 billion, more than the $15 billion it had projected, as mail volume continued to drop, falling 5 percent.

Without action by Congress, the service will run out of cash on Oct. 15, 2013, after it makes a required workers compensation payment to the U.S. Labor Department and before revenue typically jumps with holiday-season mailing, Chief Financial Officer Joe Corbett said today.

The service, whose fiscal year ends Sept. 30, lost $5.1 billion a year earlier. It announced the 2012 net loss at a meeting at its Washington headquarters.

West Virginia reader Elliot Simon sent me this Bloomberg story from yesterday morning...and the link is here.


Stock, Bond Certificates Held by DTCC Damaged by Sandy Flood

Stock and bond certificates held in an underground Manhattan vault owned by the Depository Trust & Clearing Corp. were damaged by flooding in Hurricane Sandy, according to the DTCC.

The New York-based company that processes transactions in U.S. equities and government, municipal and corporate bonds said it’s too early to determine how many of the 1.3 million physical certificates can be restored, according to a statement. The 40- year-old vault was submerged when the Atlantic Ocean’s largest tropical storm on record slammed New York City. DTCC has hired “disaster recovery and expert restoration firms” to work on the project, the firm said yesterday. 

“Our analysis of the condition of the vault, once we were able to open it, was that significant flooding and water damage occurred throughout the facility,” DTCC said of the 10,000- square-foot storage chamber at 55 Water Street in lower Manhattan. “While it is premature to determine the full extent of the damage, it is essential to begin the restoration process to avoid further deterioration.”

This is another Bloomberg story courtesy of Elliot Simon.  It was posted on their website early yesterday afternoon...and the link is here.


Federal energy commission suspends Morgan unit's trading authority

The U.S. Federal Energy Regulatory Commission yesterday suspended a JPMorgan Chase & Co. unit's electrical-trading authority, saying it had filed false information with regulators.

The action, part of a more aggressive effort by the commission to monitor U.S. power markets, prohibits J.P. Morgan Ventures Energy Corp. from selling electricity at market-based rates for six months starting April 1, 2013.

The FERC said the company made "factual misrepresentations" and omitted material information in communications with the California Independent System Operator, or CAISO, and in filings to the commission. CAISO operates the state's power grid.

One can only hope that the CFTC will develop some gonads and do the same thing to JPMorgan in the precious metal markets as well.  But I'm sure that all appointees to the CFTC have to have their testicles surgically removed as one of the conditions to getting that job.

I found this Bloomberg story embedded in a GATA release yesterday...and it's a must read.  The link is here.


Department Of Homeland Security to Scan Payment Cards at Borders and Airports

United States have long had to declare aggregated cash and other monetary instruments exceeding $10,000. Now, under a proposed amendment to the Bank Secrecy Act, FinCEN (Financial Crimes Enforcement Network) will also require travelers to declare the value of prepaid cards that they are carrying, known now as “tangible prepaid access devices.”

Expected to be finalized by the end of this year, the cross-border reporting modifications stem from a broader October 2011 definition of payment methods and form factors that replaced the term “stored value” with the term “prepaid access” in an effort to more accurately describe the process of accessing funds held by a payment provider.

This story showed up in Forbes last week...and I thank Bill Busser for sending it along.  The link is here.


‘Saudi Dakota’ sets more records for oil production in September as U.S. moves towards world’s top oil producer

What’s behind the surging domestic oil production that has the United States on track to become “Saudi America,” as the Wall Street described it today?  Advanced drilling technologies that are tapping into unconventional shale oil deposits get the credit.

From the IEA report: “The recent rebound in US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity – with less expensive gas and electricity prices giving industry a competitive edge – and steadily changing the role of North America in global energy trade.”

When the U.S. does overtake Saudi Arabia as the world’s No. 1 oil producer in the next eight years, a lot of the credit for the increased domestic oil production will have to go to the “Economic Miracle State” of North Dakota.  New oil production data released today by the state’s Department of Mineral Resources show that the Peace Garden State set more new monthly records for oil production in September.  For the second month in a row, the state produced more than 700,000 barrels of oil per day (bpd), and the 728,494 barrels of daily North Dakota oil in September was another all-time record high.

This most excellent article, with even more excellent charts, was posted on the Internet site on Tuesday...and it's well worth your time.  I thank reader Tom Germain for bringing it to our attention...and the link is here.


Israeli Offensive in Gaza: Netanyahu's Extremely Risky Gamble

Israeli Prime Minister Benjamin Netanyahu is hoping the offensive in the Gaza Strip wins his Likud party more votes in January's election. But the move is extremely risky. Skirmishes could escalate into a full-blown war that might weaken Hamas but shift Palestinian support behind even more radical groups.

Just a few hours before the launch of the deadly offensive against military targets and Hamas leaders in the Gaza Strip, Israeli Prime Minister Benjamin Netanyahu was in his favorite place: in front of live television cameras. On Wednesday evening, he addressed the Israeli people with direct, aggressive words. "Today, we relayed a clear message to the Hamas organization and other terrorist organizations," he said. "If there is a need, the military is prepared to expand the operation." Defense Minister Ehud Barak also addressed reporters, saying that Hamas' "consistent provocation in recent weeks … forced our hand into acting with both precision and decisiveness."

The dual appearance seems to betray the motives behind the most recent attacks. "When the cannons roar, we see only Netanyahu and Barak on the screen, and all the other politicians have to applaud them," wrote the daily Haaretz in a commentary published Thursday. "The assassination of (Hamas' top military commander Ahmed) Jabari will go down in history as another showy military action initiated by an outgoing government on the eve of an election."

This story showed up on the German website yesterday...and I thank Roy Stephens for bringing it to my attention...and now to yours.  It's worth reading...and the link is here.


'Horrible Citizens' - The Life of Greece's One Percent

The Greek economy has been tanking for years now as the country struggles to balance its budget by imposing deep austerity measures. But the country's richest residents haven't noticed. Many aren't taxed at all, and some of those that are prefer to dodge their obligation to the state instead.

He'd be happy to discuss art, says the spokeswoman of Greece's biggest shipping magnate. He'd be willing to talk about his collection and the market, or about his fondness for German painters, such as Neo Rauch or Otto Dix, from whom he owns several works. Perhaps he might even muse on the Botero painting he recently purchased for €330,000 ($420,000).

George Economou, though, would prefer not to discuss his country. "He is happy to answer questions on art," his handler repeats. She is standing in gold-colored sandals at the entrance to his villa in Maroussi, a northern suburb of Athens. Her billionaire boss behind her, wearing a pink shirt, khakis and boat shoes, is snatching an hors d'oeuvre off a serving tray.

This is another offering from the Internet site yesterday...and is also courtesy of Roy Stephens.  The link is here.


Chinese perma-growth at risk as Leninists tighten Politburo grip

As expected, hardliners have won the power-struggle at the top of China's Communist Party, or at least they have won the latest round judging by the line-up of the Politburo's Standing Committee this morning.

This is beginning to look like a shocker for the world economy, with big implications for global growth, trade, oil and commodity demand, investment flows, etc.

Two key reformers were shut out of the seven-man Standing Committee: Guangzhou party chief Wang Yang and the head of the national party organisation Li Yuanchao.

Wang Qishan – the torchbearer of economic modernisation – did make it onto the committee but will be in charge of fighting graft, not fighting dinosaurs.

This Ambrose Evans-Pritchard blog was posted on the Internet site sometime yesterday...and I consider it a must read.  It's Roy Stephens' final offering in today's column...and the link is here.


Three King World News Blogs/Audio Interviews

The first blog is with Egon von Greyerz...and it's headlined "There is a Tide in the Affairs of Men...".  The last blog is with BMO's Don Coxe.  It's entitled "Nassim Taleb, Black Swans & Financial Collapse".  The audio interview is with Nigel Farage.


CFTC approves position limit appeal

The Commodity Futures Trading Commission (CFTC) will move forward with an appeal of a federal district court’s decision vacating the position limits rule.  The Commission approved the appeal on a 3-2 vote.

“As part of the Dodd-Frank Act, Congress directed the Commission to limit promptly speculative positions in physical commodity futures and options contracts and economically equivalent swaps. The rule addresses Congress’ concern that no single trader be permitted to obtain too large a share of the market, and that derivatives markets remain fair and competitive. I believe it is critically important that these position limits be established as Congress required. I support the Commission's continued efforts to put in place position limits on speculative positions by appealing the September ruling," said CFTC Chairman Gary Gensler.

All we can do is wish the CFTC good luck with its appeal...and hope that process reaches a speedy and satisfactory conclusion.  The link to the hard copy of the CFTC press release is here...and I thank Matthew Nel for sending it.


New York Sun: The Ron Paul awakening

The New York Sun says U.S. Rep. Ron Paul should have given himself more credit in his farewell address in the House on Wednesday, since while the libertarian-oriented congressman can't claim to have brought about limited government, he has inspired many and changed the national debate. The Sun's editorial is headlined "The Ron Paul Awakening" and it's posted further down...along with the full C-SPAN video of Paul's address embedded in it.

The full text of Paul's "Farewell to Congress" address is linked here...but for those of you who did not watch the video when the link was dispatched to you on Wednesday night, might be interested to know that Paul spoke specifically about the clamor for return of German's foreign-vaulted gold and about the refusal of the U.S. government to account for this country's own gold reserves.

I borrowed "all of the above" from a GATA release yesterday...and the link to this must read New York Sun editorial is here.


Miller's Money Forever..."We Buy Gold"

Florida Avenue is the main drag in our little town in central Florida. In less than a mile, you're likely to see three or four folks standing on the sidewalk wearing headphones, bopping to music, and waving big glittery signs or arrows with "We Buy Gold" written across them. It's a common sight across many cities today.

During my annual trip to Arizona, my friend Phil asked me about gold. He owns some gold with no emotional value tied to it, and I convinced him of two things. First, he should not sell his gold; and second, he should hold it in a portable form with an easily recognizable value, like Gold Eagles. If things really get tough, he wouldn't want to have to barter jewelry with no easily agreed-upon value.

There are many places where he could probably sell his jewelry, but how would he know if he was getting a fair price? I didn't know either, but I knew I had a friend who would.

I called up my good friend Rob. His family has owned a pawnshop for decades; it even has a "We Buy Gold" sign in the window. Who better to ask?

Casey Research's own Dennis Miller is the author of this very excellent must read article about buying and selling gold jewellery.  I work at such a place part time during the day...and will vouch for everything that is said here about the reputable "cash-for-gold" operations.  The link is here.


India still the world's biggest gold market

India has toppled China to emerge as the largest gold consumer in the third quarter of 2012. Though global gold demand fell in the Q3 with investors buying fewer bars and coins, India’s gold demand revived in the June-September quarter 2012.

According to data compiled by the World Gold Council (WGC), gold demand totalled 223.1 tonnes, up 9% year on year from 204.8 tonnes in the third quarter of 2011. Demand from China actually slipped in the same quarter. China recorded an 8% drop in demand at 177 tonnes (191 tonnes) due to the economic slow down in the country. Jewellery demand was down 5% at 124 tonnes as retailers reduced their inventory.

The WGC has said that India’s demand jumped as a result of the restocking of gold by jewellers before the festival of lights, Diwali, which is currently on in India. The  gold demand trend report for June-September quarter of 2012 has noted that Indian consumers seem to have adjusted to the rise in gold price levels.

This story was filed from Mumbai yesterday...and I found it over on the Internet site.  It's worth reading...and the link is here.


High gold prices push many Indians to silver for Diwali

It is not just gold that caught the eye of Indian consumers celebrating Diwali. Brisk business in silver was also seen in select parts of the country.

Given the high price of gold and the Indian government’s new regulation on buying gold and tax deductions at source, the sale of silver items at jewellery shops soared to a new high.

"Silver has proved to be the preferred substitute with most retail buyers this Diwali,'' said Manish Mehta of bullion retailer, D P Zaveri and Sons. ``Customers came in asking for silver coins, corporate gifting products, small utensils to be used at home and for silver items to conduct puja (the ceremony for prayers),'' he added.

This is another story that was filed from Mumbai yesterday...and the link to this must read story is here.


Soros raises gold ETF holdings by half, nearly triples Freeport stake

Billionaire fund manager George Soros increased his stake by half in the SPDR Gold Trust while fellow billionaire fund manager John Paul maintained his holding in the world’s largest gold bullion-backed ETF.

However, Paulson reduced his position in Gold Fields, while Soros Fund Management nearly tripled its position in Freeport-McMoRan Copper & Gold, SEC filings showed Thursday.

During the third quarter, Soros Fund Management raised its interest in SPDR Gold shares from 884,400 shares in the second quarter to 1.3 million shares.

Here's another must read offering from the Internet site.  This one was posted there in the wee hours of this morning...and the link is here.



¤ The Funnies

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¤ The Wrap

In the end, more than freedom, they wanted security. They wanted a comfortable life, and they lost it all – security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again. -- Edward Gibbon, British historian and M.P.

Despite the rather ugly looking engineered price declines in both gold and silver around the London p.m. gold fix yesterday, it was just another day in the roll-over cycle for the December delivery month...which is now less than two weeks away...ten business days...but only nine business days in New York because of the Thanksgiving holiday next Thursday.  And it's a given that there won't be much trading on the Friday following, as most traders use this U.S. holiday as an excuse to take four days off in a row.  I suspect that this will be the case this time...but we could a surprise as well, as there are still monstrous December positions in the Comex gold and silver futures market that have to be dealt with...and as I said yesterday, most of it will happen in the last five business days before expiry...which is November 27th.

And, overhanging all that, are the grotesque, obscene and monstrous short positions in both silver and gold that are held by JPMorgan Chase et al.  This situation is still unresolved...and still the 800 lb. gorilla in the living room that refuses to go away.

I'm not a happy camper about the share price action in either gold or silver...especially in silver, considering the fact that the silver price has risen over the last five business days...and the shares have been smoked.  I've said everything I'm going to say about it further up in this column when I posted the HUI and Nick Laird's Silver Sentiment Index...and if you want to refresh your memory, you can scroll back up to my comments.

Nothing much has changed since my Thursday column...and nothing much happened in Far East trading on their Friday.  Both metals got sold off a bit...but both recovered a bit going into the London open.  The dollar index is not doing a thing...and volumes are very light, with virtually no roll-overs.  London has been open about thirty minutes as I write this paragraph...and gold is down only a dollar or so...and silver is down less than 15 cents.

As I hit the 'send' button at 5:20 a.m. Eastern time, both gold and silver came under more selling pressure almost from the moment I wrote the above paragraph.  Gold is down about eight bucks now...and silver is down a chunky 41 cents.  Volumes are up a bit, especially in silver, but nothing extraordinary...and there are still no roll-overs worth noting, so it's my guess that all this new price/volume activity is of the high-frequency trading variety.  There is a tiny dollar index rally under way, but to hang these price moves of the last ninety minutes on that, would be a real stretch.

As I said in this space yesterday, the real price/volume activity would take place in New York...and that's precisely what happened...and I expect pretty much the same thing again today...although things may have started earlier in the tradng day than I expected...but it's too soon to tell for sure.  It's also Friday, so be ready for anything.

Enjoy your weekend, or what's left of it if you live west of the International Date Line...and I'll see you here tomorrow.