Gold & Silver Daily
"JPMorgan et al were on the job within minutes of the COMEX open"
 

¤ Yesterday In Gold & Silver

The gold price flat-lined all through Far East and early London trading on their Wednesday.  There was a bit of bump up at the noon London silver fix, but the real fireworks didn't start until the 8:20 a.m. EDT COMEX open.  At that point the dollar index headed south---and the gold price headed north.  Volume exploded as JPMorgan et al stepped in front of the technical funds in the Managed Money category.  Most of the gains were in by 10:30 a.m. in New York---and the absolute high tick came at the 1:30 p.m. EDT COMEX close.  It sold off a few bucks from there, before trading flat for the remainder of the electronic trading session.

The low and high ticks were recorded by the CME Group as $1,190.40 and $1,218.50 in the June contract.

Gold finished the Wednesday session at $1,215.10 spot, up $22.10 from Tuesday's close.  Gross volume was north of 283,000 contracts, but netted out to 'only' 200,000 contracts.  It should be obvious that "da boyz" threw everything they had at this rally.

Here's the 5-minute tick chart courtesy of Brad Robertson once again---and as you can see, the big volume came between the COMEX open and close, with most of it occurring between the COMEX open and 10:30 a.m. in New York.  Add two hours for EDT---and the 'click to enlarge' feature is more than helpful here.

After trading more or less sideways through most of the Far East session, silver developed a positive bias starting at 2 p.m. Hong Kong time on their Wednesday afternoon---and after that, the price chart was a virtual carbon copy of the gold chart---and certainly requires no further explanation.

The low and high ticks for silver were reported as $16.48 and $17.235 in the July contract.

Silver closed in New York yesterday at $17.09 spot, up 61 cents from Tuesday.  It would have closed up at least $61 if "da boyz" hadn't showed up.  Net volume was over the moon at 72,000 contracts, more than double what it was on Tuesday.

The platinum chart was a reasonable facsimile of the price action in gold and silver.  That white metal finished the Wednesday session at $1,147 spot, up 16 bucks on the day.

Palladium didn't do much---and it closed yesterday at $786 spot, up a dollar.

The dollar index closed very late on Tuesday afternoon in New York at 94.56---and began to weaken slightly during the Far East trading session.  It was down over 25 basis points by the London open---and rallied back to almost unchanged by the COMEX open.  Then the roof caved it.  The 93.50 low tick came about ten minutes before noon in New York---and it rallied a hair during the remainder of the Wednesday session, closing at 93.62 and down 94 basis points on the day.

Here's the 1-year U.S. Dollar chart so you can see how far it has dropped---and how much further it has [potentially] left to go.

The gold stocks gapped up and stayed up.  Their highs came at gold's high, the COMEX close---and they faded a bit from there.  The HUI finished the Wednesday session up 2.23 percent.

The silver equities rallied sharply, with almost all of their gains coming by 10:30 a.m. in New York.  After that they chopped more or less sideways for the remainder of the day.  Nick Laird's Intraday Silver Sentiment Index closed up a very decent 4.51 percent.

The CME Daily Delivery Report showed that 4 gold and 31 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  In silver, the only short/issuer of note was the Japanese bank Mizuho with 28 contracts out of its client account.  Not surprisingly, JPMorgan stopped 19 contracts---8 for clients and 11 for itself.  HSBC USA stopped 12 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in May fell by 3 contracts down to 145, minus the 4 mentioned in the previous paragraph.  In silver, May o.i. dropped by 34 contracts, leaving 375 contracts still open, minus the 31 in the previous paragraph.

There were no reported changes in GLD yesterday, but over at SLV an authorized participant added 955,880 troy ounces.  I would expect that a very decent chunk of physical silver is owed SLV after yesterday's price action---and it's a given that the authorized participants, principally  JPMorgan, will short the shares in lieu of depositing metal, as the metal doesn't exist to satisfy that kind of demand.  It's also a given that JPMorgan won't be providing it out of their private stash, either.

The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs as of the close of business on Friday, May 8---and here's what they had to report.  Their gold ETF added 4,914 troy ounces, but they removed 8,429 troy ounces from their silver ETF.

For the second day in a row there was no report from the U.S. Mint.

It was a very quiet in/out session at the COMEX-approved depositories on Tuesday.  In gold, there was 2,101 troy ounces received---and 16,170 troy ounces shipped out.  In silver there was nothing received---and only 38,356 troy ounces shipped out the door.  No need to link that activity.

It was quite a bit busier at the COMEX-approved gold kilobar depositories in Hong Kong.  They received 5,507 kilobars---and shipped out 6,110 kilobars.  All of the action was at Brink's, Inc.  The link to that activity in troy ounces is here.

I have a decent number of stories for you today---and I hope you'll find some in the list below that you'll find worth reading.

 

¤ Critical Reads

U.S. Retail Sales Hint at Recession, Weakest Since Financial Crisis

Despite bouncing back last month at the fastest pace in a year, April just printed the slowest YoY growth since Nov/09 at just 0.9% (retail sales has still missed expectations for 4 of the last 5 months). Against expectations of a 0.2% MoM rise in April (considerably slower than the 0.9% pop in March), Retail Sales missed with a 0.0% change. Ex-Auto and Gas MoM also missed with a mere 0.1% gain (against +0.5% exp.) but it was the control group that saw the biggest miss, printing 0.0% (against hopeful expectations of a 0.5% gain). There was widespread weakness with outright declines in autos, furniture, gas, food, electronics (AAPL hangover), and general merchandise.

What is curious is that moments ahead of the release, sell-siders were overselling the retail print to appear far more important than it is, in hopes for a big beat. CRT strategist David Ader says in note that "Retail Sales is, oddly, perhaps more important than NFP..."

This chart-filled news item appeared on the Zero Hedge website  at 8:42 a.m. EDT on Wednesday morning---and today's first story is courtesy of Dan Lazicki.

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Q2 GDP Forecast Cut to 0.7% by Atlanta Fed

Zero Hedge first brought attention to the Atlanta Fed over two months ago, when the first massive divergence between bullish consensus and objective reality appeared. Since then it has been nothing but a downhill race for reality, with consensus scrambling to catch up. Moments ago, the Atlanta Fed just cut its Q2 GDP forecast once more, this time to 0.7% from 0.8%. This is on the back of a Q1 GDP which as of this moments is around -1.0%.

From the Atlanta Fed:  The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.7 percent on May 13, down slightly from 0.8 percent on May 5. The nowcast for second-quarter real consumer spending growth ticked down 0.1 percentage point to 2.6 percent following this morning's retail sales report from the U.S. Census Bureau.

It also means that the first half U.S. GDP print will be negative and all else equal, would suggest a technical recession. It also means that for 2015 full year GDP to print at a "growing" 2.5%, the economy will have to grow at 5% or higher in both Q3 and Q4.

Good luck with that.

This brief 2-chart story showed up on the Zero Hedge website at 11:31 a.m. EDT yesterday morning---and it's definitely worth a look---and it's the second offering in a row from Dan Lazicki.

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Moody's Downgrades Chicago Credit Rating to Junk Bond Status

Moody's Investors Service announced Tuesday it has lowered Chicago credit rating to junk bond status, citing unfunded pension obligations and lagging tax revenue, in a move Mayor Rahm Emanuel called irresponsible.

Moody's downgraded the city's debt rating on bond issues backed by property, sales and fuel tax revenue to Ba1, one notch below investment grade, from Baa2. As a result, the city's borrowing costs will increase as it pays more interests to make its bonds attractive to buyers.

In making the announcement, Moody's noted the city's options for curbing growth in its unfunded pension liabilities was hurt by an Illinois Supreme Court decision. The court ruled Friday that the Legislature's restructuring of Illinois' pension obligations violated a section of the state constitution.

This news item appeared on the newsmax.com Internet site at 5:59 a.m. EDT on Wednesday morning---and it's courtesy of Brad Robertson.

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Bond Rout Deepens to $433 Billion as Bull Positions Unwound

Losses from the worst global debt-market slump in two years deepened to $433 billion as investors begin to ponder how high yields will climb before stabilizing.

The value of the world’s fixed-income markets dropped to $45.07 trillion on Tuesday from $45.51 trillion on April 17, according to a Bank of America Merrill Lynch index.

Record central-bank stimulus had sent investors piling into debt at the same time that dealers pulled back from making markets -- a combination that saw investors paying a price for holding bonds with yields not far from record lows and the Federal Reserve discussing an increase in U.S. interest rates.

This Bloomberg article bears strong similarities to an Ambrose Evans-Pritchard offering I had on this subject in Wednesday's column.  This story was from early Tuesday evening Denver time---and I thank South African reader B.V. for pointing it out.

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U.S. Set to Rip Up UBS Libor Accord, Seek Conviction

The U.S. Justice Department is set to rip up its agreement not to prosecute UBS Group AG for rigging benchmark interest rates, according to a person familiar with the matter, taking a new step to hold banks accountable for repeat offenses.

The move by the U.S. would be a first for the industry, making good on a March threat by a senior Justice Department official to revoke such agreements and putting banks on notice that these accords can be unwound if misconduct continues.

UBS is among the five banks that are poised to reach settlements with U.S. regulators over allegations that they manipulated currency markets, people familiar with the situation have said. Four of them -- Citigroup Inc., JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Group Plc -- will likely enter pleas related to antitrust violations, people familiar with the talks have said.

This is another story from the Bloomberg website.  This one put in an appearance there at 4:04 p.m. MDT on Tuesday evening---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Don Coxe discussed oil and bonds on BNN

In the first half of the interview, Don Coxe, Chairman, Coxe Advisors joins BNN to discuss why oil forecasters are getting it wrong, and why crude could be in for a major sell off.  This segment runs for 6:46 minutes.

The second part is headlined "Don Coxe on the bear market for bonds"---and the link to the second segment, which runs for 8:05  minutes, is here.

They were posted on the bnn.ca Internet site at 2:30 p.m. yesterday afternoon EDT.  I thank Ken Hurt for sending both of these along.

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House Votes to End N.S.A.’s Bulk Phone Data Collection

The House on Wednesday overwhelmingly approved legislation to end the federal government’s bulk collection of phone records, exerting enormous pressure on Senator Mitch McConnell of Kentucky, the Senate majority leader, who insists that dragnet sweeps continue in defiance of many of those in his Republican Party.

Under the bipartisan bill, which passed 338 to 88, the Patriot Act would be changed to prohibit bulk collection by the National Security Agency of metadata charting telephone calls made by Americans. However, while the House version of the bill would take the government out of the collection business, it would not deny it access to the information. It would be in the hands of the private sector — almost certainly telecommunications companies like AT&T, Verizon and Sprint, which already keep the records for billing purposes and hold on to them from 18 months to five years.

So for the N.S.A., which has been internally questioning the cost effectiveness of bulk collection for years, the bill would make the agency’s searches somewhat less efficient, but it would not wipe them out. With the approval of the Foreign Intelligence Surveillance Court, the spy agencies or the F.B.I. could request data relevant to an investigation. Corporate executives have said that while they would have to reformat some data to satisfy government search requirements, they could most likely provide data quickly.

The legislation would also bar bulk collection of records using other tools like so-called national security letters, which are a kind of administrative subpoena.

This New York Times article, filed from Washington yesterday, was sent to me by Roy Stephens just after midnight Denver time this morning.

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Water Theft Becomes Common Consequence of Ongoing California Drought

With the state of California mired in its fourth year of drought and a mandatory 25 percent reduction in water usage in place, reports of water theft have become common.

In April, The Associated Press reported that huge amounts of water went missing from the Sacramento-San Joaquin Delta and a state investigation was launched. The delta is a vital body of water, serving 23 million Californians as well as millions of farm acres, according to the Association for California Water Agencies.

The AP reported in February that a number of homeowners in Modesto, California, were fined $1,500 for allegedly taking water from a canal. In another instance, thieves in the town of North San Juan stole hundreds of gallons of water from a fire department tank.  Brad sent another story about the water crisis.

This very interesting commentary was posted on the accuweather.com Internet site yesterday---and it's the second contribution of the day from Brad Robertson.  Brad sent another story about the water crisis.  This one is headlined "The Greatest Water Crisis in the History of the United States"---and it's much more in-depth.

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Hell Unleashed — Paul Craig Roberts

This is what the arrogant morons who comprise the U.S. government have stirred up:  Watch this video for its entire 1 hour 20 minutes, and then ask yourself if Washington is making a good decision by driving us into conflict with Russia. (You might have to use your cursor to push
the circle with the dot back to the beginning of the video.)

Americans, being an insouciant people, are unaware that it was Russians, not England’s Wellington, who defeated Napoleon. The Grande Army did not return from Russia. The loss broke the back of French military power.

The German Wehrmacht, which in a few days overran France and drove the British off the continent, was destroyed in Russia by the Red Army. The allied invasion of Normandy encountered only a few under-strength German units deprived of fuel. The German army and all available resources were on the Russian front.

Americans played a small role in the war against Hitler. Eisenhower cleverly waited until the Red Army had defeated Hitler, and then invaded long after the tide had turned against Germany. Today Washington claims credit for winning a war in which Washington’s role was small.

Always, controversial, but never far off the mark, this commentary by Paul appeared on this his website yesterday---and it's definitely worth reading.  I thank Dan Lazicki for sending it our way.

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Prince Charles Black Spider Lobby Letters Reveal a Meddling Monarchy

The U.K. Government has published a series of letters it attempted to keep secret, showing the extent of lobbying of ministers by Prince Charles, who - as heir to the throne - is supposed to remain politically impartial.

The U.K. Supreme Court had earlier ruled that the public has the right to see the letters written by Prince Charles to senior government and Whitehall figures in which he attempted to influence government policies.

The letters — known as 'black spider' owing to the ink and handwriting — have finally been published after a ten-year battle by journalists and freedom of information campaigners, who say the British public has the right to know the extent of the Prince's lobbying of ministers.

I knew of these letters, as this story has been simmering for years---and now they're finally in the public domain.  This interesting news item appeared on the sputniknews.com Internet site at 6:19 p.m. Moscow time on their Wednesday evening, which was 11:19 a.m. EDT in Washington.  I thank reader M.A. for finding it for us.

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Hollande Must Learn How to Be Leader From Putin – French Media

Russian President Vladimir Putin has established himself as a capable head of state by defending his country's national interests and winning the hearts and minds of his fellow citizens. French President Francois Hollande, meanwhile, is a "walking contradiction" and should learn a thing or two from the Russian president on how to be the leader of his country, said French Nouvelles de France.

When Russia celebrated the 70th Anniversary of its victory over Nazi Germany on May 9, Putin, together with 500,000 of his countrymen, marched down the streets of Moscow holding a picture of his father, who fought during the Great Patriotic War. In the meantime, Paris had a demonstration in support of the legalization of marijuana.

After rejecting his invitation to the Moscow Victory Parade, Hollande instead went to shake hands with the King of Saudi Arabia in Riyadh, known for its human rights abuses. Then, hoping to get approval of French voters, Hollande flew to the Antilles to attend a climate change summit and participate in the inauguration of a museum dedicated to the history of slavery.

This article appeared on the sputniknews.com Internet site very early Wednesday evening Moscow time---and I thank Roy Stephens for digging it up for us.

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Macedonia unrest: ‘Warning to Skopje against new Turkish pipeline’

Macedonia has become important to the U.S. as it could become the only way for Russia’s proposed Turkish Stream pipeline to reach Central Europe, which Washington does not want, political analyst Srdja Trifkovic told Russia Today.

Some thirty people have been charged with 'terrorism' over a deadly shoot-out in Macedonia at the weekend. A fierce battle erupted between police and an armed gang in the town of Kumanovo, in the north of Macedonia. The district is populated by ethnic Albanians who make up about a quarter of Macedonia's population. Albanians answered with protests outside the Macedonian Embassy in Tirana, accusing Skopje of using violence instead of talking when dealing with ethnic Albanians. The Macedonian authorities say the gunmen were plotting terror acts against government institutions.

RT: What are the main reasons for the current unrest in the Balkans?

Srdja Trifkovic: It is rather tricky because the Albanians do not react the way they acted or reacted over the past three days without encouragement from the outside. We’ve seen this 14 years ago, in 2001 when the Albanians were caught in the village of Aracinovo, and there were some American fighters with them.

Macedonia or rather the Former Yugoslav Republic of Macedonia has become very important to the US recently because of Bulgaria’s refusal to accept the South Stream project. In the end the Bulgarians under E.U. pressure had to say “no.” And now if the Russian pipeline goes across Turkey to the Greek- Turkish border, the only way it can reach central Europe would be across Macedonia and then the old path as originally suggested through Serbia, Hungary into Austria, Slovenia, and Italy – and this is something the Americans don’t want.

The U.S. just won't give up---and it will be interesting to see how this unfolds as time goes on.  This article appeared on the Russia Today website on Tuesday afternoon Moscow time.  It's another contribution from Roy Stephens.

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Breakthrough to Ukraine peace in recent days, no alternative to Minsk deal - German FM

German Foreign Minister Frank-Walter Steinmeier says there has been a serious breakthrough in fulfilling the Minsk peace road map in Ukraine. Despite any difficulties encountered, he says, the participants must press on with implementing the deal.

Steinmeier was speaking at a meeting of NATO member states diplomats in Antalya, Turkey. "Despite the fact that in two places [in eastern Ukraine] the ceasefire is still fragile, in the past few days there has been a serious breakthrough in implementing the Minsk agreements, concerning the creation of working groups," Steinmeier told the gathering.

He was referring to the decision taken on May 6 by representatives of Ukraine, Russia and the OSCE to create four working sub-groups to help implement the peace road map. They focus on security, political issues, economy and refugees. The political and economic sub-groups are scheduled to hold meetings in the Belarusian capital on May 16.

This is another news item from the Russia Today website.  This one was posted there at 3:05 p.m. yesterday afternoon Moscow time, which was 8:05 a.m. in Washington.  It's another story from Roy Stephens.  It's worth reading.

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Kerry in Sochi: Ukraine’s 15 minutes of fame is probably over

John Kerry’s Sochi meetings with Vladimir Putin and Sergey Lavrov hardly dissolved years of mistrust between Washington and the Kremlin. However, they probably signaled the end of Ukraine’s period as a global cause célèbre.

John Kerry didn't travel to Sochi because he fancied an early summer jaunt to Russia’s tourist showpiece. He flew to the Black Sea pearl to do business. Serious business. By doing so, he signaled that Washington is finally prepared to leave the Ukraine crisis behind and re-engage with Russia on other matters more pressing to humanity. There are deeper headaches than the future of a corrupt, critically divided, failed state on Europe’s edge.

Kerry’s joint press conference with Sergey Lavrov was more notable for what he didn’t say than what he did mention. The Secretary of State spoke about the Middle East and the Minsk agreement. He didn’t refer to Crimea, nor did he bluster about “Russian troops” in Donbas. Indeed, Kerry made it clear that the only solution to Ukraine crisis is Minsk, Minsk and more Minsk.

The truth is that everyone is tired of Ukraine, except the diminishing band who made their names from the Maidan crisis. The media has exhausted the subject and politicians on both sides are as frustrated with their own proxies as they are with the “enemy” at this stage. What began as an emotional roller coaster has turned into a bitter disappointment for everyone in the west. The penny has slowly dropped that all the “revolution” did was replace a bunch of corrupt, albeit elected, rulers with a group of malcontents who are now stealing for themselves and their own cronies. The actors have changed but the script sounds the same to me.

This must read Op-Edge piece appeared on the Russia Today website in the wee hours of Wednesday morning Moscow time---and the stories from Roy just keep on coming.  There was another must read story on these developments.  It was posted on thesaker.is Internet site yesterday---and it's headlined "Yet another huge diplomatic victory for Russia".  I thank Larry Galearis for sharing it with us.

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Oil glut worsens as OPEC market-share battle just beginning: IEA

A global oil glut is building as OPEC kingpin Saudi Arabia pumps near record highs in an attempt to win a market-share battle against stubbornly resistant U.S. shale production, the International Energy Agency (IEA) said on Wednesday.

The West's energy watchdog said in a monthly report that although higher-than-expected oil demand was helping to ease the glut, growth in global oil consumption was far from spectacular.

As a result, signs are emerging that the crude oil glut is shifting into refined products markets, which could make a recent rally in oil prices unsustainable.

This Reuters article, filed from London, put in an appearance on their Internet site early yesterday morning EDT---and it's certainly worth reading if you have the interest.  I thank Elliot Simon for bringing it to my attention---and now to yours.

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‘Gulf rulers snub Camp David summit: Total disarray of U.S. policy in Mideast’

With most of the GCC countries skipping the summit at Camp David, it reflects the failure of US policy in the Middle East, as well as its declining power and influence, geopolitical analyst Ajamu Baraka from the Institute for Policy Studies told RT.

The U.S. will host a summit of Arab leaders in Camp David this week. Four out of the six counties of the Gulf Cooperation Council [GCC] have decided to skip the meeting. The only leaders who will attend the summit are the monarchs of Kuwait and Qatar; others will send lower-ranking officials.

RT: Washington's denying any 'snub'. So if there is no snub going on here, what is happening, do you think?

Ajamu Baraka: We’re seeing a reflection of total disarray of U.S. policy in the region and a reflection of its declining power and influence. Of course there was a snub. Everyone recognizes that. The issue that the US has now is how they put back in place something that resembles a coherent approach to its policy and policy’s objectives in the Middle East.

This is another interesting oil-related story.  This one showed up on the Russia Today website very early on Wednesday afternoon Moscow time---and once again I thank Roy Stephens for bringing it to our attention.

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China 'Deeply Concerned' Over U.S. Plans to Patrol South China Sea

Beijing is seeking an explanation from Washington for its recently revealed plans to deploy warships in the waters off the disputed Spratly Islands in the South China Sea, the country's Foreign Ministry spokeswoman said on Wednesday.

Several media reports emerged on Tuesday that U.S. Defense Secretary Ash Carter was considering expanding military patrols around the Spratly Islands, an archipelago off the Philippine, Malaysian and Vietnamese coasts.

The islands, thought to hold potentially significant oil and gas reserves, are claimed by China, Taiwan, Malaysia, Brunei, the Philippines and Vietnam.

The latest tensions between China and the United States have emerged ahead of State Secretary John Kerry's visit to Beijing scheduled for May 16-17. Acting State Department spokeswoman Marie Harf said Kerry will meet senior Chinese government officials "to advance U.S. priorities" ahead of this June's U.S.-China Strategic and Economic Dialogue (S&ED).

This news item, filed from Beijing, was posted on the sputniknews.com website late yesterday afternoon Moscow time---and it's another contribution from Roy.

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Dr. Marc Faber: Gold mining stocks good place to buy

The market forecaster they call "Dr. Doom", Marc Faber, Editor and Publisher, The Gloom, Boom & Doom Report, joins BNN to discuss the ills of the world and what's next for china and gold.

This 4:55 minute BNN video clip appeared on their website at 12:45 p.m. Wednesday afternoon EDT---and I thank Ken Hurt for his third offering in today's column.

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Jim Rickards: Japan’s (Third) Lost Decade

In the early 2000s, the phrase “lost decade” began to be applied to Japan’s economic performance over the course of the 1990s. The lost decade started with the popping of one of the greatest stock market bubbles in history.

Japan’s Nikkei 225 Index hit an all-time high of 38,916 in December 1989, and then began a sickening 80% crash to a low of 7,831 in April 2003.

But the lost decade included more than just stock market losses. Japan also saw crashing property values, falling interest rates, rising unemployment, declining and stagnant GDP, and the worst demographic profile of any major economy. In short, Japan exhibited all of the hallmarks of a depression of the kind not seen since the 1930s.

As the term “lost decade” became commonplace among economists, a funny thing happened. Another decade came and went and the Japanese economy was still in depression.

This very interesting commentary by Jim showed up on the dailyreckoning.com Internet site yesterday---and my thanks go out to Dan Lazicki for sending it along.

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Venezuela’s Gold Reserves – Part 1: El Oro, El BCV, y Los Bancos de Lingotes

Venezuela’s gold reserves have rarely stayed out of the financial news headlines over the last four years. From initial gold repatriation announcements in August 2011, through to gold shipments from Europe to Venezuela’s capital, Caracas, in late 2011 and early 2012, as well as the more recent negotiations on using gold in swaps and for loan collateral, the Venezuelan gold story has filled many column inches.

However, much of the coverage has been disjointed and purely focused on the story of the day. The analysis below aims to take a broader overview and to provide a big picture treatment. To understand where Venezuela’s gold got to where it is today, you have to understand where it’s been.

The analysis is divided into two parts. Part 1 starts with a short historical overview of Venezuela’s gold up to 1992, followed by an examination of where the gold, and the claims on gold, were located just prior to repatriation in 2011. It also drills down into the composition of the gold now held in the BCV vaults and shows that these bars would be expected to consist of roughly equal percentages of London Good Delivery bars and US Assay Office ‘melt’ bars.

This very long commentary by Ronan Manly was posted on the Singapore website bullionstar.com yesterday---and depending on what time zone you're in, I recommend you either top up your coffee, or blow the froth off a cold one.  It's the final offering of the day from Dan  Lazicki---and I thank him on your behalf.  I haven't had the time to read it yet, so I'm in no position to pass judgement on it, so you can be judge and jury on this one.

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Silver Bullion Buying Outstripping Supply as JP Morgan ($JPM) Buys

Silver bullion remains one of the most undervalued commodities and store of value assets in the world today and therefore one of the greatest opportunities.

Indeed, we view the opportunity in silver bullion today as very much like that seen in the period from 2003 to 2006. Then, silver traded below $10 per ounce prior to sharp gains during and after the financial crisis which saw silver surge to $20 prior to a sharp correction and then surge to nearly $50 per ounce in April 2011.

It would appear that the fundamentals in the case for owning silver are as strong as ever. It has been subject to the same ongoing price suppression that has beleaguered gold in recent years which has scared many safe-haven and store of value investors out of the market.

However, the tide may now be turning as large industrial users – for whom falling prices are a bonus – come into the market.

We recently covered JP Morgan’s rapidly increasing stockpile of over 55 million ounces (either in behalf of the bank itself or clients) and rumoured JP Morgan silver acquisition of an enormous hoard of 350 million ounces of physical silver. Indeed, the blog was picked up very widely and we received much feedback – mostly positive but some critical.

This commentary on silver by Mark O'Byrne appeared on the goldcore.com Internet site yesterday---and it's certainly worth skimming, although most of what's in it has already appeared in this column.

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India's Q1 gold demand up 15 per cent on positive mood: WGC

India's gold demand during the January-March quarter went up 15 per cent to 191.7 tonne compared with the same period last year, mainly on account of positive sentiment and favourable policy changes, according to the World Gold Council (WGC). The total demand stood at 167.1 tonnes during the corresponding quarter last year, according to WGC 'Gold Demand Trends First quarter 2015' report.

In value terms, India's Q1 2015 gold demand grew 9 per cent to Rs 46,730.6 crore, against Rs 42,898.6 crore during Q1 of 2014. "India's gold demand during the first quarter of 2015 was up 15 per cent compared with the corresponding quarter last year, though it is still below the 5-year average. This growth is a reflection of the muted demand in the same period as last year due to crippling gold import policies, coupled with weak economic sentiment and trade uncertainty at the time of the general elections," said WGC Managing Director, India, Somasundaram PR .

In contrast, he said, following the partial removal of the import curbs (with the exception of a duty reduction) and the Budget announcements introducing new gold products, the environment for gold has been encouraging in the past few months, resulting in buying behaviour slowly returning to normalcy.

This story showed up on the asianage.com Internet site earlier today in the Far East---and it's something I found on the Sharps Pixley website in the wee hours of this morning EDT.

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Why China Is Taking Control of Physical Gold Pricing

The Chinese have always been in love with gold. And this year especially China is taking several steps to rattle gold markets. 

The country is currently lobbying to be included in the International Monetary Fund’s reserve currency and gold has a lot to do with that process. Estimates say China has amassed thousands of tons of gold reserves that could rival the United States in the future.

“It is the Chinese view that all great currencies have gained prominence in some measure because of the hard asset reserves the government standing behind the currency holds. Gold reserves both from the government and reserves held by the population are a key factor for economic security for them,” says Simon Mikhailovich, managing director at Tocqueville Bullion Reserve.

This gold-related story was posted on theepochtime.com website on Tuesday---and I found it on the gata.org Internet site.  It's worth reading.

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Avery Goodman: The real reason China is buying up the world's gold

Colorado securities lawyer Avery B. Goodman writes tonight that China's vast acquisition of gold is meant to create a mechanism for controlling the currency markets and devaluing the yuan against the U.S. dollar as convenient while escaping charges of currency market manipulation.

Drawing on a crucial U.S. State Department document unearthed by GATA, Goodman writes: "Whoever controls the price of gold against their own currency controls the price of gold against any other currency that gold is denominated in. When China increases the number of yuan it takes to purchase an ounce of gold, the dollar will respond by rising in value, even though China will not be pegging its yuan directly against the dollar." Chinese goods thereby will become cheaper against U.S.-made goods, preserving China's advantages in world trade.

Goodman continues: "Control over the worldwide currency markets is why China wants to control the gold market. It is already taking affirmative steps to establish that control, and that is what is behind the announcement that the Shanghai Gold Exchange will establish a yuan-based gold fix before the end of 2015."

This commentary by Avery was embedded in a GATA release yesterday evening---and it contains one other worthwhile link as well.  It's definitely worth reading.

Read more...

 

¤ The Funnies

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¤ The Wrap

How did it get to the point where, as a silver analyst, I spend almost all of my time talking about price manipulation---and not about actual market fundamentals? Where I make consistent ugly accusations about the nation’s most important bank, the world’s leading derivatives exchange---and the federal commodities regulator?  Where I raise issues that I know are substantive and that should be forcefully addressed by these entities, yet am met only with silence?

I’ve been thinking about these questions and of little else. Either JPMorgan has had nothing to do with the silver manipulation since taking over Bear Stearns in 2008 or everything to do with it, including amassing hundreds of millions of actual ounces over the past four years at prices the bank deliberately rigged lower. Either the CME Group is running a modern day bucket shop with little participation by real producers and consumers, proven by the U.S. Government’s own data and one’s own eyes, or I am out to lunch and know little of what I speak. Either the CFTC has convincing logical explanations that refute my allegations that it is turning a blind eye to its most important mission and chooses to keep those explanations to itself, or it is afraid to openly address the issues for fear it will expose itself as an enabler of the manipulation.  - Silver analyst Ted Butler: 13 May 2015

The COMEX open was the starting gun for a sell-the-dollar/buy-gold frenzy that we haven't seen for a while.  A similar situation in the dollar index occurred 24 hours prior to that, but precious metal prices were held in place by the "da boyz" and their algorithms.  You have to wonder what was so different about the dollar decline on Tuesday vs. yesterday.  The answer is---I don't know.

Anyway, JPMorgan et al were on the job within minutes of the COMEX open---and literally threw everything they had at precious metal prices to prevent them from blasting to the outer edges of the known universe, which is where they would have ended up if they hadn't stepped in front of these rallies.  As I mentioned at the top of this column, net gold volume was over the moon at 200,000 contracts---and silver's net volume was sky-high as well at 72,000 contracts.

Without doubt the technical funds in the Managed Money category were buying longs and selling shorts---and 'da boyz' were in there as sellers of last resort on the other side of all these trades.  If they hadn't been there, we would be looking at gold and silver prices that would have made your eyes water.

Unless I'm reading this all wrong---and the Commercials are pulling a fast one behind a lot of spread trades---there was massive deterioration in the Commercial net short positions in gold, silver and platinum yesterday.  But, as I carefully noted---and as Ted Butler pointed out on the phone---all this activity occurred on Wednesday, the day after the cut-off for tomorrow's Commitment of Traders Report.  That's a trick of theirs that I've seen them pull many times over the last ten years or so.  We'll have to wait more than a week before we can see what really happened yesterday---and anything can happen between now and then, and it just might.

Here are the 6-month charts for all four precious metals.  Not only did the 50-day moving averages get obliterated to the upside in both gold and silver, but both metals also closed just below their respective 200-day moving averages as well.

Just checking the RSI traces on gold and silver, you can see that we're not anywhere near overbought, but a couple of more days of price action like yesterday---and we'll be there.  So we'll just have to wait it out and see what JPMorgan et al have in store for us in the days ahead.  Yesterday's price action was strictly a COMEX affair---Managed Money vs. the Commercials, as always---and had nothing to do with supply/demand fundamentals.

And as I write this paragraph, the London open is about fifteen minutes away.  Both gold and silver sagged a hair in morning trading in the Far East, but around 1:45 p.m. Hong Kong time, prices turned higher---and both gold and silver are trading a bit above their Wednesday closing prices in New York.  Ditto for platinum and palladium.

Net gold volume is approaching 18,000 contracts, but most of the volume is of the HFT variety.  Silver's net volume is very respectable at 5,600 contracts.  The dollar index has been sliding quietly lower through the entire Far East and Middle East trading sessions---and is currently down 14 basis points.

Although was I was happy to see these rallies, I was disappointed that it appears that it's the same old, same old---as "da boyz" stepped in front of them as well.  Using past as prologue, they'll end the same way as they always have.  But, having said that, we could have quite a ride between now and then---and as I said a few paragraphs ago, we'll just have to wait it out and see what the powers-that-be have in store for precious metals.  Things might be different this time, but I doubt it.

And as I send today's effort off into cyberspace at 5:05 a.m. EDT, I note that the tiny rallies that began an hour or so before the London open, all ended there---and all four precious metals are back to unchanged or down a bit on the day.  Net gold volume is now pushing 32,000 contracts---and silver's net volume is about 9,800 contracts.

Virtually all of this is of the HFT variety---and it's obvious, at least to me, that precious metal prices are being held firmly in place as the dollar index continues to sink.  At the moment it's down 17 basis points, but was down over 40 basis points about forty-five minutes before London opened.

Yesterday's price action during the COMEX trading session came as a surprise---and for that reason, nothing I see on my computer screen later this morning will come as a shock, either.

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

Ed Steer