Gold & Silver Daily
"The lows we saw in all the precious metals just after the Comex close looked like a final capitulation to me...not only in price, but in volume"
 

¤ Yesterday In Gold & Silver

Gold hit its low price tick of the day [about $1,525 spot] shortly after the London open yesterday morning...and by 9:40 a.m. in New York, the gold price was up about fifteen bucks off that low...and then spiked over fifteen bucks going into the London p.m. gold fix.  That was the New York high at $1,553.50 spot.

From there, it got sold off to its New York low [$1,530.10 spot] about twenty minutes after the close of Comex trading.  The gold price then rallied about eight dollars going into the close of electronic trading at 5:15 p.m. Eastern time.

Gold closed down four bucks on the day at $1,540.30 spot...but would have obviously closed substantially higher if it had been left to its own devices once the London p.m. gold fix was in...which it wasn't.  Net volume was an absolutely astounding 200,000 contracts.

Silver was also under selling pressure in the Far East and London yesterday...and also set a new low shortly after the London open as well.  From there it followed almost an identical price path to gold.

The New York high [$28.10 spot] came about 10:30 a.m. Eastern...but once that high was in, the engineered sell-off continued anew...and by the time the carnage was over about six or seven minutes after the close of Comex trading, silver had hit its low of the day...and printed another low for this move down...$26.68 spot.

The recovery off the bottom was instantaneous...and only a few minutes later, silver was back over the $27.00 mark...and closed the trading day at $27.27...down another 45 cents on the day...but 59 cents off its low price tick.  Net volume was a stunning 55,000 contracts.

From its New York high to its New York low, the silver price was savaged for $1.42...a hair over 5 percent.  If you think that this sort of price activity was the free market in action, then you obviously only need to follow the daily precious metals advice that you will find at this link here.

The dollar index peaked around 81.58 just moments after the London open...and then declined a bit before spending the rest of Wednesday trading within 15 basis points of 81.35.  The index finished up about 20 basis points on the day.

Not surprisingly, the gold stocks opened in the plus column...and then peaked at the 10:30 a.m. Eastern time, which was the high tick in the gold price.  From there the gold stocks pretty much followed the metal's price...with the low coming shortly before 2:00 p.m...which was the low price tick for gold in New York.  Even though gold finished down four bucks...the HUI finished in the black, but only by 0.20%.

There were some green arrows in the silver stocks yesterday...but with silver down as much as it was during the New York session, most of the silver equities were brutalized once again...and Nick Laird's Silver Sentiment Index closed down 0.68%.

(Click on image to enlarge)

It was a nothing day for deliveries...and the CME's Daily Delivery Report showed that only 3 silver contracts were posted for delivery tomorrow.

The GLD ETF showed a tiny withdrawal of 16,253 troy ounces, which was probably a fee payment of some kind...and there were no reported changes in SLV.

Over at Switzerland's Zürcher Kantonalbank, both their gold and silver ETFs showed minor withdrawals of metal as of the close of trading on Tuesday.  Their gold ETF showed a decline of 80,814 troy ounces...and their silver ETF declined 44,368 troy ounces.

The U.S. Mint had another sales report.  They sold 1,500 ounces of gold eagles...4,000 one-ounce 24K gold buffaloes...and 275,000 silver eagles.  This brings the mint's month-to-date sales up to 36,000 ounces of gold eagles...5,500 one-ounce 24K gold buffaloes...and 1,410,000 silver eagles.

There wasn't a lot of activity over at the Comex-approved depositories on Tuesday.  They reported receiving 300,253 ounces of silver...and shipped a smallish 13,894 ounce of the stuff out the door.  The link to that action is here.

Silver analyst Ted Butler was at the top of his game with his mid-week market commentary...headlined "In Search of the Bottom"...to paying subscribers yesterday.  Here are three free paragraphs...and the first three from his report...

"I can’t call it unique, nor can I claim to be unfamiliar with the present circumstance of silver and gold price weakness. I didn’t predict it, but that doesn’t mean I can’t see what caused it. The fact that the situation is so familiar makes it depressing in many ways; yet understanding what will occur at some point is encouraging. Of course, I’m speaking of the bottom in the price of silver and gold that is being established."

"I believe that the most plausible and verifiable explanation is usually the correct explanation. Since the top of silver prices on Feb 28 at $37, the $10 price decline (so far) has allowed the commercials on the COMEX to buy back and reduce their total net short position by 30,000 contracts (150 million ounces), as speculators sold that same net amount. The biggest commercial silver short, JPMorgan, bought back almost half that amount. In gold, the commercials bought back 100,000 net contracts (10 million oz) on the $150 price decline from the top on Feb 28."

"Not only are these figures verified by CFTC COT data, the amounts of metal represented in the COMEX maneuvering since Feb 28 dwarf any other verifiable gold and silver ownership changes throughout the world. In fact, the world’s holdings in gold and silver ETFs (the largest privately held stores of metal) have been quite stable over the past six months or more. Therefore, the most obvious and plausible and verifiable explanation for the price decline has to be COMEX maneuvering. The next obvious question is who was doing the maneuvering; the commercials or the speculators? Since it is unthinkable that independent speculators would collude for the purpose of losing money, it is clear that the commercials were doing the maneuvering. This is old stuff, of course, but I repeat it because it is important to understand how any market works."

Here's a nifty chart of all the big New York money center banks. It shows the decline in their respective share prices since the end of March.  The 'click to enlarge' feature will be useful here.  I thank Washington state reader S.A. for sending it along.

Here are two more charts from Washington state reader S.A.  They put the current engineered price declines in both gold and silver in some sort of long-term perspective. 

Australian reader Wesley Legrand sent me this 3-year chart of the HUI...along with the following comment..."Incredible HUI Chart: You'd think that gold is under $1,000!"

(Click on image to enlarge)

Reader Scott Pluschau has posted a blog over at his Internet site that's headlined "Target 2 reached in silver [Copper target reached]"...and you can read all about it here.

I have the usual number of stories today...and a lot of them are well worth reading.

 

¤ Critical Reads

JP Morgan's $2 Billion Trading Loss Is Already $3 Billion (And Counting)

Jamie Dimon said it could get worse...and it is.

The JP Morgan trading loss that was $2 billion four days ago is now $3 billion, report Nelson Schwartz and Jessica Silver-Greenberg in The New York Times.

Why?

Because every hedge fund in the world knows JP Morgan is stuck in a position so big that it can't unwind it... and they're taking the other side of the trade.

Great shades of LTCM...as this is precisely what happened to them when they tried to get out of all their losing trades.  Eric Sprott's comments about further loses by JPMorgan in his New York speech yesterday were prophetic.  This story was posted on the businessinsider.com website late yesterday evening...and it's worth the read.  I thank Roy Stephens for sending this...and the link is here.

Read more...

"Jon Corzine - What's Going On?"

It pays to be rich, powerful and a Democrat with friends in Washington. While Anna Gristina, a Connecticut mother accused of being a New York “madam” sits in a cell on Riker’s Island, Jon Corzine, the former CEO of MF Global sits at home in his New Jersey mansion. MF Global had been a publically traded securities firm with $40 billion in assets, but with liabilities even larger, filed for bankruptcy late last year, after being accused of co-mingling customer funds with its own, a flagrant violation of securities law.

As we all know, prostitution is illegal. Ms. Gristina has been charged with providing attractive young women to testosteronic men for money — a crime, but largely victim-less. Nevertheless, she has already spent two months on Riker’s Island, awaiting a June 21st hearing. Bail for her was set at $2 million in a bond, or $1 million in cash. Despite the misappropriation of an estimated $1.6 billion, Mr. Corzine has yet to be charged. Yet 36,000 clients had their money appropriated under his watch. It is hard not to believe that his status as a former Senator from and Governor of New Jersey, and major bundler for President Obama’s campaign has not provided him special privileges. Is not justice supposed to be blind?

It is hard to imagine that Ms. Gristina, whose business was to introduce consenting adults, could be an enormous risk to society. On the other hand, a wealthy and powerful man who appears to have cheated his clients is a fraud and a menace. MF Global was a public company, until it became the nation’s 8th largest bankruptcy when it filed last October. Thus, not only are customers, for whose funds Mr. Corzine had a fiduciary responsibility, out their money, but shareholders of MF Global lost their investment as well. Of course, it is perfectly possible that the morally challenged Mr. Corzine was unaware that embezzling is a crime. However, as CEO he is responsible for financial transgressions within his firm. It is unfortunate that he is not man enough to admit it.

This most excellent essay showed up over at The Daily Reckoning yesterday...and is a hoot to read!  Corzine was also involved in the LTCM debacle as well.  As one of the 'rescuers'...he knew all their positions...and he and his firm [Goldman Sachs] were betting heavily against them.  This guy is a real piece of work, dear reader.  Once again I thank Roy Stephens for sharing this with us...and the link is here.

Read more...

Has The Simple Retail Investor Become Smarter Than Sophisticated QIBs?

There was a time when retail investors were mocked and derided by all: after all whenever the big boys needed to unload they jest blew the whistle, and like obedient lap dogs retail would buy at the very peak of the market because "stocks are a once in a lifetime buy", leading to what some call distribution, and others, a plunge. Not any more.

In spite of the recent 20% surge in stocks, following a pattern absolutely identical to the one from September 2010 to March 2011, for the entire 32 week duration of the artificial central bank induced rally beginning October 5, there were a total of 3 weeks of inflows into the market, totaling a whopping $2.8 billion. The outflows: 29 weeks for a total of $96.6 billion, with $2.4 billion pulled out in the most recent week.

This short but worthwhile read was posted over at zerohedge.com yesterday...and the graph is worth the trip all by itself.  Make sure you click on it so you can view the whole thing.  As reader U.D. said..."Has the electronic casino, a.k.a. the stock market lost a key play...the sheeple?"  The link is here.

Read more...

That Ugly Market Pattern Keeps On Happening

A pattern that we've observed before is how pathetic the stock market has been behaving these days.

Each day we see periods of downs and ups, but in the end, the market ends down, usually fairly near the lows, with miserable performance in the final hour.

Today was no exception, as a nothing day (that at one point was decently higher after the FOMC minutes came out at 2:00 PM ET), turned into a 0.4% loss.

You've just read three of the four short paragraphs of this businessinsider.com piece from yesterday evening.  The graph that accompanies the article is definitely worth a quick look.  This is another story courtesy of Roy Stephens...and the link is here.

Read more...

Fed minutes: More members open to stimulus measures

Minutes of the central bank's April 24-25 meeting released Wednesday stated that "several members" thought additional Fed support could be needed if the recovery lost momentum or if the risks to the economy became great enough.

The minutes did not spell out what circumstances would trigger further Fed efforts to lower interest rates to boost the economy. But they did note some threats to the U.S. economy. One is Europe's debt crisis. Another is the risk that spending cuts and tax increases that could take effect at year's end if Congress can't reach a budget agreement could slow growth more than expected.

The comments stood in contrast to the previous minutes, which said that only "a couple" of members expressed support for further bond purchases. Since the financial crisis, the Fed has pursued two rounds of bond purchases to try to push down long-term interest rates, with a goal of encouraging borrowing and spending.

This usatoday.com piece was posted on their Internet site early yesterday afternoon...and I thank West Virginia reader Elliot Simon for sending it along.  The link is here.

Read more...

Greece on brink of collapse

Europe’s financial crisis lurched into a perilous new phase as dire predictions emerged of a collapse in Greece’s economy, with a run on its banks bringing an inevitable end to its membership of the euro.

As leaders in Athens accepted the need for a new general election to end a national stalemate, the International Monetary Fund said Europe’s leaders should prepare for the possibility of a Greek departure from the single currency.

Christine Lagarde, head of the IMF, warned she was “technically prepared for anything” and said the utmost effort must be made to ensure any Greek exit was orderly. The effect was likely to be “quite messy” with risks to growth, trade and financial markets. “It is something that would be extremely expensive and would pose great risks but it is part of options that we must technically consider,” she said.

This story was posted on The Telegraph's Internet site on Tuesday evening...and I dug it out of yesterday's King Report...and the link is here.

Read more...

Euroland's €1 trillion question: after Greece goes, can Spain stay in?

Greece is no longer the main event. Everyone knows it’s a matter of when, not if, ouzoland leaves the euro. Not least the Greeks themselves, who are pulling euros out of local banks at a right lick in preparation for the glorious return of a cheapo drachma.

Bank deposits, already down from €244bn (£195bn) at December 2009 to €171bn at the end of March, are now being withdrawn at the rate of around €3bn a week. In the real world the exit is underway, as another dive in Greece’s benchmark 10-year bond also indicated. It dropped for the 10th day running to just 14.4 cents on the euro.

Rather than trying to keep Greece in, Europe’s politicos, the ECB and the IMF should be focusing on how to contain the impact of its inevitable exit. And, if IMF chief Christine Lagarde, really is “technically prepared for anything”, she must have a solution for Spain.

This story was posted on the telegraph.co.uk website early yesterday evening...and I thank Roy Stephens for sending it along.  The link is here.  This is worth reading.

Read more...

Argentines jump through new hoops to get dollars

Argentina's quest to keep dollars in the country is spawning illegal money trades inside offices and even schools. But big companies have fewer ways to skirt currency controls and must adapt to the country's offbeat, changeable rules.

As the red tape piles up, businesses face delays and distortions that are hitting private investment. Analysts say the tightened state grip could backfire as an economic slowdown cools consumer and corporate spending.

With limited access to dollars on the formal market, individuals and some small companies go in search of greenbacks on the black market, where costs are rising sharply.

This Reuters piece was filed from Buenos Aires yesterday afternoon...and I thank Roy Stephens for sending it along.  The link is here.

Read more...

India dumps Iran, squeezes Obama

The cloud cover of sophistry that has been characteristic of India's Iran policy in recent years lifted on Tuesday when the government admitted in parliament that it had taken a policy decision to reduce oil imports from Iran.

The frank admission came on a day when an emissary from Washington, Carlos Pascual, special envoy on energy matters in the United States State Department, arrived with the proclaimed intention of weaning New Delhi away from Tehran's fuel.

The Barack Obama administration will be delighted that the sustained diplomatic and political pressure on India is finally bearing fruit. Tehran, on the other hand, will view this as the unkindest cut of all the blows that New Delhi has inflicted on it over the past five year. Meanwhile, a protagonist lurking in the shade is all excited - Saudi Arabia.

A mystery lingers. What did the Obama administration promise the Manmohan Singh government as quid pro quo? Manmohan most certainly sensitized US Secretary of State Hillary Clinton of India's "wish list" during her recent hurried visit to hold consultations personally with him just ahead of the US-India Strategic Dialogue co-chaired by her, which is scheduled to convene in Washington.

For those of you interested in the new "Great Game"...this is a must read...and is Roy Stephens last offering in today's column.  It's posted over at the Asia Times Internet site...and the link is here.

Read more...

Three King World News Blogs

The first is with Rick Santelli...and it's headlined "Traders Taxing JPMorgan to Exit Losing Postions".  The second is with technical analyst Louise Yamada.  It's entitled "We Now Have Massive Tops on Global Markets".  And lastly is this blog with Caesar Bryan of Gabelli & Company...and it's headlined "What Investors Need to Know About Gold & the Mining Shares".

Read more...

Egon von Greyerz Interviewed by Die MetallWoche

Egon von Greyerz is founder and managing partner of Matterhorn Asset Management out of Zurich, Switzerland.  The interview runs about 23 minutes...and is posted on the metallwoche.de website...and the link is here.

Read more...

Grandich, Sinclair do hand-holding for monetary metals investors

Both of these commentaries are imbedded in this GATA release from yesterday...and the link to the GATA release is here.

Read more...

WGC: 1Q Gold Demand Falls 5% From Year Ago; Jewelry Demand Dips But Investment Up

World gold demand fell 5% to 1,097.6 metric tons during the first quarter compared to the same period a year ago, with jewelry consumption down but investment demand higher, the World Gold Council said in its quarterly trends report released early Thursday.

“It was quite a complex quarter,” said Marcus Grubb, managing director for investment at the World Gold Council.

He pointed out that prices climbed year-on-year despite the lower global demand, including a sharp decline in buying from India, historically the world’s largest consumer. This meant there had to be “a lot of positives” elsewhere for demand to hold up as well as it did, Grubb said. Chinese buying surged, far outpacing India for both gold jewelry and investment, and central banks remained net buyers.

I found this story posted over at the kitco.com website in the wee hours of this morning...and it's definitely worth reading.  The link is here.

Read more...

Japanese pension fund buys gold -- but only the ETF kind

Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies.

Initially, the fund aims to keep about 1.5 per cent of its total assets of Y40 billion ($500 million) in bullion-backed exchange-traded funds, according to chief investment officer Yoshisuke Kiguchi, who said he was diversifying into gold to "escape sovereign risk."

The move into a non-yielding asset comes as funds in the world's second-biggest pension market are under increasing pressure to meet promised payments, as domestic interest rates remain rooted near zero. This year, the first of Japan's baby boomers turn 65, becoming eligible for payouts.

This story showed up in the Financial Times yesterday...and is posted in the clear in this GATA release.  I thank reader 'David in California' for giving Chris Powell and myself the 'heads up' on this FT piece...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

The glory of great men should always be measured by the means they have used to acquire it. - François de la Rochefoucauld

Well, the lows we saw in all the precious metals just after the Comex close looked like a final capitulation to me...not only in price, but in volume as well.  I suspect that the sharp decline in the silver price about 1:35 p.m. in New York yesterday was a short position being place, as it had all the characteristics of it.  If that's the case, then that position was under water within minutes.

If we did see the lows yesterday, it's just a matter of 'where to from here...and how fast'.  As Ted Butler pointed out on the phone yesterday...all these new shorts that have been placed during this engineered price decline are going to want to cover at some point.  The 'raptors' will be the ones selling to them, but the question remains "at what price will they do it?"  Will they let them off the hook easily by selling to them at a low price...or will they stick it to them and force them to bid the price up a whole bunch before they starting selling their longs?  An even bigger question is whether JPMorgan will show up as a seller of last resort again.  If they don't, then look out above!

That is all that matters in the 'where to from here...and how fast' equation.  So we wait.

I'd give another day's pay to know what the Commitment of Traders would have looked like if it had been compiled at the close of electronic trading yesterday.  I'd bet that it would be another one for the records books considering the fact that we hit new lows for this move down after the cut-off for Friday's COT report at 1:30 p.m. on Tuesday afternoon.

Of course the Relative Strength Indicators for both gold and silver hit new record lows at the close of trading yesterday.  Here are the 3-year gold and silver charts.  Unless 'da boyz' have something even more horrific planned to the downside that we know nothing about...and can't see coming...these oversold points should also be record lows for years to come.

(Click on image to enlarge)

(Click on image to enlarge)

I had a couple of readers point out that JPMorgan et al may have painted a 'triple bottom' [accidental or otherwise] in both gold and silver over the last year and a bit...as it's certainly visible on both the above charts.  We'll see if that make a difference, but it will take many months or even years before we know if that's true...depending on 'how high...and how fast' that prices move from here.

Both gold and silver worked their way higher in price during most of the Far East trading day on their Thursday...but at 3:00 p.m. Hong Kong time, right on the button, a not-for-profit seller showed up...and both metals have been trading sideways ever since.  As of 4:25 a.m. Eastern time, volume is very high in both metals...but nowhere near what they were this time yesterday morning when the new low price tick was set just after the London open.  The dollar index is moving sideways...and is basically unchanged from Wednesday's close.  And as I hit the 'send' button at 5:19 a.m. Eastern time, gold is up about eight dollars...and silver is up 20 cents.

I'm done for the day.  Let's hope 'day boyz' are done as well.

I hope you have a good Thursday...and I'll see you here tomorrow.