Casey Research Publication
Gold & Silver Daily
"Precious metals won't break out until JPMorgan Chase allows it to happen"
 

¤ Yesterday In Gold & Silver

I wouldn't read much into Monday's gold price action, as we are in the final forty-eight hours of rolling out of the August delivery month...and virtually all of yesterday's volume was associated with that event.

Gold closed at $1,327.20 spot...down $6.60 from Friday's close.  Gross volume was way up there at 254, 300 contracts, but once all the roll-overs are subtracted out, the net volume was a tiny 17,000 contracts.

The silver price action was a different story, however.  Silver was under pressure almost right from the Sunday night open in New York...and hit its low tick shortly after London opened there Monday.  From that low, silver began to rally nicely, but it was obvious from the price action that it was running into serious opposition the higher it rose...and the big rally going into the Comex open got sold down almost immediately, with the coupe de grâce coming at 9:00 a.m. EDT.  After that, the silver price behaved itself for the rest of the day.

The low tick, shortly after the London open, was around $19.60 spot...and Kitco recorded the high tick as $20.34 spot.  That came a minute or so after 8:30 a.m. EDT.  One can only imagine what silver would have closed the day at if the metal had been allowed to trade freely.

Silver finished the Monday session at $19.85 spot...down 14 cents from its Friday close.  Gross volume was around 35,000 contracts.

Here's the New York Spot Silver [Bid] chart on its own, so you can see the early morning price shenanigans for yourself.

Platinum and palladium both had decent days yesterday, but palladium went "no ask" shortly before noon in New York...so a willing seller appeared...and that was it for the day.  Platinum hit its peak shortly after the London p.m. gold fix.  Here are the charts...

For the day that was, gold closed down 0.49%...silver was down 0.70%...platinum was up 0.77%...and palladium was up 2.34%.

The dollar index action on Monday wasn't much to look at.  It closed late Friday afternoon in New York at 81.66...and then bounced off 81.53 a couple of times before 'rallying' into the close...finishing on Monday at 81.705...up only a handful of basis points.

Not surprisingly, the gold stocks chopped around in slightly negative territory for most of the New York trading session yesterday...and almost closed flat, except they got sold down about a percent in the last few minutes before the close.  The HUI finished the day off 1.02% from Friday's close.

The decline in the stocks that make up Nick Laird's Intraday Silver Sentiment Index was a bit more severe...and it closed down 1.57%.

(Click on image to enlarge)

The contents of Monday's CME Daily Delivery Report came as no surprise, as 3 gold and 134 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday...the last day of the July delivery month for silver.  The big short/issuer was, as it has been all month, JPMorgan Chase out of its client account with 132 contracts.  JPMorgan Chase stopped 91 contracts in its in-house [proprietary] trading account...and Jefferies was the other long/stopper of note with 28 contracts...all for its in-house [proprietary] trading account.  The link to yesterday's Issuers and Stoppers Report is definitely worth a quick look...and the link to that is here.

Late tomorrow evening EDT, the CME Group will post the First Day Notice numbers for the August delivery month in gold...and as I've stated before, it will be interesting to see how much ends up in the proprietary trading arms of JPMorgan Chase.  I'll have these numbers for you in Thursday's missive.

For a change, there were no reported withdrawals or additions to either GLD or SLV.

The U.S. Mint had a very decent sales report yesterday...and if one uses the past as prologue, this may be the last sales report of the month.  They sold 10,500 ounces of gold eagles...4,500 one-ounce 24K gold buffaloes...and a very chunky 950,000 silver eagles.  Silver eagles sales this month so far total 4,406,500.  Only 65,000 ounces of gold eagles/buffaloes have been reported sold, so that puts the silver/gold ratio for mint sales at just about 68 to 1.  That's the biggest sales ratio number that I can remember posting.

Ted Butler is of the opinion that most of these silver eagles are heading overseas.

Friday was a very busy day for silver over at the Comex-approved depositories.  They reported receiving 1,792,734 troy ounces of the stuff...and shipped 1,237,851 troy ounces out the door.  JPMorgan took delivery of 598,075 troy ounces of that amount.  The link to that activity, which is worth a quick look, is here.

It was quieter in gold, as only 32,090 troy ounces were reported received...and nothing was shipped out.  Here's the link to that.

In my regular Friday afternoon Commitment of Traders Report phone call with Ted Butler, there was a 'surprise' in last week's COT Report that he 'forgot' to mention...and what a 'Golden' surprise it was!

Last Friday's COT Report showed that the Commercial net short position blew out by 1.0 million ounces...a fact that I mentioned in my Saturday column.  But that masked an increase in the long position of the 'Big 4' traders...and here are two paragraphs from silver analyst Ted Butler's weekly commentary on Saturday that lays it all out...

That surprise was the large increase in JPMorgan’s massive net long COMEX gold futures position. The data indicate JPMorgan may have increased its net long position in gold by almost 9,600 contracts to bring that position close to 85,000 contracts. What data? There is only one data point, but it’s a very hard number. The percentage of the Big 4 net long position (which JPMorgan must reside in) jumped to the highest ever at 32.4% and when multiplied against total open interest of 434,750 contracts results in a hard net number of 140,859 contracts held by the big 4 longs. This represents an increase in the Big 4’s net long position of 9,655 contracts from the previous week.

I’m alleging that JPMorgan accounted for the entire one-week increase in the Big 4 category and that the bank now holds 85,000 contracts of the 140,859 contracts held net long by the Big 4. Certainly, if JPMorgan or the CFTC dispute my calculations, then they can set the record straight. I further allege that JPMorgan holds, once all spreads are removed from total open interest, more than 23.6% of the entire net open interest in COMEX gold futures, up from 20.6% in the previous week. Never has any entity held such a large concentration in COMEX gold futures, to my knowledge. Certainly that is something the CFTC should respond to, as the implications for manipulation in gold has never been clearer.

Ted mentioned that it was always a possibility that there was an error in the reporting...and it might be "corrected" in this Friday's report...but I'll bet that it stands, as this is the kind of legerdemain  that JPMorgan Chase excels at...and that's another reason why I'm very curious to know how much gold they take delivery of next month.  They may be sitting in the bushes over there as well.  We'll get a pretty good indication of that by Friday.

Because it's a Tuesday column, I have a very decent number of stories for you today...and I hope you can find the time to read all the ones that interest you.

 

¤ Critical Reads

U.S. says JP Morgan manipulated market; settlement seen

The U.S. power regulator outlined its case of market manipulation against JPMorgan Chase & Co. on Monday as industry sources said a final settlement on the issue should come on Tuesday.

Traders used improper bidding tactics in California and the Midwest to boost profits, officials said in a statement that brought to light some details of an extensive investigation.  The U.S. Federal Energy Regulatory Commission (FERC) staff has found "eight manipulative bidding strategies" used by a JPM affiliate in 2010 and 2011, the regulator said.

Two industry sources said a settlement over the trades could come as early as mid-morning on Tuesday. The bank is expected to pay around $400 million to end the investigation and the settlement could include other payments, according to reports and an industry source.

Monday's regulatory move did not contain any mention of specific traders or commodities chief Blythe Masters, who had been mentioned in media reports as having been singled out by investigators.

This Reuters story was posted on their website early yesterday evening EDT...and I thank U.A.E. reader Laurent-Patrick Gally for today's first news item.

Read more...

Treasury's Lew: Congress Needs to Raise Debt Limit

Congress needs to raise the debt limit and take away the "cloud of uncertainty" about the nation's ability to pay its bills, Treasury Secretary Jack Lew said in an interview broadcast Sunday.

"The fight over the debt limit in 2011 hurt the economy, even though, in the end, we saw an extension of the debt limit. We saw confidence fall, and it hurt the economy. Congress needs to do its job. It needs to finish its work on appropriation bills. It needs to pass a debt limit," Lew said on NBC's Meet The Press.

Senior lawmakers on Capitol Hill are trying to come up with must-do legislation to keep federal agencies running after Sept. 30 and prevent the possibility of a government shutdown. At issue is what is normally routine: a plug-the-gap measure to fund the government for a few weeks or months until a deal can be worked out on appropriations bills giving agencies their operating budgets for the full 2014 fiscal year, which begins Oct. 1.

This article was posted n the moneynews.com Internet site early on Sunday morning...and is courtesy of West Virginia reader Elliot Simon.

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Déjà Vu: People Are Using Borrowed Money to Buy Stock Like it's 2007 or 1999

Deutsche Bank has a monster note out on margin debt that has been making the rounds.  The conclusion of the note is rather simple – today’s euphoric borrowing on margin to buy stocks is reminiscent of past bubbly equity market periods.  The note reviews commentary from the 1999 and 2007 periods and compares it to what’s being said today.  They found some eerie similarities:

We prepared a collection of press articles which were published around the key events during the past financial crises. Our key finding is straight forward. Irrespective of the publishing date, the articles read alike throughout the two major crisis periods, i.e. the “new technologies market equity bubble” (1999-2000) and the “Great/Global Financial Crisis” (2007-08). Most interestingly, literally the same content can be found in today's press as displayed [back then].

So, are we in a 2007 or 2000 type environment?  Yes.  I would say we are given that the data is confirming the same sort of market trends and debt trends.  But the question is what’s the trigger?  The market is kind of like a Jenga set at this stage in the cycle.  Everyone knows it can probably be toppled by the wrong move.  But that move might not come this year, next year or in the next few years.  As Keynes said, “Markets can remain irrational a lot longer than you and I can remain solvent.”

This piece was posted on the businessinsider.com Internet site in the wee hours of Monday morning...and it's courtesy of reader Scott Pluschau.

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OVERSTOCK.COM CEO: Steve Cohen Is Directly Responsible For Corruption That Has Cost Hundreds Of Thousands Of People Their Jobs

Overstock.com CEO Patrick Byrne colorfully explained in his own words why he took out a full page ad in The Wall Street Journal mocking SAC Capital's Steve Cohen Saturday.

"Cohen's life work is being destroyed," he wrote in a note to Business Insider, "I feel good. Shooting SAC Capital dead and throwing all of its employees into the streets is simply civilization scraping some dog--- off its shoe.  I felt it was time I spent $100k on a derisive ad in order to say that."

"Besides," Byrne added, "if you're not going to kick a man when he's down, when are you going to kick him?"

Since 2005 Byrne has been saying that powerful market actors have been working to destroy his company. In 2010 he identified them as Michael Milken and SAC's Steven Cohen.

Wow!  Maybe he'll tell the world what he really thinks some day!  This businessinsider.com story was posted on their website late on Sunday morning...and it's definitely worth reading.  It's the second offering in a row from Scott Pluschau.

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Momentum Builds Against N.S.A. Surveillance

The movement to crack down on government surveillance started with an odd couple from Michigan, Representatives Justin Amash, a young libertarian Republican known even to his friends as “chief wing nut,” and John Conyers Jr., an elder of the liberal left in his 25th House term.

But what began on the political fringes only a week ago has built a momentum that even critics say may be unstoppable, drawing support from Republican and Democratic leaders, attracting moderates in both parties and pulling in some of the most respected voices on national security in the House.

The rapidly shifting politics were reflected clearly in the House on Wednesday, when a plan to defund the National Security Agency’s telephone data collection program fell just seven votes short of passage. Now, after initially signaling that they were comfortable with the scope of the N.S.A.’s collection of Americans’ phone and Internet activities, but not their content, revealed last month by Edward J. Snowden, lawmakers are showing an increasing willingness to use legislation to curb those actions.

This news item was posted on The New York Times website on Sunday...and it's definitely worth skimming.  It's another contribution from Laurent-Patrick Gally.

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German president says whistle blowers like Snowden merit respect

Germany's president, who helped expose the workings of East Germany's dreaded Stasi secret police, said whistle blowers like U.S. fugitive Edward Snowden deserved respect for defending freedom.

Weighing in on a debate that could influence September's federal election, President Joachim Gauck struck a very different tone from that of Chancellor Angela Merkel, who has assured Washington that Berlin would not shelter Snowden.

Gauck, who has little power but great moral authority, said people who work for the state were entitled to act according to their conscience, as institutions sometimes depart from the law.

This Reuters story was posted on their Internet site early Friday afternoon EDT...and I thank reader Bill Busser for bringing it to my attention...and now to yours.

 

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IMF approves €1.7 billion loan payout to Greece

The International Monetary Fund released €1.72 billion ($2.29 billion) in aid for Greece on Monday after completing a review of the country's performance under the international rescue program.

The latest disbursement means that Greece has received a total of roughly €8.24 billion ($10.94 billion) from the IMF under the bailout coordinated with the European Union and the European Central Bank in March 2012.

On Friday, the 18-nation eurozone gave the green light for the release of €4.0 billion in bailout funds for Greece after it had met program conditions.

Twice bailed-out Greece still faces a funding shortfall of some €3.8 billion late next year but its troika of international creditors are not overly concerned, a senior EU official said Friday, speaking on condition of anonymity.

It doesn't matter anymore.  Greece, plus any other country that needs it, will get whatever funds are necessary, as the only other alternative is bankruptcy.

This AFP news item was posted on the hindustantimes.com Internet site earlier today...and it's courtesy of reader M.A.

 

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Europe’s 'recovery’ is a conjuring trick

The eurozone has had a good year – on paper. But it is crippled by too much debt to survive intact.

This week, British people engage with their European neighbours in greater numbers than at any other time of the year. With the school holidays underway, they charge off to France, Spain, Greece and Portugal in search of better weather, cheaper drink and the je ne sais quoi of continental living. For most, soaking up the sun and gulping down Sancerre, much will seem the same as last summer. Behind the scenes, however, financial markets in the Club Med countries are very different compared with 12 months ago, when the eurozone’s straitjacket appeared to be splitting.

Share prices in particular have enjoyed a remarkable resurgence. Stock market indices in Portugal, France and Spain are up by about 30 per cent. That’s pretty impressive for economies running on empty but is completely outshone by Greece, where the main index is now 64 per cent higher than in June 2012. If that sounds too good to be true, remember that at its current level of 294, the Athex 20 is still 85 per cent lower than its high point of 2008. None the less, there’s a temptation to look at the direction of travel and conclude that, even for the eurozone’s weaklings, the point of maximum danger is history. This is what EU leaders and the European Central Bank would like us to believe, because it fits their broader narrative: the single currency works, is sustainable and benefits all in the long run.

At the core of this “recovery” is a bluff that has yet to be called. In August last year, the European Central Bank’s president, Mario Draghi, promised to do “whatever it takes” to defend the euro through the unlimited purchase of bonds issued by troubled EU states. It was high-quality legerdemain. Presented with the perceived safety net of a one-way bet, private investors returned to buying sovereign debt and company shares in the EU’s angst-ridden periphery.

Not since the Wizard of Oz has an illusionist created so much fuss with so little substance. Without spending a single cent, Draghi conjured up a fall in borrowing costs and a rise in stock markets. What’s more, consumer confidence improved in the EU’s more solvent regions, albeit from a woefully low base. The killer question now is: how long can the magician keep the trick going? Or, as Toto did in the movie with Judy Garland, will the curtain be pulled back to reveal nothing more than bluster behind a screen of smoke and noise

This must read commentary was posted on the telegraph.co.uk Internet site on Sunday evening BST...and I thank Manitoba reader Ulrike Marx for finding it for us.

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Credit squeeze in Asia now worst since financial crisis

Bank lending conditions in emerging Asian nations have tightened the most since the global financial crisis, according to the latest survey from the Institute of International Finance (IIF).

The IIF's index of bank lending conditions in emerging Asia fell in the second quarter to 45.7, below the key 50-level that divides easing and tightening territory and its lowest level since the beginning of the survey in 2009.

Asia also showed the tightest lending conditions of global emerging regions.

The survey questioned 133 banks across Latin America, Europe, Asia and the Middle East- Africa region and Asia's headline figure of 45.7 was the lowest. Latin America was second-worst at 47.6 while Africa and the Middle East had the best result at 52.9.

This CNBC Asia article was posted on their website in the wee hours of Monday morning EDT...and I thank Laurent-Patrick Gally for his final contribution to today's column.

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Marc Faber: "It's Gonna End One Day... Through War Or Financial Collapse"

Given more than his normal 30-second soundbite on mainstream media, Marc Faber is able to discuss in considerably more detail his views on the massive growth in global financialization (when compared to real economies) noting that "one day, this financial bubble will have to adjust on the downside." This will occur via either an inflationary burst or a collapse of the system. Simply put, "it's gonna end one day," either through war or financial collapse, "it will be very painful." The Gloom, Boom, and Doom Report editor notes current asset valuations are driven by excess credit creation, printing money, and distorted market signals, and the unintended consequences of the effect on investor psychology are perfectly mistimed. Faber concludes with a discussion of the inflationary impact of US monetary policy and where it is seen (and not seen) and the global social unrest implications of middle class discontent.

The video clip with Dr. Faber runs for 9:31 minutes...and it was posted on the zerohedge.com Internet site late on Friday night EDT...and I thank reader Ken Hurt for sending it our way.

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Japan now reconsidering sales-tax hike

Japan's Prime Minister Shinzo Abe may ditch a long-planned hike in the national sales tax, a senior official said Sunday, according to Kyodo News.

Abe had intended to help shore up Japan's finances by raising the 5% national consumption tax to 10% in two steps, slated for April 2014 and October 2015. But Kyodo quoted Chief Cabinet Secretary Yoshihide Suga as saying in a television interview that Abe would reconsider the issue "after revised data are released in September on preliminary figures for April-June gross domestic product, and before a fall extraordinary Diet session."

Instead, Abe may choose to implement gradual one-percentage-point hikes to the tax, or even opt for no increases at all, Kyodo said. Reports Saturday had said the Abe government planned to consult with economists over the likely impact from the tax hike. A separate Reuters report quoted Abe as saying he hadn't yet issued any instructions on the tax, with the report also citing a recent Nikkei opinion poll putting support for the current tax-increase plan at 11%, versus 58% who favored "flexibility" in the timing of the move.

I'm sure this change of heart had a lot to do with Japan's June retail sales.  They declined 0.2% m/m; as +0.8% was expected.  The above three paragraphs is all there is to this marketwatch.com new item that was posted on their Internet site early on Sunday evening...and it's something I found in yesterday's edition of the King Report.

 

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Official: Cannes diamond heist actually nets $136 million

Wearing a scarf to mask his face, the gunman sneaked into the posh Cannes hotel and held up a diamond show as three security guards looked on, then fled on foot about a minute later. In the end, he made off with a breathtaking $136 million worth of valuables - the biggest jewelry heist in years, maybe ever.

It was a French Riviera robbery that might make Hollywood scriptwriters smile. And it even happened at a hotel that was featured in Alfred Hitchcock's jewel-encrusted thriller "To Catch a Thief."

On Monday, a state prosecutor provided new details about the brazen heist a day earlier at the Carlton Intercontinental hotel - not least that the loot was actually worth more than twice the (EURO)40 million ($53 million) estimate that police had first announced.

This AP story was posted on their Internet site early Monday evening EDT...and I thank reader M.A. for his second contribution to today's column.

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James Turk: Gold backwardation explained

Gold is in backwardation for 90 days into the future and has been in backwardation for almost two months, GoldMoney founder and GATA consultant James Turk writes today, a duration unprecedented in his four decades studying the gold market. This backwardation, Turk writes, signifies difficulty for central banks in their manipulation of interest rates and suppression of market forces.

"When gold backwardated in 1999 and in 2008," Turk writes, "it marked important lows and key turning points in the gold price, which thereafter began multi-year uptrends. I expect the same outcome to be repeated now given that gold is once again in backwardation."

Turk's commentary is headlined "Gold Backwardation Explained" and it's posted at the Internet site of his newsletter, the Free Gold Money Report.

Here's James with his two bits worth on this issue.  As you know, dear reader, I've already chosen sides in this debate...and it's up to you as to whom you wish to believe.  But one side of this issue doesn't have their facts straight.

 

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Bron Suchecki: Norcini...Gold is not in backwardation

I asked Bron about the James Turk commentary posted above...and this was his response.

Actually it is not a bad post, as it does raise the “currency” nature of gold as well as its “commodity” nature, and how both of these natures can influence an interpretation of what we see in the market at the moment. Also, there is a typo error calling the gold lease rate GOFO, which will just confuse people.

This post of mine is really my (and Dan’s – who says that a few futures months below spot, from a “commodity” view, is not backwardation) last word on this issue I think.

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Don Coxe: “Now We’re Going To See Who Loses The Most When Gold Moves To The Upside”

Beginning at the 27:40 mark, Don noted that:

“What I believe is happening with gold is [that] we’re seeing the gigantic [long] positions that have been taken in the futures markets…[by] the speculators were wiped out, and what we have [now] is the largest short position in history on gold in the futures market.

On the other hand for the commercials, who are not speculators, who need to sell forward (go short) we’ve already seen a couple of gold companies reporting better earnings than expected because they had hedges in place. They have the lowest exposure in their short position—one of the lowest exposures in decades.

So you have those who know best are no longer short, as a matter of pure business principles, because they see that this just doesn’t make sense, and those who are pure speculators—with the biggest short position in history.

That kind of thing cannot survive if there’s…going to be any kind of continuation of these expansionary monetary policies. So therefore I don’t think it’s a matter of if, but when, that we’re going to see an upside breakout in gold.

This gold commentary [from three weeks ago] by BMO's Donald Coxe was posted on the bullmarketthinking.com, but is still worth listening to...and I thank reader U.D. for sharing it with us.

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On 'Keiser Report,' GoldMoney's Macleod reveals sharp fall in BofE's gold inventory

Interviewed this week on Max Keiser's "Keiser Report" program on the Russia Today network, GoldMoney research director Alasdair Macleod discloses that the Bank of England's reported gold inventory fell by 1,300 tonnes between February and June. Macleod speculates that this gold was used to smash the market in April to get the price back under central bank control. The program is posted at YouTube. Macleod's segment begins at 13 minutes and the decline in the Bank of England's reported gold inventory begins to be discussed at the 18:40 mark.

Since that interview, GATA's secretary/treasurer Chris Powell has been attempting to get some hard numbers from the Bank of England...and so far they are being evasive with their answers.  If/when I find out more, I'll post that information in this column.  I thank California reader Ron Hanna for being the first person through the door with this interview.
 

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Gold talks stalled: South Africa's Chamber of Mines

South Africa's Chamber of Mines has declared a dispute with labour group AMCU in gold negotiations, a move that will likely place wage talks for the entire sector before a government-affiliated mediator, it said on Monday.

"AMCU has rejected the gold producers' revised offer of a 5% increase in wages and benefits. The producers have indicated that they cannot accede to AMCU's demands, in respect of which AMCU has not moved at all in respect of its demands," the chamber said in a statement.

The move is expected to lead to all parties taking their dispute to the Commission for Conciliation, Mediation and Arbitration for mediation.

This news item, filed from Johannesburg, was posted on the moneyweb.co.za Internet site yesterday afternoon local time...and I thank reader M.A. for bringing this article to our attention.

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Gold Premiums in India Double as Supplies Decline on Curbs

Gold premiums in India, the world’s largest user last year, doubled in the past week as jewelers rushed to secure supplies after a surge in imports this month spurred the central bank to impose fresh curbs on purchases.

The fees paid by jewelers to banks and other importers climbed to about $10 an ounce over the London cash price from as low as $4 an ounce a week earlier, said Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation. The Reserve Bank of India on July 22 made it mandatory for gold importers to set aside 20 percent for re-exports as jewelry.

“There will definitely be raw material shortage during the festival season,” Soni said in a phone interview from New Delhi today. “The international market is not that favorable right now and exports can’t increase just like that. We need relaxation on this for the survival of the industry as millions of artisans will be without jobs.”

This Bloomberg story, filed from New Delhi, was posted on their website very early yesterday morning MDT...and I thank reader M.A. once again for finding this for us.

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Silver Vault for 200 Tons Starts in Singapore as Wealthy Buy

A silver vault that can hold 200 metric tons opens in Singapore this week to cater for increasing demand for physical precious metals among Asia’s wealthy even as the commodity leads declines this year.

The new facility is 30 percent booked at the opening, said Joshua Rotbart, precious-metals general manager at owner Malca-Amit Global Ltd. The storage will add to the firm’s five vaults at the Singapore FreePort, which are fully reserved for gold, he said in an interview. The repository can hold $128 million of silver at today’s prices. Gold is about 67 times more expensive.

“Our existing vaults at the FreePort are highly secured and the rate is too expensive to store silver there,” said Rotbart, who declined to say where the new facility is sited. “We need to find a solution, and we also see a strong demand."

This very interesting Bloomberg story was filed from Singapore...and posted on their Internet site in the wee hours of yesterday morning.  It's worth reading...and I thank reader M.A. for his final offering in today's column.

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A (Photovoltaic) Silver Bull in China

Early this month, big news came out of China. It may have gone unnoticed by some investors—and there's really no reason why it would have been covered extensively by mainstream media—but it's important if you're a silver investor. China raised its target for solar generating capacity to more than 35 gigawatts (GW) by 2015, a stunning increase of 67% above the previous target.

China's State Council announced on July 4 that installed capacity for solar electricity would grow about 10 GW per year until it reaches the newly set target. The country's previous target was 21 GW; installed capacity in 2012 was about 7 GW, so this would translate into a 400% increase. Moreover, if one looks at the rate at which it keeps raising the target, we may well see even more solar capacity by 2015—and quite possibly two times that by 2020.

Why does this mean to us as precious metal investors? A simple answer would be that growing demand could crimp supply and push on prices. But let's take a deeper look to see if that's the case…

I've already posted a couple of news items in this column during the past week about this issue...and here's a fresh look from Jeff Clark over at Casey Research.  It's a must read.

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It'll Be Way Harder for Goldman Sachs And Morgan Stanley to Get Out of the Physical Commodities Business Than JP Morgan

As JPMorgan Chase & Co prepares to exit physical commodities trading, the spotlight is turning to the future of the two banks that have dominated Wall Street's involvement in the natural resources supply chain for 30 years.

Goldman Sachs and Morgan Stanley two decades ago became known as the 'Wall Street Refiners' for their mastery of both financial and physical commodities.

But since 2012 Morgan Stanley has looked at selling its commodity arm and Goldman has made moves to scale back its physical operations.

This very long Reuters essay was posted on the businessinsider.com Internet site yesterday morning EDT...but it's definitely worth reading.  I thank Roy Stephens for sending it along.

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Hedge Funds Raise Gold Bets as Goldman Sees Decline: Commodities

Hedge funds raised wagers on a gold rally as speculation that the Federal Reserve will hold off on curbing stimulus drove prices toward the biggest gain in 18 months. Goldman Sachs Group Inc. expects the rally to reverse.

Money managers increased their net-long position by 26 percent to 70,067 futures and options as of July 23, U.S. Commodity Futures Trading Commission data show. The fourth consecutive weekly gain is the longest streak since October.

Gold futures rose 8.6 percent in July, heading for the largest monthly gain since January 2012, as Fed chairman Ben Bernanke damped speculation that a cut in bond purchases is imminent.

This Bloomberg item, along with a 2:44 minute embedded video clip, was posted on their website early yesterday afternoon...and it's also courtesy of Roy Stephens.

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Einhorn’s Reinsurer Cut Gold Holding Amid Bear Market

Greenlight Capital Re Ltd., the reinsurer that counts hedge-fund manager David Einhorn as its chairman, cut an investment in gold in the three months ended June 30 as prices fell into a bear market.

The reinsurer had about $50.5 million of commodities at the end of the second quarter, compared with $90.3 million on March 31, according to a regulatory filing yesterday. The cost basis for the investments fell to $41.8 million from $59.9 million in the period, the Cayman Islands-based company said.

The “decrease in commodities was due to a decline in the price of gold combined with the disposal of a portion of our physical gold holdings,” according to the filing.

It's a good bet that JPMorgan Chase is now the proud owner of everything the Einhorn sold.  This is another Bloomberg offering...and this one was posted on their website shortly after the markets closed yesterday afternoon in New York...and it's Roy's third and final offering in today's column.

Read more...

 

¤ The Funnies


 

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¤ The Wrap

There are no markets anymore...only interventions. - Chris Powell, GATA

Even though net trading volumes in all four precious metals were pretty low yesterday, it was obvious that at least three or four really wanted to fly to the upside...and were well on their way until a willing seller made an appearance.  There are just no legitimate short sellers left in this market...and if it wasn't for JPMorgan et al, all PM prices would have been over the moon decades ago.

But with 48 hours left in the July delivery month...along with the final roll-overs out of the August gold contract...I'm still not expecting any major fireworks to the upside, even though it's obvious that this is what Mr. Market would like to do if given the opportunity to do so.

The precious metals won't break out until JPMorgan Chase allows it to happen...and as you are already more than aware, the fundamental laws of supply and demand have nothing to with it...and never have.

But when this break-out does occur, I'll be prepared to bet big money that it won't happen in a vacuum, as JPMorgan will have some cover as to why the precious metal prices are exploding to the upside.  The only unknown is whether its origin will be economic, financial, political...or some 'other' event/black swan...or a combination of these.  Whatever it is, it won't be  a coincidence that it's occurring.  These crooks may have been born at night...but it wasn't last night.

The other question that needs an answer is...how soon?  Beats me, but the day it happens, you won't have to ask "Is this it?"...as it will be self-evident.

Checking the CME's web site for yesterday's preliminary volume figures I note that gold's open interest for August is falling precipitously...and is now down to just under 21,000 contracts.  There are still 134 contract showing as being open in the July delivery month...but all of them were reported by the CME as being posted for delivery tomorrow, so silver is done for the month.

All four precious metals were under a bit of selling pressure in Far East trading on the their Tuesday...and they all got swatted shortly after the London open...but are recovering a bit as I write this paragraph at 4:06 a.m. EDT.  Gold volumes are not overly heavy...and most of the trading activity is now in the new front month, which is December.  Silver's volume is about average for this time of day.  The dollar index isn't doing a thing.

And as I hit the "send" button on today's column at 5:20 a.m. EDT, the precious metals haven't recovered too much from their lows of earlier in the London trading session.  Gold is down about five bucks...and silver is down around two bits.  Net gold volume is still pretty light...and silver's volume is 'average' for this time of day.  The dollar index is still flat.

I haven't the foggiest as to what the rest of today will bring...but whatever it is, it should all be in this Friday's Commitment of Traders Report...and it will be more than interesting to see if JPMorgan has any more surprises for us like they did in last Friday's report.

That's more than enough for today...and I'll see you here tomorrow.