Gold & Silver Daily
"I was happy to see the new low prices that were set yesterday"
 

¤ Yesterday In Gold & Silver

The gold price rallied a few dollars in early Far East trading on their Wednesday, before getting rolled over once trading began in London at 8:00 a.m. GMT.  The low tick came shortly after London closed---around 11:10 a.m. EDT in New York---and then rallied into the close of electronic trading.

The high and low ticks were reported by the CME Group as $1,164.30 and $1,146.50 in the April contract.

Gold finished the Wednesday session at $1,153.90 spot, down $7.60 from Tuesday.  Gross volume was very close to 200,000 contracts, but only netted out at 125,000 contracts.

Here's the 5-minute gold tick chart.  It starts on the left side at 1:00 p.m. EDT on Tuesday---and the New York open for Wednesday morning in the Far East starts at 16:00 on this chart, because it's MDT and you have to add two hours for EDT.  As is normally the case, the really big volume came during the COMEX trading session.  The 'click to enlarge' feature is a must here.

It was more or less the same price pattern for silver, at least until the COMEX opened, then it really got smacked to the downside, with the low also coming about 11:10 a.m. EDT.  From there it rallied well off its low until around 3:20 p.m. before trading flat into the close.

The high and low ticks were recorded as $15.73 and $15.26 in the May contract.

Silver closed in New York on Wednesday at $15.465 spot, down only 15.5 cents from Wednesday.  Net volume was pretty chunky at 36,000 contracts.

Platinum's tiny rally in the early going in the Far East met the same fate as the similar rallies in gold and silver, then in mid morning trading in Zurich, a willing seller appeared, driving the price down its low at 11:10 a.m. EDT, the same time as gold and silver bottomed out.  The platinum price rallied a few dollars off its low---and it finished the day at $1,115 spot, down another 13 bucks.  The HFT boyz have platinum in the very oversold column as well.

Palladium traded almost ruler flat until 10 a.m. in Zurich---and then down it went as well.  The low tick came shortly before 1 p.m. in New York. Palladium was closed down anther 15 bucks to $785 spot---and back below $800 spot once again.

The dollar index closed late on Tuesday afternoon in New York at 98.67---and then didn't do much until shortly before the London open.  Then away it went to the upside once again, with the 99.98 high tick coming about 1:50 p.m. in New York.  The index faded a bit after that---and closed on Wednesday at 99.68---up 101 basis points from it's Tuesday close.

Once again, here's the 1-year dollar chart showing the continuing insanity---and a monstrously overbought position.

The gold shares opened unchanged---and dipped into the red beginning at 10:00 a.m. EDT.  Their lows came at 10:30 a.m., even before the low tick was in for gold.  They rallied strongly back into positive territory, before trading sideways starting at 3:00 p.m. in New York.  The HUI finished up 3.28 percent on the day.

The silver equities followed an almost identical price path to their golden brethren---as Nick Laird's Intraday Silver Sentiment Index closed up 2.94 percent.

I would guess that we saw some serious bottom fishing, or the insiders were buying like crazy because they knew that the bottom was in yesterday.  We'll see.

The CME Daily Delivery Report showed that zero gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.   JPMorgan out of its in-house [proprietary] trading account stopped them all.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that another 13 contracts were added to gold open interest in March, bringing the total up to 133 contracts.  In silver, the March o.i. fell by 44 contracts, leaving 840 still open.

With the website back up and running, there were no reported changes in GLD for either Tuesday or Wednesday---and as of 9:48 p.m. EDT yesterday evening, there were no reported changes in SLV, either.

The U.S. Mint had a tiny sales report.  They sold 1,000 troy ounces of gold eagles---and that was all.

There was little gold movement at the COMEX-approved depositories on Tuesday.  Nothing was reported received---and only 4,018 troy ounces were shipped out.  For a change, there was even less activity in silver, as only 997 troy ounces were shipped in---and nothing was shipped out.

Once again I have a lot of stories---and I hope you'll find some in here of interest.

 

¤ Critical Reads

Recession Alarm: Wholesale Sales Plunge Alongside Factory Orders, Worst Since Lehman

For the first time since Lehman, Wholesale Trade Sales dropped for a 3rd month in a row in January. Plunging 3.1% MoM (against -0.5% expectations), this is the biggest drop since March 2009. Excluding auto sales, wholesale sales fell 3.5%. Wholesale inventories rose 0.3% (beating expectations) with only a very modest -0.1% drag from oil.

This has sent the inventory-to-sales ratio soaring as the "Field Of Dreams" economy is back - but as one wise trader noted, we are now 10bps higher in inventory/sales than when we entered the recession in Dec 2007.

This short, but must read Zero Hedge piece appeared on their Internet site at 10:13 a.m. EDT Wednesday morning---and today's first news item is courtesy of Norman Willis.  The charts alone are worth the trip.  There was a somewhat similar story posted on the wolfstreet.com Internet site yesterday as well.  It's headlined "The Last Time This Ratio Spiked, Stocks Crashed"---and it's courtesy of Mark Hancock.

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Food Stamp Beneficiaries Exceed 46,000,000 for 40 Straight Months

The number of beneficiaries on the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, has topped 46,000,000 for 40 straight months, according to new data released by the Department of Agriculture (USDA).

In December 2014, the latest month reported, there were 46,252,064 Americans on food stamps. Food stamp recipients have exceeded 46 million in each month since September 2011.

This news item was posted on the cnsnews.com Internet site at 10:05 a.m. EST yesterday morning---and I thank reader M.A. for sending it.

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Former SEC Director Admits the Truth: The Market Is Rigged

For more than a decade, John Ramsay kept his mouth shut about how rigged the US equity market was.

As SEC Director of Trading & Markets, Ramsay tells Bloomberg her "had red tape over his mouth," but now he is "uncorked."

“I’ve been able to find my voice on these issues in a way I couldn’t have done when I was in the government, because you’re always limited by internal politics and not wanting to get too far out in front of the agency,” he said. “I feel like I’ve been a little bit uncorked.”

Having joined Brad Katayama's IEX Group (infamous for the Flash Boys' exposure), Ramsay  is calling out the “convoluted” and "illogical" pricing rules of major stock exchanges and compared the $25 trillion U.S. stock market’s structure to the Death Star of "Star Wars."

It will be hard for current regulators to shrug off Ramsay's comments.

No surprises here.  This Bloomberg story gets the Zero Hedge treatment---and it was posted on their website at 11:03 p.m. EDT on Tuesday evening---and I thank reader David Caron for sharing it with us.  It's worth reading.

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Jim Rickards: FED Has Major Conundrum

West Shore Funds Chief Global Strategist Jim Rickards discusses the strong dollar and emerging market fallout with Alix Steel on “Street Smart."

This 4:55 minute video interview appeared on the bloomberg.com Internet site at 2:06 p.m. Denver time on Tuesday afternoon---and I thank Harold Jacobsen for finding it for us.

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Former JPMorgan Executive Blythe Masters Joins Bitcoin-Related Start-Up

A prominent former executive at JPMorgan Chase has left the world of commodity trading for the virtual world of digital transactions.

Blythe Masters, who until last year was the head of JPMorgan’s giant commodities unit, is joining Digital Asset Holdings, a Bitcoin-related start-up that is looking to use Bitcoin’s underlying technology to streamline financial transactions.

The company, a relative newcomer to the Bitcoin industry, is not a trading platform or an exchange. Rather, it plans to provide software to customers that it says will improve the financial transaction process by making it faster, cheaper and more secure.

“We’re not seeking to disintermediate and destroy the current financial system,” Ms. Masters said in an interview on Wednesday. “We’re seeking to make it stronger, better and safer.”

This article appeared on The New York Times website yesterday sometime---and I thank Washington state reader S.A. for sending it our way.  There was Bloomberg story about this as well---and it was headlined "Swaps Pioneer Masters to Lead Virtual-Currency Start up"---and it's also courtesy of reader S.A.

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Goldman’s president is ‘freaked out’ by tanking European bond yields

Goldman Sachs’s second-in-command, Gary Cohn is freaked out about the pervading trend of negative interest sweeping across Europe.

Cohn told CNBC’s “Squawk Alley” on Wednesday that negative rates, in which investors effectively pay government bond issuers for holding their debt, “freaks him out.”

Cohn’s frank response is saying something, coming from the towering, 6’4’’ president and chief operating officer of the world’s most prominent investment bank, which is known as a bond trading powerhouse.

The Goldman honcho noted that negative yields make it hard in the insurance, asset management and pension businesses to generate a return. Those institutional investors represent a good chunk of Goldman’s clientele.

This marketwatch.com article, filed from New York, showed up on their Internet site at 2:11 p.m. EDT yesterday---and it's the first offering of the day from Roy Stephens.

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ECB ‘Chasing Own Tail’ as Bond Rates Turn Negative: SocGen

The amount of bonds eligible for the European Central Bank to buy under its quantitative-easing program is poised to shrink as the purchases risk pushing more yields below zero, according to Societe Generale SA.

The ECB, led by President Mario Draghi, began buying euro-area sovereign debt on Monday under the 19-month plan to inject 1.1 trillion euros ($1.2 trillion) into the region’s economy to spur growth. While the ECB was said to have purchased debt with negative yields this week, including that of Germany and the Netherlands, its rules preclude buying of securities yielding less than its deposit rate of minus 0.20 percent.

The move and anticipation of further bond purchases helped to push Germany’s seven-year rate below zero on Tuesday, while yields from Italy to Ireland dropped to record lows. German notes maturing in April 2018 were no longer eligible for ECB buying on Tuesday as their yields dropped to minus 0.23 percent.

“It’s like the ECB is chasing its own tail,” Ciaran O’Hagan, head of European rates strategy at SocGen in Paris, said on Tuesday. “Yesterday, the Bundesbank could have bought 2018 notes. Today it needs to go out to 2019. The universe of buyable bonds is melting like snow in the spring sun.”

This interesting, but not surprising story---filed from London---put in an appearance on the Bloomberg website at 2:10 a.m. MDT on Wednesday morning---and it's courtesy of West Virginia reader Elliot Simon.

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Jim Rickards: A New Era for Credit Suisse

James Rickards, author of "The Death of Money," discusses Tidjane Thiam replacing Brady Dougan as the Credit Suisse CEO. He speaks with Alix Steel on "Street Smart."

This very interesting 3:02 minute video clip showed up on the Bloomberg Internet site at 2:20 p.m. MST on Tuesday evening---and it's another offering from Harold Jacobsen.

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Tsipras Slams “Crimes of Third Reich and Hitler’s Hordes", Threatens Seizure of German Assets

Earlier today, despite fears that it may not find enough cash to fund its latest T-Bill rollover, Greece was able to sell €1.3 billion of three-month Treasury bills, covering the amount it wanted to refinance a maturing issue, in what Reuters dubbed was an "auction that tested its ability to raise funds amid a cash crunch." The paper came at a higher cost as the T-bills were priced to yield 2.70 percent, up 20 basis points from 2.50 percent in a previous sale in February, the country's debt agency PDMA said.

However, this latest funding appears to have brought Greek funds to a critical low level because roughly at the same time news broke that Greek Justice Minister Nikos Paraskevopoulos said he is ready to sign an older court ruling that will enable the foreclosure of German assets in Greece in order to compensate the relatives of victims of Nazi crimes during the Second World War.

As Kathimerini reports, Greece's Supreme Court ruled in favor of Distomo survivors in 2000, but the decision has not been enforced. Distomo, a small village in central Greece, lost 218 lives in a Nazi massacre in 1944.

The situation gets more interesting by the day.  This news item put in an appearance on the Zero Hedge website at 9:28 a.m. Wednesday morning EDT---and the first reader through the door with this was Dan Lazicki.  There was also a story about this in The Telegraph as well.  It's headlined "Greece demands Nazi war reparations and German assets seizures as creditor squeeze continues"---and I thank South African reader B.V. for finding it for us.

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NATO not amused by E.U. plan to create separate army

NATO says a plan by the European Union to create its own army would be ineffective. The military alliance’s secretary-general, Jens Stoltenberg, says the E.U. should make sure everything they do is complimentary to NATO and avoid duplication.

Stoltenberg told a press briefing in Belgium that he would welcome an increased investment by European nations in defense, but this should be channeled towards NATO, adding that “duplication would be inefficient.”

"It's important to avoid duplication and I urge Europe to make sure that everything they do is complementary to the NATO alliance," he said, Reuters reported.

Nigel Farage rips Juncker a new one in the E.U. parliament yesterday--- that video, along with all of the above, is to be found in this Russia Today story.  It was posted there at 4:54 p.m. Moscow time on Wednesday afternoon, which was at 9:54 a.m. EDT in Washington.  It's worth reading---and it's courtesy of Roy Stephens.

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E.U. unlikely to create common army due to huge expenses, U.S. opposition — Russian official

The idea of creating a united European Union army is not new but is unlikely to be realized because of the huge expense involved on the one hand, and Washington’s stance on the other hand, Alexey Pushkov, the head of the Russian State Duma Committee for Foreign Affairs, told TASS on Wednesday.

The United States will not allow the European Union to increase its military potential, which may counterbalance the U.S. military potential, Pushkov explained commenting on the initiative of European Commission President Jean-Claude Junker to create a European army.

NATO Secretary-General Jens Stoltenberg said in turn that the European army should not duplicate NATO’s functions.

"First and foremost, the European army will require considerable financial spending on the part of the European Union, which is already facing huge financial hardships," Pushkov said adding that Greece and Ukraine provided very good examples. According to Pushkov, the Europeans value NATO largely because the United States pays 75% of expenses on NATO’s military activities while Europe economizes on the military aspect.

As always, the cooler heads in Moscow put all this into the proper perspective.  This news item appeared on the tass.ru Internet site at 9:48 p.m. Moscow time on their Wednesday evening.  It's also courtesy of Roy Stephens.

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Ukraine's NATO Membership Should Be Off the Table - Brzezinski

The United States should make an arrangement with Russia ensuring that even if Ukraine becomes a member of the European Union, it will not become a member of NATO, former US National Security Advisor Zbigniew Brzezinski said at a Monday conference at the Center for Strategic and International Studies.

“We [the United States] should also indicate to Russia that we favor… and expect that Ukraine’s eventual place as a genuine European country, democracy, member of the EU, will not entail membership in NATO,” Brzezinski said.

Brzezinski argued that the United States should make the arrangement with Moscow in order to “cool down the crisis and return to some degree of normalcy.”

I don't know if the current power elite pay any attention to Zbigniew anymore or not, but they certainly should in this instance.  This article, filed from Washington, showed up on the sputniknews.com Internet site at 2:51 a.m. Moscow time on their Tuesday morning---and I thank Jim Skinner for digging it up for us.

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U.S. to Send Drones, Humvees to Ukraine, Boost Russia Sanctions as Moscow May "Deploy Nuclear Weapons In Crimea"

So much for the second Minsk ceasefire. A few hours ago, the U.S. returned to its strategy of escalating Russian "costs" when it placed sanctions on eight Ukrainian separatists and a Russian bank, warning that recent attacks by rebels armed by Russia violated a European-brokered ceasefire in the war-torn country.

"If Russia continues to support destabilizing activity in Ukraine and violate the Minsk agreements and implementation plan, the already substantial costs it faces will continue to rise," Adam Szubin, the Treasury Department's acting undersecretary for terrorism and financial intelligence, said in a statement announcing the sanctions.

As Reuters adds, "the sanctions signal Washington is ratcheting up pressure on Moscow a day after accusing Russia of sending tanks and heavy military equipment into Ukraine, which a top U.S. official also said breached the Minsk accord agreed on Feb. 12."  What was not said is that this also comes a day after the U.S. sent over 100 tanks and armor to Russia neighbor Latvia in a move that would, from the Kremlin's perspective, signal further NATO arms build up on its borders.

This news story was posted on the zerohedge.com Internet site at 7:24 p.m. EDT yesterday evening---and the first reader through the door with it was Dan Lazicki once again.

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Kiev may be deliberately disrupting weapons withdrawal plan — LPR negotiator

Kiev could be deliberately disrupting the plan on weapons withdrawal thus undermining the Minsk agreements, said the representative of the self-proclaimed Luhansk People's Republic in the Contact Group on the Ukrainian crisis, Vladislav Deinego.

"There is a rather high probability that the fulfillment of the second point of the set of measures on implementing the February 12 Minsk agreements is being deliberately frustrated," Deinego was quoted by the LuhanskInformCenter news agency as saying.

In particular, this can be confirmed by reports that on Tuesday the checkpoint near the village of Shirokino, in the Donetsk region, was shelled from the territory controlled by the Kiev authorities, he said.

A representative of Kiev’s military operation headquarters, Anatoly Stelmakh said on Sunday that the Ukrainian forces had withdrawn all the heavy artillery from the disengagement line. However, Kiev military spokesman Andriy Lysenko said the Ukrainian army was not planning to pull out all the heavy weaponry from the contact line.

Deinego reminded that Ukraine’s parliament, the Verkhovna Rada, has fewer than 4 days left to adopt a decree on granting a special status to Donbas. "Should this decree not be adopted, this would directly signal that the implementation of the Minsk accords is disrupted," he stressed.

These five paragraphs of this tass.ru story are all you need to read to get the gist of the story.  It was filed from Moscow at 8:53 a.m. Moscow time yesterday morning---and I thank Roy Stephens once again.

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Five High-Ranked Ukrainian Officials Die in String of Mysterious Suicides

As the Ukraine crisis continues, violence isn’t limited to the streets. A number of top Ukrainian officials have died under mysterious circumstances during one 34-day period, leading many to suspect foul play.

The first death occurred on January 26 of this year, and would prove to be the beginning of a most violent month.

What these deaths portend is anyone’s guess. An old Ukraine, beleaguered by violence, slowly and inevitably wearing away. 

This interesting, but rather gruesome article appeared on the sputniknews.com website on Monday---and it's another contribution from Roy Stephens.

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IMF Approves $17.5 Billion Ukraine Bailout

To all those Greeks who are wondering why their government is raiding their pensions so it can make recurring payments to the IMF, here is the answer:

  • IMF BOARD SIGNS OFF ON $17.5 BLN FOUR-YEAR LOAN PROGRAM FOR UKRAINE -- IMF CHIEF LAGARDE
  • IMF'S LARGARDE SAYS UKRAINE HAS MOVED TOWARD TALKS WITH HOLDERS OF ITS PUBLIC SECTOR DEBT WITH A VIEW TO IMPROVE MEDIUM-TERM SUSTAINABILITY
  • LARGARDE SAYS UKRAINE PROGRAM AMBITIOUS, INVOLVES RISKS; SAYS THERE IS "REASONABLY STRONG PROSPECT OF SUCCESS

That said, there are risks. Such as a civil war:

  • LAGARDE SAYS CONFLICT IN EASTERN UKRAINE POSES RISKS TO LOAN

But that's OK because:

  • LAGARDE SAYS MINSK CEASEFIRE LARGELY HOLDING FOR NOW

Oddly enough, that is not what the U.S. said yesterday and today, when it used the breakdown in the ceasefire as the pretext to send tanks and armors to Latvia and Humvees and drones to Ukraine.

What a Kabuki theater this is turning into.  If it wasn't so serious, one wouldn't know whether to laugh, or cry!  This excellent Zero Hedge piece from yesterday showed up on their website at 12:59 p.m. Wednesday afternoon EDT---and I thank reader B.V. for another contribution to today's column.  The Russia Today website, not to be outdone, had this article on the subject headlined "IMF approves $17.5bn bailout package for Ukraine"---and this one's courtesy of Roy Stephens.

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Significant Decrease in Russian Gas to Europe via Ukraine

The transit of Russian natural gas via Ukraine to Europe including Moldova in January-February fell by 38.8% year-on-year to 7.9 billion cubic meters, Ukrtransgaz’ press service reported Tuesday.

Ukrtransgaz is the operator of Ukraine’s gas transport system.

That's all there is to this tiny russia-insider.com story from Tuesday---and it's courtesy of Roy Stephens.

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'Start Killing Russians': Outrageous Outburst by Fox News Military Analyst

Robert Scales, a retired U.S. major general and a Fox News military analyst, provided his view on the US involvement in Ukraine, describing it as a “game, set and match” situation; “the only way the U.S. can have any effect in the region is to start killing Russians,” he stated.

Maj. Gen. Robert Scales had been invited to the Lou Dobbs Tonight program on Tuesday to comment mostly on the fight of Iraqi forces against Islamic State near the city of Tikrit.

The host, however, wanted more insight into the U.S. involvement in the world and asked the retired major general to comment on the recent U.S. announcement that it would send 3,000 troops to Eastern Europe – to what effect, he wondered.

I think to no effect, Lou,” Robert Scales answered. “It is Game, Set and Match in Ukraine. The only way the US can have any effect in this region and turn the tide is to start killing Russians. Killing so many Russians that even Putin’s media can’t hide the fact that Russians are returning to the Motherland in body bags. But given the amount of support we’ve given the Ukrainians, given the ability of the Ukrainians themselves to counterattack, to get seized [by the] 12,000 Russians camped in their country – sadly, that is not likely to happen.

Isn't he just a sweetheart of a guy?  He sounds just like General George S. Patton Jr. at the end of WWII.  This story was posted on the sputniknews.com website at 8:06 p.m. Wednesday evening Moscow time, which was 1:06 p.m. EDT in Washington---and I thank Roy Stephens for sending it.

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Britain may broadcast Putin's financial secrets to Russian people

Britain may broadcast the financial secrets of Russia’s ruling elite as part of the information war against the Putin regime, the Foreign Secretary has indicated.

Philip Hammond said he was interested by the idea of publicising the wealth of the Russian president’s inner circle in order to embarrass them in front of their people, as part of the response to the ongoing incursion into eastern Ukraine.

The Foreign Secretary warned that Putin is rapidly modernising his armed forces, and warned Russia’s bid to destabilise eastern Europe poses “the greatest single threat” to British national security.

Mr Hammond said that Britain must now “accept” that efforts to offer Russia its “rightful place” in the post-Cold War order had been “rebuffed”.

I didn't realized that the Brits could pile it this deep, but they can obviously do it with the best of them.  From a western perspective, this is all getting rather childish, but the psychopaths of the West are tall in saddle now, so look out!  This story showed up on the telegraph.co.uk Internet site at 11:19 a.m. GMT on Tuesday---and I thank Casey Research's own Jeff Clark for bringing it to my attention---and now to yours.

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Russia gets seat on SWIFT board

Increased banking traffic means Russia now has a seat on the board of the SWIFT global interbank communications system. The seat comes at a time of increased pressure for Russia to be removed from the organization because of sanctions.

It is the first time Russia has had a seat on the 25-member board of directors of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) since it joined in 1989. Every three years the organization reconfigures the shares among the countries participating. Each country receives a number of shares in proportion to the traffic in the system. The reallocation has led to changes in the structure of the board.

“By the end of 2014 the SWIFT traffic growth in Russia allowed us to reach thirteenth place in the world, so Russia has increased its stake to a level that allows it to nominate a candidate to the Board of Directors”, the executive director of the Russian National SWIFT Association Roman Chernov told RBC.

Oh, the irony of it all.  This Russia Today news item appeared on their Internet site at 12:33 p.m. Moscow time on their Wednesday afternoon, which was 5:33 a.m. EDT in Washington.

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Yes! There is Plunge Protection Team—–BOJ Bought Stock 143 Times to Stop Drops

Since 2010, The Bank of Japan has ‘openly’ – no conspiracy theory here – been a buyer of Japanese stock ETFs. Their bravado increased as the years passed and Abe pressured them from their independence to ‘show’ that his policies were working to the point that in September 2014, The BoJ bought a record amount of Japanese stock ETFs taking its holdings to over 1.5% of the entire market cap, surpassing Nippon Life as the largest individual holder of Japanese stocks.

As The Wall Street Journal reports---The Bank of Japan’s aggressive purchasing of stock funds has helped Japanese shares climb to multi-year highs in recent months. But some within the central bank are growing uncomfortable about the fast-paced rally and the bank’s own role in fueling it.

Like I've been saying for almost a decade.  If the world's central banks weren't propping up everything that wanted to crash and burn---and sitting on the prices of everything that wanted to explode to the outer edges of the known universe, the world's economic, financial and monetary system would be a smouldering ruin in five business days.  This news item appeared on David Stockman's website on Wednesday sometime---and it's the final offering of the day from Roy Stephens---and I thank him on your behalf.

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Apple Gold Demand – Bloomberg View Misrepresents GoldCore

  • Bloomberg View misrepresents our widely read Apple gold demand article
  • CNBC quoted extensively and favourably from
  • Gilbert quoted selectively from our piece – Misrepresenting “gold bugs”
  • Silly gold ‘bug’ name calling shows bias against gold and towards stocks 
  • “Gold bugs” and “stock roaches” can peacefully coexist
  • In these uncertain times diversification is what remains vitally important
  • Gold proven safe haven asset
  • Maybe a rational debate would be enlightening

In his column on Monday, Bloomberg columnist Mark Gilbert made reference to our Market Update released last Friday – Apple Major New Gold Buyer – Propel Gold Higher?. Our piece was very widely read – Apple being the sexy tech and investment story of today. It was covered internationally including being quoted from favorably and extensively by CNBS.

It sounds like Mark O'Byrne over at the goldcore.com Internet site got chewed up by the sharks over at Bloomberg.  I'm sure that someone there was paid to do a hatchet job on the poor man.   Take a blue pill and call me in the morning, Mark. This commentary was posted on the goldcore.com Internet site yesterday---and it's courtesy of Dan Lazicki again.  It's worth skimming.  By the way Lawrie Williams had a piece on his own website on Tuesday about the iWatch headlined "Will the Apple gold watch move the market – probably not".

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Venezuela negotiating again to pawn its gold reserves, sources tell Reuters

Venezuela's central bank is in talks with Wall Street banks to create a gold swap that would allow it to monetize some $1.5 billion of the metal held as international reserves, according to government sources familiar with the operation.

The move would help the government of President Nicolas Maduro boost its hard currency position as the OPEC nation struggles with soaring consumer prices, chronic product shortages and a shrinking economy caused by low oil prices.

Under the swap, the central bank would provide 1.4 million troy ounces in exchange for cash, said a central bank source. After four years, it would have right of first refusal to buy the gold back, added the source, who asked not to be identified.

For some reason I thought that Venezuela had already hocked it's gold.  I remember reading a story about that last year.  Maybe it's being rehypothecated---and there are about to be two claims on their gold.   I found this gold-related news item in a GATA release yesterday morning.

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Jim Rickards: Three Catalysts for the Price of Gold

Investors have long understood that gold is an excellent hedge against inflation. The analysis is straightforward. Inflation is caused, in part, by excessive money printing by central banks; something central banks can do in unlimited amounts. On the other hand, gold is scarce and costly to produce. It emerges in small quantities.

The total growth in global gold supplies is about 1.5% per year and has been slowing lately. Compare this to the 400% growth in base money engineered by the Federal Reserve since 2008, and it’s easy to see how a lot more money chasing a small amount of gold will cause the dollar price of gold to rise over time.

But this is not the only driver of higher gold prices. There are at least three other catalysts – extreme deflation, financial panic, and negative real interest rates. A brief look at all three scenarios will give us a more robust understanding of gold’s potential price performance.

A new-and-improved gold price is precisely what is required---and it's my opinion that's precisely what we'll get when they play the gold card.  Just what day that might be, is unknown, but I get the impression that we won't have long to wait.  This absolute must read commentary appeared on the dailyreckoning.com Internet site yesterday---and once more I thank Dan Lazicki for finding it for us.

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Lawrence Williams: World top 10 gold miners face negative free cash flows

We are indebted again to precious metals analysis consultancy, Metals Focus, for bringing to our attention that the world’s top gold miners had moved into a combined Negative Cash Flow (NCF) position during the final quarter of last year. This is after three consecutive quarters where they had recorded positive Free Cash Flow (FCF) – that is after taking into account all elements of costs including capital expenditures.

For several years, Mineweb ran a campaign to push the gold mining sector to report FCF figures (South Africa’s Gold Fields was probably the only Tier 1 gold miner at the time which did) but eventually most have come round to so doing – helped by the relatively new reporting metric of All In Sustaining Costs (AISC), to which most big gold miners now subscribe, which gets close to reporting the FCF figure.

Prior to this mining companies, and gold miners in particular, were prone to reporting profits and capital expenditures as completely separate balance sheet items, although the true situation frequently saw profits being reported while company treasuries were being drained overall by high capex and led to the situation where borrowing, equity raising or asset disposals had proved to be necessary for the company to maintain its dividends.

Jamie Dimon certainly knows why they all have negative cash flows, as do the other bullion banks.  But the precious metal mining industry would rather go under then admit they were being screwed over by "da boyz" in the COMEX futures market.  This very interesting commentary by Lawrie appeared on the mineweb.com Internet site at 2:57 p.m. GMT yesterday afternoon---and it's the final offering of the day from Dan Lazicki, for which I thank him on you behalf.

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WGC - World Official Gold Holdings as of March 2015

This PDF file from the World Gold Council showed up on the Sharps Pixley website yesterday---and if you believe for one minute that these numbers are accurate, especially China's, then I really do have a bridge for you!

Don't forget that according to the IMF template, countries can report gold in the vault---and gold "receivables"---as one line item, so it's a good be that a large chunk of this is paper gold, especially the IMF gold, as it's most likely in the form of paper claims against a countries gold, but the country itself would still hold the real gold in its own vaults, so it's a given that this is being double counted.

If I were you, dear reader, I'd glance through these number purely for entertainment purposes only.

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¤ The Funnies

Here are a few more shots from around Jerome, Arizona.  The place looks like a ghost town when you're driving through it, but upon closer inspection, the quality of the stores, once you get past the storefronts, are as good as anything we found in Sedona.  We were informed by several high-end store owners that Jerome is the third most visited tourist location in Arizona---after Grand Canyon and Sedona, with over two million visitors a year.  That's amazing, considering the fact that the "curb appeal" of this place barely moves the meter.  We could have spent a lot more time there than we did---and good luck finding a parking spot by midday, even in January!

Cypress Development Corp. is a Canadian gold, silver and base metals exploration company developing projects in Red Lake, Ontario, Canada, and in Nevada, U.S.A.

Cypress holds a 100% interest in the approximately 1140 acre Gunman Zinc-Silver Project located in White Pine County, northeast of Eureka, Nevada. Three RC drill programs totaling approx. 38,000 feet have been completed by Cypress on the Gunman project with significant grades between 5% to 33% per ton zinc and 0.5 to 15.0 oz per ton silver over considerable widths encountered. Zinc could represent the next big base metal play due to ongoing demand growth and the closures of 3 major mines in Canada, Australia and Ireland and not enough supply coming on stream from new projects. Sentiment could shift towards zinc, with prices potentially rallying in anticipation of tightening supplies. 

 

¤ The Wrap

As has been the case for eight days running, silver (and gold) has hit successive new price lows on the COMEX through today. I know some things for sure – how and why this is happening, even though I can’t know what everyone (including me) wants to know, namely, where’s the exact bottom? That will only be known after the bottom has passed. So let’s stick to what is known – the how and why of the decline.

This price decline is a 100% pure COMEX production, as is nearly always the case. It is not the result of any developments in the physical world of silver, such as investors selling physical silver on balance. It is not the result of any sudden increase in silver (or gold) mine production or falloff in physical industrial demand. Technical funds and other price momentum speculators are selling into the lower prices that the commercials know how to create. The commercials rig ever lower prices for the purpose of buying whatever contracts the technical speculators can be induced into selling. The game has become so obvious and repetitive and proven by the CFTC’s own data, that the only wonder is how everyone can’t see it after it’s explained to them.

What is also known is that there is a limit to technical fund selling. There may be no limit, in theory or practice, as to how many contracts the commercials can buy or sell, but there is a very finite limit for the technical funds. Quite simply, if the equation was reversed and it was the commercials who were limited in any way and the speculators could buy or sell in unlimited quantities, the COMEX silver manipulation would not have lasted even a year, to say nothing of not enduring for 30 years. JPMorgan demonstrated on several occasions over the past seven years that it was allowed to hold over 40,000 net contracts of COMEX silver short, the equivalent of 200 million ounces. Never would an individual technical fund or other speculator be allowed to hold 40,000 contracts of COMEX silver. I’m not telling you anything you don’t know about the COMEX paper game being rigged and how the key to ending the manipulation now rests in the physical silver market, but even the current price take-down will soon be exhausted in strictly paper terms. - Silver analyst Ted Butler: 11 March 2015

I'd like to think, based on the share price action in both silver and gold, that we saw the lows in the precious metals for this move down during the COMEX trading session yesterday.  But as Ted Butler pointed out in the quote above, we won't know for sure until it's plainly visible in the rear-view mirror.

Here are the 6-month charts for all four precious metals---and it's obvious that we are at, or very close to, the lows from last November, which are pretty much bottom-of-the-barrel numbers.

We're oversold in three of the four precious metals---and because palladium has been trading to its own drummer for many months now, I don't think that the current RSI-neutral position means much in the grand scheme of things, as it's a very tiny market.

As I type this paragraph, the London open is thirty minutes away.  All four precious metals hit their lows of the Far East trading session at 10 a.m. Hong Kong time on their Thursday morning---and shortly before 2 p.m. they all popped to the upside in unison.  This had nothing to do with supply and demand---and everything to do with trading in the futures market.  At the moment, they're all up decent amounts---and only time will tell if they're allowed to keep those gains.  Not surprisingly, net gold volume is already pretty chunky at 29,000 contracts---and silver's net volume is 6,100 contracts.  It's obvious that these rallies, such as they are, aren't going unopposed by JPMorgan et al.

The dollar index, which peaked out at 100.60 at noon Hong Kong time on their Thursday, is now down 38 basis points as of this writing.

I was happy to see the new low prices that were set yesterday---and the corresponding rise in their associated equities.  As I said further up in today's missive---"I would guess that we saw some serious bottom fishing, or the insiders were buying like crazy because they knew that the low was in yesterday.  We'll see."

The only unfortunate thing is that because yesterday's price action occurred after the cut-off for tomorrow's Commitment of Traders Report, we'll probably never know what the true bottom was in terms of long and short contracts held by the Big 8 traders---and their technical fund prey in the Managed Money category.

And as I send this off to Stowe, Vermont at 5:20 a.m. EDT, I note that the prices of all four precious metals got stepped on shortly after 7:00 a.m. GMT in London.  They're all still up on the day, at least for the moment, but the gains have certainly been pared back.  Net gold volume is now 39,000 contracts---and silver's net volume is around 7,700 contracts.  As I said before, these rallies are not going unopposed---and the volume and price action certainly bears that out.

It appears that the dollar index ran into "gentle hands" at the 99.00 mark at 8:00 a.m. GMT right on the dot, which was the London open, but the precious metals got capped about an hour before that.   Right now the index is down 36 basis points.

That's more than enough for another day---and I'll be more than interested in what the price charts show when I roll out of bed later this morning.

See you here tomorrow.

Ed Steer