Casey Research Publication
Gold & Silver Daily
"It was a bit of a strange day price wise...but underneath it all was volume so monstrous that it took my breath away."
 

¤ Yesterday In Gold & Silver

What little gains that had accrued during the Far East and London trading session had all but disappeared by the time that New York opened on Wednesday morning.  The rally that began shortly after trading began on the Comex, wasn't allowed to go far...and from that point, the gold price got sold down to its low of the day, which was $1,702.30 spot.

The low tick came at 11:00 a.m. virtually right on the button...and the subsequent rally ran out of gas about 2:45 p.m. in the New York electronic market.  From there it got sold down a few dollars into the 5:15 p.m. close.

Gold finished the Wednesday trading day at $1,717.30 spot...up 40 cents on the day.   Net volume in early London trading, which I had mentioned in 'The Wrap' in yesterday's column, was an off-the-charts 65,000+ contracts when I hit the 'send' button on Wednesday's column at 5:20 a.m. Eastern time yesterday morning.  The closing gross volume for Wednesday was an astonishing 306,070 contracts...with net volume checking in around 225,000 contracts. Under no circumstance would one consider this to be normal trading volume...especially considering the small intraday price changes.  I'll have more on this in 'The Wrap'.

What I said about the gold price action above, could be directly applied to the silver price action on Wednesday as well.  The gold and silver charts are virtual carbon copies of each other.

Silver closed at $31.84 spot...down 18 cents from Tuesday's close.  Silver's volume was sky high as well during the entire Wednesday trading session all over Planet Earth.  Gross volume was an astonishing 77,047 contracts...and net volume was very chunky at 53,603 contracts.  This wasn't normal price/volume action either.  Like gold, I have my suspicions about what may be happening...and I'll talk about it 'The Wrap' as well.

As I mentioned in 'The Wrap' in yesterday's column, the dollar index tanked by 40 basis points on the Obama election news in late morning Far East trading on their Wednesday...but began to recover strongly from that low about 3:30 p.m. Hong Kong time...about thirty minutes before the London open.

By 8:00 a.m. in New York, the dollar index had gained 60 basis points from its low tick in the Far East.  From its 8:00 a.m. 80.90 high tick, the index got sold down 10 basis points...and then traded almost ruler flat going into the close.  The index closed at 80.81...up 18 basis points from Tuesday's close.

Even a cursory glance indicates that there was absolutely no relationship between the dollar index and the precious metal prices yesterday...especially during the Comex trading session.

The gold shares pretty much followed the gold price in the early going...with the low in the shares coming just a minute or two before 11:00 a.m. Eastern time...the low price tick for gold yesterday.  After that, the shares chopped higher...and moved back into positive territory.  Then, starting at 2:00 p.m. in New York, a strong buyer showed up...and the shares moved solidly higher from there, right into the close...almost without a break.  Despite the fact that the general equity markets got killed, the HUI finished up 1.83%...almost on its high tick of the day.

Despite the fact that the silver price finished down, most of the silver stocks finished in positive territory...and Nick Laird's Silver Sentiment Index closed up 0.84%.

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The CME's Daily Delivery Report showed that only 4 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Friday.

An authorized participant added 87,207 troy ounces of gold to GLD yesterday...and there were no reported changes to SLV.  Based on this information, it's pretty obvious that last Friday's price smash in both gold and silver was a 100% paper affair on the Comex...as it almost always is.

The U.S. Mint had a tiny sales report.  They sold another 50,000 silver eagles...and that was it.

The Comex-approved depositories reported receiving 1,203,658 troy ounces of silver on Tuesday...and also shipped 283,338 ounces of the stuff out the door.  Virtually all of the activity involved the Brink's, Inc. depository...and the link to the action is here.

Three readers that I know of [Marvin Wieler, Eric Gould, Normand Bedard and Cave Caron] were kind enough to e-mail the CEO of Scotiabank, Mr. Rick Waugh...and they got the same non-answer canned response from Mr. Dave Shearim that I got, namely...

Dear Mr. Wieler,

Thank you for your email of November 6th addressed to Rick Waugh, CEO of Scotiabank. I have been asked to review your inquiry and provide a response to you on behalf of the Scotiabank Group.

We have determined from our review, the Scotiabank Group is not involved in the research or publication of the Commitment of Traders Report and as a result we are unable to comment on the data provided in the report. We respectfully recommend you consider making direct contact with the Commodity Futures Trading Commission (CFTC) as we understand they are the source of the report and would be better positioned to respond to you with answers to any inquiries you may have about the report.

Once again, thank you for writing, giving us an opportunity to review and respond to your inquiry.

Sincerely,
Dave Shearim
Senior Manager - Office of the President
Scotiabank - Executive Offices
e-mail: mail.president@scotiabank.com

Telephone: (416) 933-1700 or (877) 700-0043
Fax: (416) 933-1777 or (877) 700-0045

Although it's obvious that the truth won't be forthcoming from the Bank of Nova Scotia/Scotia Mocatta any time soon...if at all...at least they are aware of the fact that large numbers of people are now on to them.  I thank everyone who took the time to write in and make their opinions known.

Normally I would have a chart from Nick Laird at this point...but instead of that, Nick sent me a series of photos of a female Yellow-bellied Sunbird building her nest hanging from the Christmas lights on the verandah of Nick's house.  Living in Canada, it's hard for me to associate spring with the Christmas season...but south of the equator, that's what happens.  Here are five photos that track the bird's progress over the three days it took to construct the nest.  The fifth shot shows the male supervising from a safe distance.

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I don't have a lot of stories today...and the first four are reactions to Obama's victory yesterday.

 

¤ Critical Reads

Dr. Marc Faber: Obama Is A Disaster, The Stock Market Should Have Fallen 50 Percent

“I am surprised with the re-election of Mr. Obama. The S&P is only down like 30 points. I would have thought that the market on his reelection should be down at least 50%...I think Mr. Obama is a disaster for business and a disaster for the United States. Not that Mr. Romney would be much better, but the Republicans understand the problem of excessive debt better than Mr. Obama who basically doesn't care about piling up debt. You also have in the background Mr. Bernanke, who with artificially low interest rates enables the debt to essentially escalate endlessly.”

No shades of grey in this Bloomberg TV "Street Smart" interview yesterday.  It runs for 10:42 minutes...and I thank Roy Stephens for our first story of the day.  The link is here.

Read more...

Jim Rogers: Get Ready for Cheap Money 'Run Amok'

Investors should prepare for rising prices and more expansionary monetary policy now that President Barack Obama has won re-election, investor Jim Rogers told CNBC on Tuesday.

Just moments before Obama was projected to prevail in his bid for a second term against Republican challenger Mitt Romney, Rogers sharply repudiated both candidates, calling them both “evil”.

“If Obama wins, it’s going to be more inflation, more money printing, more debt, more spending.” Rogers told CNBC, saying he expected to sell U.S. government debt and buy precious metals, such as gold. “It’s not going to be good for you me or anybody else.”

This CNBC story was posted on their website in the wee hours of Wednesday morning...and I thank Roy Stephens for his second offering in a row.  The link is here.

Read more...

Paul Craig Roberts: The Special Interests Won Again

The election that was supposed to be too close to call turned out not to be so close after all. In my opinion, Obama won for two reasons: (1) Obama is non-threatening and inclusive, whereas Romney exuded a “us vs. them” impression that many found threatening, and (2) the election was not close enough for the electronic voting machines to steal.

As readers know, I don’t think that either candidate is a good choice, or that either offers a choice. Washington is controlled by powerful interest groups, not by elections. What the two parties fight over is not alternative political visions and different legislative agendas, but which party gets to be the whore for Wall Street, the military-security complex, Israel Lobby, agribusiness, and energy, mining, and timber interests.

Being the whore is important, because whores are rewarded for the services that they render. To win the White House or a presidential appointment is a career-making event as it makes a person sought after by rich and powerful interest groups. In Congress the majority party can provide more services and is thus more valuable than the minority party. One of our recent presidents who was not rich ended up with $36 million shortly after leaving office, as did former UK prime minister Tony Blair, who served Washington far better than he served his own country.

Always controversial, but not far off the mark, is this offering from Mr. Roberts that was posted on his website yesterday sometime.  I thank reader Rob Bentley for sending it...and I consider it a must read.  The link is here.

Read more...

Pepe Escobar...Asia Times...Barry Obama rides again

So he's done it. Way beyond demographics, the ground game, getting the turnout, the micro-targeting of voters, the worries about suppression of black and Hispanic early voters in Ohio and Florida, and over 55% of women voting for him, Barack Obama inherits his second term to try to (re)project at least a measure of the vanished American dream across a deeply, profoundly, divided country (with the popular vote virtually tied at 49%; not to mention the 90 million Americans who did not even bother to vote).

So what next? In a perfect world, wishful thinking rules; Obama should give all he's got to build a US geared towards more tolerance, social justice and equality. That is far from given. As for the world at large, will Obama finally have the cojones to really address the Palestinian tragedy; carry a stick - and not carrots - to those anti-democratic Persian Gulf petro-monarchies; engage in a meaningful "reset" with Russia; think twice about his multiple shadow wars; not turn the "pivoting" to Asia into the preamble of a war against China; and seal a deal with Iran? Well, Barry, now there's no excuse.

This story, filed from Las Vegas, was posted on the Asia Times website early on Thursday morning in Hong Kong.  I thank Roy Stephens for bringing it to our attention...and the link is here.

Read more...

Treasury Quietly Warns: 'Expect Debt Limit to Be Reached Near End of 2012'

The U.S. Treasury quietly warned at the end of a statement issued last Wednesday that it expects the federal government to hit its legal debt limit before the end of this year--which means before the new Congress is seated--and that "extraordinary measures" will be needed before then to keep the government fully funded into the early part of 2013.

On Aug. 2, 2011, President Obama signed a deal he had negotiated with congressional leaders to increase the debt limit of the federal government by $2.4 trillion. But, now, after only 15 months, almost all of that additional borrowing authority has been exhausted.

This must read story was posted on the cnsnews.com Internet site on Tuesday...and I thank reader Bruce McLean for sending it to me.  The link is here.

Read more...

Karl Denninger: Watch for Market Dislocations

Karl Denninger...author of The Market Ticker was one of 28 financial luminaries who offered timely market commentary at the Navigating the Politicized Economy Summit last September in Carlsbad, California.

And as Louis James says in his introductory paragraph..."he has a very different way of looking at things than Doug and I do, but still comes to some similar conclusions regarding the US economy and how to invest. Perhaps precisely because he has such a different frame of reference, I found this to be one of the more striking conversations I had at the Summit."

This 32-minute video interview was embedded in yesterday's edition of Conversations With Casey...and the link is here.

Read more...

Angst returns on German recession fears and U.S. fiscal cliff

Stock markets skidded across the world and investors retreated to safe-haven assets on fears that Europe’s festering crisis has spread to Germany and a bitterly-divided Washington may struggle to avert a fiscal crisis.

Mario Draghi, the European Central Bank’s president, warned that Germany is no longer insulated from the slump in southern Europe. "The latest data suggest that these developments are now starting to affect the German economy," he said, triggering an immediate sell-off on Europe’s bourses and pushing the euro down to almost $1.27 against the dollar.

Germany’s industrial output dropped 1.8pc in September and orders fell 3.3pc, far worse than expected. Spanish industrial output fell 7pc. Annalisa Piazza from Newedge said it was a shocking upset and implies that Germany may be in recession already.

This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk Internet site yesterday evening...and it's worth your time if you have it.  I thank Manitoba reader Ulrike Marx for sharing it with us...and the link is here.

Read more...

Greeks clash with riot police as politicians pass austerity measures

Conservative and socialist lawmakers from Greece's three-party coalition government voted to adopt the €18.5bn budget cuts by 2016 despite protests earlier in the day by more than 70.000 people who massed outside the parliament.

Violent protesters threw fire bombs and rocks at police, who responded with stun grenades, tear gas and the first use of water cannon in Greece in years.

Inside the building, lawmakers interrupted the debate as Parliament employees went on strike to protest wage cuts.

According to Athanassios Nakos, second deputy speaker of the parliament, 153 out of 299 lawmakers voted in favour of the bill that includes spending cuts and reforms to be implemented by 2016, while 128 voted against.

This is another story from The Telegraph yesterday...and it's courtesy of Roy Stephens.  The link is here.

Read more...

EU slashes eurozone growth forecasts

The European Commission slashed its eurozone economic growth forecast for next year to just 0.1 pc, six months after tipping a much stronger recovery of 1.0pc.

The European Union's Autumn economic forecasts said gross domestic product (GDP) across the 17-nation currency area would shrink 0.4pc in 2012 and that it would take until 2014 to recover, with expected growth then of 1.4pc.

"Europe is going through a difficult process of macro-economic rebalancing, which will still last for some time," EU Economic Affairs Commissioner Olli Rehn said in a statement, pointing to a gradual pick-up "from early next year."

They're still dreaming in Technicolor over there, as there is no chance of recovery...ever...as long as their current economic, financial and monetary situation is allowed to exist.  That applies everywhere on Planet Earth...not just Europe.  This is anther story from The Telegraph...this one was posted on their Internet site early yesterday afternoon GMT.  Once again it's courtesy of Roy Stephens...and the link is here.

Read more...

Fear of 'catastrophic event' holding back global recovery, Harper says

“If I were to go back and look ahead, I would say one of the things that most surprises me is that four years after this crisis, we’re still in it to some degree,” Canadian Prime Minister Stephen Harper told a moderator at a global business meeting in India yesterday.

He said the U.S. governments debt and deficit problems are one thing, but a bigger more potentially imminent concern for world leaders is the risk of another economic crash.

“I do believe is that what worries big actors in the global economy, is that there will be some kind of catastrophic event as happened in late 2008 that will send everything into a tail spin,” Mr. Harper said.

Stephen has a keen grasp of the obvious...but one of the few world leaders to actually say the magic words in public.  This story was posted in Canada's Globe and Mail newspaper yesterday...and it's Roy Stephens last offering in today's column.  The link is here.

Read more...

Three King World News Blogs

The first is with John Hathaway...and it's headlined "Gold Set to Super-Surge to New All-Time Highs".  Next is Dr. Stephen Leeb.  It's entitled "What You Need to Know About the Coming Gold & Silver Move".  The last blog is with Citi analyst Tom Fitzpatrick...and it bears the title "This is How Gold & Silver Will Fare if Stocks are Crushed".

Read more...

Despite rising prices, gold holds the glitter

Gold prices may fluctuate, but the country’s love for the yellow metal does not seem to diminish.

The nearly 30 per cent rise in price of the precious metal over the last year has not kept customers away, according to metal major MMTC Ltd.

The company expects its annual exhibition-cum-sale, Festival of Gold, which was inaugurated on November 2, to notch up sales of Rs 50 crore by the close of the event on November 11 – equal to last year.

“Already in three days sales have touched Rs 15 crore,” Rajender Prasad, General Manager of MMTC, said, while adding, “We are getting very good response right through the year.” However, sales peak during the auspicious Akshaya Tritiya and Diwali, he claimed.

This story, filed from New Delhi on Tuesday, was posted on thehindubusinessline.com Internet site...and I thank West Virginia reader Elliot Simon for digging it up on our behalf.  It's worth reading...and the embedded photo is worth the trip all by itself.  The link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

Government is a broker in pillage...and every election is a sort of advance auction in stolen goods. — H.L. Mencken

It was a bit of a strange day price wise...but underneath it all was volume so monstrous that it took my breath away.  It started the moment that gold and silver began to trade on Tuesday evening in New York...Wednesday morning in Tokyo.

Normally a volume day such as we had yesterday would have been accompanied by either a massive rise in price...or a waterfall decline of biblical proportions in both metals.  Neither happened.  I suppose that it could have been high-frequency traders, but that sort of volume activity is even beyond them.

Besides the eye-watering volumes...the other thing that pegged the needle on my b.s. meter was the fact that it occurred on a Wednesday...the day after the cut-off for the weekly Commitment of Traders Report, which is due out tomorrow afternoon.

As I've mentioned countless times in this space over the years, sometimes JPMorgan Chase et al will make a big move after the Comex close on Tuesday, as that is the cut-off for the Friday Commitment of Traders Report...so they can hide what they're doing until the following Friday...which gives them eight business days to do whatever they want to [or have to] do...without it showing up in any public document...and yesterday's volume/price action may have been one of those times.  Whatever happened yesterday, won't be known until next Friday's COT Report comes out...not tomorrow's.

But what might have happened is pure speculation on my part...and I want you to treat it as such.  I'm guessing that large long positions currently held by some traders in the Non-Commercial/Technical fund category, were sold directly to the 'Big 4' bullion banks [and maybe the raptors] in the Commercial category.  This allowed them to cover a huge portion of their short positions in both metals without having to compete for these long positions in the open market. If the raptors weren't include in this 'rescue'...then it could be the perfect set-up for a double cross...and a possible short squeeze of biblical proportions.

Ted Butler caught "da boyz" pulling this exact stunt quite some time ago...and it's entirely possible that JPMorgan Chase et al decided to do it again, except on a much larger scale this time around.  This incident was the first thing that popped into my mind when I saw the Wednesday volume numbers on the CME's website late yesterday afternoon.  But we won't know for sure until a week from tomorrow...and anything could happen between now and then...and probably will.

In overnight trading, very little happened in the Far East on their Thursday.  Volumes were very light in both metals...and the dollar index was comatose, but spiked up to just about the 81.00 level shortly after London opened.  All of this is light years away from what was happening on Wednesday at this time of day.  And as I hit the 'send' button at 5:15 a.m. Eastern, both metals are down a bit from yesterday's close in New York.

I haven't a clue what to expect in New York trading today...but I'm getting the impression based on the share price action of the last five weeks...and the unprecedented volume numbers from yesterday...that there are big changes going on under the surface of he precious metals market that the powers-that-be are desperately trying to keep hidden for the moment.

I know that the Fed and the U.S. government would like some real positive inflation numbers to show up...and that can't happen until the velocity of money picks up.  And nothing would help that process along more than a rapidly rising gold price...and it's entirely within the realm of possibility that just such an event lies in the not-too-distant future...and the decks are being cleared to prepare for it.  An event such as that would be the end of the price management scheme in both silver and gold.

We'll see.

Before hitting the sack, I'd like to remind you one more time that there's still an opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take out a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

I'll see you on Friday...Saturday west of the International Date Line.