Casey Research Publication
Gold & Silver Daily
"The precious metals rallied up until the Comex open...or the London p.m. fix...and that was it for the day."
 

¤ Yesterday In Gold & Silver

The gold price chopped around just above the unchanged mark for most of Far East trading session...and then developed a positive bias shortly after London opened.  This lasted until the London p.m. gold fix...and from that point the price softened a bit into the close.  The high tick at the p.m. fix was recorded by Kitco as $1,290.00 spot.

Gold closed at $1,283.00 spot, up $8.40 from Wednesday's close.  After Wednesday's big day, Thursday's net volume cropped back into the 'light' category...only 99,000 contracts.

It was more or less the same price pattern in silver.  It's low tick, around $19.20 spot...came shortly before London opened.  After that it followed the gold price action like a shadow, with the high tick [$19.71 spot] coming shortly after Comex trading began in New York...and not at the London p.m. gold fix.

Silver closed the Thursday session at $19.39 spot...up 9 cents from Wednesday.  Volume, net of July and August, was 43,000 contracts.

Platinum didn't do much...or wasn't allowed to...and the palladium price wasn't allowed to get too frisky, even though it looked like it really wanted to sail.  Like it has been for many days now, palladium has been the star of the four precious metals.  Here are their charts...

The dollar index certainly didn't do a lot yesterday.  It closed in New York late on Wednesday afternoon at 82.69...and from there chopped its way higher until noon in New York the following day.  The high tick at the point was 83.00...and from that point, the index fell 25 basis points by 1:30 p.m...and then didn't do much into the close.  The index finished the day at 82.80...up a whole 11 basis points.  Nothing to see here.

The gold stocks opened almost on their highs...but the moment that the London p.m. gold fix was in at 10:00 a.m. EDT, the shares headed south along with the gold price...and the HUI hit its nadir about twenty minutes later.  The shares recovered from there, but couldn't hold their gains as the trading day drew to a close...and the HUI finished basically flat...up 0.01%.

The silver stocks finished mostly down as well...and Nick Laird's Intraday Silver Sentiment Index closed in the red to the tune of 0.31%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that there were zero gold and 163 silver contracts posted for delivery within the Comex-approved depositories on Monday.  Once again it was JPMorgan Chase as the short/issuer from its client account with 162 contracts...and the largest long/stopper was also JPMorgan Chase, with 105 contracts for its in-house [proprietary] trading account...and 1 contract for its client account. Canada's Bank of Nova Scotia was a distant second with 37 contracts stopped.  The link to yesterday's Issuers and Stoppers Report is here.

Once again there was a withdrawal from GLD...and an addition to SLV.  In GLD, an authorized participant withdrew 28,985 troy ounces.  But an authorized participant added a chunky 2,411,825 troy ounces to SLV.

Over at Switzerland's Zürcher Kantonalbank, they reported small declines in both their gold and silver ETF holdings for the week ending Friday, July 12th.  Their gold ETF declined by 23,804 troy ounces...and their silver ETF had 128,623 withdrawn.

The U.S. Mint reported that a smallish 4,000 troy ounces of gold eagles was sold yesterday...and that was it.

Over at the Comex-approved depositories on Wednesday they reported receiving 598,822 troy ounces of silver...and shipped 717,942 troy ounces of the stuff out the door.  The link to that activity is here.

In gold, these same depositories reported receiving 31,814 troy ounces...and shipped 64,161 troy ounces off to parts unknown.  The link to that action is here.

I have the usual number of stories today...and the final edit is up to you.

 

¤ Critical Reads

Billions in Debt, Detroit Tumbles Into Insolvency

Detroit, the cradle of America’s automobile industry and once the nation’s fourth-most-populous city, filed for bankruptcy on Thursday, the largest American city ever to take such a course.

The decision, confirmed by officials after it trickled out in late afternoon news reports, also amounts to the largest municipal bankruptcy filing in American history in terms of debt.

“This is a difficult step, but the only viable option to address a problem that has been six decades in the making,” said Gov. Rick Snyder, who authorized the move after a recommendation from the emergency financial manager he had appointed to resolve Detroit’s dire financial situation.

This story appeared on The New York Times website yesterday...and I thank Roy Stephens for today's first story.

Read more...

Ambrose Evans-Pritchard: Can the world cope with a trigger-happy Fed?

After weeks of utter confusion, the result of Fed taper talk is clear enough.

Long-term borrowing rates are much higher across the world regardless whether the underlying economies are in any fit condition to absorb this shock.

The rise in 10-year sovereign yields by basis points has been: Japan (25), Germany (35), France (62), UK (63), Norway (63), Australia (66), Korea (66), Spain (70), US (70), Italy (74), Poland (120), Mexico (122), Turkey (131), Brazil (135), and Indonesia (170).

As you can see, the emerging market bloc has suffered the worst hit, especially those countries caught when the tide went out with big current account deficits – the CADs as they are called in the trade.

Basically, the whole world has just suffered a credit shock, even as the global economy weakens and the IMF downgrades its forecasts. What a mess.

This AE-P story was posted on the telegraph.co.uk Internet site yesterday...and it's the second offering in a row from Roy Stephens.

Read more...

Nasdaq chairman warns about 'bubbly valuations' in markets

Borje Ekholm, the chairman of Nasdaq OMX, has warned about "bubbly valuations" in financial markets as a result of ultra-loose monetary policy from the world's largest central banks.

Ekholm, who is also the CEO of Investor AB, one of Sweden's largest investors, said it was time to start talking about normalizing interest rates and the cost of capital.

"What happens when you get too much cheap capital -- which we've had for quite some time -- is of course, there is a risk you could get bubbly valuations in the financial markets. And that is clearly a risk," Ekholm told CNBC on Thursday morning.

U.A.E. reader Laurent-Patrick Gally sent me this short 2:20 minute CNBC interview in the wee hours of yesterday morning just after I'd filed yesterday's missive.

Read more...

The Jobs Number is B.S. Says Former Head Of B.L.S.

Today, courtesy of the Post's John Crudele we find that our estimate was spot on not just from anyone, but the former head of the BLS himself: Keith Hall. 

Keith Hall believes the US economy is a lot sicker than the 7.6 percent unemployment rate would lead you to believe. And he should know.

Hall was, from 2008 until last year, the guy in charge of Washington’s Bureau of Labor Statistics, the agency that compiles that rate. “Right now [it’s] misleadingly low,” says Hall, who believes a truer reading of those now wanting a job but without one to be more than 10 percent.

The fly in the ointment is the BLS employment-to-population ratio, which is currently at 58.7 percent. “It’s lower than it was when the recession ended. I think that’s a remarkable statistic,” says Hall, a senior research fellow at the Mercatus Center at George Mason University in Fairfax, Va.

That level tells Hall the real unemployment rate is actually about 3 percentage points higher than the BLS number. If the jobless rate is unacceptable at 7.6 percent, it’d be shockingly bad if he is right and the true rate is 10.6 percent.

This Zero Hedge posting from yesterday is the second story in a row from Laurent-Patrick Gally.

Read more...

Newsletter Editor Schork: Gas Prices May Hit $4 by Labor Day

U.S. gasoline prices could hit $4 before Labor Day, as the recent surge in crude oil prices works its way down to the gas pump, says Stephen Schork, editor of The Schork Report, an energy newsletter.

"It all comes down to crude oil, and crude oil over the last month has risen $13 a barrel," Schork told Newsmax TV in an exclusive interview. "The general rule of thumb is retail gasoline increases 2.5 cents a gallon for every $1 rise in crude oil prices."

That means a 30- to 40-cent rise in gasoline prices prior to Labor Day, Schork says. The national average for regular unleaded gas stood at $3.66 a gallon Wednesday and "could be pushing up toward $4 by the end of this summer driving season," he said.

This moneynews.com story from early Wednesday, includes an 8:38 minute video...but there is a short executive summary as well.  I thank Elliot Simon for sending this news item along.

Read more...

Chase, Once Considered "The Good Bank," is About to Pay Another Massive Settlement

During the financial crisis, while Dr. Evil-ish Wall Street villains like Goldman and Lehman Brothers were getting all the bad press, pundits continually referred to J.P. Morgan Chase as the "good bank." The myth of Chase as the finance sector's one upstanding rock of rectitude reached its zenith in July of 2009 with an embarrassingly hagiographic piece in the New York Times entitled, "In Washington, One Bank Chief Still Holds Sway." In that one, the paper breathlessly praised Jamie Dimon for emerging from "the disgrace of his industry" to become Barack Obama's "favorite banker."

Chase and Jamie Dimon kept that rep for a good long time. As late as 2011, Dimon's name was being floated around Washington very seriously as a potential replacement for Tim Geithner's Treasury Secretary post. Even when Dimon showed up on the Hill last year to testify (read: obfuscate) about the infamous "London Whale" episode, Senators on the banking committee – who, as writer George Zornick noted, had collected a cumulative $522,088 in donations from Chase – slobbered all over Dimon and shelved the important London Whale matter to ask the great genius's advice on how to fix the economy.

Well, there's some more news about the "good bank" – Chase is about to pay yet another ginormous settlement for cheating and stealing from the public.

Matt Taibbi from Rolling Stone magazine is on another one of his infamous rants here.  It was posted on their Internet site during the New York lunch hour yesterday...and I thank Manitoba reader Ulrike Marx for her first offering in today's column.

Read more...

Obama may cancel Moscow visit over Snowden row

Officials cited by The New York Times have said that, while Obama still plans to travel to St. Petersburg for the annual gathering of the G20, he is now rethinking a stopover in Moscow due to a range of issues existing between Russia and the US, most notably the tentative residence of NSA whistle blower Edward Snowden in a major international airport in the Russian capital.

The White House has yet to confirm whether Obama’s visit to Moscow will be canceled. On Wednesday, Press Secretary Jay Carney seemed to be intentionally vague when asked to confirm the claims.

I can say that the president intends to travel to Russia for the G-20 summit. I don’t have anything to add to what we’ve said in the past about that trip,” said Carney when questioned specifically on the Moscow stopover.

This short story was posted on the Russia Today website yesterday evening Moscow time...and I thank Roy Stephens for finding it for us.

Read more...

Going, Going, Gone: Crisis-Plagued Madrid Sells Out

After five years of growing unemployment and an economic recession, Spaniards are demoralized. With debts of €7.4 billion, the capital is the most highly indebted city in the country.

Mayor Ana Botella -- the wife of conservative former Prime Minister José María Aznar, also with the PP -- would like to bring the Summer Olympics to Madrid in 2020, following the city's third attempt to capture the games. Her predecessors have already invested more than €6 billion in the effort, and she needs at least another €2.5 billion. That might explain why, in recent months, Botella has begun to sell off public buildings and properties -- even if she hasn't managed to raise very much money so far. A Chinese bank snatched up a magnificent building near the Prado Museum at a price discount of almost a third.

The fire sale also included 26 works by Spain's best-known contemporary artists, which were part of the city hall's inventory. Botella justified the sale, saying the works had "only decorative value."

Madrilenians feel resigned and, if they are scoffing at anything, it is another bizarre idea: Popular Party politicians want to build Eurovegas, a giant entertainment complex, on a 750-hectare (1,850-acre) site in the southwestern part of the city. Under the plan, skyscrapers would shoot up from the wheat fields in the coming years, to house casinos, hotels and convention centers. Backers claim the project, which would become one of the biggest construction sites in Europe, also has the potential to create up to 10,000 jobs, chicken soup for the soul in a country with 27 percent unemployment, and with 682,000 people out of work in the Madrid region alone.

I was shocked to read this.  It's madness!  This short article appeared on the German website spiegel.de yesterday...and I thank Roy Stephens for his last contribution to today's column.

Read more...

Germany's aid offer to Greece is too little, too late: German MEP

Germany offered Greece further aid to establish a growth fund on Thursday, but a German member of the European Parliament (MEP) told CNBC the amount was too small, and came two years too late.

During a visit on Thursday, Germany's finance minister, Wolfgang Schaeuble proposed giving Greece 100 million euros ($131 million). However, Jorgo Chatzimarkakis, an MEP with Germany's Free Democratic Party, said that the offer was a "good sign", rather than a real help to the dismal Greek economy.

"This is urgently needed money, but 100 million euros is much too low as a spur for the Greek economy," said Chatzimarkakis, who is German-born but of Greek descent.

This news item appeared on the CNBC website very early yesterday morning EDT...and I thank Laurent-Patrick Gally for his final offering in today's column as well.

Read more...

China media accuses Japan P.M. of dangerous politics

Two of China's top newspapers accused Japanese Prime Minister Shinzo Abe on Thursday of dangerous politics that could threaten regional security, as Tokyo warned Beijing not to expand gas exploration in disputed waters of the East China Sea.

The People's Liberation Army Daily said Abe was trying to play the "China threat" angle, to win votes in July 21 elections, with a visit on Wednesday to Japan's southern island of Ishigaki, near islets claimed by both China and Japan.

Territorial claims by Japan and China over the uninhabited islets and resource-rich waters in both the East China Sea and South China Sea rank as one of Asia's biggest security risks.

This Reuters article, co-filed from Beijing and Tokyo, was posted on their website in the wee hours of yesterday morning EDT...and I thank Ulrike Marx for sharing it with us.

Read more...

Bernanke Tells Congress: I Don't Really Understand Gold

While Ron Paul is no longer part of  the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again.  Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.

“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t portend to either.

Bernanke had more things to say about the yellow metal.  Calling it “an unusual asset,” the Fed Chairman noted people hold gold both as “disaster insurance” and as an inflation hedge.  He expressed surprise about the latter, noting “movements in gold” don’t predict inflation well.  Bernanke took solace in the marked decline in gold prices, though, suggesting they could reflect diminishing concerns over really bad outcomes.

This guy lies like a sidewalk.  What a crock.  He understands the purpose of gold all too well...and he'll certainly be talking about it differently at some future date.  This news item was posted on the Forbes website very early yesterday afternoon EDT...and I thank Ulrike Marx for her final offering in today's column.

Read more...

China reportedly planning to back the yuan with gold

The reports have not been confirmed officially, but analysts are warning that the step, if taken, will weaken the yuan and destabilise China's already troubled economy, ultimately provoking a new bout of the economic crisis worldwide.

Beijing's possible move to back the yuan with gold would not be meant as a strategic measure to strengthen the national currency and increase its attractiveness as an investment medium. Rather, it would be a flaunt aimed at demonstrating to the world (and to the USA in particular) that China is capable of taking the risks associated with a departure from the dollar standard. Experts warn however that, apart from benefiting no-one, such a decision may actually have catastrophic consequences.

Separating the yuan exchange rate from the US dollar may further weaken the American currency in the long run; in addition, China's monetary policy would become very much restricted, believes Evgeny Nadorshin, chief economist at AFK Sistema.

This rather strange news item showed up on the Russia: Beyond the Headlines website on Thursday...and I'm not sure what to make of it.  It may be true, but I can't imagine China broadcasting it in advance.  I thank reader 'David in California' for bringing it to our attention.

Read more...

Lawrence Williams: Odds favour sharp gold price recovery ahead – but when?

Institutional sellers of gold are beginning to review their sales policy – or indeed may have no more gold left to sell – and if the rumours that central banks and the bullion banks are short of bullion too, then we could see a sharp squeeze developing as those looking to buy physical gold are finding it is just not available.  Banks will start – indeed some have already started – telling customers who want to take delivery of their supposedly allocated physical gold, that they can only have cash instead.

This is in many ways indicative of the Central Banks’ money printing initiatives.  Effectively printing more and more unbacked cash to meet obligations is the classic Faustian route to economic disaster.  Some day, if confidence starts to be lost in the central banks – one just doesn’t know how soon – this will all come crashing down in default and/or inflation – or even in hyper-inflation.

But this could all be a long way down the road.  It just depends on how long the public can be convinced that the governments are fully in control and all is well.  (Eurozone nations may already be past that point!)  In the meantime though, as Nichols ends his analysis: “Only now, having sold gold in the past couple of years, Western institutions may find it difficult to rebuild their gold ETF holdings without bidding gold prices to much higher levels because many of the buyers since 2011 — Chinese households or the Russian central bank, for example — have no interest whatsoever in selling . . . not now and not for many years or even decades to come.”

Lawrie comments on New York based long-term precious metals analyst Jeff Nichols' latest missive...and it was posted on the mineweb.com Internet site on Wednesday.

Read more...

Jeff Clark...Casey Research...The Bull Within the Bear

This short piece by Jeff contains a chart that makes it worth the trip all by itself.  It was posted on the hardassetalliance.com Internet site yesterday...and it's a must read.

Read more...

John Paulson: The Rationale for owning Gold is Valid

Mr. Paulson has been around the block a few times...and rarely gives interviews.  This is the first time I've ever posted one involving him in the last five years.  He discusses gold and real estate in this 20-minute CNBC video that was posted on their website early Wednesday afternoon.  There's a transcript in the right side bar as well.  It's a must watch/read...and I thank Ken Hurt for his efforts in bringing this very important interview to our attention.

Read more...

Addison Wiggin: With Gold, Don't Miss the Top

During a recent interview, we couldn’t let Jim Rickards (author of Currency Wars) go without asking him about our ‘Zero Hour’ scenario.

As you’ll recall, Zero Hour is the moment the price of physical gold starts to run away from the ‘paper price’ you see on CNBC’s ticker.

The most likely catalyst is a chain of events that goes like this…

This absolute must read commentary was filed from Australia somewhere...and posted on the moneymorning.com.au Internet site on Wednesday local time 'down under'.  I thank reader Harold Jacobsen for the last story in today's missive.

Read more...

 

¤ The Funnies

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¤ The Wrap

Since year end, as a result of the significant decline in price, more than 13 million ounces, or more than 30% of the gold metal held in the world’s largest ETF, GLD, was sold and redeemed by shareholders in that trust. By including all other gold ETFs and COMEX warehouse stocks, the total number of physical gold ounces redeemed or moved rises to 22 million ounces. This amount is roughly equal to the 24 million equivalent ounces sold by speculators and bought by commercial traders on the COMEX, bringing the total amount to 46 million gold ounces or roughly $70 billion. Of course, this is the amount from COMEX futures and publicly recorded physical gold flows; it does not include the OTC market, swaps and LBMA dealings. - Silver analyst Ted Butler...17 July 2013

It was just another day of quiet price suppression in New York yesterday.  The precious metals rallied up until the Comex open...or the London p.m. fix...and that was it for the day.  This is the same pattern that JPMorgan et al have been using for years now.  There are exceptions, of course, but not many.  Right now the cap is set at $1,300 in gold...and $20 in silver...and that was apparent again yesterday.

Some will chalk it up to the "summer doldrums"...but the fact of the matter is that if "da boyz" weren't riding shotgun over the precious metal market every minute of the day, the prices that would appear on your computer screen would be many multiples of the prices that are posted there now.

There's not much other 'news' out there.  The only thing I want to mention is that we get the latest Commitment of Traders Report from the CFTC at 3:30 p.m. EDT today...and what's in there will be pretty much yesterday's news because of the price action on Wednesday, which won't be in this report.  And whatever the numbers are, I'll have it all for you in tomorrow's column.

In Far East trading on their Friday, there were smallish rallies in all four precious metals, but that petered out before lunch time in Hong Kong...and probably had something to do with the drop in the dollar index that occurred at that time.  And very little is happening now that London has been trading for half an hour as I write this paragraph.  Volume is 'average'...and mostly of the HFT variety.

And as I hit the 'send' button at 5:05 a.m. EDT...nothing much has change since I wrote the above paragraph about ninety minutes ago...although volumes in both metals are already a bit higher than I'd like to see them.  With today being Friday, it's hard to know what to expect during the Comex trading session in New York, so nothing will surprise me when I get up later this morning.

That's all I have for today.  Enjoy your weekend...or what's left of it if you live west of the International Date Line...and I'll see you here tomorrow.