Gold & Silver Daily
"It's a mug's game trying to call this market on a short-term basis, as anything can happen"

¤ Yesterday In Gold & Silver

Compared to Thursday, it was pretty quiet price wise for gold on Friday.  Gold's low of the day came shortly after the London morning gold fix at 10:30 a.m. BST.  The subsequent rally got cut off at the knees at 9:30 a.m. in New York, but then it rallied anew beginning at 12:30 p.m. EDT.  A not-for-profit seller showed up again at 2:15 p.m. in electronic trading, and once they were done, gold rallied again into the close.

The high tick at 2:15 p.m. EDT was recorded by Kitco at $1,381.00 spot, and the low, both in New York and London, just a hair below $1,360 spot.

Gold finished the Friday trading session at $1,377.20 spot, up $11.10 from Thursday.  Volume, net of August and September, was very heavy at 189,000 contracts.  That's huge for a day with such a small trading range, and a sign that the HFT boys were all over this market.

Here's the New York Spot Gold [Bid] chart showing the New York session on its own.  It was unusual to see this kind of price action on a Friday afternoon, especially in the electronic market.  Note the 9:30 a.m. sell off.

The price action in silver was similar to gold's, right down to the two sell offs in New York at 9:30 a.m. and 2:20 p.m.  The low in London appeared to come around the morning gold fix as well, about $22.80 spot.  The high tick in New York was recorded $23.53 spot.

Silver closed at $23.255, up 24.5 cents on the day, and well off its high.  Net volume was monstrous at 55,000 contracts.

Here's the New York Spot Silver [Bid] chart on its own,

The unusually high volume activity that occurred in Far East and early London trading that I spoke of in The Wrap in yesterday's column, obviously continued for the rest of the day, and was particularly prevalent during the Comex trading session.  On a daily basis, about 80% of silver and gold volume is done in New York.

Platinum and palladium didn't do much, and both closed down a dollar or so.  Here are the charts,

The dollar index didn't do much yesterday either, except for a spike down with the low of the day coming at precisely 9:30 a.m. EDT, the same moment that the rally in gold and silver got cut off at the knees in New York.  Someone obviously hit the buy the dollar index/sell gold and silver buttons at the same moment.  As GATA's Chris Powell would say, "There are no market anymore, only interventions."  The dollar index closed up 11 basis points from Thursday, finishing the Friday session at 81.28.

The gold stocks opened two percent higher, but with gold getting hit at the precise moment that the stock markets began to trade in New York, a willing seller showed up immediately, and sold the stocks down three percent into negative territory, a five percent swing in less than forty-five minutes.

From that point, a willing seller showed up every time the HUI headed higher.  What should have ended as a positive day for stocks, was turned into a negative.  The HUI finished down 1.93%, even though gold traded in positive territory from 12:30 p.m. EDT onward.

The silver stocks fared no better, and Nick Laird's Intraday Silver Sentiment Index closed down 1.89% despite the fact that the silver price finished well above its Thursday close.

(Click on image to enlarge)

Yesterday I didn't have the CME's Daily Delivery Report for you, but here it is now, and I thank California reader Jon De Weese for helping me out on this one.  It showed that 52 gold and 11 silver contracts were posted for delivery on Monday.  In gold, it was Canada's Bank of Nova Scotia that was the short/issuer on all 52 contracts, and JPMorgan Chase was the long/stopper on 47 of those contracts, all out of its in-house [proprietary] trading account.  JPMorgan was the short /issuer on all 11 silver contracts.  The link to Jon's webpage is here, and you'll be as amazed as I was when I clicked on the link for the first time last night.

Surprisingly enough, there was no gold or silver posted for delivery in Friday's CME Delivery Report.

I note that there are still 1,143 gold contracts open in August, and I await their fate with great interest.  I suspect that they will all be delivered into, but I'm wondering out loud why the short/issuer is being so shy, and dragging this out so long into the delivery month.

Over at GLD, an authorized participant finally deposited some more gold.  This time it was 77,272 troy ounces, and as of midnight last night, there were no reported changes in SLV.  Without doubt, the ETF is owed silver, but it remains to be seen if any more silver is forthcoming, or will the APs have to short the shares in lieu of depositing physical metal?

It's been a while since I've heard from Switzerland's Zürcher Kantonalbank, but I received something from them yesterday.  For the week ending August 9th, they reported that their gold ETF declined by 49,309 troy ounces, and their silver ETF declined by a smallish 109,674 troy ounces.

Once again there was no sales report from the U.S. Mint.  Month-to-date the mint has  sold only 2,500 ounces of gold eagles, 4,500 one-ounce 24K gold buffaloes, and 1,596,000 silver eagles.  The silver eagles sales seem normal, but I've never seen gold sales this low since I can't remember when.  Based on these sales, the silver/gold ratio is way up there at 226 to 1, about the same ratio as last week. I said last week that such a ridiculous sales ratio couldn't last, but here it is again one week later.

Over at the Comex-approved depositories on Thursday there was no reported gold transfers, either in or out.

There was a lot more activity in silver, as 771,257 troy ounces were added to their depositories, and 1,006,267 troy ounces of the stuff were withdrawn.  The link to that activity is here.

Not surprisingly, the Commitment of Traders Report [for positions held at the close of Comex trading on Tuesday] did not make for happy reading.  The Commercial net short position in silver blew out by almost 10,000 contracts, or 50 million ounces, and the total Commercial net short position doubled in a week to a bit over a 100 million ounces of silver.   According to silver analyst Ted Butler, the Big 4 [read JPMorgan] sold short another 3,500 silver contracts, the '5 through 8' largest traders sold short another 1,000 or so contracts, and the Raptors [the Commercial traders other than the Big 8] sold 5,500 contracts of their record long position.

Ted is of the opinion that JPMorgan's short position in silver now sits around the 16,000 contract mark, or 80 million ounces.

In gold, the headline number showed virtually no change in the Commercial net short position, and that's because the big error from last week's report [28,400 contracts] automatically corrected itself on the rally during the reporting week, if that makes any sense.  If I'm understanding Ted correctly, the Commercial net short position for the week that was, deteriorated by the exact same amount as the error from the prior week.  Of that amount, the Big 4 [mostly JPMorgan] sold 8,000 contracts of its long position, 800,000 troy ounces, which Ted now figures is down to the 7.7 million ounce level, down from 8.5 million ounces in the prior week.

What these numbers show is that the Commercial traders are back to their old tricks and, without doubt, were even more aggressive in their selling since the Tuesday cut-off.  Next week's COT Report won't make for happy reading either.  It's obvious, especially from the heavy volumes all week, that JPMorgan et al are throwing quite a bit of Comex paper at these rallies, and although it's possible we could move sharply higher from here, the odds don't favour that, at least in the very short term.

I'd love to be proven wrong, but I've seen this movie too many times before over the past decade, and I have to use the past as prologue.  I suppose this time it might be different, and they might let the prices run, but why didn't they do that a few weeks back when they were maximum long in gold, and minimum long in silver, as they've given back a lot of their ill-gotten gains since then.

I'll be interested in what Ted has to say later today, as he normally doesn't tell me everything when we're talking on the phone.  If there's anything more to be gleaned from yesterday's COT Report, I'll steal if for my Tuesday column.

I have the usual number of stories for a Saturday, which is a lot, including quite a few that I've been saving for today.


¤ Critical Reads

Cohen Said to Refuse SAC Client Push to Return Cash Early

Steven Cohen's $14 billion SAC Capital Advisors LP, which last month was indicted by the government as a “veritable magnet for market cheaters,” has refused clients’ requests that the firm speed up payouts on the billions of dollars earmarked for withdrawals, according to three people familiar with the discussions.

SAC, which faces a midnight deadline for redemption requests from investors who want to pull money from the firm, has told clients that final payments will be made at the end of the year. Some investors have pushed Cohen to give clients their money back before then, fearing that the government could freeze the funds’ assets, said the people, who asked not to be identified because Stamford, Connecticut-based SAC is private. The government has said it doesn’t plan on restraining assets.

SAC started the year with $15 billion of assets, about $6 billion of which belonged to outsiders. As insider-trading probe against the firm intensified, clients redeemed more than $3 billion in the first half of 2013, which is being returned over the course of this year. SAC’s executives have said they expect the firm to start 2014 with about $9 billion in assets and that virtually all outside investors will be gone by then, according to people familiar with the firm.

This Bloomberg news item was posted on their website late Thursday evening MDT...and I thank Manitoba reader Ulrike Marx for today's first story.


Philadelphia Borrows So Its Schools Open on Time

Just a month after Detroit became the largest American city to file for bankruptcy, and with major cities like Chicago and Los Angeles struggling, this former manufacturing behemoth is also edging toward a financial precipice. But here the troubles are centered on the cash-starved public schools system.

The situation is not as dire yet as Detroit’s. There is no talk of resorting to bankruptcy. But the problem is so severe that the city agreed at the last minute on Thursday to borrow $50 million just to be able to open schools on time. Even with that money, schools will open Sept. 9 with a minimum of staffing and sharply curtailed extracurricular activities and other programs.

“The concept is just jaw-dropping,” said Helen Gym, who has three children in the city’s public schools. “Nobody is talking about what it takes to get a child educated. It’s just about what the lowest number is needed to get the bare minimum. That’s what we’re talking about here: the deliberate starvation of one of the nation’s biggest school districts.”

This 2-page article appeared on The New York Times website on Thursday...and I thank U.A.E. reader Laurent Patrick for sending it our way.


Justice seeking to block Bernanke testimony

The government is trying to block questioning of Federal Reserve Chairman Ben Bernanke in a lawsuit by the former head of American International Group Inc.

The Justice Department told a federal appeals court Friday that high-ranking officials should not have to testify except in extraordinary circumstances.

Former AIG CEO Hank Greenberg sued the government over the $182 billion bailout of the insurance giant that has since been repaid. Greenberg claims the bailout terms were too onerous and is seeking at least $25 billion.

It is rare for a Fed chairman to be questioned in a lawsuit, but U.S. Court of Federal Claims Judge Thomas Wheeler ruled that Bernanke has firsthand knowledge of the bailout and should undergo questioning. Justice wants the appeals court to order Wheeler to block the questioning.

I guess they're trying to put Bernanke beyond the law.  The above four paragraphs are all there is to this short AP story from late yesterday.  It was picked up by the Internet site...and I thank reader M.A. for sharing it with us.


Editorial: No Banker Left Behind

The Detroit bankruptcy case has been cast as a contest between bondholders and pensioners that can be resolved only by shared sacrifice.

In principle, we have no problem with that, though in practice, the pensioners’ fair share will have to take into account their extreme vulnerability: Public pensions are not federally insured and many municipal retirees do not receive Social Security.

What we do have a problem with is shared sacrifice that does not seem to apply to the big banks that abetted Detroit’s descent into bankruptcy.

This must read commentary by The New York Times editorial board, was posted on their website on Thursday...and had to wait until today's column.  I thank Phil Barlett for bringing it to our attention.


Unease at Clinton Foundation Over Finances and Ambitions

Soon after the 10th anniversary of the foundation bearing his name, Bill Clinton met with a small group of aides and two lawyers from Simpson Thacher & Bartlett. Two weeks of interviews with Clinton Foundation executives and former employees had led the lawyers to some unsettling conclusions.

The review echoed criticism of Mr. Clinton’s early years in the White House: For all of its successes, the Clinton Foundation had become a sprawling concern, supervised by a rotating board of old Clinton hands, vulnerable to distraction and threatened by conflicts of interest. It ran multimillion-dollar deficits for several years, despite vast amounts of money flowing in.

The review set off more than a year of internal debate, and spurred an evolution in the organization that included Mr. Clinton’s daughter, Chelsea, taking on a dominant new role as the family grappled with the question of whether the foundation — and its globe-spanning efforts to combat AIDS, obesity and poverty — would survive its founder.

This 4-page essay was posted on The New York Times website on Tuesday...and is another item I've been saving for today's column.  It's another offering from Laurent-Patrick Gally.


Paul Craig Roberts: Humanity is Drowning in Washington's Criminality

Americans will soon be locked into an unaccountable police state unless US Representatives and Senators find the courage to ask questions and to sanction the executive branch officials who break the law, violate the Constitution, withhold information from Congress, and give false information about their crimes against law, the Constitution, the American people and those in Afghanistan, Pakistan, Yemen, Iraq, Libya, Syria, Somalia, Guantanamo, and elsewhere. Congress needs to use the impeachment power that the Constitution provides and cease being subservient to the lawless executive branch. The US faces no threat that justifies the lawlessness and abuse of police powers that characterize the executive branch in the 21st century.

Impeachment is the most important power of Congress. Impeachment is what protects the citizens, the Constitution, and the other branches of government from abuse by the executive branch. If the power to remove abusive executive branch officials is not used, the power ceases to exist. An unused power is like a dead letter law. Its authority disappears. By acquiescing to executive branch lawlessness, Congress has allowed the executive branch to place itself above law and to escape accountability for its violations of law and the Constitution.

National Intelligence Director James R. Clapper blatantly lied to Congress and remains in office. Keith B. Alexander, Director of the National Security Agency, has also misled Congress, and he remains in office. Attorney General Holder avoids telling Congress the truth on just about every subject, and he also remains in office. The same can be said for President Obama, one of the great deceivers of our time, who is so adverse to truth that truth seldom finds its way out of his mouth.

If an American citizen lies to a federal investigator, even if not under oath, the citizen can be arrested, prosecuted, and sent to prison. Yet, these same federal personnel can lie to Congress and to citizens with impunity. Whatever the American political system is, it has nothing whatsoever to do with accountable government. In Amerika no one is accountable but citizens, who are accountable not only to law but also to unaccountable charges for which no evidence is required.

Always controversial, but never far off the mark, this essay by Paul is a must read for all my American readers.  It was posted on his Internet site on Tuesday...and I thank reader M.A. for his second contribution to today's column.


How Laura Poitras Helped Snowden Spill His Secrets

This past January, Laura Poitras received a curious e-mail from an anonymous stranger requesting her public encryption key. For almost two years, Poitras had been working on a documentary about surveillance, and she occasionally received queries from strangers. She replied to this one and sent her public key — allowing him or her to send an encrypted e-mail that only Poitras could open, with her private key — but she didn’t think much would come of it.

The stranger responded with instructions for creating an even more secure system to protect their exchanges. Promising sensitive information, the stranger told Poitras to select long pass phrases that could withstand a brute-force attack by networked computers. “Assume that your adversary is capable of a trillion guesses per second,” the stranger wrote.

Before long, Poitras received an encrypted message that outlined a number of secret surveillance programs run by the government. She had heard of one of them but not the others. After describing each program, the stranger wrote some version of the phrase, “This I can prove.”

This long, but intriguing essay was posted on The New York Times website on Tuesday...and my thanks go out to Laurent-Patrick Gally once again.


Distorted data? Feds close 600 weather stations amid criticism they're situated to report warming

Data from hundreds of weather stations located around the U.S. appear to show the planet is getting warmer, but some critics say it's the government's books that are getting cooked -- thanks to temperature readings from sweltering parking lots, airports and other locations that distort the true state of the climate.

Indeed, the National Oceanic and Atmospheric Administration has closed some 600 out of nearly 9,000 weather stations over the past two years that it has deemed problematic or unnecessary, after a long campaign by one critic highlighting the problem of using unreliable data. The agency says the closures will help improve gathering of weather data, but critics like meteorologist and blogger Anthony Watts say it is too little, too late.

"The question remains as to why they continue to use a polluted mix of well-sited and poorly-sited stations," Watts told

This very interesting story was posted on the Internet site on Tuesday...and it's a must read if you have any interest whatsoever in global warming.  It's another offering from reader M.A...for which I thank him.


Solar power to trump shale, helped by US military

The US Naval Air Weapons Station relies on a 14 megawatt array of solar panels in California's Mojave desert for a third of its power. Pearl Harbor will soon follow as the Pentagon goes off-grid, better shielded from enemies.

The US Navy will derive half its energy supply from renewables by the end of this decade, according to a report entitled Enlisting the Sun: Powering the U.S. Military with Solar Energy, by the US solar industry (SEIA). It may be a stretch to say that the US Naval Research Laboratory is the vanguard of the world's green revolution, but not a big stretch.

"The US Defence Department is racing ahead. This could be like the semiconductor industry in 1980s where the military changed the game," said Jeremy Leggett, chairman of Solarcentury.

Nor is the Pentagon alone. Grant lists from the "SunShot Initiative" of the US Energy Department show that America's top research institutes are grappling with each of the key issues that have bedevilled solar energy for so long.

This fascinating story is way off the beaten path for Ambrose Evans-Pritchard...but it's a worthwhile read if you have the time.  It was posted on the Internet site late Wednesday afternoon BST...and it's courtesy of West Virginia reader Elliot Simon.


Have the austerians won the day, or will the pragmatists prevail?

We can argue about what’s appropriate, but when economies become destabilised, state intervention is not just warranted, it’s absolutely necessary. Unfortunately, this remains an issue with which many on the Right still have something of a problem, as the debate now raging in the US about who should replace Ben Bernanke as chairman of the Federal Reserve demonstrates.

In a recent interview, Rand Paul, a potential Republican candidate for president, said that his preferred choice for chairman would be Friedrich Hayek. When it was pointed out that Hayek, the intellectual godfather of Thatcherite economics, was in fact dead, and therefore unavailable for the job, he opted for Milton Friedman, another of the 20th century’s leading free-market economists.

He’s dead, too, the interviewer reminded Mr Paul, only to draw a quick-witted retort. A dead chairman, Mr Paul said, would actually be something of an advance, “because then you probably really wouldn’t have much of a functioning Federal Reserve”.

This had the merit of being quite funny, but actually the senator from Kentucky was making what to him was a serious point. Like his father Ron, Mr Paul is a committed libertarian who believes that all state intervention is bunkum. That goes for the actions of central bankers, too. In the Pauls’ view, any such interventions make matters worse, if only because they end up sowing the seeds for the next crisis.

This interesting commentary by Jeremy Warner was posted on The Telegraph's website on Wednesday evening BST...and I thank Roy Stephens for sending it.


Jim Rickards: Time to Bet on the Euro?...and Gold

This 4:09 minute video posted on the Internet site on Thursday afternoon is just as much about GOLD as anything else...and for that reason alone it's a must watch.  I thank reader Harold Jacobsen for digging this video clip up for us.


French revolutionary rule keeps Paris bakers baking

The presence of bread – which holds an almost mythical importance for the French – has been guaranteed in the capital since the chaotic and starving days of the French Revolution.

“Let them eat cake,” Queen Marie Antoinette allegedly quipped when told the poor had no bread to eat. Their hunger and anger was to be one of many catalysts in the bloody overthrow of the French monarchy.

And to avoid the possibility of another revolution, the state has since ensured that modern Parisians have no need to rise up for lack of a fresh baguette. City bakers now have strictly regulated summer holidays and are expressly forbidden to abandon the capital en masse and leave behind a potentially dangerous bread vacuum.

The rules go back to the Revolution, when in October 1798 baker Denis François was lynched by an angry mob for not opening his shop.

Wow!  I had no idea!  This very short story is for educational purposes only, but it's amazing!  It was posted on the Internet site on Friday...and it's another offering from Roy Stephens.


Germany Fights Population Drop

At first glance, this town in central Germany, with rows of large houses built when it was a thriving center of toy manufacturing, looks tidy and prosperous. But Heiko Voigt, the deputy mayor here, can point out dozens of vacant homes that he doubts will ever be sold.

The reality is that the German population is shrinking and towns like this one are working hard to hide the emptiness. Mr. Voigt has already supervised the demolition of 60 houses and 12 apartment blocs, strategically injecting grassy patches into once-dense complexes.

“We are trying to keep the town looking good,” he said.

There is perhaps nowhere better than the German countryside to see the dawning impact of Europe’s plunge in fertility rates over the decades, a problem that has frightening implications for the economy and the psyche of the Continent. In some areas, there are now abundant overgrown yards, boarded-up windows and concerns about sewage systems too empty to work properly. The work force is rapidly graying, and assembly lines are being redesigned to minimize bending and lifting.

The fertility rate in the West is plunging everywhere...and here's the first story I've seen about it that shows the real-time consequences of that fact.  I don't want to classify it as a must read, but if you have the time, it's worth it.  This is another story that showed up on The New York Times website on Tuesday...and it's another contribution from Laurent-Patrick Gally.


Muslim Brotherhood calls for rallies across Egypt after day of bloodshed

The Muslim Brotherhood defiantly called for a week of protests across Egypt starting on Saturday, a day after more than 100 people died in clashes between Islamists and the security forces that pushed the country ever closer to anarchy.

Undeterred by the bloodshed in which about 700 have been killed since Wednesday, the Brotherhood urged its supporters back onto the streets to denounce the overthrow of Islamist President Mohamed Mursi and a crackdown on his followers.

"Our rejection of the coup regime has become an Islamic, national and ethical obligation that we can never abandon," said the Brotherhood, which has accused Egypt's military of plotting the downfall of Mursi last month to regain the levers of power.

This Reuters story, filed from Cairo, was posted on their website late yesterday evening EDT...and I thank Roy Stephens for sending it our way. [By the way, when I was editing this column at 6:15 a.m. EDT, I noticed that Reuters changed the headline.]


Four suspected militants killed in Israeli drone strike in Egypt

Although reports of Israeli drone use over Sinai have surfaced in the past, this is the first to come with official acknowledgement.

In a statement on its website, the jihadist Ansar Beit al-Maqdis group confirmed that its militants had been the target of the Friday strike. It listed the name of four fighters who had been killed. They are all identified as Sinai residents.

Security officials said that the attack had taken place with the consent of the Egyptian authorities, Reuters and the Associated Press reported. If true, this level of cooperation would be a departure from that experienced under the rule of President Mohamed Morsi, ousted during a military takeover last month.

This article appeared on the Internet site a week ago today...and I thank reader M.A. for finding it for us.


Market mayhem: BSE Sensex, Indian rupee crash, but gold price surges

In a triple whammy, benchmark BSE Sensex and Indian rupee went into a free-fall while gold price surged as fears of a return to capital control regime haunted investors who remained unconvinced that there would be no further curbs.

The S&P BSE Sensex plunged the most in four years and the rupee plummeted to a record low amid fears that capital controls would return as the government attempts to reduce exchange-rate volatility and stem the burgeoning current account deficit (CAD) in India. Gold gained the most in two years.

The BSE Sensex fell 769.41 points, or 3.97 per cent, to 18,598.18, leaving investors poorer by more than Rs 2 lakh crore. The rupee breached 62 for the first time, falling to 62.03 before recovering to close at a record low of 61.65.

This news item was posted on the Internet site early Friday evening IST...and I thank Ulrike Marx for sending it.


Credit crisis begins to cripple Chinese cities

As the Chinese economy boomed, few cities soared faster or higher than Shenmu, a community of nearly 500,000 in northwestern China.

Top luxury clothing stores in this city's downtown were recording as much as $500,000 a day in sales. Tables at the best restaurants had to be reserved weeks in advance. The new Fortune Garden Club for the city's business elite made headlines by paying $1 million for a king-size mahogany bed, to be used by members and their companions.

But a painful credit crisis is now spreading across Shenmu and cities nearby, as thousands of businesses have closed, fleets of BMWs and Audis have been repossessed and street protests have erupted.

Now the leading purveyors of Western fashions are deserted, monthly sales at restaurants are down as much as 97% and the marble entrance to the Fortune Garden Club is shuttered. All but one of the city's car dealerships have failed. The owner of the city's largest jewelry store was detained by the authorities a week ago after creditors found him secretly packing millions of dollars' worth of gold and jewels into cases and accused him of preparing to flee the city without settling his debts. A top restaurant closed a day earlier, and its owner left town, as have the founder of the Fortune Garden.

This New York Times story found a home on The Economic Times of India website in the wee hours of Friday morning IST...and it's definitely worth reading.  I thank reader U.D. for sending it our way.


Prospectors pan Indiana creeks in quest for gold

Among the dirt, gravel and stones dredged from the bottom of Salt Creek, an unmistakable sparkle shone through.

A tiny flake of gold, no bigger than a speck, had risen to the top of the worthless rock.

In the shallow streams and creek beds of Brown County, a new gold rush is going on. Outdoorsy types have taken to the water in search of flakes of natural gold left behind millions of years ago.

No one is hitting the mother lode or striking it rich. But for modern-day Indiana prospectors, panning for gold is a chance to be outside, gather with like-minded friends and experience the thrill of finding buried treasure.

"There's nothing like seeing that glint of pure yellow in the bottom of your pan. There's an allure that goes beyond economics. If you have gold fever, you know it," said Nelson Shaffer, a gold specialist with the Indiana Geological Survey.

This story, filed from Gatesville, Indiana, was posted on the Internet site on Thursday...and it's the final offering in today's column from reader M.A.


The End Times begin: Hathaway gets real and CNBC broadcasts him

The Tocqueville Gold Fund's John Hathaway, a thoroughly respectable member of the financial establishment who only in recent weeks has begun to acknowledge the manipulation of the gold market by Western central banks, went on CNBC's "Fast Money" program, declared that a short squeeze is under way in gold because the paper gold market is leveraged at 100 to 1, and was not cut off.

Of course the CNBC "analysts" who commented following Hathaway's remarks completely missed the substance of what he said. Real financial journalism has not descended upon the West quite yet. But if reality about gold can come frankly out of Hathaway's mouth and be spread throughout the world by CNBC, are even Reuters, Bloomberg News, The Wall Street Journal, The New York Times, and the Financial Times still safe for the Federal Reserve and Wall Street and their scheme of gold price suppression and currency market rigging?

I found this story in a GATA release yesterday...and I thank Chris Powell for 'all of the above'.  The video clip is embedded in a report posted on the Internet site.


Frank Holmes: What Happens When You Tell Indians to Stop Buying Gold

India’s demand for gold during the second quarter of 2013 topped all other countries, according to the latest World Gold Council data. As noted by GoldCore, the demand for gold in India rose to its “highest in the last 10 years,” with jewelry, bars and coins demand, capping 310 tons during the period.

You can see India isn’t the only country in the East enamored with gold. I’ve discussed many times how China’s love for physical gold has endured, as gold deliveries on the Shanghai Gold Exchange climbed to record levels and jewelry stores were flooded with buyers in Beijing, Shanghai and Guangzhou.

Now the World Gold Council (WGC) confirms that in the second quarter, 60 percent of jewelry demand and almost half of all bar and coin demand came from these two countries alone!

Frank's comments on gold take up the first portion of his weekly 'Investor Alert' blog from yesterday...and there are some excellent chart embedded as well.  It's worth the read...and it's courtesy of Elliot Simon.


Gold Investors Seek Alpine Haven in Swiss Army Bunkers

Jacques Rall, a Frankfurt-based broker at Euro Pacific Bank, who started investing in gold and silver in 2007 because of concerns about government debt and inflation, said he’s not worried about gold’s slump this year as he predicts increasing demand for metal assets.

Gold’s assumed safe haven qualities are not new as governments once used holdings of the metal to back currencies. In 1933, the U.S. forced private owners to sell gold to the Federal Reserve, with the treasury building a depository at Fort Knox. U.S. President Richard Nixon severed the dollar’s peg to gold in 1971. Switzerland was one of the last countries to link its currency to gold until a public vote in 1999 ended it.

Today, decommissioned Swiss military bunkers are being converted into vaults to meet rising private demand, said Buchwalder. A former Swiss Air Force command and control center in Uri is now a vault owned by data storage company Deltalis. At Swissdatasafe, based in Amsteg, investors can store valuables and art in secure locations in the Swiss Alps.

This interesting news item, filed from Zurich, was posted on the Bloomberg website very early Thursday morning Denver time...and I thank Laurent-Patrick Gally for his final offering in today's column.


India Faces Its Worst Economic Crisis Since 1991 When It Had To Airlift 67 Tons Of Its Gold For A Loan

Yesterday India's central bank (the RBI) imposed what amounts to a form of currency controls, while trying to attract foreign deposits.

The RBI cut the amount local companies can invest overseas without seeking approval to 100 percent of their net worth, from 400 percent, according to a statement on Aug. 14. Residents can remit $75,000 a year versus the previous limit of $200,000.

The authority said banks accepting deposits after Aug. 24 from Indians living abroad need no longer keep 4 percent of the funds in cash and invest 23 percent in government-approved securities.

It didn't do any good. Driven by expectations of impending exit from QE3 in the US, the rupee punched through 62 this morning, hitting a new all-time low.

At these levels inflation will soon become a concern. Investors continued dumping short-term government bills, with the 6-month paper going above 11% for the first time.

This news item, along with some excellent charts, was posted on the Internet site at noon on Friday EDT...and I consider it a must read.  I thank Roy Stephens for his last contribution to today's missive.


Sprott's Thoughts: Have precious metals bottomed?

After a gut wrenching correction that drove gold and silver prices down 38% and 63% respectively from their 2011 highs, the recent price action in precious metals has been dramatic. From the low on June 28th, gold bullion has appreciated by more than 11%, but the real fireworks have been seen in gold mining equities with the NYSE Arca Gold Bugs Index up close to 20% and the junior miners, as measured by the Market Vectors Junior Gold Miner ETF, up a stunning 33%! Silver has joined the party, increasing by 17% over the same time period and silver stocks as measured by the MSCI Silver Index are up 28% to August 16. This price action confirms that the sentiment for precious metals and miners has changed dramatically, and it couldn’t have happened soon enough.

This commentary by David Franklin is worth reading.  It was posted on the Internet site yesterday.


JPMorgan Advises To... Buy Gold?

Gold shrugged off news today that Paulson & Co had cut its exchange listed gold exposure in half and rose 2.2% to $1,365/oz. This may be delivering an exclamation mark to define the end of the 10-month, 25% fall in gold and 50% fall in gold equities, (while the S&P advanced 13%).

The World Gold Council reported today that physical gold demand remains strong, questioning the price weakness seen in paper markets. Additionally, gold supplies could be constrained in September if labor strikes are initiated in South Africa. There’s typically some positive seasonality to the gold price in August/September helped by India, which is still the largest single (28%) gold market.

Often this strength correlates with the Denver gold conference. The conference attracts many of the larger gold investors and given the other positives for the metal (and that the depressing effect of the Q2 results is past) we would not be surprised to see a stronger gold price in the run up to the show. We’d encourage shorter-term investors to consider getting long the gold space with a four to five week time horizon.

With a long-side corner on the gold market, this was an easy call.  But as Ted Butler pointed out to me on the phone yesterday, is probable that the analyst knew nothing of that when making this buy recommendation.  This news item showed up on the Zero Hedge website yesterday...and I thank Ulrike Marx for today's last story.



¤ The Funnies

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¤ The Wrap

Hastiness and superficiality are the psychic diseases of the 20th century...and more than anywhere else, this disease is reflected in the press. - Aleksandr Solzhenitsyn

Today's pop 'blast from the past' needs no introduction whatsoever...and neither does the performer. He is, without doubt, one of the best male vocalists of all time...and was all over the pop charts in the 1960s.  I remember him well...and the women loved him...throwing panties and hotel room keys on the stage whenever he performed in Las Vegas The link is here.  Enjoy!

Today's classical 'blast from the past' was composed by Wolfgang Amadeus Mozart in 1779 while he was on a 2-year tour of Europe that included Mannheim and Paris.   It's his Sinfonia Concertante in E-flat major for violin, viola and orchestra, K. 364.  Itzhak Perlman [violin] and Pinchas Zuckerman [viola] do the honours with Zubin Mehta conducting the Israel Philharmonic Orchestra.  I've heard both these artists live and in concert with the Edmonton Symphony Orchestra...and they are beyond awesome...especially Itzhak Perlman.  The recording looks to be at least 30 years old, but the video and audio quality are still pretty good.  The link is here.

Judging by the huge volume figures for both gold and silver yesterday, I'd guess that both metals were kept on a pretty tight leash...and that goes for the shares as well.

As I mentioned on several occasions during the last couple of weeks, the volume numbers have really started to blow out, even on quiet days...and it was obvious at the time that the budding rallies in all four precious metals were not going unopposed.  That has certainly turned out to be the case from what was in yesterday's COT Report...and what has probably occurred since the Tuesday cut-off.

But will this pattern continue?  I don't know...and it's a mug's game trying to call this market on a short-term basis, as anything can happen.  We're getting pretty overbought in silver...and gold is getting close...and it wouldn't surprise me in the slightest if we got some sort of engineered price correction at some point.  Of course we can stay in overbought territory for quite some time, just like we did in oversold territory...but using the past as prologue, I'd say that this rally is on borrowed time.

However, once this presumed correction is out of the way, there's no reason that I can think of why we shouldn't continue to power higher.  The current prices of all four precious metals are at ridiculous and artificially low levels...and the economic, financial and monetary state of the world is beyond repair.  And as Mike Maloney pointed out in his video in the 'Critical Reads' section, a new monetary system will make an appearance at some point and, without doubt, gold will play a role.  Even Jim Rickards concedes that.

It's just that the road to that end will be bumpy...and strewn with potholes...unless we get an over-the-weekend price revaluation.   That remains a distinct possibility...and could come at any time, despite what the COT Report has to say.

Before heading out the door, here's Nick Laird's "Total PMs Pool" chart updated with this past week's data...and as you can tell, we are on the mend both in total ounces and in price.  As far as I'm concerned, it's only a matter of time before we're back at new highs...and not too much time I would think.

(Click on image to enlarge)

But until then...I, like you...will just have to wait it out.

That's it for the day...and the week.

See you here on Tuesday.