Gold & Silver Daily
"Well, we got our answer...a 'failure' at the 20-day moving average in gold..."

¤ Yesterday In Gold & Silver

The gold price chopped gently lower [on very light volume] through all of Far East and most of London trading on Wednesday.  Then shortly before 9:00 a.m. in New York, the high-frequency traders went to work...and by noon on the button Eastern time, they had gold down to its low of the day at $1,439.60 spot.

In such an illiquid market, the subsequent rally was threatening to got parabolic, so a not-for-profit seller stepped in shortly before 3:00 p.m. in the electronic market.  After that, not much happened going into the 5:15 p.m. close.

Gold's high tick might have been the $1,478 spot mark shortly after trading began in Tokyo on their Wednesday morning, so gold had an intraday move of around thirty eight bucks...and closed at $1,458.10 spot, down $19.30 on the day.  Net volume jumped up to 157,000 contracts by day's end.

It was very much the same chart pattern in silver, so I shan't dwell on it.  The only real difference was the severity of the sell-off after the price got capped just before 3:00 p.m. in New York electronic trading.

The high of the day was pretty much the closing price on Tuesday afternoon in New York, which was $24.35 spot.  The low tick [$23.16 spot] came just before noon in New York, so silver had an intraday move of just over a buck...4 percent.

Silver closed the Wednesday trading session at $23.65 spot...down 70 cents from Tuesday's close.  Net volume was very chunky at 59,000 contracts.

Platinum's chart was about the same.  Only palladium had different start and end times for its engineered price decline...starting at noon local time in Zurich...and ending around 10:20 a.m. in New York.

The dollar index closed on Tuesday afternoon in New York at 81.72...and held that number until 9:00 a.m in London on their Wednesday morning, before sliding to it's 8:20 a.m. Comex open low tick in New York, which was 81.33.  About two hours later it was back up to 81.60....and traded basically flat, closing at 81.65. which was down 7 basis points from Tuesday's close.  No currency/precious metal price correlation once again.

As I said in this space yesterday, the correlation between the dollar index and the precious metal prices are irrelevant if JPMorgan Chase et al are stomping around.

As you are already painfully aware, dear reader, the gold stocks gapped down over 3 percent at the open...and hit their nadir very close to gold's low price tick, which came a couple of minutes before 12 o'clock noon in New York.  They struggled higher from there, but at 2:00 p.m. EDT...away they went to the upside until the not-for-profit seller showed up in the futures market to put the kibosh on what was about to become a parabolic gold price.  Needless to say, the stocks reacted rather poorly to that...and the HUI finished down 2.13%.

As a group, the silver stocks fared better than their golden brethren...and Nick Laird's Intraday Silver Sentiment Index closed down only 1.09%.

(Click on image to enlarge)

The CME's Daily Delivery Report for 'Day 3' of the May delivery month in silver showed that 23 gold and 219 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  It was all JPM and Scotiabank in gold...and of the 219 silver contracts, Jefferies was the biggest of the four short/issuers with 143 contracts...and JPM and Scotiabank were the largest long/stoppers with 89 and 62 contracts respectively.  The link to yesterday's Issuers and Stoppers Report is here.

GLD inventories keeps on heading south, as an authorized participant withdrew another 106,377 troy ounces yesterday...and as of 8:43 p.m. Eastern time yesterday evening, there were no reported changes in SLV.

The U.S. Mint had a small sales report for the first day of the month.  They sold 10,000 ounces of gold eagles...and 1,500 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Tuesday, they reported receiving 672,681 troy ounces of silver...and shipped 282,575 troy ounces of the stuff out the door.  The link to that activity is here.

As for gold on Wednesday at the Comex-approved depositories...they didn't report receiving any...but they shipped 128,163 troy ounces out the door.  The link to that activity is here.

After a rather slow Tuesday at the store...which we were glad to have...the activity on Wednesday more than made up for it.  We still have no delivery dates for virtually all silver products...and the only bar we could get in virtually unlimited quantity with little premium, was the 100 oz. silver bar.  We can still get it, but the premiums on them were hiked again yesterday...the second time in the last ten days. A rapid increase in premiums is always a precursor to the phone call from our wholesaler advising that they are out of stock and not taking any more orders until further notice...and I'll let you know when that happens.

I spoke to a very large Toronto bullion retailer on the phone yesterday...and they can't get any silver, either...and gold from the Royal Canadian Mint is 7-8 weeks.  This supply issue is not about to go away any time soon...and neither is demand.

As silver analyst Ted Butler said in his mid-week review to his paying subscribers yesterday..."There is no doubt that we are currently immersed in the most severe retail silver shortage in history, with premiums rising and delays stretching out like never before."

Below are a couple of charts that Nick Laird slid into my in-box in the wee hours of this morning.  They are the Intraday Average Price Movements for April, for both gold and silver.  There are no discernable price patterns having to do with the fixes, or the opening or closing of any particular exchange in these charts.

(Click on image to enlarge)

(Click on image to enlarge)

Here's your 'cute quota' for the day...

It was a rather slow news day yesterday, so I hope that gives you more time to spend on the stories that interest you.


¤ Critical Reads

Fed Keeps Interest Rates Low, Continues Bond Buying Program

The Federal Reserve held fast to its ultra-accommodative monetary policy Wednesday, solidified by what board members described as an economy weakened by fiscal policy.

Interest rates will remain at historically low levels while the U.S. central bank will not alter its $85 billion a month asset purchasing program, the Fed's Open Markets Committee decided at this week's meeting.

Language in the FOMC statement after the meeting saw one notable change - a declaration that it would increase or decrease the pace of its asset purchases depending on conditions.

This short story was posted on the Internet site early yesterday afternoon Eastern time...and I thank West Virginia reader Elliot Simon for today's first story.


Former Fed Governor Warsh Admits "There is no Plan B"

At the very crux of the financial crisis, former Fed governor Kevin Warsh notes, "experimental extreme monetary policy," had the "right risk-reward", but, he warns, in this excellent (and somewhat chilling) discussion at the Milken Institute, "we left a financial crisis more than for years ago." While the politicians may 'prefer' to think of this as a crisis - and indeed "for them it is a crisis as they preside over an economy that refuses to grow," which has tended to lead to loss of office, but, Warsh condemns, "they have run out of excuses." Over the last several years, "[the Fed] has over-promised and under-delivered," and the bank's most important asset - credibility - is under attack.

The Fed has "enabled" Washington to do nothing, since the politicians expect the same "rabbit out of the hat" rescue that occurred in the darkest days of the financial crisis. This means no growth strategies ("the mix of policies has to be right") will occur. Since the financial crisis, Washington has done its level best to focus on GDP in the next quarter, or perhaps the election, and precious little beyond that short-term horizon. Warsh concludes, "There Is No Plan B."

This Zero Hedge piece from yesterday afternoon is the second offering in a row from Elliot Simon.


Outside View: America's most tolerated dangers

If asked, most Americans would agree that economic and financial chaos or a stunning terrorist attack by foreign jihadists possibly with nuclear and other weapons of mass destruction constitute among the gravest threats to the United States.

But the United States faces other more immediate, yet tolerated, dangers that have done and are doing irreparable harm to the nation. Sadly, these dangers don't provoke enough public fury or even attention to motivate corrective action.

These tolerated threats are bad governance, hubris and self-delusion. Bad government is so wide spread that the public accepts Washington's dysfunctionality as the new norm. And hubris and self-delusion have been so assimilated into the national culture and vocabulary as to be an integral part of this new norm as cancer is to healthy human cells.

About bad government, it may well be that a system of checks and balances cannot operate effectively as long as both political parties are driven by ideological extremes that view compromise as capitulation and exercise of reason as disloyalty or political treason.

This op-ed piece was posted on the Internet site yesterday...and I thank Roy Stephens for his first offering in today's column.


Iceland’s economic thaw a thorn in EU’s side

Iceland just elected the parties which plunged them into crisis only five years ago. Is it casino capitalism all over again, or just a slap in the face of the EU?

In terms of redemptive electoral stories, the return of the Independence Party in Iceland is quite significant, albeit that they will come back to government with only a few percentage points more votes than they polled at their nadir in the depths of the Icelandic crisis in 2009.

However the biggest winner was Sigmundur Gunnlaugsson, the leader of the Progressive Party, who propelled his party to hold 19 seats (same as the Independence Party) with 24.4 versus 26.7 per cent of the vote respectively. The parliament (Althing) has 63 seats, so the two leading parties have a comfortable working majority against a dissipated opposition which includes two new parties.

True, the political class is not exactly enjoying a ringing endorsement. True, 83.3 per cent voted, but that turnout was the lowest since independence from Denmark in 1944. Politicians are only trusted by 15 per cent of the population. Unsurprisingly, only bankers fare worse.

At the inflection point of the crisis, Iceland introduced capital controls and stinging austerity, but it also had a tool up its sleeve which struggling Mediterranean nations cannot take advantage of. Whereas they are imprisoned in the euro, the Icelanders let their krone collapse.

This very interesting read was posted on the Russia Today website just before midnight last night Moscow time...and it's Roy Stephens' second story in a row.


Irish manufacturing shrinks at fastest rate in 19 months

Irish manufacturing shrank at its fastest rate in 19 months in April as sluggish orders both at home and from abroad led to the sharpest contraction in output since August 2009, a survey has shown.

The NCB Manufacturing Purchasing Managers’ Index, which fell below the 50 line dividing growth from contraction for the first time in more than a year in March, dropped further to 48.0 in April from 48.6 in the previous month.

The poor PMI data adds to the less positive tone of recent data releases as the recession hitting much of the rest of Europe eats into export growth and a still-struggling domestic economy hurts retail sales.

This news item appeared on the Internet site early yesterday morning BST...and I thank Roy Stephens once again.


Debt-crippled Holland falls victim to EMU blunders as property slump deepens

The coalition of Mark Rutte has belatedly woken up to the danger. Last month it retreated from pro-cyclical tightening, delaying €4.3bn in budget austerity. By then Mr Rutte’s totemic worship of EU deficit targets had invited the ridicule of the official Bureau for Economic Policy Analysis (CPB), which said Dutch leaders did not seem to understand how private credit busts interact with fiscal cuts to create havoc.

“The Dutch government’s inability to acknowledge the damage done by austerity despite mounting evidence is a case of 'cognitive dissonance’,” it told the Financial Times.

Yet this is not at root a case of botched fiscal policy. It is a case of misaligned monetary policy. The Netherlands offers a salutary lesson of what can happen to a rich sophisticated economy caught in a post-bubble crunch once it has lost control of its currency, central bank and monetary levers. This would have happened to Britain without the Bank of England, and the US without the Fed.

This story was posted on The Telegraph website early yesterday evening...and I thank Manitoba reader Ulrike Marx for sending it along.


Until Elections Do Us Part: A Deep Frost in Franco-German Relations

Progress in the European Union is stalled at the moment because France and Germany can't get along. Paris is hoping for a change of government in Berlin after elections this fall, but even that would do little to bridge growing differences between the countries.

The ambassadors who gathered in the library of the German Foreign Ministry the Thursday before last knew the situation was unusually serious. These diplomats are accustomed to seeing images of Chancellor Angela Merkel with a Hitler mustache drawn on her face, hearing vitriolic tirades about Germany's enforcement of austerity policies in Europe and experiencing tense diplomatic talks. For some time now, German diplomats have watched anti-German sentiment increase dramatically in many countries in the European Union.

Under these circumstances, the ambassadors who converged at the Foreign Ministry certainly didn't expect the meeting to be any kind of laid-back reunion, but what they encountered still caught them by surprise. Nikolaus Meyer-Landrut, Merkel's EU policy advisor, gave the diplomats an unvarnished picture of the Chancellery's concerns that matters may not improve any time soon. Merkel's advisor left the diplomats with a clear impression that the German government has given up hope of any appreciable progress in European policy before Germany's federal elections this September.

This story was posted on the German website late yesterday afternoon Europe time...and it's another offering from Roy Stephens.


U.S. officials arrest Swiss banker

U.S. officials have arrested a former UBS banker working for the Swiss operations of Coutts, the private banking division of Royal Bank of Scotland Group Plc, sources told Reuters.

The arrest comes as U.S. authorities crack down on tax evasion and has revived Swiss bankers' fears that they could face detention if they travel to the United States and are suspected of helping people hide money in offshore accounts.

Coutts notified staff in Geneva on Friday that one of its private bankers had been arrested last week when he entered the U.S. for a vacation, a source familiar with the situation said.

This story, filed from Zurich, was posted on the Reuters website at noon Eastern time on Monday...and I thank U.A.E. reader Laurent-Patrick Gally for bringing it to our attention.


Expat exodus from Spain as deadline for Britons to declare property and savings at home arrives

New Spanish tax laws affecting an estimated 200,000 British expats, have sparked panic, prompting some to leave the country or hand in their residence cards at town halls before today's deadline (30 April), fearing a Cyprus-style money grab.

Opponents, including Spanish politicians, have branded the new asset declaration law discriminatory, and fear an exodus of EU residents from the fragile economies of the coastal towns.

Russell Thomson, the former British Consul for Alicante, Spain, has led a petition to the EU, branding the law unlawful and discriminatory against non-Spanish residents.

Wow, you know the whole world is going to hell when you start reading stories like this one.  This article appeared on the Internet site early Tuesday afternoon BST...and it's worth reading.  I thank reader Graeme Guthrie for sharing it with us.


Divided Cyprus: Banking Crisis Awakens Hopes for Reconciliation

The Greek half of Cyprus has been hard-hit by the banking crisis -- and now hopes are growing in the Turkish north for reconciliation. If the two populations could resolve their dispute, they could likely access large natural gas reserves estimated to be worth hundreds of billions of euros.

Gemikonagi is one of the less picturesque locales along the Mediterranean. A conveyor belt stretches far out past pebble beaches and over the blue sea, a remnant of the town's past as a lading port for ores. The main drag has a few bunched up döner kebab stands and some slot-machine gambling joints. Until just recently, this backwater in the far western part of the Turkish Republic of Northern Cyprus (TRNC) used to be a popular place for Greek Cypriots who wanted to find cheap eats and gamble away their euro bills on this side of the divided island. That is, of course, until the crisis arrived.

The banking crisis in the southern part of island is now also hitting its northern part -- and hard. For years, thousands of Turkish Cypriots have been commuting to jobs located in the Greek part of the island. But now many of them are forced to fear for their jobs -- in exactly the same way that the casinos in Gemikonagi not have to worry about losing their Greek clientele, which calls the town Karavostasi.

This very interesting background story about the Greek and Turkish Cypriots was posted on the Internet site late yesterday morning Europe time...and is another news item courtesy of Roy Stephens.


'There will be more wealth confiscation, without a doubt'

European politicians will take the "easy option" of taking money from the rich rather than raising taxes and cutting spending to deal with the continent's debt problem, Lars Christensen, the head of Saxo Bank, said.

Asked if the raid on uninsured savings in Cyprus would be repeated, he told City AM: "There will be future bail-ins [loss of deposits] and other types of confiscation of wealth in the eurozone, without a doubt.

"There's no other realistic way forward if politicians continue to fail to deal with the basic indebtedness problem across Europe. They will either have to raise taxes and cut spending, or politicians will take the easier route and take money from the rich."

This article was posted on the Internet site late Tuesday morning BST...and I found it in yesterday's edition of the King Report.


Three King World Blogs

The first interview is with Dr. Stephen Leeb...and it's headlined "Investors Should Be Buying Silver Aggressively Here".  Next is this Richard Russell commentary.  It's entitled "This is Unlike Anything We've Seen in History".  Lastly is this Louise Yamada blog...and it bears the title "3 Absolutely Incredible Gold Charts and Commentary".


Arizona Becomes 2nd State to Make Gold and Silver Legal Tender

Just under a month ago we raised the prospect of a number of states following Utah (which authorized bullion for currency in 2011) down the path of gold and silver as legal tender. "The legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing," was how this shift was previously described and as Yahoo reports, the Arizona Senate on Tuesday approved a measure to make gold and silver legal currency in the state, in a response to what backers said was a lack of confidence in the international monetary system.

The bill will make gold and silver coins legal tender as of mid-2014 and more than a dozen other states continue to mull the transition. Those against the bill argue somewhat ironically, "anybody who thinks gold or silver is a really safe place to put your money had better think again," anchored on the last two weeks, but as one supporter of the bill added, a "sound and honest money system such as gold and silver" is needed to bring stability.

All this bill needs is the signature of the governor to make it law...and I'm wondering how long that might take.  The first reader through the door with this Zero Hedge piece form yesterday was Elliot Simon.


Gold Bull Run Seen Over as Bear Drop Frays Faithful

Gold’s longest winning streak in at least nine decades is poised to end as diminishing trust in the metal’s ability to preserve value spurred a majority of analysts to predict the first annual retreat since 2000.

Prices will close the year at $1,550 an ounce, 7.5 percent less than at the end of 2012 and the biggest drop since 1997, according to the median of 38 estimates compiled by Bloomberg. Investors are selling bullion held through exchange-traded products at the fastest pace on record, hedge funds accumulated their second-biggest bearish bet ever and futures had their biggest two-day drop in 33 years last month.

Bullion slumped into a bear market in April even as central banks printed money on an unprecedented scale, Europe’s debt crisis spread and the International Monetary Fund made a fourth consecutive cut to its 2013 economic growth forecast. Gold’s drop at a time of record highs in U.S. equities underscores how some investors have lost faith in the surge that drove prices as much as seven times higher over the 12-year bull run.

This bit of main-stream media nonsense showed up on the Bloomberg website yesterday evening...and I thank Elliot Simon for his final offering in today's column.


Nick Barisheff: Uncompromised Bullion Held in True Allocated Storage...a Checklist

This week, more rumors and confusion surfaced about gold ownership, despite gold’s strong technical performance as it rebounded from a low of $1,395.50 on April 12 to $1,467.50 on April 29. Much of the confusion stems from a misunderstanding of the terms ‘allocated storage’ and ‘unallocated storage.’ Because Bullion Management Group Inc. specializes in uncompromised bullion held in secure allocated storage, this is an issue we find ourselves constantly addressing with clients. It’s a black or white area: Either you own uncompromised bullion bars for which you have title documentation that are stored in secure allocated storage, or you have an unallocated account that can be settled in cash at the issuer’s discretion. There is nothing illegal or conspiratorial about this. The fine print on your precious metals account or bank certificate should make it clear. Yet many investors with unallocated accounts are shocked when they attempt to take delivery of the gold.

Many of the myths about allocated and unallocated gold storage are based on partial truth and anecdotal evidence. These embers, fanned by fear and ignorance, lead to irrational investment decisions. Experienced investors know that facts, not emotion, lead to wise long-term decisions. The discovery of facts, often hidden in the fine print, requires an intense intellectual effort.

This commentary from Nick was posted on the Internet site yesterday...and is definitely worth your time.


Junior mining stocks see record insider buying

Those looking for even more evidence that corporate executives are smelling bargains in the junior mining sector should consider this: Insider buying on the TMX Venture exchange is near a record high.

INK Research’s Venture indicator is at 715 per cent today, just 20 percentage points below its record peak of 735 per cent set on Oct. 27, 2008. That means there are more than seven stocks listed on the exchange with insider buying for every one seeing selling. It also marks a steep increase since early March, when the indicator was near 400 per cent.

Such a high level of buying interest among officers and directors within their own businesses in the resource sector has correctly foreshadowed a recovery in share prices in the past: That high point of nearly five years ago came about six weeks before the Venture market bottomed on Dec. 5, 2008, points out Ted Dixon, INK Research CEO.

This very interesting must read was posted on Internet site on Tuesday...and my thanks go out to reader "Alex B." for bringing it to my attention...and now to yours.


Gold buyers forced to go on waiting list

Investment company Physical Gold said there were waiting lists of three weeks for some coins, and four to six weeks for gold bars. "Previously all would have been available within a few days," the company said.

The company said that it had seen a 50pc increase in enquiries about purchasing gold and a 35pc increase in sales, with people buying tax-free gold coins. "We are now starting to experience physical gold shortages," said Daniel Fisher, CEO of Physical Gold.

"In particular there are waiting times on some gold bars and a real difficulty in obtaining mixed year Sovereigns. "However, many clients are willing to 'do a deal' and wait for delivery as they want to secure the current price as they feel it will be higher in the near future."

This very short story was posted on the Internet site on Tuesday afternoon BST...and I thank Roy Stephens for today's last story.  It's definitely worth reading.



¤ The Funnies

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¤ The Wrap

This current set up seems to have my entire wish-list in place. A super-bullish COT structure, following an epic sell-off...amid indications that physical silver conditions, both retail and wholesale, are as tight as a drum...and public sentiment on gold and silver in the gutter. I wish the crooks at JPMorgan were less short, but it’s not a perfect world. As it stands, this is the best silver set up I think I’ve seen. - Silver analyst Ted Butler...01 May 2013 

There's nothing much to add to my comments at the top of this column regarding yesterday's price 'action', as it was just another day when JPMorgan et al had their way with precious metal prices in a very illiquid market.

But as I said in this space in yesterday's column..."The 20-day moving averages are sneaking ever closer.  Gold close on its 20-day moving average yesterday [Tuesday]...and silver's current price isn't that far away, either. If gold and silver prices are allowed to break [and close] above these price points, it will be interesting to see how the mega-short technical funds will react.  And the even more important question to be asked is will JPMorgan et al sell to them at a low price, or at a much higher price?  Questions with no answers at the moment...and I know that silver analyst Ted Butler is also watching this situation closely."

Here's the 6-month gold chart...complete with 20 and 50-day moving averages...with yesterday's price data included.

(Click on image to enlarge)

Well, we got our answer...a 'failure' the 20-day moving average in gold...and as I also said, the technical traders eat this stuff up, even though it's an obviously managed market.

The other too-cute-for-words part of this engineered price decline was that it occurred on a Wednesday, the day after the cut-off for tomorrow's COT Report so, once again, we'll have to wait until next Friday to get any indication of what transpired yesterday.  But it's a strong possibility that the price action between now and then will most likely mask what happened yesterday.

Where we go from here is unknown, but with all precious metal prices trading below their most critical moving averages once again, there's no reason for the technical funds shorts to start heading for the exits...and 'da boyz' can do pretty much as they please with the prices until we approach those levels again.

There was price 'weakness' in Far East trading during their Thursday, but prices have recovered a bit now that London has been open about an hour.  Volumes are much higher than they were this time yesterday...and I can tell by the lack of roll-overs that it's virtually all high-frequency trading...particularly in gold.

And as I hit the 'send' button on today's column at 5:15 p.m. EDT, London has been open a bit more than two hours now.  Both gold and silver still aren't doing much...and gold is down about three bucks from Wednesday's close...and silver is down about a dime.  Volumes in both metals have only increased slightly since I wrote the prior paragraph, so all is quiet at the moment...and the dollar index is flat as well.

That's all I have for today...and I wonder what JPMorgan Chase et al will have in store for us as the trading day begins in New York.

See you tomorrow.