Gold & Silver Daily
"The next five trading days for gold and silver are going to be very busy...and very interesting."
 

¤ Yesterday In Gold & Silver

Gold got sold off a bit right at the open of trading in New York on Sunday night...and that pretty much set the tone for the rest of the Monday.

The real decline didn't start until the London trading day began at 8:00 a.m. local time...which was 3:00 a.m. Eastern.  Gold then got sold down until about half-past lunchtime, before a smallish rally began that lasted until the equity markets opened at 9:30 a.m. in New York.  By that time, gold was only down a bit over ten bucks.  But that's when the real selling started...and by the time that its low of the day was in a few minutes after 2:00 p.m. in New York, the gold price had been clocked for a hair under sixty bucks.

The subsequent rally wasn't allowed to get far...and spot gold closed at $1,677.30...down $47.50 on the day.  Net volume was pretty hefty at 166,000 contracts.

The chart for silver was pretty much the same as gold's...but there were a couple of notable differences.  The first was that silver's low of the day [$30.59 spot] came just a few minutes after 11:00 a.m. Eastern time...not minutes after 2:00 p.m. like gold...and the rally that began at that time, had considerably more legs associated with it.

Silver's rally of $1.05 off its low, shaved the loss on the day to only 77 cents...and the metal closed at $31.64 spot.  Net volume was 37,000 contracts.

The dollar didn't do a whole heck of a lot until about 7:30 a.m. in London.  Four hours later the dollar was up about 45 basis points...and pretty much held that gain until shortly before 11:00 a.m. Eastern time.  Then, in the space of about an hour, the dollar shed about 35 basis points of that gain...and then slowly rallied into the close.  The dollar finished up about 30 basis points on the day.

Even a cursory examination of the dollar chart vs. gold shows absolutely no co-relation between the gold price and the dollar whatsoever.

Yes, the gold stocks gapped down at the open...but it's open for debate as to how much that had to do with what the gold price was doing...and what was going on in the general equity markets.  The reason I say that is simple.  The gold stocks hit their low just minutes after 11:00 a.m...many hours and many, many dollars before the actual gold price hit its low of the day minutes after 2:00 p.m.  The gold stocks cut their losses in half by the end of the trading day...and the HUI only finished down 1.95%.  All things considered, I consider that to be a rather impressive performance.

It was a bifurcated market in the silver equities yesterday.  As a group, the smaller producers got smoked...but, as a group, the big cap silver companies only reported smallish losses...and there were actually some green arrows.  But Nick Laird's Silver Sentiment Index was still down 2.84%.

(Click on image to enlarge)

The CME's Daily Delivery Report was posted at its usual time yesterday...but the page was completely blank for all commodities.  The only thing under the header was this note..."!!! No Data !!!".  Does that mean nothing happened, or that data was not reported?  Who knows...but at this point in the November delivery month, it probably doesn't matter either way.

GLD reported it's first decline since October 27th...showing a smallish withdrawal of 58,363 troy ounces.  There were no reported changes in SLV.

Over at the Zürcher Kantonalbank in Switzerland for the week that was, their gold ETF showed a tiny decline of 5,156 troy ounces...but over in their silver ETF, they showed a more substantial withdrawal of 916,842 ounces.  As always, I thank Carl Loeb for providing these numbers for us.

The U.S. Mint did not have a sales report on Monday.

On Friday, the Comex-approved depositories reported taking in 618,463 ounces of silver...and shipped 246,135 troy ounces of the stuff out the door.  The link to that action is here.

Silver analyst Ted Butler had a fairly big report to subscribers on Saturday...and here are two and a half free paragraphs...

"It [has occurred] to me that it is financial terrorism that best describes the behavior of the manipulators in the silver market. When a world commodity, like silver, declines 30% in a matter of days [twice this year], or when it declines 7% in a day [Thursday] for no good economic reason, it is natural to wonder why that occurred. When the only plausible explanation is that the sell-offs occurred as a deliberate attempt to scare innocent holders out of the market through fear and intimidation [of further loss], is that not financial terrorism?"

"As I’ve indicated previously, the key to these sudden and sharp silver sell-offs is in the sequence of events. In every single instance, it is never a case of investors suddenly deciding to sell and that collective selling action which precipitates the price decline. Rather, it is always the case of the price first being suddenly rigged lower [at the quietest of trading times] and investors then reacting to those lower prices and selling after the price has come down. Also, in every single instance, those who initiated the suddenly lower prices [the COMEX commercials], then reap the whirlwind of their financial terrorism by buying all the positions they were able to intimidate into being sold. Scare folks into selling so that the financial terrorists can then buy from those that had been terrorized."

"This is a crooked, rotten racket that has been going on for decades in silver. The only difference is that it is not al Qaeda or some militant terrorist group at work, but a consortium of leading banks and firms financially terrorizing that segment of the public that has chosen to invest in silver. Instead of being organized by bin Laden, the silver terrorists are organized and protected by the CME Group."

I have an embarrassingly large number of stories today, so I'm going to pass the buck again...and leave the final edit up to you.

 

¤ Critical Reads

Older, Suburban and Struggling, ‘Near Poor’ Startle the Census

They drive cars, but seldom new ones. They earn paychecks, but not big ones. Many own homes. Most pay taxes. Half are married, and nearly half live in the suburbs. None are poor, but many describe themselves as barely scraping by.

Down but not quite out, these Americans form a diverse group sometimes called “near poor” and sometimes simply overlooked — and a new count suggests they are far more numerous than previously understood.

This very sad [but very true] story was posted in The New York Times on Friday night...and I thank Roy Stephens for sending it my way.  The link is here.

Read more...

On Capital Flight and Forced Repatriation

Doug Casey has been talking about getting some of your assets out of your home country for years...out of the reach of your government...especially the U.S. government.

Capital flight is a perfectly logical consequence in today’s world. Barely a day passes where we are not reminded that nothing is safe any more. Not our currencies, not our equities, not our bonds and certainly not our banks/brokers.

The word Repatriation sounds nice enough but really it means Theft and expropriation. There will be nothing voluntary about this. There will be little [if any] due process.

If this happens...and the folks in Brussels are pushing hard...a very dangerous precedent will have been set. Flight capital will have been made illegal.

This story was posted over at zerohedge.com on Saturday...and I thank Washington state reader for sending it along.  The link is here.

Read more...

The Run On Europe Begins As Global Investors Head For The Hills...

Until recently, the concern about Europe has been mostly theoretical--a potential train-wreck that would occur if/when the world's lenders decided that the continent's problems extended beyond the basket case known as Greece and cut lending to Europe's "core."

Well, that concern is no longer theoretical...it's happening, as the world's lenders are increasingly deciding that it's better to be safe than sorry, and they're pulling their money out of Europe.

This editorial by Henry Blodget is posted over at the businessinsider.com website...and I thank Australian reader Wesley Legrand for forwarding it.  The link is here.

Read more...

Dollar Pre-Eminence Grows as Foreign Banks Double Deposits at New York Fed

Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe's debt turmoil, buttressing the dollar’s status as the world’s reserve currency.

Forty-seven non-U.S. banks held balances of more than $1 billion at the New York Fed as of Sept. 30th, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP Plc, the world’s largest inter-dealer broker. The dollar has appreciated 7.2 percent since Standard and Poor's cut the nation’s AAA credit rating Aug. 5th, the second-best performance after the yen among developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes.

This Bloomberg story was filed yesterday...and I thank reader Scott Pluschau for sending it along.  The link is here.

Read more...

Former AIG CEO Sues US Government for at Least $25 Billion

A company run by former American International Group Chief Executive Maurice "Hank" Greenberg Monday filed a $25 billion lawsuit against the United States, claiming that the government takeover of the insurer was unconstitutional.

In its complaint, Greenberg's Starr International said that in bailing out AIG and taking a nearly 80 percent stake, the government failed to compensate existing shareholders. It said this violated the Fifth Amendment, which bars the taking of private property for public use without just compensation.

A fine outstanding citizen like Hank Greenberg hiding behind the skirts of the U.S. Constitution?  That's rich!  Mr. Greenberg is Honorary Vice Chairman and Director of the Council on Foreign Relations and a member of David Rockefeller's Trilateral Commission.  West Virginia reader sent me this Reuters piece that was posted over at cnbc.com yesterday...and the link is here.

Read more...

MF Global trustee: $1.2 billion missing

A trustee seeking to distribute customer securities overseen by bankrupt MF Global Inc. estimated Monday that $1.2 billion in client money may be missing, twice as much as previously expected. "At present, the Trustee believes that even if he recovers everything that is at US depositories, the apparent shortfall in what MF Global management should have segregated at US depositories may be as much as $1.2 billion or more," the trustee said in a statement.

The 1-paragraph story posted over at marketwatch.com yesterday is cut and paste above...and the link to the hard copy is here.  I thank Casey Research's own Bud Conrad for sharing this story with us.

Read more...

MF Global may be the next Lehman, Turk tells King World News

GoldMoney founder and GATA consultant James Turk told King World News yesterday that the bankruptcy of the MF Global brokerage house may be the new "Lehman moment" for world markets. Turk speculates that the physical markets for the precious metals now may separate from the paper markets.

I thanks Chris Powell for writing the introduction...and the link to the KWN blog is here.

Read more...

Did Someone At FINRA Do Corzine A Favor And Waive His Registration Requirements?

Given that Corzine was out of the industry for about 12 years – which is quite a bit beyond the 2 year window – he needed to re-qualify by examination but there’s no indication that he sat for the Series 7 or the Series 24, which he needed upon his return to a FINRA member firm.  

This really puzzles me.  I mean, you know, FINRA makes such a BIG deal about not granting registration waivers, particularly when someone has been out of the business for a few weeks or months beyond the two year window.  Since I don’t see any indication that Corzine took the two exams at issue, did FINRA grant him a double waiver? Who authorized that?  Why?

This story was posted in Forbes on November 4th...and I thank reader 'David in California' for sending it along.  Better late, than never..and the link is here.

Read more...

Britain 'will join euro before long’, says German finance minister

Wolfgang Schäuble said that, despite the current crisis in the eurozone, the euro will ultimately emerge as the common currency of the entire European Union. He said he “respects” Britain’s decision to keep the pound, but insisted that the survival and eventual stabilisation of the euro will convince non-members to join the currency club. “This may happen more quickly than some people in the British Isles currently believe,” he added.

Is this guy dreaming in Technicolor...or does he know something that the rest of us don't?  This very short story appeared in The Telegraph last Friday...and is worth skimming.  It's another Roy Stephens offering...and the link is here.

Read more...

Credit Default Swaps as a Scare Tactic in Greece

As the debt mess in Europe deepens, bankers are pressing Greece's bond holders to swallow big losses.

Behind the scenes, however, BNP officials seem to be twisting some arms. A big point of contention is — surprise! — derivatives.

Investors who own Greek debt and have bought insurance on it, in the form of credit default swaps, wonder why they should accept the offer that’s on the table. If Greece stops paying after the restructuring, those swaps are supposed to cover their losses, much the way homeowner's insurance would cover a fire.

This story from the Saturday edition of The New York Times was written by Gretchen Morgenson...and is well worth your time.  I thank reader Phil Barlett for this story...and the link is here.

Read more...

Debt crisis spreads despite Spanish election result

The Euro zone’s debt crisis swept closer to the heart of Europe yesterday despite a clear-cut election victory in Spain for conservatives committed to austerity, adding to pressure on the European Central Bank to act more decisively.

Austrian bank supervisors instructed the country’s banks to limit future lending in their east European subsidiaries, another sign of the potential knock-on effects of the euro zone crisis for economies around the world.

The decision by Austria, which appears to be unilateral, shows how even the euro zone’s strongest economies are feeling the pressure of the sovereign debt crisis.

This story appeared in the Irish Times yesterday...and is a must read.  It's another story that Roy Stephens sent me, for which I thank him.  The link is here.

Read more...

Hungary turns to IMF as stress mounts in Eastern Europe

Rising bond yields and a weakening forint has forced the country's Fidesz government to swallow its pride and request a "precautionary" credit from both the International Monetary Fund and Europe, reportedly of €4bn b(£3.4bn).

The growing likelihood that Hungary's debt will be downgraded has accelerated capital flight, causing two-year debt yields to jump from 5.5pc to 7.5pc since September.

"Hungary is a warning sign," said Neil Shearing from Capital Economics. "It is the country where the risks are most acute in the region, so this is where you would expect to trouble to start. We fear this may spread to Ukraine and the Balkans.

This Roy Stephens offering is an Ambrose Evans-Pritchard piece that was posted in The Telegraph late last night.  It, too, is well worth the read...and the link is here.

Read more...

Moody's warns over French credit rating

A rise in interest rates on French government debt and weaker growth prospects could be negative for the outlook on France's credit rating, Moody's warned in a report today, adding to pressure on European debt markets.

Worries that France has the weakest economic fundamentals among the euro's six AAA-rated countries have drawn the euro zone's second largest economy into the firing line in the debt crisis this month.

The rating agency said the deteriorating market climate was a threat to the country's credit outlook, though not at this stage to its actual rating.

This is the second story from The Irish Times in today's column...and is another Roy Stephens offering.  The link is here.

Read more...

Germany dismisses eurobond plan ahead of EU commission proposals

The European Commission faces a tough sell in Germany as it advances long-awaited plans for a “eurobond” system for countries in the single currency to issue debt with a common euro zone guarantee.

Even before the commission unveils its proposals tomorrow, Berlin’s response to the initiative has been as swift and dismissive as always...“The chancellor and the federal government do not share the belief of many that eurobonds would be a cure-all for the crisis,” said Steffen Seibert, government spokesman...“Rather, they see the danger that such eurobonds would distract from getting to the root of the problem.”

Let's hope they resist forever.  This is another story posted over at the irishtimes.com website...and is, of course, another Roy Stephens offering.  The link is here.

Read more...

Debt crisis exposes cracks in primary dealer model

The transformation of government bonds into a credit market is raising the prospect of the collapse of the primary dealer model, removing any semblance of secondary liquidity and meaning euro zone debt managers may struggle to prop up distribution.

"The primary dealer system in Europe is wandering slowly to the elephants' graveyard of financial markets, as liquidity dries up in all but the most liquid of government bonds," said one public sector banker.

Investment banks are increasingly weighing the benefits and costs of dealerships, especially the extent and manner of their participation in increasingly volatile auctions.

This eye-opening Reuters story was filed from London on Friday...and is well worth the read.  I thank reader U.D. for spotting this story...and the link is here.

Read more...

Bernanke Is Going To End Up Bailing Out All Of Europe

Bernanke will not be willing to let the European Central Bank's ineffectiveness infect U.S. banks and destroy the global economy.

He points to statements from well-known independent economist Ed Yardeni to elaborate on that idea:

"Given the ECB’s reluctance to act, I suspect that the Fed will spearhead the formation of a Global Liquidity Facility (GLF) to avert a global financial meltdown. Fed Chairman Ben Bernanke demonstrated that he is a master at putting together such emergency measures back in 2008. In effect, it would act as the world’s central bank. Mr. Bernanke is clearly very worried about the prospect that the European sovereign debt crisis is a contagion that could spread to the US, as evidenced by his bizarre town hall meeting with troops returning from Iraq on November 10. The GLF would receive deposits from the Fed and other participating central banks, including the ECB. The funds would be used to buy the bonds of debt-challenged governments that would be required to accept strict supervision of their fiscal and regulatory policies by the IMF."

This story was posted over at the businessinsider.com website...and I thank Australian reader Wesley Legrand for sharing it with us.  The link is here.

Read more...

Chinese Fund Managers Sentenced to Death after Cheating Investors out of 1 Billion USD

Two brothers and their father were sentenced to death on Monday for cheating 15,000 investors out of over $1.1 billion in east China’s Zhejiang province.

Ji Wenhua, president of the Yintai Real Estate and Investment Group, was sentenced to death for the crime of fund-raising fraud, said the Intermediate People’s Court in the city of Lishui, where the company was based.

The family, along with others, had illegally raised over 7.04 billion yuan ($1.12 billion) between 2003 and 2008 before they were taken into police custody in 2008, holding the truth from investors that their company had been losing money for years, according to the court.

This story was filed from Hangzhou, China...and posted over at thechinamoneyreport.com about ten days ago...and I thank reader Randall Gallimore for sending it to me.  The link is here.

Read more...

Gold firm owner sentenced in $29.5 million Ponzi scheme

The founder of a Lake Worth-based precious metals firm that was a front for a $29.5 million fraud was sentenced Friday to more than 12 years in prison.

Jamie Campany, the owner of the grandiose-sounding Global Bullion Exchange, took money from more than 1,400 customers nationwide who thought precious metals would be good to have in uncertain economic times. The firm told customers that the metals would be stored at secured locations until they wanted to sell.

But those metals were never bought, Campany admitted. Global Bullion Exchange was a Ponzi scheme, with old clients getting paid with new clients' money.

The story was posted over at the South Florida website sunsentinel.com...and I thank Florida reader Donna Badach for digging this item up on our behalf.  The link is here.

Read more...

Silver: Investment Demand Is Just Part of the Picture

Here's a short essay about silver that was written by Casey Research's own Louis James.  It was posted in yesterday's edition of Casey's Daily Dispatch.

This is a very interesting article...and well worth your time.  The link is here.

Read more...

Despite rising inflation, Iran advises against buying dollars or gold

Iran's economy and finance minister, Shamseddin Hosseini, advised citizens not to buy dollars or gold coins because of their high cost, the newspaper Iran reported.

"Foreign currencies and gold coin rates will drop so those who buy them at high cost must not complain later," Hosseini said yesterday, according to the Tehran-based daily.

Rising inflation in Iran, which the International Monetary Fund has forecast will reach an annual 22.5 percent this year from 12.4 percent in 2010, and a cut in bank deposit interest rates have boosted demand for foreign currency and gold.

I borrowed this Bloomberg story from a GATA release on Sunday...and the link is here.

Read more...

Kazakhstan buys its own gold output

Kazakhstan plans to begin construction of a third gold refinery next year to process an expected increase in volumes of the precious metal, the country’s Industry Ministry said on Monday.  There are currently two other gold refineries in Kazakhstan.

Kazakhstan, Central Asia’s largest economy, has ambitious plans to raise annual gold output to 70 tonnes or more by 2015. It produced 27.5 tonnes of gold in the first nine months of 2011, including 12.5 tonnes of refined gold, official data show.

The central bank has committed to augment its gold reserves and ease exposure to the dollar by purchasing Kazakhstan’s entire bullion output from next year until at least 2014 or 2015.

This Reuters story was posted over at China Business News on the weekend...and is well worth the read.  I thank reader A.C. for bringing it to our attention.  The link is here.

Read more...

Twice in a week, the Financial Times pays grudging respect to gold

Here are a couple of stories out of the Financial Times...one on Friday and the other on Thursday.  They are printed in the clear in this GATA release.  Both are must reads...and the link is here.

Read more...

Just another option expiry in gold, Embry tells King World News

Sprott Asset Management's John Embry told King World News yesterday morning that the smashing of gold and silver prices today was a predictable consequence of the advent of futures option expiry on Tuesday. He advises being ready for "extreme money creation at all levels and virtually throughout the world."

I thank Chris Powell for wordsmithing the introduction...and the link to this must read blog is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

Nothing improved in Europe over the weekend and, to put it bluntly, things are actually going from bad to worse, as the slide into oblivion is starting to look terminal.  The situation is hopeless...and it's just a matter of how the end will manifest itself...and over what time period.

With the sharp sell-offs that occurred in both gold and silver at the market open on Sunday night, I must admit that yesterday's price action did not come as a complete surprise.

Gold volume was pretty heavy...and I'm sure there was extensive long liquidation by the technical funds...and the big Commercial traders were covering shorts...and the small Commercial traders [Ted Butler's raptors] were going long.  The preliminary open interest numbers for yesterday's trading day didn't mean a thing...and Friday's final open interest numbers showed declines, but nothing special.

The fortunate thing about Monday's action is that it will all be in Friday's Commitment of Traders Report...and the cut-off for that is at the end of Comex trading today.  All of the big declines in both gold and silver that began the day after the cut-off for last week's report will also be in it, so we should get a clear picture of who did what during this major bear raid in the precious metals.

Here's the 1-year gold chart.  You can see that the Commercial traders took out gold's 50-day moving average with real authority yesterday...and that should pretty much wipe out virtually all of the leveraged long holders in the tech fund [Non-Commercial] category...and the speculative long traders in the Nonreportable category as well.  I'm sure Friday's COT report will show that.

(Click on image to enlarge)

Although silver got hit quite hard yesterday, it wasn't on a lot of volume, as there's virtually nothing but air down at these levels.  The 50 and 200-day moving averages were blown out months ago...and virtually every leveraged long was blown out ages ago as well.  Even if the price moves lower from here, it will be virtually on fumes and vapours.  What few spec longs that are left, wouldn't be worth the effort to go after.  Yesterday's net volume in silver was 37,000 contracts...and I'd bet that a huge chunk of that was high-frequency traders...as there would have been almost no volume at all if they weren't in there screwing around.  It would turn into a very illiquid market in a real hurry if the HFT boys weren't in it.

I'd also bet that the dollar price rise after silver's 11:00 a.m. Eastern time low didn't occur on much real volume either...and it actually have been a short-covering rally.  Here's the 1-year chart..

(Click on image to enlarge)

Both gold and silver got sold off a bit during trading in the Far East earlier today...but both metals then rallied until shortly before 9:00 a.m. in London...and it remains to be seen where their respective prices go from here.  Gold volume [as of 5:15 a.m. Eastern] is already getting up there...and the silver volume numbers are still M.I.A.  One has to wonder when the CME is going to get around to fixing this problem.

We are only a week away from First Day Notice for delivery into the December delivery month...and all futures and options traders have to either sell their positions, roll them over, or stand for delivery.  The next five trading days for gold and silver are going to be very busy...and very interesting.

As always, I await the New York open with great interest.

See you on Wednesday.