Casey Research Publication
Gold & Silver Daily
"Over four years of trading data shows that the gold price, on average, always declines from the moment that London opens, right through Comex trading in New York...and ends shortly before the London close."
 

¤ Yesterday In Gold & Silver

As you already know, the gold price didn't do much of anything in the Far East during their Wednesday trading session.  But once London opened at 3:00 a.m. Eastern time yesterday morning, the price began a slow slide to its low of the day, which was the 3:00 p.m. London gold fix...10:00 a.m. in New York.

[As an aside, you can see from the Kitco gold chart below how the gold price gets sold off going into the London p.m. fix.  It happened every day this week...and most other days as well.  I'll have more on that in 'The Wrap'.]

The subsequent two hour rally took gold briefly above its Tuesday closing price in New York...but that didn't last for too long as gold got sold off shortly before Comex trading ended and the electronic New York Access Market began at 1:30 p.m. Eastern.  The gold price closed down $10.90 spot...and volume was on the light side...relatively speaking.

Like gold, silver didn't do much in Far East trading yesterday...and didn't do much in London trading either...and the price was basically unchanged when Comex trading began at 8:20 a.m. in New York yesterday morning.

From the Comex open, the silver price was up fifty cents in just few minutes but, like gold, got sold off into the London p.m. gold fix.  The subsequent rally ran the silver price up to the $42 mark before a not-for-profit seller showed up...and that, as they say, was that.

Silver finished up sixteen cents on the day, but would have obviously done much better than that if 'da boyz' hadn't shown up at the $42 mark to hammer it flat.  Volume was on the lighter side...most of it in the December delivery month.

The gold stocks spent most of the Comex trading session on either side of unchanged...with the low at the London p.m. gold fix the most prominent [and regular] feature.  But once the gold price got hit shortly before the close of Comex trading at 1:30 p.m. Eastern, the stocks rolled over and headed down with some authority.

But then that buyer with very deep pockets showed up once again...and the HUI turned on a dime.  The gold stocks gained back almost 2 percent of their losses by the close...and the HUI only finished down 0.51%.  I hate to keep harping on this, but who is the buyer...and what do they know that we don't?  One of the things I do know is that they've been pouring billions of dollars into gold stocks since Wednesday of last week.

Despite the fact that the silver price spent most of the day in the black, the silver equities gave back a large part of their earlier gains on the day...and Nick Laird's Silver Sentiment Index finished down a smallish 0.52%.

(Click on image to enlarge)

The CME's Daily Delivery Report for the second delivery day in September showed that 76 gold, along with 550 silver contracts, were posted for delivery on Friday.  In gold, the shorts/issuers were Credit Suisse First Boston and ABN Amro...two names you don't see that often.  It almost goes without saying that JPMorgan was the receiver/stopper for 70 of the 76 contracts.

In silver, the big short/issuer was Barclays with 488 contracts posted for delivery.  The two biggest longs/stoppers were the Bank of Nova Scotia [240 contracts]...and Merrill with 100 contracts.  There were a lot of other smaller issuers and stoppers [Ted Butler's raptors]...and yesterday's delivery report is worth looking over. The link is here.

For a change, there were no reports from either GLD or SLV yesterday.

But the U.S. Mint had another sales report to end the month of August.  They sold another 7,500 ounces of gold eagles...1,500 one-ounce 24K gold buffaloes...and another 300,000 silver eagles.

For the month, the mint sold 112,000 ounces of gold eagles, which was almost double July sales...and the second biggest sales month of the year so far.  They sold 28,000 one-ounce 24K gold buffaloes, more than double what they sold in July...and also the second largest sales month of 2011.

And, for the month of August, silver eagle sales totaled 3,679,500...just sliding past May's sales to take second place year-to-date.  So far in 2011, silver eagle sales have totaled 28,951,000...so, unless the wheels fall of the silver market, or the U.S. Mint pulls a fast one like they did last December [shoving a lot of December 2010 sales in January 2011], then 40 million for the year is well within reach.  And I sure do hope that you're getting your share!

The Comex-approved depositories took in 602,450 troy ounces of silver on Tuesday...and shipped a smallish 18,236 ounces out the door, for a net increase of 584,214 ounces.  The link to the action is here.

Here are a couple of free paragraphs from silver analyst Ted Butler's mid-week comments to his subscribers.  I consider this to be one of his landmark commentaries since I began following his work over a decade ago...and I wish I could post the whole thing.  I told Ted that on the phone yesterday...and he's seriously considering putting it up it in the public domain.  If he does, it will be posted in this column immediately.

"Restating what I feel is the obvious; the dramatic gold rally was caused by aggressive buying by the group of speculative traders which are classified as commercials by the CFTC. Many make the mistake of assuming that just because these traders are classified as commercials that means their trading is purely for legitimate hedging purposes. Nothing could be further from the truth, as the bulk of their trading is speculative in nature. Therefore, while it would be technically correct to say that the gold rally has been caused by speculative buying, most would assume that meant new buying of long positions by easily-identified speculators such as hedge funds and momentum traders. That is definitely not what has transpired in gold recently, as the “normal” hedge fund and technical fund speculators have been selling COMEX gold contracts, not buying them. Instead, the big COMEX gold speculative buyers have been the commercials who were previously heavily short. Correctly identifying the true speculators driving a market is a distinction that makes all the difference in the world. That so few see it is amazing to me."

"There is little doubt that the commercial gold shorts have taken a horrific beating in buying back their short contracts. My guess is that the collective loss on the covered gold contracts so far [since early August - Ed] is on the order of $1.5 billion. Such a loss, even when spread equally among the roughly 40 traders classified as COMEX commercial gold shorts, amounts to a hefty per entity average loss of $37.5 million each. And I’m speaking of closed out losses only; there is still a large number of open gold shorts that the commercials are holding whose resolution remains to be seen. Those “open” losses run to an additional $8 billion at current gold prices. It is imperative to recognize the unprecedented magnitude of these closed out and open gold losses. It’s not enough to say that these commercials lost big-time; having never lost before on such a scale, the turnabout for these commercials must be shocking to them."

Despite my best efforts at editing, I still have a rather large number of stories that may [or may not] pique your interest, so I'll leave the final edit up to you.

 

¤ Critical Reads

One Way to Fix the SEC

Here's a Matt Taibbi blog posted over at Rolling Stone magazine yesterday.

A new SEC would pay its top officials much higher salaries (in line with top private-sector attorneys) but not allow any of them to have previously worked on Wall Street or to go there for five years after they leave the agency. It would have genuine law-enforcement power, as opposed to the SEC’s civil-suit-only mandate, and be able to indict a firm and its top executives for wrongdoing. In other words, the agency would have the chops to regulate a powerful industry badly in need of it, free of conflicts of interest.

It’s now crystal clear -- and beyond unconscionable -- that the SEC stopped doing its job long ago. We need to rebuild it on a more secure foundation.

This is all very wonderful, but the SEC is only there for one reason...to protect the criminals and banksters both in New York and in Washington.

It's a short read...and is Roy Stephens first offering of the day.  The link is here.

Read more...

‘Green Jobs’ Solar Company Obama Touted Last Year Declares Bankruptcy

Solyndra, a San Francisco based solar panel company that received a $535 million loan guarantee from the federal government has declared bankruptcy. Last year President Obama touted the company as "leading the way" in the green jobs future he envisions.

Just a few months ago, ABC News revealed that one of the major financial backers for Solyndra is also a major donor to the Obama campaign.

The donor, Steve Westley, has subsequently been named to the President's Energy Advisory Board. Solyndra was supposed to have produced 4,000 jobs with the loan guarantee. Now all of the company's employees have been laid-off. Mr. Westley is still on the advisory board.

I remember the original fuss over this when Obama first made the announcement from the factory floor.  This short 2-minute video is posted over at breitbart.tv...and I thank reader Bryan Bishop for sending it along.  The link is here.

Read more...

The World from Berlin: 'Italy Is Burning and No One Is Putting It Out'

Italian Prime Minister Silvio Berlusconi and his ruling coalition have made a raft of changes to their proposed austerity package, causing many to doubt Rome's intentions. German commentators say that the country's future looks bleak.

With a players' strike currently occupying the thoughts of soccer-mad Italians, it's perhaps appropriate that Silvio Berlusconi has moved the goalposts over the debt-ridden country's austerity package. The Italian prime minister and his coalition have agreed to a raft of changes to the proposed budget, including scrapping a tax on the rich, in a move which has led to confusion in the financial markets and could well result in a confrontation with the European Central Bank.

It's not an overly long read, but you can tell from the tone of this, that Italy is also on the slippery slope.  One wonders how long France and Germany can hold out if Italy goes.

This is Roy Stephens second offering of the day.  It's a posting over at the German website spiegel.de...and the link is here.

Read more...

Germany Acts Alone: Self-Important Approach Worries Berlin's Allies

The euro has failed, though more politically than economically, according to an article in the September edition of US magazine Vanity Fair. "Conceived as a tool for integrating Germany into Europe, and preventing Germans from dominating others, it has become the opposite," financial journalist and author Michael Lewis writes. "For better or for worse, the Germans now own Europe."

The fact that a reunited Germany has weathered the Western world's financial crisis with ease, at least so far, has made its neighbors and friends uneasy. In the political salons of Washington and Paris, from Brussels to Madrid, and inside political broadsheets and think tanks, people are asking whether the new Germany is altering its foreign policy. Is Berlin turning away from the European Union, or is it the opposite, that it wants to use the currency to gain control of the entire continent -- something it couldn't do with weapons?

This is another Roy Stephens offering from spiegel.de yesterday...and the link is here.

Read more...

Merkel backs euro fund boost, faces revolt risk

German Chancellor Angela Merkel's cabinet approved new powers for the euro zone's bailout fund on Wednesday, but she faces an uphill battle to convince party skeptics to back efforts to contain the crisis.

Concerned that Germany's parliament has little control over the European Financial Stability Facility (EFSF), some members of Merkel's center-right coalition are threatening to oppose boosting its powers when the Bundestag (lower house) votes on September 29th.

This Reuters piece was posted yesterday evening from Berlin...and I thank Roy Stephens once again.  The link is here.

Read more...

Swiss franc jumps; government will 'live with' strength

The Swiss franc jumped against the euro and the dollar on Wednesday after a top Swiss government official said the nation would have to live with a strong currency and the Swiss National Bank (SNB) stayed away from intervention.

This Reuters story was filed from New York yesterday...and I extracted it from a GATA release...and the link is here.

Read more...

FTSE suffers worst run since financial crisis

Britain's benchmark share index dropped 421 points or 7.2pc over a rollercoaster August to close at 5394.53 on Wednesday, the biggest monthly fall since May 2010.

The drop marked a fourth consecutive month of decline, signalling the index's longest negative run since the period from November 2007 to February 2008, when the global meltdown was unfolding.

Why is anyone surprised, dear reader, as this is Doug Casey's 'Greater Depression' unfolding just as he said it would.

This story was posted over at The Telegraph last night...and it's another Roy Stephens story...and the link is here.

Read more...

Russia, Colombia buy gold in July - IMF data shows

Russia raised its gold reserves again in July, while Colombia raised its official holdings of gold for the first time in over 13 years, highlighting a move by emerging economy central banks to allocate more of their reserves into gold and away from benchmark currencies.

Russia has been adding to its gold reserves just about every month for the last five years...and I post the graph on the 20th of every month, so this should come as no surprise to you.

This tiny Reuters story was sent to me by reader Charley Orr yesterday...and the link is here.

Read more...

Wall Street Journal and New York Times commentaries urge: Murder gold

This is your big read of the day...and it's a must read as well.  The headline pretty much says it all...and both stories are printed in the clear in this GATA release.  Chris Powell's preamble to both stories also falls into the must read category as well.  Both stories are posted over at gata.org website...and the link is here.

Read more...

5 reasons gold is headed for $3,000

Here's a story that was posted over at money.msn.com on Tuesday.

Recent dips are giving us another chance to get in on the great gold rush. The factors driving the metal higher -- broken governments and fragile economies -- aren't going away.

JPMorgan Chase analyst Colin Fenton just predicted gold could spike to $2,500 an ounce over the next four months. And Tom Winmill, who manages the Midas Fund, thinks gold could trade as high as $2,200 next year, largely due to national budget issues and economic uncertainty. Then in early 2013 after the U.S. presidential elections, an ongoing inability to deal with national spending and debt issues may push it even higher, he believes.

There's a lot of good stuff in here...but then there's this paragraph that comes under the heading 'How to buy gold'...What I don't suggest, despite the barrage of advertisements from gloom-and-doomers like Glenn Beck, is that you buy actual gold as an investment. The reasons: It's hard to find a reputable dealer with a fair price. Plus you may have to pay to store your gold. "Owning physical (gold) is a dumb idea," says Hathaway, of the Tocqueville Gold Fund. "I don't recommend it."

I asked John Hathaway about this comment...and here's what he had to say in an e-mail to me yesterday evening: "For small investors, it makes more sense  to own the ETF, which I fully understand is not the same thing as physical.  We own three tons of physical in our mutual fund, so I don’t think it is a bad idea.   I have a neighbor who is trying to sell ten 100 oz. bars of silver, and he can’t get a decent bid.  And of course, I don’t believe in trading physical, but that’s his problem.  As a trader, he should have owned SLV.  I disagree with those who claim the ETFs for gold and silver are frauds, so yes, for most retail investors, in my opinion it makes more sense for them to own the ETFs.  With 20-20 hindsight, I wish I hadn’t put it quite that way for the article."

I thank reader Dan Zignego for sending me this story...and the link is here.

Read more...

Critical Levels to Watch on Gold and Silver: Louise Yamada

With gold and silver consolidating longer-term gains, King World News interviewed legendary technical analyst Louise Yamada to see where things were heading from here.

Because the gold and silver prices are principally driven by the internal structure of the Commitment of Traders Report, I'm not a big fan of T.A. in these circumstances...and so I don't necessarily agree with what she has to say...especially when you consider what Ted Butler had to say earlier in this column.

But, whatever floats your boat...and the link to the KWN blog is here.

Read more...

Gold & Silver in the Early Stages of a Massive Bull Market - Stephen Leeb

In yesterday's column I posted the blog of this interview.  Now the full audio interview with Stephen Leeb is posted over at the King World News website...and the link is here.

Read more...

Expect More QE to Send Gold Prices Soaring - Rick Rule

With gold closing the month of August solidly above the $1,800 level, King World News interviewed one of the most street-smart pros in the resource sector, Rick Rule, founder of Global Resource Investments, which is now part of the $10 billion strong Sprott Asset Management.

This short blog is well worth your time...and the link is here.

Read more...

Shift focus to precious metals, says JP Morgan chief strategist

Longer-term inflation fears and a slowdown in the developed markets have boosted the attractiveness of precious metals, according to JP Morgan Asset Management’s chief markets strategist.

In a market insight report for August, Rebecca Patterson said the case for investing in supply-constrained commodities – such as gold, crude oil, copper, platinum and palladium – would grow markedly as investors looked for opportunities amidst wider macroeconomic difficulties.

This story was posted over at the citywire.co.uk website yesterday...and I thank reader Howard Brown for sending it along...and the link to this short read is here.

Read more...

U.S. Elites Begin To Confront The Paper Dollar

There is nowhere left to hide. America’s governing elites begin to internalize the magnitude of their failure to generate jobs.  The Congressional Budget Office now predicts worse than 8% unemployment until 2014.  America begins to engage, seriously, with the implications of the faltering dollar and reconsider the appeal of the gold standard. From The New Yorker to The National Interest to The Washington Monthly to The Nixon Foundation, thoughts turn to gold.

The New Yorker’s August 29 Market Watch, by Talk of the Town deputy editor Nick Paumgarten, celebrated the 40th anniversary of the abandonment of gold and the experiment begun with the paper dollar standard.  The tone? “Don’t let the door hit you, Paper Dollar, Jr., on the way out.”

This short 2-page article was posted in the Monday edition of Forbes...and is Roy Stephens final offering of the day.  It's also a must read as well...and the link is here.

Read more...

 

¤ The Funnies

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For more information, please visit the website or contact Erick J. Bertsch, VP Corporate Development, toll free at 1-888-355-1766 or by email at ebertsch@greatpanther.com


 

¤ The Wrap

There are two ways to conquer and enslave a nation.  One is by the sword.  The other is by debt. - John Adams, 1826

Gold volume fell all the way down to 168,000 contracts yesterday...which is the lowest volume day in quite some time.  Silver's net volume was a respectable 35,000 contracts.  Considering the fact that silver volume was less than 2,000 contracts at the London open yesterday morning, a lot of contracts were traded in New York...and I would suspect that most of it was high frequency traders...and that might apply to gold as well.

It was a pretty quiet trading day in New York yesterday...and the only real 'action' was in silver, where its attempt to break above $42 ran into an all-to-eager seller.

As you may remember, I've pointed out on several occasions that the only way out for a short seller in the Comex futures market was to either cover, deliver...or default.  Well, I got a rather interesting e-mail from reader John Scola yesterday about that very thing...and he added a fourth way out for JPMorgan et al...the CME and CFTC could change the rules.  I must admit, that this is a distinct possibility.

When I was discussing yesterday's gold price activity at the top of this column, I mentioned the fact that the gold price gets sold off as the London p.m. fix approaches...and a lot of times, the low in New York at 10:00 a.m. Eastern time is the low of the day.

Well, there's a reason for that.  Here's a chart that Nick Laird over at sharelynx.com made up a couple of years back.  I've posted it many times...and here it is again.  Note the price roll-over at the London open...the small dip at the London a.m. gold fix...and the big dip at the London p.m. gold fix...and also the drop into the London close.  The easily visible dips at the London p.m. fix all three days this week stand out like a sore thumb on the Kitco chart at the top of this column.

As Nick says on the chart..."The average gold price has been obtained from 4 years of data---from March 2006 through to March 2010---approximately 1,000 trading days.  So what you see in the graph below is no fluke. Over four years of trading data shows that the gold price, on average, always declines from the moment that London opens, right through Comex trading in New York...and ends shortly before the London close.

Even though trading is thin when London and New York are not open, the price trend is always up.  This sort of price activity never happens in a free market...ever!  And this graph proves that for all to see.

(Click on image to enlarge)

Gold and silver prices didn't do much of anything during most of the thinly-traded Far East market earlier today...and drifted lower into the London open at 3:00 a.m. Eastern time.  Once London opened, both metals rallied a bit, but that didn't last...and as of 5:15 a.m. Eastern time, both metals are basically unchanged from Wednesday's close in New York.  Volume is pretty light in silver...and getting up there a bit in gold.

Today is the beginning of a new month.  I'm not expecting any real fireworks until after the Labour Day long weekend, but under the circumstances we face today, you just never know.  And, as always, I look forward to the New York trading session with great interest.

Before signing off for the day...I'd like to remind you one more time of the FREE on-line Casey Research sponsored event happening on September 14th at 2:00 p.m. Eastern time.  It's entitled "The American Debt Crisis"...and it's posted over at the americandebtcrisis.com website.  The introductory trailer runs 8:33...and if you want to register for this FREE webinar, you can just type in your e-mail address in the spot indicated in the right sidebar.  The link to all of the above, is here.

See you on Friday.