Gold & Silver Daily
 

¤ Yesterday In Gold & Silver

There wasn't a lot of price activity in gold during the Far East and early London trading session on Thursday, but that all changed about 10:10 a.m. BST when gold spiked up almost fifteen bucks---and it took JPMorgan et al a lot of Comex contracts to put that fire out.  From there, gold declined quietly until about 3:20 p.m. in electronic trading in New York---and traded sideways from there into the close.

The CME Group recorded the low and high ticks as $1,325.00 and $1,346.80 in the August contract.

The gold price finished the New York session yesterday at $1,335.30 spot, up $8.70 from Wednesday's close.  Not surprisingly, net volume was quite substantial at 139,000 contracts---and I would guess at least 25 percent of that amount was used to snuff the gold spike.

It was more or less the same price pattern in silver, but the high tick came a bit later in this metal---and the price got sold down about a percent after that as the Thursday trading session came to a close.

The low and high in silver were $21.12 and $21.63 in the September contract.

Silver finished the Thursday trading session at $21.415 spot, up 32 cents from Wednesday's close.  Volume, net of July and August, was huge at 60,500 contracts, but 5,200 contracts of that amount was traded in December, which may have been a roll-over out of September, but one would think that it's way to early for that.  Setting that aside for the moment, I would guess that silver volume was around 50 percent higher than normal, so "da boyz" obviously worked overtime to get the silver price back in the box.

The platinum price rallied unsteadily starting around 8 a.m. Hong Kong time on their Thursday---and that rally picked up a bit more steam at the Zurich open, with the high tick coming in that metal about the same time as the high tick in silver.  after that it was all down hill until shortly after 10 a.m. in New York---and platinum chopped sideways into the close, finished the day at $1,508 spot, up eight dollars from its Wednesday close.

Palladium didn't do much until about 10 a.m. BST in London. The smallish rally that began at that point got hit hard a bit over an hour later---and about two hours later a determined seller had palladium down 15 bucks from its high tick.  From that point it rallied back to a buck above unchanged shortly before the Comex close, but was closed down a dollar on the day to $869 spot.

The dollar index finished the Wednesday trading session at 80.03---and spent the next eight hours clinging to the 80.00 level.  But someone came along at 2:20 p.m. Hong Kong time on their Thursday afternoon---and rallied the index up to the 80.19 mark by 10 a.m. New York time, which coincided with the London p.m. gold fix.  From there the index gave up a handful of basis points going into the close---and it finished at 80.12, which was up 9 basis points on the day.

The gold stocks gapped up a bit at the open---and hit their highs about fifteen minutes later---and then sank back to about a percent above unchanged until shortly after 2 p.m. EDT.  Then the rolled over with a vengeance, hitting their low tick at 3:30 p.m.---and traded sideways from there.  The HUI finished down a surprising 1.80%.  That's certainly not what I was expecting.

The silver stocks were up 2 percent within twenty minutes of the open of the equity markets in New York yesterday---and then they followed exactly the same pattern as the gold stocks, rolling over hard just after 2 p.m. EDT.  The silver equities closed down a shocking 2.55%.

I'll have more to say about this lousy share price action in The Wrap.

The CME Daily Delivery Report showed that 32 gold and 4 silver contracts were posted for delivery within the Comex-approved depositories on Monday.  The link to yesterday's Issuers and Stoppers Report is here.

There was a minor withdrawal from GLD yesterday---7,602 troy ounces to be exact, which was undoubtedly a fee payment of some kind.  And as of 9:23 p.m. EDT yesterday evening, there were no reported changes in SLV.

Since yesterday was Thursday, Joshua Gibbons, the "Guru of the SLV Bar List" reported on the internal goings-on within SLV---and here's what he had to say:  "Analysis of the 09 July 2014 bar list, and comparison to the previous week's list---991,231.0 troy ounces were removed (all from Brinks London). No bars were added or had a serial number change.  The bars removed were from: Inner Mongolia Qiankun (0.7M oz) and Henan Yuguant (0.3M oz)."

"As of the time that the bar list was produced, it was overallocated 519.2 oz.  All daily changes are reflected on the bar list, [which is] back to normal!"  The link to Joshua's website is here.

The good folks over at the shortsqueeze.com Internet site updated the short positions in both SLV and GLD for the two weeks ending June 30---and here's what they had to report.  In silver, it was exactly as Ted Butler said it would be, as the short position blew out from 13.55 million shares/troy ounces to 19.03 million share/troy ounces, an increase of 5.48 million shares/troy ounces---or 40.44 percent.  Because the authorized participants [read JPMorgan] had no silver to deposit, they did what they had to do in lieu of that fact---and that was to short the shares.

In GLD, the short position increased from 1.36 million troy ounces to 1.52 million troy ounces, or 12.08 percent.  It's my opinion that the gold that was needed to deposit in GLD was a little late in arriving after the early June rally began---and a lot of what was owed came in after the June 30 cut-off for this report---and I wouldn't be at all all surprised if the authorized participants had to short the GLD shares for some of what was owing---and those short positions were covered in the first week of July.  That's an educated guess on my part---and it won't be known one way or another until the last trading week of July when the next report comes out.

There was a small sales report from the U.S. Mint.   They sold 3,000 troy ounces of gold eagles---and 1,000 one-ounce 24K gold buffaloes.

There was no in/out activity in gold over at the Comex-approved depositories on Wednesday but, as is almost always the case, it was exactly the opposite scenario in silver.  183,605 troy ounces were reported received---and 751,146 troy ounces were shipped out.  And not that it means anything, but there was 1,184,532 troy ounces changed from the Registered category and into the Eligible category at the CNT Depository.  The link to yesterday's silver action is here.

Here's the 5-minute tick gold chart from yesterday [up until 12:40 p.m. EDT] courtesy of reader Brad Robertson.  There's nothing new in the price chart itself, but take a gander at the volume numbers that run along the bottom---and please note that the times posted are Mountain Daylight Time, so you have to add two hours for New York---and seven hours for BST in London.  The largest volume came within an hour of the spike when "da boyz" had to short everything in sight---and the second volume burst started at the 8:20 a.m. EDT Comex open [6:20 a.m. MDT on this chart]---and then continued up until the 9:30 a.m. open of the equity markets in New York.

Once again I don't have many stories for your reading pleasure again today---and I hope that you find a few that you like.

 

¤ Critical Reads

Marc Faber: Global economy not supporting valuations

This 3:30 minute video clip with Marc was posted on the cnbc.com Internet site at 3:16 p.m. EDT on Wednesday---and I thank Ken Hurt for today's first news item.

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This Nonexistent Social Network With No Revenues and No Assets Is Worth $4 Billion

If you thought the potato-salad Kickstarter story was a crazy example of free markets run amok, here's one that's even more surreal: A social-media company called CYNK Technology is exploding in the stock market, with shares up more than 25,000 percent since the middle of June. If you've never heard of CYNK Technology, you're forgiven — the company has no assets, no revenues, and a single employee. It's not even clear if the company's social network, IntroBiz, has any members.

And yet, Wall Street is going nuts over CYNK. As of today's close, the company's market value is over $4 billion, making it more valuable, on paper at least, than companies like JetBlue and the New York Times.

What the hell is going on? Is this some sort of coordinated stock-market prank? Or just a sign that we're in another tech bubble? Judging from the tweets about CYNK, even market experts are flummoxed by the company's quick, inexplicable rise.

You couldn't make this stuff up.  This story was posted on the nymag.com Internet site on Wednesday---and I found it embedded in yesterday's edition of the King Report.

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Marc Faber: Asset Bubble Might Already Be Popping

Asset classes across the board have entered bubble territory and might already be bursting, says Marc Faber, publisher of the Gloom, Boom & Doom Report.

"I think it's a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already," he tells CNBC.

Presumably, he was referring to the decline in stocks Monday and Tuesday, which pushed the S&P 500 down 1.1 percent. The index rebounded to 1,972.83 Wednesday.

Faber acknowledged he's been wrong during the past two years in forecasting a stock-market correction, but he's unbowed.

I'm not sure if this is rehashed print version of Marc's CNBC commentary from today's first story or not.  This one appeared on the moneynews.com Internet site early yesterday morning at 6:47 a.m. EDT.  West Virginia reader Elliot Simon sent it our way.

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Fed's Fischer sees little benefit in breaking up too-big banks

The Federal Reserve's new vice chair all but dismissed the idea of breaking up the largest U.S. banks, saying on Thursday it is unclear that such a complex task would help stabilize the country's financial system.

In his most detailed speech on financial regulation since becoming the Fed's No. 2 official, Stanley Fischer also floated the idea of adding a financial stability mandate to all of the U.S. regulators under the umbrella of the Financial Stability Oversight Council (FSOC), a coordinating committee. Fischer, a former governor of the Bank of Israel, was careful to hedge his comments on what more was left for regulators to do following the 2007-2009 financial crisis, borrowing heavily from published papers on the politically sensitive topic.

Addressing the lingering problem of too-big-to-fail banks - those that benefit from the public assumption that the government will do whatever is needed to protect them in times of crisis - Fischer said the Fed and other regulators must not become complacent, because more work is necessary.

This Reuters article, filed from Cambridge, Massachusetts at 5:41 p.m. on Thursday afternoon, is a story that Harry Grant sent me just after midnight MDT this morning.

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Wall St. ends lower on angst over Portugal's bank woes

U.S. stocks dropped on Thursday as concerns about the financial health of Portugal's top listed bank gave investors a reason to cash in recent gains.

With the Dow and the S&P 500 near record highs, the slide in Europe triggered by financial shares quickly translated into broad selling on Wall Street. The S&P 500 briefly lost 1 percent earlier, a daily drop the benchmark has not seen since April 10.

Espirito Santo Financial Group, the largest shareholder in Portugal's Banco Espirito Santo, suspended trading in its shares and bonds, citing "material difficulties" at parent company ESI. The bank's shares tumbled 17.2 percent. Portugal's benchmark stock index fell 4.2 percent and Italy's FTSE MIB slid 1.9 percent.

This Reuters story, filed from New York, showed up on their website at 5:04 p.m. EDT yesterday---and it's the first offering of the day from Roy Stephens.

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Espírito Santo Financial suspends trading in own shares

Espírito Santo Financial Group SA, the controlling shareholder of Portuguese lender Banco Espírito Santo SA, said Thursday that it has suspended trading in its own shares and bonds.

In a news release, Espírito Santo Financial Group said the suspension was due to “ongoing material difficulties at its largest shareholder Espírito Santo International S.A.” It didn’t elaborate further.

Shares of Banco Espírito Santo , which haven’t been suspended, tumbled in early trade in Lisbon, and the local blue-chip index fell over 3%.

This tiny marketwatch.com story appeared on their Internet site at 6:28 a.m. EDT yesterday---and I thank Joe Kahan for sending it our way.

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Germany clears path for E.U. to directly fund ailing banks

The E.U.’s bailout fund has moved closer to being able to directly pump money into troubled banks after the German government introduced a bill allowing direct bank recapitalisation.

The draft law will now require approval in the Bundestag, but is planned to enter into force in November.

“This is an important step to stabilise our financial sector … and to increase further the trust in our common European currency,” said finance minister Wolfgang Schaeuble on Wednesday (9 July).

He added that the law would help “rule out the risk that the taxpayer would have to accept liability, as in the financial crisis”.

This news item showed up on the euobserver.com Internet site at 11:04 a.m. Europe time on Thursday morning---and it's the second contribution of the day from Roy Stephens.

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Retaliation for Spying: Germany Asks CIA Official to Leave Country

Marking its most vocal response yet to the United States for alleged spying and a tough new tone, the government in Berlin asked Washington's top CIA official in Germany to leave the country on Thursday. The news followed a meeting of the Parliamentary Control Panel (PKGR) in the federal parliament responsible for scrutiny of intelligence services.

Panel Chairperson Clemens Binninger said the request had been "a reaction to unsuccessful cooperation in the pursuit of clarification." The panel convened a special session on Thursday to discuss two cases of suspected spying by German government employees on behalf of the United States that have emerged during the past week.

The revelations of the past week show that, in addition to conducting signals intelligence to gather information on Germany, US intelligence agencies are also using human intelligence. They strongly suggest that US services in Germany continue to collect large amounts of intelligence, and all this despite the outrage over the NSA scandal and news in October 2013 that the Americans had been spying on Chancellor Merkel's mobile phone.

This article was posted on the German website spiegel.de at 5:31 p.m. on Thursday evening Europe time---and I thank reader M.A. for finding it for us.  Reader M.A. sent the Russia Today story on this---and it's headlined "Germany expels CIA Berlin chief over NSA spying".

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Athens heart surgeon arrested after stalling operation over bribe

A 59-year-old heart surgeon and department chief at one of Athens's biggest public hospitals, Evangelismos, has been arrested after demanding that a patient pay him 1,500 euros for surgery that had been deemed life-saving, police reported on Thursday.

According to the unnamed male patient who filed the complaint, he had been rushed to the hospital after suffering a heart attack and was told he needed immediate surgery.

The surgeon, who headed the department where the patient was being treated, demanded 1,500 euros for the surgery to go ahead, according to the report. When the patient appeared reluctant to pay up, the surgeon allegedly threatened to have him discharged without performing the procedure.

This story was posted on the ekathimerini.com Internet site at 10:15 a.m. local time on Thursday---and I thank Harry Grant for bringing it to our attention.

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Italian E.U. presidency backs South Stream

The Italian E.U. presidency is in favour of a controversial Russian pipeline, South Stream, which would circumvent Ukraine to bring gas to south-east Europe.

"We think South Stream should go ahead, as it would improve the diversification of gas routes to Europe," Italy's state secretary for E.U. affairs Sandro Gozi said on Thursday (10 July) during a press event in Brussels.

He echoed statements made by Italian foreign minister Federica Mogherini who visited Moscow on Wednesday and met with her Russian counterpart.

She said the pipeline was "very important for the energy security of our country, as well as that of the entire European area”, but stressed that the project should comply with E.U. law.

This news item, filed from Brussels, was posted on the euobserver.com Internet site at 7:13 p.m. on Thursday evening Europe time---and I thank Roy Stephens for sending it our way.

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Fossil industry is the subprime danger of this cycle

The epicentre of irrational behaviour across global markets has moved to the fossil fuel complex of oil, gas and coal. This is where investors have been throwing the most good money after bad.

They are likely to be left holding a clutch of worthless projects as renewable technology sweeps in below radar, and the Washington-Beijing axis embraces a greener agenda.

Data from Bank of America show that oil and gas investment in the U.S. has soared to $200bn a year. It has reached 20pc of total US private fixed investment, the same share as home building. This has never happened before in US history, even during the Second World War when oil production was a strategic imperative.

The International Energy Agency (IEA) says global investment in fossil fuel supply doubled in real terms to $900bn from 2000 to 2008 as the boom gathered pace. It has since stabilised at a very high plateau, near $950bn last year.

This very long Ambrose Evans-Pritchard offering showed up on the telegraph.co.uk Internet site at 9:03 p.m. BST on Wednesday evening---and it's the final offering of the day from Roy Stephens.

I asked Casey Research's energy guru Marin Katusa for his opinion on this AE-P piece---and this is what he had to say: "The article completely misses the point---and shame on Pritchard for doing this.

"What he isn't stating is the a large percentage of the private money is going into unconventional development--and yet the beginning he talks about how conventional has peaked in 2005.

"That is old news--and in 2006 we wrote about unconventional would make up 50% production in North American by 2020, and its going to happen before.

"The new reality is that Unconventional is expensive, especially when you try to fight the declines and keep on drilling.

"So, its the new normal, and again goes back to my initial thesis when I bet Porter Stansberry 100 ounces of silver (and won) that oil wont go below $40 with a decent global economy as unconventional oil needs +$70 bbl to make the return worth the risk."

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Marin Katusa vs. Porter Stansberry

At the latest Casey Research conference, respected investment analyst Porter Stansberry stood at the podium and predicted that the price of oil will fall below US$40 per barrel within the next 12 months. Part of his reasoning revolves around the impact that the shale gas revolution has had in the United States – he believes a similar thing will happen with oil.

Porter is a friend of mine and a very smart, successful individual… but I think not.

From my perspective, the pressures at play in the oil market are all pushing prices in the opposite direction: up. Global supplies are tightening, costs are rising, and demand is not falling. Prices are going to remain high, and then go higher. And there will not be a shale oil revolution anytime soon.

I'm the kind of guy who puts his money where his mouth is, so I challenge Porter to a bet. I bet Mr. Stansberry that the price of oil will stay above $40 a barrel over the next 12 months. The wager? 100 ounces of silver.

This most excellent and must read commentary by Marin was posted on the Casey Research website way back on May 1, 2012---but it's worth revisiting when you consider what Marin had to say about the Ambrose Evans-Pritchard commentary in the previous story from The Telegraph.

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China's yuan 'a growing force in global finance'

China's yuan is a growing force in global finance, more than doubling in use over the past year, according to a new study from the Institute of International Finance Thursday.

Although its use in the international payments system remains dwarfed by the dollar and euro, the yuan, officially known as the renminbi, grew to 1.4 percent of total transactions.

That jump moved it ahead of the Hong Kong and Singapore dollars and even with the Swiss franc, the sixth most used currency in global transactions, the IIF study said.

In trade finance, overwhelmingly dominated by the U.S. dollar, the yuan jumped into second place last year ahead of the euro and the Japanese yen, comprising eight percent of transactions.

This AFP story was picked up by the news.yahoo.com Internet site around noon EDT on Thursday---and I thank Howard Wiener for sending it.

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Three King World News Interviews

1. Egon von Greyerz: "The World is on Fire and We Will Soon See a 2008-Style Collapse"  2. Tom Fitzpatrick: "Gold, Silver, Platinum and Copper Now Set For Stunning Advances"  3. Frank K: "Shocking Charts Show Massive Gold Flow From West to East"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Mike Kosares: Summer surprise update

Mike Kosares of Centennial Precious Metals in Denver updates his speculation about a possible "summer surprise" in gold. He also presents a chart showing that the gold price has usually correlated closely with the monetary base calculation of the Federal Reserve Bank of St. Louis and that the correlation abruptly broke down last April with the smashing of the gold price, what GATA and others have identified as desperate intervention by Western central banks. In any case, as Kosares notes, the divergence in that chart "suggests that at current prices gold might be on the bargain table."

Kosares' commentary is headlined "Summer Surprise Update" and it's posted at Centennial's Internet site, USAGold.com---and it's worth reading.  I thank Chris Powell for providing the above paragraph of introduction.

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No sops in India's budget hurt gold sector

Eagerly awaiting the Indian Budget on July 10 for growth oriented policies, the gold market has come in for some major disappointment. The Union government in India has kept the import duty on gold and silver unchanged at a record 10% in the Budget.

While expectations were high that India would cut the gold import duty to 8% from the prevailing 10%, India's finance minister did not bother to even mention the bullion industry in his budget speech.

The gold jewellery sector is still reeling from the shock of having being completely ignored in this year's budget, though some said this would amount to a fresh revival in gold smuggling.

This gold-related news item, filed from Mumbai, was posted on the mineweb.com Internet site yesterday---and is certainly worth your while.

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India's gold imports plummet 34% YoY

India’s gold imports declined nearly 34% to 670.4 tonnes in the year ended March 2014, from the April 2012 to March 2013 fiscal period of 1,013.9 tonnes, following the stringent curbs imposed by the government and the Reserve Bank of India on overseas purchases of the precious metal.

Replying to a query in Parliament on the gold reserves held by the RBI, she added that according to RBI’s statistical supplement dated June 18, gold held by the RBI is 557.8 tonnes.

This is another mineweb.com story from Thursday.  It was filed from Mumbai as well.

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¤ The Funnies

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Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization

Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.

Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.”

Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained. 

Please visit our website for more information about the project.


 
 

¤ The Wrap

The tipping point of the silver conspiracy was the takeover of Bear Stearns in March 2008 by JPMorgan, which was publicly orchestrated and arranged by the Treasury Dept. and the Federal Reserve. The acquisition allowed for the unreported transfer of the largest concentrated short position ever known to exist, thus enabling JPMorgan to step in and continue the manipulation of silver prices as Bear Stearns had done until its failure. No one could deny that Treasury and the Fed were not active participants in arranging the Bear Stearns/JPMorgan takeover and were fully aware of Bear Stearns’ massive concentrated short position in COMEX silver (and gold). - Silver analyst Ted Butler: 09 July 2014

The gold and silver rallies that began out of thin air shortly after 10 a.m. BST in London yesterday morning had no follow-through of any kind, except for the obligatory sell-offs in New York after that.  Whatever caused those price spikes, whether it was new longs being placed, or short positions being covered, it certainly resulted in a continued blow-out of the Commercial net short positions in both metals, as volumes soared---especially in silver.

Here are the 6-month charts for both metals---and the overbought conditions haven't changed much.

And the other development was the absolutely horrendous share price action.  The precious metal equities did very well on Wednesday on price gains that were substantially smaller than those on Thursday.  Then they give up all Wednesday's gains on an even bigger rally in the underlying metals yesterday.

In the old days, such counterintuitive price action was the precursor to an engineered price decline.  Will that be the case this time?  Beats me, but it makes me nervous.  And as I've said before, maybe I'm looking for black bears in dark rooms that aren't there---but with this overbought situation hanging over our heads, I'm still choked with caution.

As I write this paragraph, the London open is fifteen minutes away.  The four precious metals didn't do a thing in Far East trading on their Friday---and all is quiet at the moment.  Volume is very low, just over 12,000 contracts in gold---and 4,500 contracts in silver.  The dollar index is chopping sideways---and unchanged from Thursday's New York close.

Today we get the new Commitment of Traders Report for positions held at the close of Comex trading on Tuesday.  Eye-balling the above charts its a tough call on both metals, but basically unchanged wouldn't surprise me.

And as I hit the send button on today's column at 4:55 p.m. EDT, there's still not much going on in London trading.  Gold and silver are trading unchanged---and platinum and palladium are down a dollar or so.  Volumes are pretty light---and the dollar index is down a handful of basis points and flirting with the 80.00 level once again.

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