Casey Research Publication
Gold & Silver Daily
"As I've been saying for over a month, the 50-day moving average in gold has never been breached to the downside since the 'drive by shooting' on May 1st."
 

¤ Yesterday In Gold & Silver

The gold price did nothing in Far East and early London trading.  Of course all that changed when the New York bullion banks went to work just minutes after the Comex open at 8:20 a.m. Eastern time.

In less than an hour, they had the price down by about $16...and it became obvious that the gold price wasn't going to be allowed to go anywhere for the rest of the trading day...and it didn't.  Volume was a bit heavier on Friday than it was during the rest of the week.

Silver's high was in early Far East trading...and then it was down hill from there for the rest of Friday...with most of the damage occurring starting the same moment that JPMorgan et al hit the gold price.  By the time the New York trading day was over, they had silver down $1.37 from its Thursday close.  Friday's volume was identical to Thursday's volume.

It was obvious that 'da boyz' were after silver once again yesterday.  Gold only finished down 0.79%...platinum was down 0.71%...palladium was down 0.49%...and silver, it got hammered for 3.65%.

The dollar did virtually nothing yesterday...but shortly before the close of electronic trading in New York, it jumped 50 basis points for no reason at all...as every market on Planet Earth was closed for the weekend.  I'm sure that the CFTC won't be investigating this 'disorderly trading', either.

And, as you can tell, the dollar played no roll in the pricing of the precious metals yesterday.

With the Dow futures already in the tank...and the gold and silver price slammed minutes after the Comex opened for business, it's obvious that the precious metal shares had no chance.  The HUI finished down 1.78% on the day.  Here's the 5-day chart for the week that was.

The silver stocks got hit pretty good, as well.  But, considering the fact that silver closed down 3.65%...they could have fared a lot worse.  Here's Nick Laird's 'Silver Sentiment Index', which was down 2.78%.

Click here to enlarge.

The CME's Daily Delivery Report showed that 236 gold contracts were posted for delivery on Tuesday.  The big issuer in its client account was JPMorgan with 154 contracts.  It also was the biggest stopper with 236 contracts in its proprietary [house] account.  It was JPMorgan trading against its own clients once again.  Here's the link to the action.

There was a big drop of 341,042 troy ounces in GLD yesterday.  There was nothing in gold's price action yesterday...or during the week...that explains that size of withdrawal.

There was no report from the SLV ETF yesterday.

The U.S. Mint had a smallish sales report yesterday.  They sold another 93,000 silver eagles.  Month-to-date they are now up to 935,000.

The Comex-approved depositories showed that they received 4,054 ounces of silver on Thursday...and shipped 5,153 ounces out the door.  There hasn't been a lot of action, in or out, since Monday.

The Commitment of Traders Report showed that the bullion banks decreased their net short position in silver by 995 contracts...almost five million ounces.  I also noted that the technical funds [Non-Commercials] are only net long 17,000 contracts...which is virtually nothing in the grand scheme of things.

This is the category that the bullion banks are always beating on.  There's little blood left here.  The lowest number I've seen in this category was around 10,000 net long contracts...and that was many years ago when the total open interest in silver was about 50% lower than it is today.

The '4 or less' bullion banks are still short 181.8 million ounces of silver...and the '8 or less' bullion banks are short 216.3 million ounces.  The Commercial net short position sits at 166.6 million ounces...so the '8 or less' bullion banks are short all that...and more.

The open interest in gold for the week that was, showed an increase in the bullion banks' short position of 717,600 ounces.  The Commercial net short position has now increased to 24.8 million ounces...which is getting up there.  Ted Butler says that we're no better than neutral in gold...but the bullion banks are in a position to harvest all these new technical fund longs any time they wish.  And you can bet your last nickel that they will, when the time is right for them.

On the other hand, the COT report shows that the wildly bullish situation in silver remains intact...and it just got better in the week that was.

Here's Ted Butler's 'Days to Cover Short Positions' graph updated as of the Tuesday cut-off for yesterday's COT report.  As always, I thank Nick Laird for providing this chart.

Click here to enlarge.

The latest Bank Participation Report came out yesterday morning...and I'm just going to give you the Reader's Digest version of it.  This data comes straight out of the COT report that was issued yesterday as well...so, for one reporting week out of each month, we know what's going on with all the bullion banks everywhere.

For the June report, three U.S. banks increased their net short position in silver by about 1,500 Comex contracts since the May report a month ago.  The total net short position held by these U.S. banks is 20,326 Comex contracts...101.6 million ounces...with the lion's share [well over 90%] held by JPMorgan.

The big surprise in the report was the non-U.S. banks.  In the May report, the twelve non-U.S. banks were net short 3,608 Comex silver contracts.  In the June report they showed that they were net long 66 contracts.  That's a big swing in one month.

In gold, four U.S. bullion banks increased their net short position by a smallish 1,637 Comex contracts since the May reporting month.  These four U.S. banks are net short 94,577 Comex contracts as of the close of trading on Tuesday.  The sixteen non-U.S. banks increased their net short position by about 7,600 Comex contracts.  That may seem like a lot, but when you divide it amongst sixteen banks, it's not much.

All in all, there was a small net improvement in the overall short position in Comex silver held by the world's bullion banks...mostly thanks to the  twelve non-U.S. banks who are now net long.  In gold, the bullion banks increased their net short position by around 10,000 Comex contracts since the May report.  These aren't big changes.

But what this report continues to show, is the huge concentration of short positions held by three or four U.S. bullion banks in both silver and gold.  They are the 800-pound gorilla in the precious metals price living room...and what they do is what determines the price...as the foreign banks [except for maybe the Bank of Nova Scotia] are all bit players in the gold and silver price arena.

Quite frankly, these bullion banks shouldn't be in the commodity markets at all...but they are.

Here's Nick Laird's graph of the Bank Participation Report.  If you spend just a couple of minutes on it...and using the figures above...you can pretty much understand what the graphs mean.

Click here to enlarge.

Here's an interesting chart of the 10-year Treasury yield.  You can see the effect on the yield curve as the Fed as QE2 advances.  What this graph will look like in a month from now will be of great interest...as QE2 will be in the history books at the end of June.

Click here to enlarge.
 

¤ Critical Reads

Food prices climb further at grocery stores

Here's a marketwatch.com story filed from San Francisco that I lifted from yesterday's King Report.

Shoppers paid 4% more for a basket of 16 food items at the supermarket in May compared to February, the American Farm Bureau Federation said Thursday in its latest informal survey.

The total average cost of 16 items used to prepare one or more meals was $51.17, up $2.10 from the previous survey, with sirloin tip roast, russet potatoes, sliced deli ham and bacon increasing the most in price.

The link to the story is here.

Read more...

Squatter Nation: 5 years with no mortgage payment

Here's a story from money.cnn.com yesterday that's courtesy of Washington state reader S.A.

Charles and Jill Segal have not made a mortgage payment in nearly five years -- but they continue to live in their five-bedroom West Palm Beach, Fla. home.

They're not alone.

Some 4.2 million mortgage borrowers are either seriously delinquent or have had their cases referred to lawyers to pursue foreclosure auctions, according to LPS Applied Analytics. Of those, two-thirds have made no payments at all for at least a year, and nearly one-third have gone more than two years.

This story is worth the read...and the link is here.

Read more...

Fed passes China to become largest U.S. creditor

Here's another marketwatch.com story...this one courtesy of reader Ken Metcalfe.

The headline says it all...and the link to this very short read, is here.


 

Read more...

China ratings house says US defaulting: report

This next story is courtesy of West Virginia reader Elliot Simon.  It's an AFP story that was posted over at news.yahoo.com yesterday.

"In our opinion, the United States has already been defaulting," Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies -- eroding the wealth of creditors including China, Guan said.

It's a short story...and the link is here.

Read more...

Syrian army enters besieged town as protests leave at least 20 dead

Here's a story that was posted over at The Guardian website in the wee hours of this morning...and it's courtesy of reader Roy Stephens.

The Syrian regime ordered its army to enter the besieged town of Jisr al-Shughour on Friday as pro-democracy demonstrations across the country were met with gunfire, leaving more than 20 dead, according to activists.

Over the past few days refugees have flooded across the border into Turkey, where officials say almost 3,000 Syrians have made their way to camps to escape the fighting. Most have walked over rolling hills from the northern town that has been menaced all week by Syrian tanks and troops, who finally entered Jisr al-Shughour just after daybreak.

One wonders how long it will be before U.S. [or NATO] start bombing Syria as well.  This story is well worth the read...and the link is here.

Read more...

Pakistan troops caught on film shooting unarmed teenager dead

Here's another Roy Stephens offering from The Guardian this morning...and the headline pretty much says it all.

Pakistan's security forces are facing criticism after paramilitary troops were caught on camera apparently shooting dead a teenager at point-blank range.

The footage, broadcast repeatedly on local television, is likely to further undermine faith in the country's powerful security establishment, which is already facing allegations it helped conceal Osama bin Laden.

The video, captured by a cameraman from Pakistan's Awaz television channel, shows a youth, identified as Sarfaraz Shah, arguing with paramilitary rangers in Karachi. The 18-year-old appears to plead for mercy before being shot at close quarters.

Pakistan is slowly but surely sliding into anarchy...and not the kind that Doug Casey is always talking about.  The link is here.

Read more...

Interview with Jean-Marie Eveillard: King World News

Jean-Marie Eveillard: Senior Adviser, Portfolio Management for First Eagle Funds - Jean-Marie has 40 years of experience in the financial industry and oversees more than $50 billion. Jean Marie is one of the most respected value investors in the world.

The link to the audio interview is here.

 

Read more...

Real metal will beat paper at banks, Eric Sprott tells King World News

Chris Powell had already done the honours as far as preamble goes in a GATA release of this blog yesterday afternoon.  But while I was writing this column in the wee hours of Saturday morning, Eric King slid the entire audio interview into my in-box at 3:27 a.m. Eastern time.  So to heck with blog...the link to this must listen interview is here.
 

Read more...

Quebec tax agency accuses Kitco in gold sales tax scam

This story was all over the Internet yesterday...and I must admit that it came as a bit of shock.  However, they are innocent until proven otherwise in a court of law...if it gets that far.

Although I'm not a fan of some of the people that work there, I've always considered their business dealings to be 100% honest...and have never heard a single word to the contrary in the last twelve years...and I'm an insider in the retail gold and silver bullion market.

I have two stories on this.  The first is from yesterday's edition of the Montreal Gazette...and is courtesy of reader Howard Brown.  The link to that story is here.

The second story is from Canada's Financial Post in Toronto...and was sent to me by Washington state reader S.A.  The link to the FP story is here.

Needless to say, Kitco has denied all...and here is their press release regarding those charges.

Both stories, plus Kitco's press release, are must reads.

Read more...

 

¤ The Funnies

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¤ The Wrap

Today's 'blast from the past' is courtesy of reader David Mancini...and is from back in the mid-1960s somewhere...as the video is in black and white.  Click here.  While I'm in the mood...here's another oldie-but-goodie from the 1960s which I'd forgotten that I even knew.  I love the piano solo in here...and the orchestration of the whole piece is exceptional.  The link is here.

Gold volume yesterday was around 120,000 contracts net of all roll-overs...which is the biggest volume number that we've had all week.  And as of 4:11 a.m. Eastern, the CME had still not posted Friday's preliminary open interest numbers.

Thursday's final open interest number in gold showed an increase of 5,402 contracts.  The preliminary o.i. number was 10,936 contracts...so the bullion banks were obviously taking the short side on Thursday's rally in the gold price...and the technical funds were obviously going long.

Silver's net volume on Friday was around 49,000 contracts...which wasn't a whole heck of a lot.  There's no preliminary open interest number here, either.

Silver's final open interest number on Thursday showed an increase of 1,646 contracts, compared to the preliminary number of 4,448 contracts...so silver's rally did not go unopposed.

Here's the 1-year silver chart.  We're just chugging along under a now flat-lined 50-day moving average...and the 200-day m.a. is creeping slowly higher.

Click here to enlarge.

Here's the 1-year gold chart...and it is here that the greatest danger lies.  As I've been saying for over a month, the 50-day moving average in gold has never been breached to the downside since the 'drive by shooting' on May 1st.  With the bullion banks building up their gold short position as the weeks go by, it will come as no surprise to me [nor should it to you] that JPMorgan will pull the handle and flush as many tech fund longs as they can.  Once that act is complete, the bottom in gold will be in.

Click here to enlarge.

Of course, they will hit silver at the same time...trying to get that very last tech fund long position flushed out, so they can cover their short positions.  But, as I've said before, that stone doesn't have much blood left in it.

So we wait.

Before I sign off here, I'd like to point out this special Casey Research offer just one last time. 

The offer??? 

Buy The Next Few Years: A Casey Summit CDs for $395 (23 CDs, with more than 20 hours of presentations, stock picks, Q&A sessions and a data disc with all the summit presentation slides and handouts), and get a one-year subscription to The Casey Report... for the unbelievable cheap price of $100...and yes, you read the price right!

The deadline for this incredible offer [and it is an incredible offer] is this Tuesday, June 14th...or whenever the CDs sell out...whichever come first.  I urge you to check it out at the link, which is here.

Enjoy the rest of your weekend...and I'll see you here on Tuesday.