Casey Research Publication
Gold & Silver Daily
"You can immediately see that silver has not been allowed to close above its 50-day moving average during gold's recent run-up...but eventually it will."
 

¤ Yesterday In Gold & Silver

The gold price certainly tried to rally at the open of trading in New York on Sunday night...but that happy state of affairs wasn't allowed to last too long.

After that, the price didn't do much until shortly before 2:00 p.m. Hong Kong time [2:00 a.m. in New York]...and then the dollar headed north and the precious metal prices headed south. 

Gold's low price of the Monday trading session came at half-past lunchtime in London...and from there, the price rallied about ten bucks.  Then, shortly before 9:00 a.m. Eastern time, the New York high was in...and even though gold made several rally attempts after that, there was always a ready seller in the wings once a rally showed any legs at all.

Gold closed at $1,780.30 spot...down $8.20 on the day.  Volume was mostly air, so these price changes I spoke of in the preceding paragraphs were made on vapours...and it's easy to push the price around when volume is vanishingly small.  Net Comex volume was 66,000 contracts.

Silver's price path was very similar to gold's...and the only real difference was that silver's low of the day came at 1:15 p.m. Eastern time...about fifteen minutes before the Comex close...while gold's low was 12:30 p.m. in London.

Like gold, it was obvious that silver wanted to rally after the 12:30 p.m. London low, but ran into the same not-for-profit seller at 8:45 a.m. in New York.

Silver closed at $34.24 spot...down 42 cents from Friday's close.  Net volume was around 23,000 contracts.

Ever since MF Global went bankrupt, it appear that trading volumes in the precious metals has really fallen off, so I get the impression that most of MF Global's clients still haven't been able to get up to speed elsewhere, as they were one of the big commercial traders on the Comex. [Please note my comments about the quality of the CME's volume numbers in the last paragraph of 'The Wrap' - Ed]

As I mentioned in the first paragraph, the dollar began to rally about 2:00 p.m. Hong Kong time...and hit its zenith at 12:30 p.m. in New York.  The precious metals fell as the dollar rose for a short period of time, but this relationship came to an end at 12:30 p.m. in London trading...as the precious metals were in rally mode...and probably would have stayed that way if these sellers of last resort hadn't shown up at 8:45 Eastern.

The gold stocks rallied to almost unchanged shortly after the equity markets opened in New York yesterday morning...but that didn't last long, as they drifted lower as the day went along.  The HUI hit its low of the day at 2:30 p.m...not the 1:15 p.m. low for the metal...and then recovered a bit into the close, finishing down 1.74%.

With silver closing down more than gold in percentage terms, Nick Laird's Silver Sentiment Index reflected that by closing down 2.12%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 13 gold contracts were posted for delivery tomorrow.  As I mentioned a couple of times this month, November is not a traditional delivery month for either gold or silver...and that's why nothing much of substance is going on at the moment.  The December delivery month will be radically different in both metals.

It wasn't an exciting day over at GLD yesterday.  They reported a smallish withdrawal of 12,459 troy ounces...and there was no reported change over at SLV.

The U.S Mint sales are still moving at glacial speed this month.  They did have a report on Monday, but only sold 3,000 ounces of gold eagles and 253,000 silver eagles.  The totals for the month so far are not worth mentioning.

It was pretty much the same at the Comex-approved depositories on Friday.  The reported receiving 10,000 ounces...and didn't ship anything.

The Commitment of Traders Report [for positions held at the close of trading on Tuesday, November 8th] was released yesterday at 3:30 p.m. Eastern time...and both gold and silver showed deterioration in the Commercial short position.  In silver, the Commercial traders went long 2,248 contracts...but added another 4,117 short positions...for a net increase of 1,869 contracts.

There was a bit of a rally during the reporting week, so some of this deterioration might be attributed to the small Commercial traders [Ted Butler's raptors] selling long positions and taking profits.  The act of doing that has the mechanical effect of increasing the Commercial position, as it reduced the overall long position of the entire category.

In gold, the Commercials [mostly bullion banks] increased their net short position by a rather chunky 14,399 contracts.  Since gold had a substantial rally during the reporting week, it would be no surprise to me if the small commercial traders were selling longs and taking profits.  I didn't have a chance to talk to Ted Butler about it yesterday, so I'm not sure what the Disaggregated COT Report showed.

Needless to say, I wasn't overly happy with this report, because what it tells me is that this rally in both gold and silver is going to end the same old way as the last one.  There's nothing in this COT report, or the one before that, that indicates that JPMorgan et al are going to let this market do what it really wants to do.  Sure, we're going to get some really good rallies in the weeks and months ahead...but eventually it will end in the same way as every other rally has...a smack-down out of the blue...and probably in the thinly-traded New York Access Market, or in the Far East.

Silver analyst Ted Butler had his weekly review posted on his website on Saturday...and here are a couple of free paragraphs...

"Recently, I have been suggesting the two things to watch is if JPMorgan increases its crooked concentrated short position in COMEX silver and if the short position in shares of the big silver ETF, SLV, grows. JPMorgan did increase its COMEX silver short position a couple of weeks ago...and that circumstance must be closely monitored. The new short position in SLV has been released...and it shows a sharp increase as well. As of Oct 31st, the short position in SLV grew by 4 million shares/oz to just over 24 million shares. The short position in SLV now stands at 7.5% of all shares outstanding, an outrageously large amount."

"This means that 7.5% of all the shares in SLV have no silver backing, in violation of the prospectus, because the shorts don’t deposit silver. Such a large percentage of shares shorted represents fraud and manipulation in a fund that promises that metal backs each share. Worse, there is no data available, to my knowledge, as to the identity of the short sellers of shares. That means it could be that JPMorgan is the big short in SLV in addition to being the big short on the COMEX. That is crooked beyond description. I still own shares in SLV, but I am fed up with the sponsor of this trust, BlackRock, for allowing this fraud and manipulation to continue. BlackRock, the world’s largest money manager, pretends to be above all this, just like the CME and JPMorgan. Nothing is ever these big firms’ responsibility. I am starting to think that BlackRock may be as crooked in matters related to silver, as are the CME and JPMorgan."

And as I've been saying for many years, dear reader...I wouldn't touch either GLD or SLV with a 10-foot cattle prod.

As usual, I have a lot of stories for your reading pleasure today...and I hope you get a change to skim them all.

 

¤ Critical Reads

Guan Jianzhong: Downgrading the US

The chairman of China's only independent credit rating agency, Dagong Credit, warned they might have to downgrade the US again.  The only question remains is the timeline.  I listened to this interview and got no hint as to when it might happen.

The story is posted over at the aljazeera.com website...and I found it to be a very frank discussion between the journalist and the chairman...certainly nothing like you'd hear in the American press.  It's worth the time if you have about 24:53 on your hands.  I thank reader Al Conle for digging this up on our behalf...and the link is here.

Read more...

European Ponzi Goes Full Retard As EFSF Found To Monetize... Itself

If you check the first file in the top drawer of the You-can't-make-this-stuff-Up filing cabinet, this is the story you'll find.  Tyler Durden over at zerohedge.com can hardly contain himself as he goes supernova on this piece that showed up in The Telegraph on Saturday.

The title says it all...and I thank West Virginia reader Elliot Simon for sending me this story...and it's a must read.  The link is here.

Read more...

Goodbye 'bunga bunga', hello prison for Berlusconi?

Here's a story that belongs on the front page of the National Enquirer...and also qualifies for a spot in the you-can't-make-this-stuff-up filing cabinet.

He could move back to his beloved Villa San Martino, a former monastery turned into lavish residence in the outskirts of Milan, and escape the harsh winters of the northern Italian city by relaxing in the stunning Villa Certosa, his summer residence on the island of Sardinia.

There, he could spend days admiring nature, the fireworks from the fake volcano he had built in his gardens to entertain his guests, and finally indulge in the presence of the many topless women who were photographed at the villa during his premiership — without having to apologize for it.

But Silvio Berlusconi is not a man who likes to rest. He admits he doesn’t sleep longer than three hours a night, and in the past two decades he has proved he possesses an enviable stamina for a man his age.

Should he feel restless, he could always watch a game of his beloved A.C. Milan, the top Italian soccer team he owns, or organize one of his infamous 'bunga bunga' parties, allegedly his favorite after-dinner pastime, without worrying about the public sentiment over it.

But there is another, less pleasant alternative: He could spend the rest of his life in prison.

This piece was posted over at the msnbc.msn.com website...and I thank Washington state reader S.A. for the story.  The link is here.

Read more...

The great euro Putsch rolls on as two democracies fall

Europe’s scorched-earth policies have begun in earnest. The inherent flaws of monetary union have created a crisis of such gravity that EU leaders now feel authorized to topple two elected governments.

As I long feared, the flood of cheap credit into Southern Europe and the slow death of Club Med industry by currency asphyxiation have together created such a dangerous situation for world finance that informed opinion is willing to turn a blind eye to EU sovereign trespass. Some even applaud.

The Greeks were ordered to drop their referendum on measures that reduce their country to a sort of Manchukuo, with EU commissars "on the ground", installed in each ministry, drawing up lists of state assets to be liquidated to pay foreign creditors.

Europe’s president Herman Van Rompuy swooped in to Rome to clinch the Putsch. "Italy needs reforms not elections," he said.

We are not that far from use of EU judicial coercion, and then EU police power, and ultimately EU "border troops" - for those old enough to remember Soviet methods of fraternal assistance.

The New World Order crowd is in full cry in Europe...and Ambrose Evans-Pritchard over at The Telegraph is up on his high horse once again.  I wonder which country is next?  I thank Roy Stephens for this story, which I consider to be a must read...and the link is here.

Read more...

Walker's World: The Euro Titanic

They have rearranged the deck chairs, told the band to change their tunes and replaced some of the ship's officers. But the Titanic of the world's currency markets is still holed below the waterline and the passengers are all trapped on board.

Germany, with its folk memory of the hyper-inflation of the 1920s, is terrified of inflation and will use all its considerable influence in Europe to prevent this from happening. Germany is also digging in its heels and refusing to let the European Central Bank become a lender of last resort.

So if the debt cannot be inflated away, and if there isn't enough growth that allows it to be paid off, the remaining option is default which is the worst outcome of all. Just ask those who recall the domino defaults of 1931 and what followed. The Titanic of the currency markets sails on and the seawater pours in...

This very well written UPI piece was filed from Paris yesterday...and is well worth your time.  The link is here...and I thank Roy Stephens for sending it

Read more...

Spain and Italy's borrowing costs soar as Angela Merkel remains defiant over eurobonds

In the bond markets, Italy was forced to pay 6.29pc to raise €3bn (£2.6bn) of five-year bonds - a eurozone debt auction record, despite the promise of a new government under Mario Monti. Italy, which still lacks a cabinet, needs to raise a further €46bn in debt before the end of the year.

Panicked traders looking for the next eurozone victim turned on Spain pushing bond yields above 6pc for the first time in three months. Spain faces more hurdles this week with the auction of up to €3.5bn of short term bonds today - and a further €4bn in 10-year bonds on Thursday.

Despite its far lower public debt level levels, traders bet that Spain would follow Italy into "bail-out territory." French bank Société Générale said: "Spain is now joining Italy on the radar screen". Warren Buffett, the US investor, said bond markets were displaying a "partial run on Europe." British borrowing costs fell to just 2.2pc.

This story was filed late last night in The Telegraph...and is another Roy Stephens offering.  The link is here.

Read more...

A German Referendum on Europe? - Merkel Eyes Constitution Revamp to Boost EU Powers

Virtually nothing is more sacred to Germans than their constitution, which is known as the Basic Law. It was originally planned as a stopgap measure, but it has seen the Federal Republic of Germany through the past 62 years. During the Cold War, political parties may have squabbled over conservative Chancellor Konrad Adenauer's political commitment to Western Europe and the United States -- and they had their differences over left-leaning Chancellor Willy Brandt's Ostpolitik policy of normalizing relations with communist Eastern Europe, particularly with East Germany -- but they immediately and unanimously praised the Basic Law. "We have one of the best constitutions in the world," German Chancellor Angela Merkel once said.

Now, it looks as if Merkel herself may order an overhaul of the German constitution. At the party conference of the chancellor's conservative Christian Democratic Union (CDU) which commenced on Monday morning, Nov. 14, it is expected to approve a plan that could change the face of Europe -- and perhaps make it necessary for the Germans to rewrite their constitution.

This is a must read for sure...and another Roy Stephens offering from the German website spiegel.de.  The link is here.

Read more...

Eddie Hobbs - TV3 - The Euro Collapse

Every once in a while an interview that comes along that screams the truth...and demands your undivided attention.  This is one of them.

Eddie Hobbs, a financial expert from Ireland, really lays it out cold.  This is a real treat to watch and listen to...and his recommendation is to buy gold.

This youtube.com video runs 6:31 and is absolute must watch.  However, I must warn you in advance that even though the language spoken is English, you're going to have some trouble with it, especially at the beginning, because the dialect is really something...and I also think that the audio track is not the quality it should be.  I thank reader Al Conle for his second contribution of the day...and the link is here.

Read more...

Interview With Iranian Foreign Minister: 'We Are Prepared for Everything'

In an interview with Spiegel, Iranian Foreign Minister Ali Akbar Salehi, 62, dismisses accusations that Iran is building a nuclear bomb as Western propaganda and accuses Tehran's enemies of waging a secret war against it.

I must admit that I'm pretty much in agreement with everything that the Iranian foreign minister has to say.  This is another Roy Stephens offering from yesterday's edition of spiegel.de...and the link is here.

Read more...

Audio Interview With Jim Rickards: King World News

In my Saturday column, I was going to link the audio interview...and not the blog.  But in my unbridled haste to get things done, I ended up linking the blog anyway.  The KWN headline reads "U.S. likely holds German gold hostage, Rickards tells King World News".  If you didn't go to the King World News website and dig it up on your own, the link to this absolute must listen interview is here.  I consider it the best interview that Jim has ever given.

Read more...

Former German chancellor silent on Fed memo linking him to gold suppression

Here's a GATA release from Sunday morning.  I'm not going to go into any length about its content, as the headline pretty much says it all.

As you know, the politics of central bank gold is rife with speculation, ill-informed comment, and outright disinformation, and many relevant questions remain unanswered even after decades.

This is what this GATA release is about...and I'll let Chris Powell take it from here.  It's another must read...and the link is here.

Read more...

Physical gold to trump ETFs by 500% in 2011 hears Dubai conference

Physical gold will outsell ETFs by 500 per cent this year, Standard Bank’s Walter de Wet told the 8th Dubai City of Gold Conference on Sunday. Two years ago the position was completely reversed with physical gold sales running at only 20 per cent of ETFs.

‘It’s a complete flip from ETFs to physical gold,’ he said. ‘And it seems to reflect people’s lack of trust in financial systems and the shift in investment flows towards Asia and the Middle East.’

This story was posted over at the arabianmoney.net website on Sunday...and I thank reader Christopher Cathis for sharing it with us.  The link is here.

Read more...

Is gold headed to $2,200? - Do charts sense Chinese buying?

Gold’s action is frightening some of the more fundamentalist analysts. On Friday Edel Tully of UBS, a very powerful gold dealer, said: “Gold hit our one-month forecast of $1,775 this week, but we’re sitting tight for now, rather than making any short-term forecast changes. Right now, physical demand has moved to the background, leaving gold heavily dependent on the actions of specs and investors, a less-than-ideal position. Physical buying out of Asia is much diminished.”

And, indeed, over at LeMetropoleCafe.com, there have been repeated complaints about discounts to world gold in India and thin premiums in China, suggesting no Asian off-take.

Similarly, Friday’s news that Bloomberg’s weekly survey of gold traders showed 21 of 22 traders bullish for the coming week, the highest since 2004, did not please everyone. Bloomberg itself says the survey is right only half the time.

This marketwatch.com story was posted in the wee hours of Monday morning...and I thank Florida reader Donna Badach for sending it our way.  The link is here.

Read more...

'You have to love gold here,' Leeb tells King World News

Fund manager Stephen Leeb was interviewed by King World News yesterday and noted the indifference of central bankers to inflation even as a huge part of the population is struggling just to feed and warm itself.  Leeb loves gold as another round of monetary easing is about to begin.

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

Read more...

Gold demand doubles amid economic gloom and frozen interest rates

Fears about the global credit crisis, the euro, inflation and the falling real value of paper money of all descriptions helped more than double demand for physical gold held by Bullion Vault last year.

The dealing facility, which was set up just five years ago, now holds gold and silver worth more than £1bn on behalf of 33,000 investors. It’s an ill wind that blows no good and rotten returns from bank and building society deposits have boosted demand for valuable metals. Paul Tustain, founder and chief executive, said: "The major driver of growth has been the steady realisation among private savers that low interest rates are here to stay.

“Central bank statements have confirmed their fears.  Savers rarely regret the decision to steer clear of governments which address economic problems by printing money. At the moment, every day, about 2,000 people in the English-speaking world are despairing of economic policy and its effects on their savings, and they are turning to gold and silver.”

This story was posted in The Telegraph yesterday...and is Roy Stephens final offering of the day.  The link is here.

Read more...

Goldman and Credit Suisse Bullish on Gold Due to US Interest Rates

Gold ETF data shows continuing safe haven flows and diversification into gold.

Global holdings of gold rose last week, by nearly 897K oz, their largest weekly rise since the week ending Aug 5, 2011...when holdings rose by a net 1.089M oz, according to Reuters.

Total gold ETF holdings stand at around 68.854M oz, up a full 1.749M oz in the last month. November is shaping up to show the largest monthly inflow since July. So far this month, holdings have risen by 947K oz.

Goldman Sachs today reaffirmed that it remains overweight in commodities. On gold it says it will roll over its Dec 11 long to Dec 12.

"We expect gold prices to continue to climb in 2011 and 2012 given the current low level of  US real interest rates, and as a result recommend a long gold position.

Credit Suisse has said that gold may climb over $1,800 in the coming days with negative real interest rates as the ‘key driver’.

This pertinent data was something I cut and paste from a rather longish story posted over at zerohedge.com yesterday.  The rest of it is rather technical, but if you wish to run through it, the link is here...and I thank reader U.D. for sending it along.

Read more...

Russian Central Bank Aims To Buy 100 Tons Of Gold In 2011

"The Central Bank of Russia has purchased 90 metric tons of gold to date in 2011 and is on course to buy 100 tons before the end of the year, deputy head of the bank Sergey Shevtsov said as quoted by the bank's press service."

"The bank said earlier it would aim at buying 100 tons of gold every year and increase the proportion of gold in the country's reserves as a safeguard against volatility on the international financial markets."

Year-to-date The Central Bank of the Russian Federation has purchased 63.2 tonnes, at least according to the DJ story, so they have 36.8 tonnes to buy...about 1.18 million ounces.  They report their October purchases on their website on Thursday...and the final tally for 2011 won't be known until they update their website for December, which should be on or about January 20, 2012.

This very short Dow Jones story was filed from Moscow early yesterday morning...and is posted over at the londonstockexchange.com website.  I thank reader David Ball for digging it up on our behalf...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

There are decades where nothing happens; and there are weeks where decades happen. - Vladimir Lenin

I wouldn't read a whole heck of a lot into yesterday's price action in the early going...although the almost-always-present selling pressure in New York is something I always look at it with deep suspicion...yesterday included.  But with volume that low, it's easy for anyone to push the markets around.

According to zerohedge.com, options expiry for the December contract is Tuesday, November 22nd...a week from today...and there's always a fair amount of pushing and shoving going on in front of that date.  All the call-option writers want gold to finish as low as possible so all the call options they've written for December close out-of-the-money...and they get to keep all those lovely premiums.  I doubt that this month will be any different, so it could be an interesting time until the end of this month.

As you've probably already figured out, the European situation is pretty much hopeless no matter who is in charge of what country.  It just remains to be seen whether Europe continues to muddle along, or will a black swan of some kind show up out of left field?  Pretty much all of the Western world is in the same boat, but the spotlight is squarely on Europe at the moment.

The 6-month chart for gold is shown below.  I'm not overly enthralled with the price 'action' of the last two weeks, as it looks kind of 'toppy' to me, even though we've broken above gold's 50-day moving average.  But since this is "Painted by JPMorgan et al" chart, it remains to be seen if they paint it any further going into options expiry.  Time will tell.

(Click on image to enlarge)

The 6-month silver chart is a different looking animal.  You can immediately see that silver has not been allowed to close above its 50-day moving average during gold's recent run-up...but eventually it will.  At that time it remains to be seen if the JPMorgan will, once again, go short against all comers.  They did during gold's last rally...and silver's run-up from two weeks ago.  We'll just have to await developments.  Ted Butler spent some time talking about this in his weekend missive.

(Click on image to enlarge)

At the moment I note that both gold and silver came under selling pressure during morning trading in the Hong Kong time zone...and both are down a bit more now that London has been open for business about ninety minutes.  As of 4:38 a.m. Eastern time, the dollar has rallied about 25 basis points during the previous hour.   The CME's volume figures are so small in both metals that I just don't find them believable, so it's obvious that they're still having problems with their website in this particular area.  I hope they get it fixed...and soon.

That's more than enough for one day.  See you here tomorrow.