Gold & Silver Daily
 

¤ Yesterday In Gold & Silver

With the Globex/Comex closed for the Good Friday holiday, all four Kitco precious metal charts all looked like this.

The equity markets were closed as well, so there's no HUI or Intraday Silver Sentiment Index---and no delivery report from the CME, nothing from GLD or SLV, the U.S. Mint, or the Comex-approved depositories.

The only thing that was open for business was the U.S. Dollar Index.  It closed late on Thursday afternoon in New York at 97.53---and didn't do much until about an hour before the job numbers came out at 8:30 a.m. EDT yesterday morning.  At that point, it dropped around 30 basis points to around 97.21, before regaining a decent chunk of those loses.  Then the job numbers came out---and by the time "gentle hands" showed up 30 minutes later at 9:00 a.m., the Index was down to 96.394---which was a loss of 114 basis points from Thursday's close.

From that low, the index "rallied" until it reached the 96.80 level at precisely 1 p.m. EDT---and from there it traded more or less sideways into the close, finishing the Friday session at 96.766---which was down 73 basis points on the day.

The Commitment of Traders Report for positions held at the close of trading on Tuesday did not make for happy reading.  It was a disaster from one end to the other in both gold and silver.

I was right to be the proverbial "doubting Thomas."

What it indicated was that all the price/volume activity from the prior reporting week was not reported in a timely manner---and last Friday's COT report was not even close to being accurate.

The price action during the current reporting week suggested improvements in the Commercial net short positions in both gold and silver---and I mentioned that in yesterday's column.

But the report was not even close to what the price action indicated---and yesterday's report may not have had any of the current reporting week's data in it at all.  That's speculation on my part, but it's certainly what the numbers indicate.

In silver, the Commercial net short position blew out by an additional (and astounding) 10,619 contracts, the biggest one-week change in history if my memory is close to being correct.  That's 53.1 million troy ounces in just one week.  The Commercial net short position is now back up to 249.3 million troy ounces.

Ted Butler said that the Big 4 Commercial shorts (read JPMorgan) increased their short position by 3,300 contracts, the "5 through 8" traders actually covered 600 short contracts---and the small Commercial traders, Ted's raptors, sold 7,900 contracts of their long position.  Ted says that JPMorgan's short-side corner in the Comex silver market has increased to around 18,000 contracts, or 90 million troy ounces.  He'll get a more accurate indication of JPM's short-side corner when the new Bank Participation Report comes out next Friday.

In the last two COT reporting weeks combined, last Friday's and yesterday's, the Commercial net short position in silver increased by an absolutely gargantuan 19,651 contracts, or 98.3 million troy ounces---all on the back of a silver price rally of about $1.75.

JPMorgan et al. totally crushed this budding silver rally---and it's obvious that this massive increase in their short positions was entirely for price-capping purposes.  No other explanation is plausible.

Under the hood in the Disaggregated COT Report, the brain-dead technical funds in the Managed Money category covered 6,962 short positions in silver---and added 4,855 contracts to their long position, a total swing of 11,817 contracts---as they sold shorts and bought longs as silver's 50-day moving average was broken to the upside.

It's the same story in gold, as the surprise good news from the previous Friday's COT Report was buried under an avalanche of mostly bad news.

The Commercial net short position increased by a very chunky 28,190 contracts, or 2.82 million troy ounces.  (Don't forget there was an "improvement" of 3,565 contracts, or 356,500 troy ounces reported in the previous Friday's COT Report.  The current report negates all that, plus more.) The Commercial net short position in gold now stands at 8.11 million troy ounces.

The Big 4 traders actually covered about 2,900 contracts of their short position, while the "5 through 8" big short holders increased their short position by around 7,400 contracts.  The small Commercial traders sold 23,700 long contracts.

Under the hood in the Disaggregated COT Report, the technical funds in the Managed Money category were, of course, the Pavlovian patsies on the other side of this trade, as they covered 19,597 of their short contracts and went long 5,024 contracts on top of that.

This current rally in gold, if you wish to dignify it with that name, only lasted for $50 to the upside---at least for the moment.

The gold COT Report wasn't anywhere near as bad as the silver COT Report, but both were bad enough in their own right---and there's no way to sugarcoat this.  The report was butt-ass ugly, particularly in silver.

Yes, there's still fuel in the tanks of the Managed Money traders to take silver and gold prices higher from here, but it's equally as obvious from yesterday's and the previous COT Report, that "da boyz" are going to show up as the not-for-profit sellers of last resort the moment the attempts are made.

After these last two COT Reports, my bulls hit meter will be on its high gain setting when next Friday's COT Report puts in an appearance.  I don't think that the data we saw in this week's report---and last week's COT Report---are wrong; it's just that the timing of the reported data is now highly suspect.  And as I said earlier, it appears that all of price/volume data from the current reporting week just past---March 25-31 inclusive---was not in this report, or certainly not all of it.

As you can imagine, Ted and I had a rather intense discussion about all this on the phone yesterday, but because I was visiting the outlaws, I didn't have the time to spend bisecting and dissecting the report the way I would have liked.  And because of that, I'll be more than interested in what he has to say about it to his paying subscribers in his weekly review this afternoon.

Here's the "Days of World Production to Cover Comex Short Positions" from the March 17 cutoff two weeks ago when we were at the lows. The Big 8 trader were short about 56 days of world gold production and 138 days of world silver production.

Here's the current "Days of World Production to Cover Comex Short Positions" chart from the cutoff on Tuesday, March 31---and the short position of the Big 8 in gold has only increased by two days to 58 days---and as I said earlier, the gold numbers weren't that bad, but the days-to-cover in silver for the Big 8 has now blown out from 138 to 156 days.

If you're looking for a reason why the precious metal prices are where they are, this is the only chart you need concern yourself with---along with the companion Bank Participation Report that will be out this time next week.

It was very much business as usual in the Far East on Friday---and the Shanghai Gold Exchange reported their weekly withdrawals as of March 27.  This time they reported 45.719 tonnes---and here's Nick Laird's most excellent chart.

For the month of March, the SGE withdrew 195.165 tonnes---and for the first quarter it was 606.951 metric tonnes.  Of course that doesn't include the last two trading days of this past week, but the above numbers are close enough for government work.

I've cut the number of stories down to the bare minimum, as I must admit that I'm really not in the mood to write today's column.

 

¤ Critical Reads

March Payrolls Huge Miss: Only 126,000 Jobs Added, Worst Since December 2013

We warned yesterday that the "whisper expectation is for a NFP print that will be well below consensus, somewhere in the mid-100,000s if not worse now that the bartender hiring spree is over", and we were right: moments ago the BLS reported that in March a paltry 126K jobs were added, nearly 50% below the 245K expected, and the lowest monthly increase since March 2013.The unemployment rate was unchanged at 5.5%.

The change in total non-farm payroll employment for January was revised from +239,000 to +201,000, and the change for February was revised from +295,000 to +264,000. With these revisions, employment gains in January and February combined were 69,000 less than previously reported.  Over the past 3 months, job gains have averaged 197,000 per month.

Most importantly this ends any speculation about a rate hike in mid 2015, or ever for that matter, as virtually all Fed credibility is now lost.

This commentary hit the Zero Hedge Web site at 8:36 a.m. EDT on Friday morning---and it's definitely worth reading.  I thank reader M.A. for today's first story.

Read more...

Americans Not in the Labor Force Soar to Record 93.2 Million as Participation Rate Drops to February 1978 Levels

So much for yet another "above consensus" recovery, and what's worse it is, well, about to get even worse, because while the Fed keeps banging some illusory drum that slack in the economy is almost non-existent, the reality is that in March the number of people who dropped out of the labor force rose by yet another 277K, up 2.1 million in the past year, and has reached a record 93.175 million.

Indicatively, this means that the labor force participation rate dropped once more, from 62.8% to 62.7%, a level seen back in February 1978, even as the BLS reported that the entire labor force actually declined for the second consecutive month, down almost 100K in March to 156,906.

Why is this important? Because as long as the true employment rate, that of the civilian employment to total population, remains at depression levels, there will be no increases in average hourly earnings.

That's all there is to this brief article that's also from the Zero Hedge Web site---and the three embedded charts are worth the trip.  This one showed up there at 12:32 p.m. EDT yesterday---and it's the second offering in a row from reader M.A.

Read more...

As Quakes Rattle Oklahoma, Fingers Point to Oil and Gas Industry

Yanked without warning from a deep sleep, Jennifer Lin Cooper, whose family has lived near here for more than a half-century, could think only that the clamor enveloping her house was coming from a helicopter landing on her roof. She was wrong.

A 5.0-magnitude earthquake — the first of three as strong or stronger over several days in November 2011 — had peeled the brick facade from the $117,000 home she bought the year before. Ms. Cooper, 36, could not get out until her father pried a stuck storm door off the front entrance. Repairs have so far cost $12,000 and forced her to take a second job, at night, to pay the bill.

At a packed town hall meeting days later, Ms. Cooper said, state officials called the shocks, including a 5.7 tremor that was Oklahoma’s largest ever, “an act of nature, and it was nobody’s fault.”

Many scientists disagree. They say those quakes, and thousands of others before and since, are mainly the work of humans, caused by wells used to bury vast amounts of waste water from oil and gas exploration deep in the earth near fault zones. And they warn that continuing to entomb such huge quantities risks more dangerous tremors — if not here, then elsewhere in the state’s sprawling well fields.

This is not a new issue, dear reader, as the problem has existed for decades.  This longish, but very interesting article appeared on the New York Times' Web site on Friday sometime---and I thank Phil Barlett for bringing it to my attention---and now to yours.

Read more...

Former Guantanamo Boss Faces French Court Inquiry

Guantanamo prison ex-chief Geoffrey Miller has been summoned by a French court over the use of torture in the detention facility a decade ago, following a lawsuit from two French citizens who were former inmates of the infamous military jail.

French citizens Nizar Sassi and Mourad Benchellali have filed a lawsuit in a French court against the former Guantanamo chief, demanding a criminal probe into his actions.

On Thursday, the court granted the complaint, summoning the former American general to France for a hearing.

The French judge’s decision might set a precedent for more prosecutions of US military personnel who served at Guantanamo Bay.

This news item appeared on the Russia Today Internet site at 2:22 p.m. Moscow time on their Friday afternoon, which was 6:22 a.m. in Washington.  It's courtesy of South African reader B.V.

Read more...

Greece Looks to Putin as Standoff in E.U. Puts Repayment in Doubt

Europe wouldn’t like it and Moscow can’t really afford it, but Athens is increasingly desperate.

As a European deal to give more aid to Athens falters and the prospect of a default looms, Greek prime minister Alexis Tsipras is preparing to meet Russian president Vladimir Putin next week .

The timing has raised questions. Is the visit an ordinary component of the new Greek government’s multipronged foreign policy, or a pivot toward Russia for financial aid in the event that talks with European officials collapse outright?

Greece told its creditors on Wednesday that it will run out of money on April 9. It appealed for more loans before reforms on which new disbursements hinge are agreed and implemented. The request was rejected, euro zone officials said.

This article was posted on the irishtimes.com Internet site at 1:00 a.m. BST on their Friday morning, which was 8 p.m. EDT in New York on their Thursday evening.  I thank Roy Stephens for sending it our way.

Read more...

Greece Says Ready to Make IMF Payment on April 9

Greece will repay a loan tranche to the IMF on time on April 9, its deputy finance minister said on Friday, seeking to quell fears of default after a flurry of contradictory statements on the issue in recent days.

Greece is fast running out of cash and its euro zone and International Monetary Fund lenders have frozen bailout aid until the new leftist-led government reaches agreement on a package of reforms.

That prompted the interior minister to suggest this week that Athens would prioritise wages and pensions over the roughly 450 million euro (331 million pounds) payment to the IMF, though the government denied that was its stance.

Euro zone officials then quoted Greece as saying it will run out of money on April 9, which the finance ministry denied.

This Reuters article, filed from Athens, was picked up by the news.yahoo.com Internet site around noon EST on Friday---and I thank Orlando, Florida reader Dennis Mong for finding it for us.

Read more...

Cyprus Lifts Capital Controls Two Years After Deposits Bail-In

Cyprus will lift next week the last of the capital controls that were imposed two years ago as part of a 10-billion euro ($10.9 billion) European bailout.

The last restrictions on international transfers will be lifted on April 6, Cyprus government spokesman Nikos Christodoulides said in an e-mailed statement to Bloomberg. Domestic capital controls ended in May 2014.

“The lifting of the restrictions confirms the full restoration of confidence in the banking system, the significantly improved business climate and essentially marks the return of the economy to normal conditions,” he said.

Cyprus is emerging from the crisis that forced it to seek a bailout and impose a levy on depositors two years ago while Greece, which in 2010 became the first country to be rescued by its euro-area partners, continues its tug-of-war with creditors.

Yeah, but that's no help to the haircuts that the big depositors got.  They're making this sound like a big win---when in actual fact it's a catastrophic failure.  They should have gone the Iceland route, bail out the people---and put the bankers in jail.  This short Bloomberg article appeared on their Internet site at 3:34 a.m. Denver time on Friday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.

Read more...

John Batchelor Interviews Stephen F. Cohen: 31 March 2015

This week's broadcast dissects the various positions of the war parties of the West, specifically NATO and Washington and the politics behind them. NATO's  "Dragoon Ride" of tanks and APCs through the Baltic states is basically an (unnecessary)  intent to be a show of force and a parade, a "riding to the rescue" for NATO to protect Europe against a Russian invasion. Even more dangerous are the 290 US paratroopers training in Ukraine with Ukrainian "guardsman" - that Cohen speculates means some of the extremist battalions with Nazi leanings.

Domestically, in the US. Cohen is not encouraged by War party activist Jeb Bush, former governor of Florida who is calling for an article 5 (NATO) response to "Russian aggression" in the Ukraine.  For Cohen that would mean nuclear war as it would cross Putin's red line. All of these war party activities are worrisome for Cohen as he is unsure whether the various proponents actually understand what the dangers are of war with Russia.  So far it seems only Putin understands and the only reason we still have peace is Putin's understanding of this.

But why such an effort to sink Minsk 2? He sees the agreement as the last chance for peace with the West - and mentions again the political vandalism of Kiev over not accommodating the East in accordance of the agreement and concurrently with more bellicose statements from NATO. "None of this happens without support by Washington", he states. And he concludes that the end of Minsk2 will come when Obama agrees to ship weapons to Kiev. All of this is occurring now with silence from Merkel and Hollande (ominous) and only the smallest of dissent in the American government - at the congressional level. (In fact Merkel recently on her trip to Finland has been more hardline against Russia and is again talking sanctions. Has she caved in to Washington pressure?)

This 39:45-minute audio interview from Tuesday, appeared on the johnbatchelorshow.com Internet site the other day---and it had to wait for Saturday's column for both length and content reasons.  I thank Larry Galearis for bringing it to our attention.

Read more...

Iran---and Canadian P.M. Stephen Harper’s Need for Foreign Enemies: Walkom

When Canada closed its embassy in Iran two years ago, Stephen Harper’s Conservative government cited safety fears.

“The Iranian regime has shown a blatant disregard for the Vienna Convention and its guarantees of protection for diplomatic personnel,” Foreign Affairs Minister John Baird said then.

Coming less than a year after a mob set fire to Britain’s embassy in Tehran, this explanation made some sense. Iran is also the country that famously allowed students to hold U.S. diplomats hostage in 1979.

But news this week casts serious doubt on Canada’s official rationale. An internal foreign affairs report aired on CBC reveals that nine months before the embassy shutdown, Canadian diplomats in Tehran weren’t much concerned about rioting mobs.

This news story appeared on thestar.com Internet site way back on December 3, 2014---but it's just as true and relevant now as it was back then---and it's a must read.

Read more...

The Chinese Government Has Admitted That Things Aren't Going So Well

A high-level Chinese official on Sunday made the government's first admission that the country's economic slowdown was not going as planned.

China's top banker, Zhou Xiaochuan, told a meeting of regional leaders that his country's growth rate had tumbled "a bit too much."

"China's inflation is also declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not," said Zhou, governor of the People's Bank of China. His remarks were made at the Boao Forum for Asia, an annual conference on the island of Hainan in southern China.

Zhou added that China could "have room to act" by taking "quantitative measures" and setting interesting rates.

This story put in an appearance on the businessinsider.com Internet site on Monday----and I thank Norman Willis for sending it along.

Read more...

BRICS May Create Unbiased Credit Rating Agency

China’s rating agency Dagong is currently holding talks with economic experts in Russia regarding the creation of a new independent agency, the Russian official said.

After sanctions had been imposed on Moscow by the West over Russia’s alleged role in the internal conflict in Ukraine, the Big Three credit rating agencies — Fitch, Moody’s and Standard & Poor’s – downgraded their rating regarding Russia’s creditworthiness.

“After the recent cases with Big Three rating agencies issuing politicized and biased assessments of the state and development prospects of Russian economy, this issue is of particular relevance,” sous-sherpa Vadim Lukov told journalists, adding that Russia is not the first country to suffer from “rating aggression and rating dumping.”

No surprises here.  The only question to be asked is why they didn't do that ages ago.  This story, filed from Moscow, showed up on the sputniknews.com Internet site at 1:34 p.m. Moscow time yesterday afternoon---and I thank reader M.A. for his third and final offering in today's column.

Read more...

 

¤ The Funnies

This rabbit sat still long enough for me to take quite a few photos, but I only kept these two.  The sun had come out for a bit, so I didn't need the flash---and he was a bit far away for that anyway.  It's in the process of losing its white winter coat---and it looks like a cross between a domestic rabbit and a jack rabbit.

The first photo is straight out of the camera---and not cropped at all.  It's presented here just the way it looked in the viewfinder. The second photo is a head and shoulders shot---and I did crop this one, but not by much.

Here's a photo that Nick Laird sent our way last night---and it's much more interesting than the bunny pictures above.  This Cassowary appeared in his friend Jack's backyard up in Innisfail, North Queensland late Friday morning local time.  Jack breeds Australian insects for export---and you can find out all you need to know by clicking here.

PERUVIAN GOVERNMENT AWARDS DYNACOR PERMIT TO BUILD NEW LARGER-SCALE MILL AT CHALA

Dynacor’s newly approved second gold processing plant will create value for many years as a direct result of production increases and lower cost/units.

Another near-term catalyst exists in the form of exploration results at our high-grade gold project, Tumipampa.  As the steady flow of news hits the wire, value will be added to the asset through demonstration of the economic viability and a growing resource base.

Dynacor is a debt-free, results-driven company proving its mettle year after year with or without a ‪bull market. The company exercises discipline in its strategy to build growth by eliminating the risk of having to sell equity to the public to raise cash for operations or pay back debt payments.

With zero debt, solid working capital of $21 million and a consistent flow of cash coming from operations even in a low gold price environment, Dynacor is in a unique and strong position to advance both of its divisions, production and exploration/development.

Dynacor, with its last equity financing over five years ago, is a shareholder-first company focusing on delivering real value. Please contact Dale Nejmeldeen with questions or to learn more about the company.

 

¤ The Wrap

In market developments since last Saturday's review, standouts include further withdrawals of metal from the big silver ETF, SLV, and final sales of Silver Eagles from the U.S. Mint for March.  Close to two million additional ounces of silver were withdrawn from the Trust on Tuesday on top of the 3.5 million oz withdrawn last week. To be clear, when I speak of the turnover or movement of metal in the Comex-approved silver warehouses, I am speaking of the physical movement of metal either coming into or leaving those warehouses. That’s not necessarily the case with SLV deposits or withdrawals; it may represent actual physical movement, although it doesn’t have to be actual movement of metal.

When metal is withdrawn from the SLV (or GLD), the only certain known effect is a corresponding reduction in the proportionate number of shares outstanding, no more, no less. When metal is deposited into the trust, shares outstanding grow proportionately. There’s no way of determining whether the metal withdrawn or deposited actually moves out or into the warehouses where the metal is stored---or if the metal stayed where it was after the withdrawal, or was moved. Likewise, there’s little easy way to know if metal deposited was brought in for that purpose or was previously already in position at the relevant custodian warehouse when a deposit is made. There can be movement involved in a metal ETF deposit or withdrawal, but that is not mandatory. - Silver analyst Ted Butler: 01 April 2015

A friend of mine, John Di Tomasso, passed around an audio clip by Dire Straits last night.  I've posted it in this space before, but it's been quite a number of years---and it's certainly worth a revisit.  It's a classic for sure---and Mark Knopfler does the honours.  The link is here.

Today's classical "blast from the past" is by J.S. Bach.  It's his Concerto for Oboe and Violin in C minor, BWV 1060.  I've posted this within the last six months---and I make no apologies for posting it again so soon.  I heard this on the drive to work last week---and I couldn't get it out of my head.  Now you're stuck with it.  This version was recorded in Vilnius, Lithuania back in December 2010.  The orchestra is perfect---and the soloists are as good as they get---and the quality of the recording is first rate.  It doesn't get any better than this---and the link is here.

Well, there's nothing to talk about except the latest COT Report---and to say that I was disappointed in it would be the understatement of the year.

I see nothing in this report, or the previous one, that indicates that JPM et al. are about to release their iron grip on the precious metals in general, or silver in particular.

But---and it's a pretty big but---not to be forgotten in all of this is the unrelenting and apparently insatiable demand for physical silver by JPMorgan---and now, by the look of it, gold as well in the April delivery month.

Ted and I are both still in semi-shock about the 1,500 Comex silver contracts that JPMorgan stood for delivery on in its in-house [proprietary] trading account during the March delivery month.  They even stopped contracts from their own clients that had to deliver as short/issuers.   And pile on top of that their huge position in SLV shares, plus the metal they've taken delivery of out of that ETF in order to prevent them from exceeding the 5% reporting limit to the SEC.

And they're certainly buying every U.S. silver eagle that the U.S. Mint can produce---and that John Q. Public isn't buying.  That goes for silver maple leafs as well---and I'm still waiting for the Royal Canadian Mint's fourth-quarter and total 2014 sales numbers to see if that is, in fact, the case.  I'll be surprised if it isn't.

I can't imagine that they're buying all this silver just to double their money.  I'm expecting that they're looking to make a really big score.  There's no other reason I can think of, but as far as timing is concerned, I haven't a clue.

As I and others have said over the years, on a gold price reset, the new gold price will be well beyond the reach of all but the richest people---and silver will become the new gold.  That's the kind of score that JPMorgan may be anticipating.  But that's all speculation on my part.

With the lousy job numbers, coupled with the face plant in the U.S. dollar index yesterday, one would think that gold will do well at the 6:00 p.m. EDT open in New York on Sunday evening---but it would be presumptuous to assume that---with "da boyz" ready to pounce if need be---and they probably will.

So we wait some more.

See you on Tuesday.

Ed Steer