Gold & Silver Daily
"This time it's different...but will it make a difference this time? We'll find out soon enough."
 

¤ Yesterday In Gold & Silver

The gold price didn't do much of anything yesterday and...looking at the Kitco chart below...it's obvious that the gold price hasn't done very much of anything during the last three trading days, despite the rather precipitous decline in the U.S. dollar during that time period.

The silver graph below just shows how much silver has become a different animal than gold.  The dollar graduations on the Kitco graph below tells all.  From silver's low on this chart, to its close on Thursday, silver has risen 8.4%...compared to gold's 1.3% over the same time period.  This has nothing to do with the dollar.  It's a short-covering rally, pure and simple...with Thursday's price action being more of the same.  Volume, once again, was very heavy.

The dollar continued its decline on Thursday, reaching its nadir of 73.75 around 11:00 a.m. in London...which is 6:00 a.m. Eastern time.  From there, the dollar recovered to 74.10 by the close of Thursday trading in New York.  It's obvious from the precious metal charts, that the dollar was not a factor in yesterday's price action.

And not that I want to put too fine a point on this, but the gold price has barely reacted at all to the big decline in the U.S. dollar during the entire week just past.

The gold stocks were rather jumpy in early trading yesterday...but then settled down somewhat, with the HUI finishing up an even 1% on the day.  The silver stocks did somewhat better, but it was very uneven...and you'd never guess by looking at the action of either the gold or silver stocks, that we're at record highs in the gold price...along with a silver price that's screaming to the upside by at least a dollar a day.

As I said, the silver stocks did better, but prices were mixed.  The top-callers are still yelling their lungs out...and most of the sheeple are doing their bidding by selling and waiting for the correction...which is the reason the silver stocks are not screaming to new highs.  But if it does come...how deep will it be and how long it will last...will be the question of the day.

As Ted Butler has mentioned for weeks now, this silver rally is a short-covering rally.  Open interest is actually declining because the bullion banks are covering their short positions...it's not caused by new speculative longs coming into the market and bidding the price up.  The dynamics are totally different now.

Here's the 1-year silver chart.  If you want to bet against this trend...please be my guest. Now that the silver price is doing what it's doing...volatility, both up and down, is the name of the game from this point onwards.  As Richard Russell says, any dips should be bought.

Click here to enlarge.

The CME's Daily Delivery report showed that 1 gold, along with 18 silver contracts, were posted for delivery next Wednesday.  The link to the action, such as it was, is here.

There was action in both GLD and SLV yesterday...as metal was withdrawn from both.  GLD showed a small decline of 19,498 ounces...and a chunky 1,073,404 troy ounces of silver was taken out of SLV.  Based on the recent price action, it's a pretty good bet that this silver was desperately needed elsewhere by an authorized participant, as SLV is owed many millions of ounces that just aren't available.

The U.S. Mint had a smallish sales report yesterday.  They sold 9,000 ounces of gold eagles...along with 1,000 one-ounce 24K gold buffaloes.  They didn't report any further silver eagles sales.

Over at the Comex-approved warehouses on Tuesday, they reported receiving a smallish 34,822 ounces of silver...but shipped 516,206 ounces out the door...for a net decline of 481,384 troy ounces.  The link to the action is here.

My bullion dealer had another monster day at his store yesterday...and it was certainly one of his biggest sales days of 2011.  He has almost more business than he can handle.  Because silver bullion deliveries are now many months in the futures, customers are limited to 10 oz. of silver bullion per customer in over-the-counter sales.  If they wish to purchase more, it's a 3-month minimum wait for most items.  Physical supplies are tight...and getting tighter.

 

¤ Critical Reads

Dow Jones Industrial Average ends week at highest level in nearly three years

The Dow Jones Industrial Average ended the week at the highest level since before the financial crisis, as a string of America's biggest companies smashed Wall Street's profit expectations.

One hesitates to rain on this parade, but the oceans of money from Q.E.2 had to go somewhere...and the Fed has made no secret of the fact that it wanted to see the U.S. equity markets go higher...and the Wall Street investment houses came through in spades.

This story was posted over at The Telegraph late yesterday evening...and I thank reader Roy Stephens for sending it along...and the link is here.

Read more...

Geithner Downgrades His Credibility to Junk: Jonathan Weil

This op-ed piece by Bloomberg News colonist Jonathan Weil doesn't pull too many punches as he trashes little Timmy Geithner.  Speaking to Fox News, Geithner said that there was no chance that U.S. debt would ever be downgraded by S&P...or any other U.S. credit rating agency.  That got Weil's hackles up...and he had this to say...

"It would be one thing to express the view that a downgrade would be unwarranted, or that the chance of it happening is remote. Either of these positions would be defensible. Geithner went beyond that and staked out an absolutist stance that reeks of raw arrogance: There is no risk a rating cut will occur. He left no room for a trace of a possibility, ever."

I thank Washington state reader S.A. for sending me this story...and the link is here.

Read more...

Ben Bernanke's life gets tougher as America is sent to the debt doghouse

On Monday, the US experienced the economic equivalent of being told to join Alcoholics Anonymous. The ratings agency Standard & Poor's informed Washington that it must get its fiscal house in order within two years or lose its status as a top borrower. It was a public consigning to a debt doghouse that countries, including Britain, Greece and Portugal, were all sent to over the last couple of years and are all now trying to escape.

This is another story from The Telegraph that is also from Roy Stephens...and the link is here.

Read more...

Fleeing the Dollar Flood: The world tries to protect itself from U.S. monetary policy

Here's a story out of yesterday's edition of The Wall Street Journal that's courtesy of Washington state reader Roy Stephens. 

Members of the International Monetary Fund emerged from their huddle in Washington last weekend resolved to keep every option open to slow the flood of dollars pouring into their countries, including capital controls. That's a dangerous game, given the need for investment to drive economic development. But it's also increasingly typical of the world's reaction to America's mismanagement of the dollar and its eroding financial leadership.

The link to this worthwhile story is here.

Read more...

Putin: U.S. Monetary Policy Is ‘Hooliganism’

“Look at their trade balance, their debt, and budget. They turn on the printing press and flood the entire dollar zone — in other words, the whole world — with government bonds. There is no way we will act this way anytime soon. We don’t have the luxury of such hooliganism,” Russian Prime Minister Vladimir Putin said.

This short story is one that I borrowed from yesterday's King Report...and it's a must read...and the link is here.

Read more...

China Inflation And Wage Protests Spread, Turn Violent

Here's a piece from zerohedge.com that was sent to me by reader 'David in California' yesterday.

A two-day strike over rising fuel prices turned violent in Shanghai on Thursday as thousands of truck drivers clashed with police, drivers said, in the latest example of simmering discontent over inflation. About 2,000 truck drivers battled baton-wielding police at an intersection near Waigaoqiao port, Shanghai's biggest, two drivers who were at the protest told Reuters.

This is well worth reading...and the link is here.

Read more...

Interview With James Turk

In yesterday's column I posted a King World News blog featuring James Turk.  Eric sent me the entire audio interview last night...and it's worth listening to.  The link is here.

Read more...

Why Rob McEwen is STILL bullish on gold

Here's a Broadcast News Network story from Toronto yesterday that was sent to me by reader George Findlay.  The story itself is only semi-interesting...but the interview with Rob McEwen is a must watch/listen.  Just click on the stack of gold bars once you've brought the story up on your screen.  The link to the BNN piece is here.

Read more...

The Great Gold Tsunami Lies Ahead: Richard Russell

Here's another offering from Eric King over at King World News.  It's a Richard Russell blog of some importance.  Richard states the following..."The panic to buy gold will override everything else. It will be one of the greatest financial phenomena that most of today's investors will ever see. It will blot out everything else like a cloud blotting out the sun.

I would also add silver to that 'financial phenomena'...and the link to this must read blog is here.

Read more...

Look at these ETF charts before calling a top in silver

Are you trying to call a top in silver?

You’re not alone – I’ve been picking up on a lot of chatter in the blog (and email) world about traders and analysts trying to call that proverbial “top” in Silver “any day now.”

Before you can’t fight the temptation any longer, at least take a look at these four charts – Two Daily and Two Weekly – of major Silver ETFs SLV (bullish) and ZSL (ultra-bearish).

This is well worth your time...and I thank reader N.A. for sharing it with us...and the link is here.

Read more...

Silver Still Soaring

I've been poking around the Internet for more than twelve years...and I don't remember a time when I didn't know who Carl Swenlin [decisionpoint.com] was.

This is an excerpt from Friday's blog to his subscribers...and reader U.D. was kind enough to share it with us.  This is what he had to say in his opening paragraph...

"While we don't often cover silver, it is worth noticing that it is about 6% below its all-time highs of $48 (closing basis) and moving up quickly. Technicians will assume that there is probably strong long-term overhead resistance at $48, and, considering that silver is in the vertical phase of a parabolic advance, there could be serious problems when the resistance is reached. Perhaps that is true, but I think there are other considerations."

Needless to say, this is a must read...and the charts are exceptional.  The link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

While the current lofty price levels do allow for a sell-off of significant proportions, the underlying facts and market structure also indicate a melt up is also possible. The financial pain to the silver shorts has been immense and, as a result, the odds of a short covering panic have increased. The odds still favor higher silver prices. - silver analyst Ted Butler, 20 April 2011

The volume in gold yesterday was pretty light...around 115,000 contracts net of all roll-overs.  The preliminary open interest number was a pleasant surprise...as it showed a decline of 334 contracts.  This bodes well for the final open interest number...but I'm not sure whether it will be posted this morning...or early next week, as I don't know what the CME's holiday hours are.

I was very happy with gold's final open interest number for Wednesday's trading day...as it showed a smallish decline of 179 contracts...which is a vast improvement over the preliminary o.i. number, which was a chunky 7,552 contracts.  I've got my fingers crossed for an even bigger improvement when Thursday's final open interest numbers are posted.

In silver, gross volume was around 141,000 contracts...but the net volume was around 97,000 contracts...which is a huge number.  But we are fast approaching the May delivery month...and all April contracts not standing for delivery in May, must roll over or sell before next Thursday...as Friday, May 30th is first notice day for delivery into the May silver contract.

I must admit that I wasn't prepared for the preliminary open interest number in silver for Thursday's trading day.  It's the biggest one-day increase I've ever seen...up 12,340 contracts.  That's north of 61 million ounces worth of silver.  No doubt this will be reduced considerably when the final number is posted...but this preliminary number is so large, I really don't know how to interpret it at the moment.  I'm sure Ted Butler was shocked when he saw it when he turned on his computer this morning...and I'll certainly be talking to him about it today.

Wednesday's final open interest number in silver showed a decline of 680 contracts...which was a huge relief, because the preliminary o.i. number showed a monstrous increase of 4,836 contracts.  I'm very encouraged by this, as it re-confirms that this short covering rally in silver is still ongoing...with rising prices coming on the back of falling open interest.  That's why Thursday's preliminary o.i. number of +12,340 contracts was such a shocker when I saw it.  What will the final number be, I wonder?

Nothing much changed as far as silver backwardation is concerned...and Ted Butler is still of the opinion that it may not mean much.

Here's the "Gold/Silver Ratio" graph...showing a new low.

Click here to enlarge.

Here's the 3-year silver chart...and I must admit that it's pretty spooky looking compared to past rallies.  But, as I said before, this rally is short covering with declining open interest.  Every other rally on this graph is caused by speculative longs buying and pushing the price up.  This time it's different...but will it make a difference this time?  We'll find out soon enough.

Click here to enlarge.

Kitco's gold chart shows that the gold market is open during Far East trading...and the gold price spike that occurred around 4:30 p.m. Hong Kong time, got hammered flat instantly.  Kitco's silver chart shows nothing...and I went over to silverseek.com...and the silver price is up a bit as well...but at the moment, the Kitco feed shows gold up a bit over $5...and silver up 22 cents.

But the CME's Futures market isn't showing any volume figures, so I doubt that what's going on in Far East trading means very much in the grand scheme of things...and I would think it's safe to say that we really won't get back to normal trading patterns until after Easter Monday...and I'm not even sure if the Comex is open this morning, either.

But, having said all that, I'm just glad that I'm not short [or out of] this market.  As Ted Butler said...he's rather be a nervous long, than a short contract holder on the Comex.  Amen to that.

There's still time left to either readjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well.  And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

I don't know if there will be a Saturday column or not...and I'll be checking with Casey Research H.Q. this a.m. to find out.

Regardless of that...I hope you have a great Easter long weekend.