Casey Research Publication
Gold & Silver Daily
"I hope you weren't caught off guard by JPMorgan's high-frequency traders yesterday morning"
 

¤ Yesterday In Gold & Silver

The gold price was down about seven bucks by the time that Comex trading commenced in New York yesterday morning...and then at precisely 8:30 a.m. it blasted off for the $1,300 spot price mark, only to get hit within minutes by JPMorgan's high-frequency traders.

From that point, gold traded around the $1,295 spot mark until the London p.m. fix was in at 10:00 a.m. EDT...and then the gold price began to rally once again...making it briefly over $1,300 spot...$1,301.90 spot was the high tick...only to run into JPMorgan et al the moment that Bernanke spoke.  By the time they were through with the gold price...shortly before noon in New York...it's low tick was recorded by Kitco at $1,269.70 spot.

The gold price didn't get far after that...and gold closed the New York trading session at $1,274.60 spot...down $16.90 on the day.  Net volume was very decent...around 177,000 contracts.

Silver's chart was almost the same as the gold chart, the only difference being that the low tick [$19.20 spot] came in electronic trading just minutes before 3:00 p.m. EDT in New York.  The high point of the day was recorded by Kitco at $20.32 spot...an intraday move of 88 cents, or a bit more than 4 percent.

Silver closed yesterday at $19.29 spot, down 73 cents from Monday's close.  Volume, net of July and August's numbers, was a very chunky 60,500 contracts.

Platinum got it the neck as well...but JPM's high-frequency traders didn't expend much energy in the palladium market.  Here are the charts...

On the day, gold closed down 1.31%...silver got creamed for 3.62%...platinum was down 1.34%...and palladium was down a tiny 0.27%.

The dollar index closed on Tuesday afternoon in New York at 82.53...and then chopped and flopped around until it hit its low of 82.38 just a few minutes after 9:00 a.m. in New York.  From there it jumped to its high of the day...82.84...at 10:40 a.m. EDT.  The gain vanished two hours later...and the index didn't do much after that...closing trading on Wednesday at 82.69...up 16 basis points from Tuesday.

The gold stocks opened in positive territory...and that happy state of affairs lasted until JPM's high-frequency traders showed up in the Comex futures market.  The stocks hit their low at gold's low...minutes before noon in New York.  The subsequent recovery in the stocks was rather anemic...and the HUI rolled over once again, almost back to its low of earlier in the day...down 2.85% when all was said and done.  Considering the circumstance, it could have been worse.

Of course the silver shares weren't spared, either...and Nick Laird's Intraday Silver Sentiment Index closed down 2.56%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that zero gold and a very chunky 396 silver contracts [a hair under 2 million troy ounces] were posted for delivery within the Comex-approved depositories tomorrow.  It should come as no surprise that the only short/issuer of note was JPMorgan Chase out of its client account...and JPMorgan Chase was the only long/stopper of note as well...once again in its in-house [proprietary] trading account...accepting delivery of 351 contracts...and an additional 17 contracts for its client account.  I can't believe that JPM's clients are this stupid...and I'm wondering if all these deliveries out of their client account are actually for real clients...or maybe it's JPMorgan Chase itself masquerading as one.  They're breaking every rule in the book already, so why not this one as well?  The link to yesterday's Issuers and Stoppers Report is here...and it's worth a quick peek.

Just as a point of interest, despite the fact that that this report states it was 'run' at 8:45 p.m. EDT yesterday evening, it didn't show up on their website until well after midnight EDT this morning...and I've been checking all night long from the Mountain Standard Time zone.  This happens reasonably frequently with this report, especially when the numbers are a bit of surprise...like these ones. 

Once again there was a withdrawal from GLD yesterday.  This time an authorized participant took out 48,310 troy ounces.  And as of 9:42 p.m. EDT yesterday evening, there were no reported changes in SLV.

Over at the U.S. Mint, they made the expected correction I referred to in yesterday's column.  The gold eagle and 24K gold buffalo sales remained unchanged...but the correction showed that precisely zero silver eagles were sold by the mint on Tuesday.  I had reported 226,000 based on the number provided.  This guess...and that's what it was...turned into an error on my part...and my apologies are extended to all those willing to accept them.

I received a little tidbit of information from Casey Research's own Jeff Clark yesterday.  It was regarding Q1 sales from the Royal Canadian Mint.  "Sales of Gold Maple Leaf (GML) coins increased 96.4% to 269,000 troy ounces compared to 137,000 troy ounces in the same period in 2012. Sales of Silver Maple Leaf (SML) coins increased 65% to 6.6 million ounces during the quarter from 4.0 million ounces in the same period last year."  I'm impressed, but not surprised. 

There wasn't much activity in silver over at the Comex-approved depositories on Tuesday, as the didn't report receiving and...and only shipped 15,229 troy ounces out the door.  The link to what little activity there was, is here.

There was no in/out activity reported in gold.

I have a decent number of stories for you today...and I hope you can find the times to read the ones you find of interest.

 

¤ Critical Reads

Bernanke tells Congress Fed flexible on bond buying

Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. central bank still expects to start scaling back its massive bond purchase program later this year, but he left open the option of changing that plan if the economic outlook shifted.

While sticking closely to a time line to wind down the bond buying that he first outlined last month, Bernanke went out of his way to stress that nothing was set in stone.

"Our asset purchases depend on economic and financial developments, but they are by no means on a pre-set course," he told the House of Representatives Financial Services Committee.

Nothing has changed.  It's print, or suffer a deflationary collapse of Biblical proportions.  This Reuters piece, filed from Washington, was posted on their website late Wednesday afternoon...and I thank Roy Stephens for today's first story.

Read more...

Editorial..."A Strange Glow"...The New York Sun

So what does one figure is the explanation for the fact that when Chairman Bernanke testified before Congress today the value of the dollar began rising? The way the New York Times retailed the news is that the chairman “sharpened his insistence” that “the Fed remains committed to its economic stimulus campaign” and had not intended to signal in recent weeks that it was “lowering its sights.” Yet the dollar finished the day with a higher value — more than a 1,277th of an ounce of gold — than when it started.

Our own theory is that it was the story on the Associated Press about how “a strange glow in space has provided fresh evidence that all the gold on Earth was forged from ancient collisions of dead stars.” We’re not making it up. That’s the story that was being circulated as Mr. Bernanke was speaking. The AP was citing a report Wednesday by researchers of the observation by high-powered telescopes that detected a collision of neutron stars that European supercomputers predict could produce gold, platinum, and other heavy metals.

This rather sardonic editorial was posted on The New York Sun website yesterday...and I found it in a posting over at the gata.org Internet site.

Read more...

JP Morgan Is Reportedly Getting Ready To Settle For $1 Billion For Manipulating Energy Markets

U.S. regulators and J.P. Morgan Chase are close to a monster settlement over allegations that the banking giant tampered with electricity markets in California and the Midwest, The Wall Street Journal reports.

Sources told the Journal the deal could come in close to a staggering $1 billion, the largest payout in the history of the Federal Energy Regulatory Commission (FERC), which overseas power trading markets.

JPM and FERC, the little regulator that could, are reportedly exchanging drafts of an agreement.

No one going to jail once again.  It should be obvious that JPMorgan is basically above the law.  One has to wonder what fine/licensing fee will be levied if/when they have to pay for rigging the precious metal markets for the last generation or so.

This businessinsider.com article was posted on their website later in the afternoon, just after the markets had closed for the day in New York...and my thanks go out to Scott Pluschau for sending it our way.  There's also a Zero Hedge story on this subject that Marshall Angeles sent me early yesterday evening. But a NY Times story from Laurent-Patrick Gally says that it's only going to be $500 million.  Either scenario is not a fine in my opinion...it's a licensing fee!

Read more...

Farewell Housing Recovery: Housing Starts Miss Most Since January 2007, Permits Have Biggest Miss In History

In all the noise surrounding Bernanke's rehash of statements made countless times before, today's only relevant data point - June housing starts and permits - was largely ignored. And one can see why: printing at 836K, the starts number was the lowest since August 2012, the second largest sequential drop (down from 928K in May) since 2011 and the biggest miss to expectations of 957K since January 2007!

And worse, permits which printed down from 985K to only 911K on expectations of a 1 million headline number, just posted their largest miss... in history.

As for the reason? Simple: as we have been warning, Wall Street's infatuation with housing as a flippable investment asset, praying that a greater fool has cheaper access to credit and will thus buy up all the distressed property, just evaporated manifesting itself in a 27% drop, or 86K units, in multifamily housing, which plunged back to September 2012 levels or 236,000.

This Zero Hedge story contains some excellent charts....and was sent to us courtesy of U.A.E. reader Laurent-Patrick Gally.

Read more...

Following 45% Collapse, Mortgage Applications Are Back To 2011 Lows

For the 9th week of the last 10 mortgage applications fell (led by refinancings - down 55% from their peak). Now down an incredible 45% from its May highs - the largest 10-week plunge since December 2010 - overall mortgage activity is languishing around the lowest levels of the post-recession 'recovery'. Year-over-year, applications have dropped 44% which is close to the worst on record as applications and mortgage rates track one another in their 'whocouldaknowed' perfectly correlated manner. It seems - for all those blinkered Pollyannas - given this morning starts and permits disaster, that home sales are the next shoe to drop and judging by the empirical relationship with apps and rates, the 'surprise' could be significant for many who remain hopeful.

This is another short story that was posted on the Zero Hedge website yesterday...and the charts alone are worth the trip.  I thank Manitoba reader Ulrike Marx for her first offering in today's column.

Read more...

End of Q.E. looms on signals from U.K. and U.S.

In the UK, Bank of England rate-setters voted unanimously to leave QE unchanged at £375bn for the first time since October last year and, in the US, Federal reserve chairman Ben Bernanke again hinted that money printing would be slowed later this year if the economy remains strong.

 

However, both central banks were clear that the end of QE would not mean the end of monetary stimulus. Minutes to the Bank’s July rate-setting meeting showed that alternatives to QE are likely to be launched as early as August, prompting speculation that rates could be low until 2016.

At the Fed, Mr. Bernanke stressed that “a highly accommodative monetary policy will remain appropriate for the foreseeable future” even if QE is tapered off.

This story has posted on the telegraph.co.uk Internet site many hours before Bernanke spoke in the U.S. yesterday morning...and it's more than interesting to see how closely that the Fed and the BofE are working together...as their comments are virtually identical.  But if you're smart, dear reader, you won't believe a word they say...as the situation hasn't changed.  It's "print...or die".  But all the central banks of the world are really doing is forestalling the inevitable...and that's the total collapse of the world's current financial and monetary system.  I thank Ulrike Marx for her second offering in today's column.

Read more...

Greece on the Brink: Athens May Need 10 Billion More

The Greek recovery may be facing yet another hurdle. According to a report by German daily Süddeutsche Zeitung, the beleaguered country needs another massive influx of money if it is to avoid insolvency. The paper cites an unnamed official at the European Commission as saying that the "financial gap" could be as large as €10 billion.

The news comes at a difficult time for Greece and its relations with Germany. German Finance Minister Wolfgang Schäuble is set to visit Athens this Thursday for consultations with his Greek counterpart Yannis Stournaras and with Prime Minister Antonis Samaras. Schäuble is highly unpopular in Greece for his consistent insistence on austerity. And with German elections looming in September, it seems unlikely that additional aid money for Athens will be forthcoming anytime soon

That, though, could create further problems for Greece. The International Monetary Fund -- part of the troika of lenders keeping Athens afloat -- is only allowed to provide aid to countries whose finances are guaranteed 12 months into the future. Otherwise, it must withdraw funding. Should that happen, countries like Germany and Finland, who have made their own participation in the bailout contingent on IMF involvement, could withdraw as well. 

This news item was posted on the German website spiegel.de early yesterday afternoon Europe time...and I thank Roy Stephens for his second contribution to today's column.

Read more...

‘Sorry is not enough’: Bolivia demands E.U. find culprits behind aerial hijack

EU apologies for the aerial blockade that forced the Bolivian president’s plane to land are “not enough,” said Bolivia’s foreign minister. The presidential plane was grounded amid suspicions that NSA leaker Edward Snowden had stowed away on board.

The Bolivian Foreign Minister, David Choquehuanca, confirmed on Tuesday that Bolivia had received official apologies from Italy and Portugal, adding to those of Spain and France.

“Not only Spain has sent a verbal apology, but also Portugal and Italy have sent messages accounting for their actions,” said Choquehuanca at a press conference in the Bolivian capital of La Paz. However, Choquehuanca stressed that the apologies were not enough and the four countries “must identify those responsible and punish them in an exemplary fashion so that such an incident does not happen again.”

Well, dear reader, maybe it's just me...but it's becoming more and more apparent that all kinds of international laws are being broken with abandon...or are being ignored completely.  This is particularly true of the actions of the American Empire which, no doubt, was 100 percent behind this Bolivian aircraft incident.  This Russia Today story was posted on their Internet site late yesterday morning Moscow time...and it's also courtesy of Roy Stephens.

Read more...

Russia's Putin puts U.S. ties above Snowden

President Vladimir Putin signaled clearly on Wednesday that he did not want a dispute over the fate of former U.S. spy agency contractor Edward Snowden to derail Russia's relations with the United States.

Russia has ruled out extraditing Snowden, wanted by Washington for leaking details of U.S. surveillance programs, and the U.S. citizen is currently stuck in the transit area of Moscow's Sheremetyevo airport.

Allowing him to stay in Russia even temporarily would upset Washington. Putin does not want to jeopardize a planned Moscow summit with President Barack Obama in September, their first in Russia since he started a new term last year, or cloud the atmosphere at a subsequent G20 summit in St Petersburg.

But a refusal would open Putin to criticism at home that he gave into Moscow's former Cold War enemy, even though he has refused to extradite Snowden to the United States to face espionage charges.

This is an absolute must read for all serious students of the New Great Game.  It was posted on the Reuters website late yesterday afternoon EDT...and I thank West Virginia reader Elliot Simon for finding it for us.

Read more...

China defies IMF on mounting credit risk and need for urgent reform

If you think China's Communist Party fully understands the mess it has created by ramping credit to 200pc of GDP and running the greatest investment bubble know to man, read its shockingly complacent response to warnings from the International Monetary Fund.

The IMF's Article IV report on China states - as clearly as the IMF dares - that excess credit has been pushed to the outer limits of sanity, and that there is a growing risk of an "adverse feedback loop" as the financial system and the economy take each other down in a mutually reinforcing spiral.

The deeper thrust of the IMF report is that the growth model of the past 30 years is exhausted. The low-hanging fruit has been picked. If the Communist Party fails to take radical action, it will soon be caught in the middle income trap.

This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website yesterday evening BST...and is definitely worth reading.  I thank Ulrike Marx for sending it along.

Read more...

Where are Silver American Eagles?

As most of you know, it has been sometimes difficult for dealers to keep silver Eagles in stock for immediate delivery this year. The Mint has blamed outside suppliers of blanks for its inability to produce as many coins as the public wants to purchase. The coins are certainly not rare, with the U.S. Mint already having sold over 27.5 million coins year-to-date, on pace to set another annual sales record. Currently, delivery is now running about three weeks after customers make payment.

Knowing of this supply difficulty, I had set aside a few hundred coins a month ago specifically to take to Freedom Fest, the most we have ever offered at our booth. As soon as we opened up our booth Wednesday afternoon, we were besieged with customers wanting to purchase silver Eagles. We set a low quantity limit per customer, as our intention was to make coins available to a greater number of people for Saturday’s group photograph rather than to sell these coins to customers making a bulk silver purchase.

Unlike past years, customers constantly asked if we would sell them our entire inventory. After we declined, a few expressed a desire to come back late Saturday afternoon to see if we would make them a deal to take any remaining inventory off of our hands.

Such would-be buyers never had a chance. One dealer exhausted his supplies by Thursday afternoon. For the first time ever at Freedom Fest we sold out our entire inventory, with the last coins selling Friday afternoon. By Saturday morning, every dealer who had brought silver Eagles to Freedom Fest had sold out.

This very interesting story by Patrick Heller was posted on the numismaster.com Internet site on Tuesday...and it's definitely worth skimming.  I thank Elliot Simon for finding this news item for us.

Read more...

Still strong Indian demand for gold loans keeping banks interested

With less than 2% of the country’s gold holdings used as collateral for getting loans and continued growth in demand, recent restrictions have not really dulled growth in the sector.

Despite the recent imposition of new restrictions by the Reserve Bank of India on the provision of gold loans, banks and non-banking financial corporations, report continued growth in the sector.

And, citizen demand for such loans has two institutions cozying up afresh, by filing applications to open up new centres.

India's largest pure play gold mortgage player Muthoot Finance has applied for a banking licence and maintains it can easily launch a commercial lending business with over 2,000 branches.

This news item, filed from Mumbai, was posted on the mineweb.com Internet site yesterday...and I thank Ulrike Marx once again for sharing it with us.

Read more...

India needs to address dowry system to tame Gold

Yet another appeal by India's finance minister Palaniappan Chidmabaram to cut down gold's usage will surely not to make any impact on gold crazy Indians, analysts said.

Apart from the investment side, gold in India is an integral part of country's culture, especially linked with marriages and the dreaded dowry system it holds for which gold is the major item.

For centuries Indian marriages have been sealed with gold. During each wedding season, countless brides are given away wearing elaborate sets of golden jewellery.

Analysts said the finance minister should address the issue of dowry system seriously as majority of the gold purchased by Indians goes as part of the dowry.

This story, filed from New Delhi, was posted on the bullionstreet.com Internet site late Wednesday morning IST...and it's a must read.  I thank Ulrike Marx for her final offering in today's column.

Read more...

Gold Imports by India Seen Shrinking as Curbs Increase Costs

Gold imports by India, the world’s biggest consumer last year, may tumble in the second half as the government curbs shipments to contain a record current-account deficit and stem a slide in the currency.

Inbound shipments may drop 22 percent to 372.5 metric tons in the six months through December from 478 tons a year earlier, according to a median of estimates from 10 importers, jewelers, analysts and trade groups compiled by Bloomberg. That may still boost full-year imports to about 902 tons from 860 tons in 2012, according to Bloomberg calculations based on data from the World Gold Council and the All India Gem & Jewellery Trade Federation.

Falling Indian demand for physical gold may deepen a bear market in bullion as some investors sell the metal amid signs of an improving U.S. economy. Shoppers from India to China and Turkey crowded retail outlets to buy jewelry, coins and bars in April after the precious metal posted the biggest two-day loss in three decades. Goldman Sachs Group Inc. says that gold will reach $1,050 by the end of 2014, while Credit Suisse Group AG forecasts $1,150 in about a year.

This Bloomberg article, filed from Mumbai, starts out in negative territory...and all the positive news was left until the very end.  I'm surprised that it was included at all. This story was posted on their Internet site early yesterday morning MDT...and I thank Marshall Angeles for bringing it to our attention.

Read more...

Galena silver mine cutting workforce by a third

The Galena Mine will cut its workforce by about a third in response to plunging silver prices and high production costs, officials said Tuesday.

Layoff notices are being sent to 126 of the underground silver mine’s 351 workers. Affected employees will be given a 60-day notice in compliance with federal law and the mine’s collective bargaining agreement, said Janice Mandel, a spokeswoman for U.S. Silver and Gold Inc., the mine’s owner.

In addition to the layoffs, Blasutti and the company’s board of directors will take a voluntary 20 percent pay cut and the executive management team has agreed to a 10 percent cut, according to the release. The pay cuts take effect Aug. 1st.

Producing an ounce of silver from the mine costs about $16, so skidding prices for the metal took a toll on U.S. Silver and Gold’s profitability, according to a company news release.

And so it begins.  This must read story appeared on the spokesman.com Internet site yesterday and, like the previous story, is also courtesy of Marshall Angeles.

Read more...

Lower silver prices force Alexco to plan mine shutdown

Junior silver miner Alexco Resource has made plans to shutter its Bellekeno silver mine and mill in the Yukon at the end of its summer season, citing the drop in silver prices.

Alexco, which announced the plans in a press release Tuesday, confirmed to Mineweb the shutdown was likely to happen unless the silver market improved soon. Alexco President and CEO Clynton Nauman could not be reached for comment Tuesday.

The shutdown would, if it goes ahead, start at “the onset of winter,” Alexco said, suggesting operations would grind to a halt sometime around October. So far in the first six months this year Alexco has produced 955,772 ounces silver.

There will be many more if silver remains below its cost of production for much longer.  This news item from the mineweb.com Internet site yesterday represents Marshall's third and final offering in today's column.

Read more...

Sprott's 'Markets at a Glance': Do Western Central Banks have any Gold Left? [Part III]

Recent dramatic declines in gold prices and strong redemptions from physical ETFs (such as the GLD) have been interpreted by the financial press as indicating the end of the gold bull market. Conversely, our analysis of the supply and demand dynamics underlying the gold market does not support this interpretation. Many major buyers of gold are adding to their stocks, while at the same time supply is flat or even decreasing, compounding an already vast imbalance.

For example, central banks from the rest of the world (i.e. Non-Western Central Banks) have been increasing their holdings of gold at a very rapid pace, going from 6,300 tonnes in Q1 2009 to more than 8,200 tonnes at the end of Q1 2013. At the same time, physical inventories have declined rapidly since the beginning of 2013 (or have been raided, as we argued in the May 2013 Markets at a Glance) and physical demand from large and small scale buyers remains solid.

As we have shown in previous articles, the past decade has seen a large discrepancy between the available gold supply and sales. The conclusion we have reached is that this gold has been supplied by Central Banks, who have replaced their holdings of physical gold with claims on gold (paper gold).

Many recent events suggest that the Central Banks are getting close to the end of their supplies and that the physical market for gold is becoming increasingly tight.

This commentary by Eric is very similar to what was posted in his "Sprott's Thoughts" essay from yesterday.  However, there are some major differences...and for that reason alone, it falls into the absolute must read category.

Read more...

Lawrence Williams: The bizarre price action in gold – counter to logical assumptions

Whether you believe his point of view or not, Grant Williams’ ‘Things that make you go hmmm’ newsletter is always a fascinating, and thought-provoking read and the latest one is no exception.

In it Williams to an extent covers ground he has written about before – primarily about what he sees as the hugely illogical way the gold price has performed in recent months.  He describes this as “the bizarre price action over the last six months, which has run counter to most logical assumptions”  When everything would logically have pointed to a sharp rise in price, what has happened?  Gold has fallen – and fallen sharply.  Indeed, if he was not fully in it beforehand, Williams is now firmly in the camp of believers that the gold price is very definitely being manipulated downwards by the global financial elite to try and hide the fact that there is a huge shortage in physical gold developing – or already developed.

What Williams sees as virtual proof of his viewpoint is that there are various triggers which should have had gold moving up heavily - notably the repatriation of some of Venezuela’s gold and the even bigger furore over the repatriation of 300 tonnes of  Germany’s gold supposedly held by the New York Fed and that it is going to take 7 years to complete the transfer of its gold held in the U.S.  Indeed on the announcement of these, gold did move up initially and briefly, but then dived – a pattern that has been followed since on a number of other announcements which would normally have led to gold moving upwards in price.

Lawrie goes through Grant Williams piece that I posted in this space yesterday...and concludes his essay with these comments...

"And perhaps if one considers financial manipulation by big money as being an integral part of normal market conditions in any sector these days, perhaps [CPM's Jeff] Christian has a point .  But to ignore the increasingly strange sales patterns in the gold futures markets and its effect on the physical gold price, does seem to be a case of burying one’s head in the sand."

"Now maybe as COMEX influence on metal pricing starts to wane, perhaps replaced by the Shanghai Exchange as the most important trading platform, things will gradually change – but then perhaps the Chinese will establish their own agenda for market control – markets are just not transparent any more – indeed if they ever were."

Read more...

 

¤ The Funnies

Sponsor Advertisement

Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations.

An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff  the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information, ir@freegoldventures.com


 

¤ The Wrap

Please think about this for a minute – in order to maximize profits on their massive gold long position and more-than-neutralized silver short position, all JPMorgan has to do is to go on vacation, go fishing or spend time with the family...anything but sell. With an equally massive speculative short position that must be bought back (or delivered on), there is a built-in buying wave present in gold and silver that must get triggered at some point. When, not if, that speculative buying wave gets triggered, if there is not aggressive selling to satisfy what will surely be aggressive buying, prices for gold and silver will soar. In this circumstance, if JPMorgan sits on its hands, prices, particularly for silver, will explode. Will JPMorgan sit on its hands and go on vacation? No one knows for sure, but I will play it as JPMorgan looking to maximize its profits until proven otherwise. - Silver analyst Ted Butler...17 July 2013  

I hope you weren't caught off guard by JPMorgan's high-frequency traders yesterday morning...as any time that Bernanke speaks it's a sure sign that the precious metals are about to taken out to the woodshed...especially silver.  That turned out to be the case in spades yesterday.

Ted Butler mentioned that most of the long positions put on during last week's rally in both metals were mostly, if not all, blown out of the water after yesterday's engineered price decline...and that was probably the objective.

Based on JPMorgan's aggressive in-house silver deliveries during the July delivery month, they still aren't done covering their short positions in that metal.  It's obviously still a work in progress...and it remains to be seen how long it takes.  We can't see everything they're doing, but it's impossible to cover monster short positions in both gold and silver without leaving a debris trail 50 kilometers wide...and 200 long.  That's pretty much what they've done...and if this is what we can see, it's a safe bet that what they've accomplished behind the scenes is probably even more impressive than what we already know for sure.  I'll have a paragraph from Ted Butler about that in this space tomorrow.

As a [mostly] responsible adult, now approaching his senior years...at least in physical age...I'm appalled at the lack of action from the executives of the precious metal mining companies that we own.  Not only would they never broach the price management issue publicly in all these years, but now...as Chris Powell so eloquently pointed out...the gold mining industry would rather go back to hedging than fight.  In the case of silver, we're seeing mines already cutting back on production.  They would rather do this than address the 800 pound gorilla that's been sitting in their respective living rooms for the last 25 years.  The World Gold Council and The Silver Institute have been successful beyond their wildest dreams of keeping the mining companies in line.  And in case you haven't figured it out already, every mining executive that has ever been appointed to 'manage' these two organizations, had sold out to the dark side of The Force long before they received these appointments, or they would never have got the job.

Can you imagine any president/chairman of either of these organizations publicly stating that they were going to get to the bottom of the price management schemes in both gold and silver.  If they did, their bodies, like Jimmy Hoffa's, would never be found.

Not a thing happened in Far East trading on their Thursday...but three of the four precious metals are now trading in positive territory in early London trading as I hit the 'send' button at 5:05 a.m. EDT.  Volumes are light...and mostly of the HFT variety...and the dollar index is up about 12 basis points...not that it matters.

That's it for today...and I'll see you here tomorrow.