Casey Research Publication
Gold & Silver Daily
"As I mentioned earlier this week, "da boyz" can move these market any which way they want"
 

¤ Yesterday In Gold & Silver

NOTE:  I will be on the road most of next week...and will be writing my column on my laptop, which is an ordeal that I put myself through as few times a year as possible.  They will also be as short as I can make them...and the 'Critical Reads' section will shrink alarmingly during this time period.

The gold price didn't do a lot for most of the trading day in the Far East on Friday, but starting around 3:00 p.m. Hong Kong time, the price developed a negative bias...and shortly before 1:00 p.m. in London, the decline began more severe.  About forty minutes later...shortly after 8:30 a.m. in New York, it had hit its low tick of the day, which Kitco reported as $1,602.80 spot.

The subsequent rally lasted until 10:15...and the price sagged a bit from there until shortly before 2:00 p.m. Eastern.  The gold price gained a couple of dollars from there going into the 5:15 p.m. electronic close.

In actual fact, it was all a tempest in a teapot, as volume was very light once again yesterday...around 84,000 contracts net, the same as Thursday's volume.  The gold price closed at $1,609.20 spot...down $5.60 on the day.

Silver opened virtually on its high of the day at the beginning of Far East trading on Friday...and was down about twenty cents to the $29 spot price just minutes before 8:30 a.m. in New York.

Less than ten minutes later, the price had cratered by about 40 cents...and from there, the price pattern was almost identical to gold's, with the only minor difference being the fact that the absolute low tick [$28.45 spot] came on a quick spike down at 12:15 p.m. Eastern time.

Silver closed at $28.76 spot...down 42 cents from Thursday.  Gross volume was pretty decent at around 42,500 contracts.

I couldn't help but notice that Friday's silver price path was almost a mirror image of the Thursday price pattern, which is hardly a coincidence I would think.

The dollar index opened at 82.86 in early Far East trading on their Friday morning...and more or less traded flat until shortly after 8:30 a.m. in London.  From there it rolled over a hair...and headed south.  The absolute low tick came moments before noon in New York...and then didn't do much after that...closing the day at 82.37...down 49 basis points from the Thursday close.

Once again there was absolutely no correlation between what the dollar index was doing...and what was going on in the Comex paper markets in gold and silver.

Despite the fact that gold got smacked pretty good earlier in the day, the gold stocks rallied into positive territory by shortly after 10:00 a.m. in New York.  Then, shortly after that, someone came along and sold the gold stocks off a percent...with the low of the day coming around 11:30 a.m. Eastern time.  From that point, the stocks rallied back slowly, and the HUI finished down 0.73%.

Needless to say, the silver stocks didn't exactly shine yesterday...as virtually all of them finished in the red.  But they did follow almost the same price path as the gold stocks.  Nick Laird's Intraday Silver Seven Index closed down 1.17%.

(Click on image to enlarge)

Here's Nick's Silver Seven index which shows the longer term.

(Click on image to enlarge)

The Comex Daily Delivery Report showed that 99 gold and 243 silver contracts were posted for delivery on Tuesday within the Comex-approved depositories.  In gold, it was 'all the usual suspects'.  In silver, the two big short/issuers were JPMorgan Chase and ABN Amro with 120 and 111 contracts respectively.  The biggest long/stoppers were Canada's own Bank of Nova Scotia with 168 contracts...and then JPMorgan Chase with 59 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday but, once again, the big surprise came from SLV, where an authorized participant added 1,691,162 troy ounces of silver...and is virtually the same size of deposit that was made into SLV on Thursday...almost to the ounce, so I'm wondering if this was an double entry error.  We'll find out for sure on Monday if/when they revise their number.

Over at Switzerland's Zürcher Kantonalbank for the period ending March 21st...they reported that their gold ETF declined by a tiny 8,017 troy ounces...and their silver ETF declined by 200,557 troy ounces during the same period.

The U.S. Mint had a smallish report.  They sold only 500 ounces of gold eagles...along with 1,000 one-ounce 24K gold buffaloes.  Month-to-date the mint has sold 45,500 ounces of gold eagles...10,000 one-ounce 24K gold buffaloes...and 2,438,000 silver eagles.  Based on these numbers, the silver/gold sales ratio for the month so far is a hair under 44 to 1...which is pretty amazing...and I hope you're getting your share.

Over at the Comex-approved depositories on Thursday, they reported receiving 945,922 troy ounces of silver...and shipped 369,222 troy ounces of the stuff out the door.  The link to that activity is here.

The Commitment of Traders Report was a surprise.  Silver showed a big improvement in the Commercial net short position...and gold showed a big deterioration in its Commercial net short position.

In silver, the Commercial net short position declined by 14.9 million ounces...and as of the Tuesday cut-off stands at 132.2 million ounces. Once the market-neutral spread trades are subtracted out of the total open interest, the Big 4 traders are short 38.8% of the entire Comex silver market on a 'net' basis.  The '5 through 8' traders are short an additional 11.6 percentage points on a net basis.  Add them up and the Big 8 are short 50.4% of the entire Comex silver market...and that's a minimum percentage.

In gold, the Commercial net short position increased by a whopping 2.02 million ounces...blowing out to 16.24 million ounces.  But the 'good' news, as Ted Butler pointed out to me on the phone yesterday, was that there was no increase in the short position of the 'Big 8' traders...which includes the BIG 3...JPMorgan, Canada's Bank of Nova Scotia...and HSBC USA.  All of the increase was the result of the smaller Commercial traders selling some of their long positions for a profit.

On a 'net' basis the Big 4 traders Commercial traders are short 25.4% of the entire Comex gold market...and the '5 through 8' traders are short an additional 13.7 percentage points of the gold market.  So the Big 8 are short 39.1% of the entire Comex gold market on a 'net' basis.

In terms of troy ounces held short, the Big 8 are short 13.97 million ounces of gold...which represents 86.0% of the Commercial net short position in that metal.  In silver, the Big 8 are short 264.4 million ounces...and that amount of silver represents 200.0% of the Commercial net short position.

Looking at the numbers in the previous paragraph it's easy to see that, compared to silver, gold appears to be almost a free market...which it isn't, as the gold market is also rigged seven ways to heaven.

Here's Nick Laird's incomparable "Days of World Production to Cover Comex Short Positions" chart as of the March 19th cut-off.

(Click on image to enlarge)

Here's a series of three photos that my daughter Kathleen sent me yesterday.  What is it with cats and boxes?  And it obviously doesn't matter about the size of the cat...domestic or otherwise!

With the obvious exception of the first story, it's pretty much wall-to-wall stories about Cyprus for you today....and they're mostly presented in the order I received them yesterday.  These stories seem to change by the hour...and it will be interesting to see how this all turns out.

 

¤ Critical Reads

Drones: A Booming Business?

Unmanned aerial vehicles, also known as drones, may soon become commercialized. In Grand Forks, N.D., people are preparing for a coming boom in drones-related business.

This very interesting 4:41 minute video clip was posted on The New York Times website on Monday...but it had to wait to find a spot in Saturday's column.  I thank Roy Stephens for our first item of the day.

Read more...

Cyprus overhauls two biggest banks to stave off collapse

Cyprus will inflict losses of up to 40pc on large depositors but guarantee all deposits up to €100,000 in a plan to restructure its biggest banks and prevent the island’s economic collapse next week.

Following a run on the Laiki bank on Thursday, the Cypriot government has submitted a bill to Parliament which would enact strict capital controls for when banks open next Tuesday, restricting the movement of funds for up to 60,000 British expatriates with bank accounts in Cyprus.

Finance ministers for the 17 eurozone countries on Thursday night considered the proposals to restructure and freeze all assets held in the Popular Bank, known in Greek as Laiki, and the Bank of Cyprus.

The EuroGroup backed away from letting Cyprus collapse and announced that negotiations would begin on the new Cypriot proposals.

This story showed up on The Telegraph's website on Thursday evening...and it's the second in a row from Roy Stephens.

Read more...

Search for a Solution: Troika Reportedly Rejects 'Plan B' in Cyprus

Greek media outlets reported early Friday afternoon that an alternative bailout package proposed by Cyprus has been rejected by the troika. "The coming hours will determine the country's future," a government spokesman in Nicosia said.

Under the so-called "Plan B," Cyprus would abandon the controversial bank levy and instead attempt to raise its €5.8 billion share of the bailout through a fund based on a portfolio of government assets. It is this plan that has reportedly been rejected by the troika, comprised of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). Cyprus' receipt of a €10 billion emergency loan from the European Stability Mechanism, the euro-zone bailout fund, has been made contingent on Nicosia coming up with almost €6 billion on its own. The fund it designed to do so would include money from the Orthodox Church, pension funds and other institutions that would back government bonds that would then be issued. The Cypriot central bank is also expected to contribute to the fund with its gold reserves.

This article appeared on the German website spiegel.de early yesterday afternoon Europe time...and is Roy's third offering in a row.

Read more...

Cyprus Struggles to Meet Bailout Demand as Deadline Looms

European and Cypriot officials were locked in talks to find a formula to avert the Mediterranean island’s financial collapse, struggling to forge consensus on a bailout package before the European Central Bank cuts funding.

Cyprus’s options narrowed today after Russia spurned a bid for a loan and German lawmakers dismissed the Cypriot government’s latest rescue proposals. That left the troika of international creditors to hammer out fresh terms with President Nicos Anastasiades’s coalition focusing on the fate of Cyprus’s ailing banks.

“We believe that in the next few hours we could be able, with a lot of difficulties, to reach a framework that will be within the policies of the EU, European Central Bank and IMF,” Averof Neofytou, deputy president of Cyprus’s ruling Disy party, told reporters in Nicosia, referring to the troika of creditors. “We are trying hard. I believe we may have a result today.”

This Bloomberg article was posted on their website late in the Denver lunch hour yesterday...and I thank West Virginia reader Elliot Simon for sending it along.  The original title to this article was "Merkel Vents Anger at Cyprus Over Bailout as Deadline Looms".

Read more...

Jim Rickards and Chris Whalen: Is Cyprus the Canary in the Coal Mine

Carrington Investment Services' Chris Whalen and Tangent Capital's James Rickards discuss the crisis in Cyprus and Federal Reserve monetary policy with Alix Steel on Bloomberg Television's "Taking Stock."

This 8:37 minute Bloomberg video was posted on their website sometime on Thursday.  I consider it a must watch...and I thank reader Harold Jacobsen for digging it up on our behalf.

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Cyprus offered bailout from Russian energy firm Gazprom...if they sell offshore gas rights

Cyprus have been offered a bailout from Russian energy giant Gazprom in exchange for selling exploration rights to its offshore gas deposits.

The huge multinational already own vast gas deposits in Siberia, and reportedly want the beleaguered country's Mediterranean Sea rights.

The firm are reportedly looking to acquire the rights as the emergence an independent gas industry in Cyprus would undercut their pricing power.

This story appeared on the express.co.uk Internet site on Wednesday...and is another offering from Roy Stephens.

Read more...

Simon White: Cyprus -- the 'glue' of Europe

Hinde Capital's risk management executive Simon White writes today that even if the expropriation in Cyprus is limited to uninsured bank deposits of E100,000 and more, this may cause the flight of uninsured deposits in other euro-zone countries, which would be catastrophic for economic growth.

"Once again the question of the survival of the euro has come into view," White writes. "That the catalyst has been a seemingly innocuous country such as Cyprus does not fill one with confidence given the much larger, and much less tractable, problems Europe will eventually have to deal with. It looks like there will be plenty more horses heading to the glue factory."

This short essay was posted on the hindecapital.com Internet site yesterday.  I found it in a GATA release...and I thank Chris Powell for wordsmithing the introductory paragraph above.

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Russian Prime Minister lectures Barroso on Cyprus

Russian Prime Minister Dmitry Medvedev humbled European Commission chief Jose Manuel Barroso in public remarks on Thursday (21 March) over the EU's handling of Cyprus.

Speaking alongside Barroso at a conference in Moscow, he called the EU's original Cypriot bailout idea "to put it mildly, surprising … absurd ... preposterous."

"The situation is unpredictable and inconsistent. It [the bailout model] has been reviewed several times. I browsed the Internet this morning and I saw another Plan B, or a Plan C or whatever," he noted.

He upbraided EU institutions for failing to give Moscow due notice of its decision.

This news item, filed from Brussels, was posted on the euobserver.com Internet site early yesterday afternoon Europe time...and it, also, is courtesy of Roy Stephens.

Read more...

Pension fund seizure, capital controls legislated in Cyprus

Cyprus is expected to make a dramatic U-turn on Saturday to avert the imminent threat of financial meltdown, having signaled that it is willing to tax big savers in its stricken banks to clinch a bailout from the European Union.

The island's partners in the 17-nation euro zone scheduled a meeting for Sunday in Brussels, in a strong sign they believe a solution is near.

As hundreds of demonstrators faced off with riot police outside parliament late into Friday night, lawmakers inside voted to nationalize pension funds, pool state assets for a bond issue, and peel good assets from bad in stricken banks.

This Reuters story was posted on their website early yesterday evening Eastern time...and I plucked it from a GATA release.  This story is just about the most recent news I have in this column on the current situation...and for that reason it's worth reading.

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Doug Noland: Cyprus and Money

I wouldn’t be surprised if history looks back at this week’s developments and finds some significance.  There was some real money lost this week.  And I mean “money” as in perceived safe and liquid nominal stores of value – like euro-denominated bank deposits (in contrast to non-money-like Greek sovereign bonds or subordinated bank debt).  Cypriot deposits (small and large) had retained their “moneyness” based on what is now clearly a misperception that Germany and the EU would backstop their value.  And there’s literally Trillions of suspect Credit and “money” throughout Europe whose value is today inflated based upon similar (mis)perceptions. 

While we’re on the subject, there are tens of Trillions of securities and “money” that retain full and inflated market values based on the perception of the wealth-creating capacity of the Fed’s printing press.  And there are as well monetary partners in crime in Japan, China, the developing economies and rest-of-world.   For going on five years now, since the 2008 Credit crisis, the global “system” has been grossly over-issuing “money.”  I have referred to the Greek collapse and “European” crisis as the initial crack in the “global government finance Bubble.”  It is tempting to see Cyprus as the first crack in “money.”

Doug Noland's Credit Bubble Bulletin is certainly a must read this week...and it's posted over at the prudentbear.com Internet site.

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The Battle of Cyprus

Most people would be surprised to learn that they are legally considered ''creditors'' of their banks rather than customers who have trusted the bank with their money for safekeeping, but that seems to be the case. According to Wikipedia...

In most legal systems, the funds deposited are no longer the property of the customer. The funds become the property of the bank, and the customer in turn receives an asset called a deposit account (a checking or savings account). That deposit account is a liability of the bank on the bank's books and on its balance sheet. Because the bank is authorized by law to make loans up to a multiple of its reserves, the bank's reserves on hand to satisfy payment of deposit liabilities amounts to only a fraction of the total which the bank is obligated to pay in satisfaction of its demand deposits. [5]

The bank gets the money. The depositor becomes only a creditor with an IOU. The bank is not required to keep the deposits available for withdrawal but can lend them out, keeping only a ''fraction'' on reserve, following accepted fractional reserve banking principles. When too many creditors come for their money at once, the result can be a run on the banks and bank failure.

If you know nothing about how a bank works, then this short essay posted over at the Asia Times website yesterday falls into the must read category...and I thank Swiss reader B.G. for digging it up for us.

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Unrest in Bulgaria: New Casualty in Wave of Self-Immolations

A 40-year-old Bulgarian set himself on fire to protest poverty and corruption in his country on Friday, becoming the sixth self-immolation in the EU country in less than a month.

Public self-immolations are not new to Bulgaria and have occurred throughout the world and in many different cultures. Dozens of Tibetans have set themselves on fire since 2009 in protest of Chinese repression. The 2010 self-immolation of a young Tunisian man, Mohamed Bouazizi, was the catalyst for the wave of unrest ultimately leading to the Arab Spring. Czech student Jan Palach ignited himself publicly in 1969 as a political protest against the Warsaw Pact and the resulting invasion of Czechoslovakia. Both Bouazizi and Palach became symbols of resistance in their countries.

Bulgaria now has its own symbol of resistance: Plamen Goranow. On March 3, the 36-year-old activist set himself on fire in front of the Varna municipal building in protest against the organized crime group TIM and the TIM-controlled Varna mayor. Goranow died from his injuries, and the mayor, Kiril Yordanov, subsequently resigned from office.

This story was posted on the spiegel.de Internet site yesterday afternoon...and it's Roy Stephens final offering in today's column.

Read more...

Three King World News Blogs

The first interview is with Egon von Greyerz...and it's entitled "The Reality is That the Financial System Could Fail at Any Time".  Next is this very interesting blog with Dr. Paul Craig Roberts.  It's headlined "Former U.S. Treasury Official - Threats, Cyprus and Massive Crisis".  The last blog is also with Dr. Paul Craig Roberts. The title reads "Banks Move to Enslave Humanity".

Read more...

Navigating gold, silver legal tender isn’t for the faint of heart

While any state can pass a law declaring gold and silver as legal tender, no state government has yet to figure out how such a system will actually operate from day to day.

Despite a 2011 state law declaring gold and silver as “legal tender,” the government of the State of Utah is still not prepared to actually accept gold and silver payments.

And, any other state-- which adopts model legislation for a Legal Tender Act authorizing coin or bullion having gold or silver coin as a legitimate medium of exchange for the payment of debts and taxes--may be in for a long slog ahead when it comes to actual implementation.

This article was posted on the mineweb.com Internet site yesterday...and my thanks go out to Marshall Angeles for bringing it to my attention...and now to yours.

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Recycling, not mining, is the future for securing immediate PGM supply

Anglo American Platinum Ltd., the world's largest platinum and rhodium producer, has taken 400,000 oz of platinum out of its 2013 schedule for its South African mines. While people might not think 400K oz is very much, you have to keep in mind that in 2012, the total production of all of the platinum group metals (PGMs) was less than 700 tons. One ton of precious metal has 30,000 or 31,000 troy ounces of material, troy ounces being the traditional measurement in precious metals. That 400K oz reduction equals 10–13 tons and represents as much as 2% of world production. Global production has been declining from its peak of 320 tons in 2006, and in 2012 was down to 300 tons. This is a serious reduction in a metal that is extremely rare. Officials say this reduction is due to labor costs and unrest, but if it is due simply to declining grades then it portends a bleak future for those who will simply want to wait and see what happens.

South Africa has at least half of the world's PGM resources and reserves and produces 75% of the global total. When South Africa sneezes, the PGM market gets a cold. South Africa is sneezing a lot right now. Production is down, energy costs are up and there is labor unrest. The issue of security of supply has come to the fore for the average investor. Users of PGMs have been watching this develop for several years, as South Africa becomes politically less stable.

It is very hard to find new PGM resources, they are hard to mine and, once the market goes into deficit, it is hard to play catch-up, especially if the deficit is structural, which appears to be the case.

This article appeared ten days ago posted on the bullionstreet.com Internet site...and it's a must read in my opinion.  I thank Marshall Angeles for his second story in a row.

Read more...

Nick Barisheff: Government belt-tightening bad news for retirees

You may not have yet sensed it, but governments everywhere are tightening their belts.

To lower their ration of debt to gross domestic product...and to do so subtly...they're pursuing a policy of "financial repression."

It's not the first time they've done so. Between 1945 and 1980 for example, the U.S. succeeded in cutting its debt-to-GDP ratio by roughly 70 percent.

But for retirees, the belt-tightening is bad news.  It means real rates of return will be in the minus column for decades to come.

The GOLD world doesn't show up in either the title or the cut and paste portion shown above, but rest assured that Nick discusses it at length later in the column.  This essay was contained in the March issue of  the Investor's Digest of Canada...and it's posted on the bmgbullion.com Internet site...and it's definitely worth your time.

Read more...

Martin Sibileau: Central bank secrecy means a manipulated gold market

Sibileau asks: "Why should the morphing of gold reserves into fiat gold (via gold loans) be called a manipulation? There is nothing different between the creation of fiat gold out of bullion and the creation of U.S. dollars out of U.S. Treasuries.

"The answer is simple: There should be nothing wrong with it if it was not hidden. ...

"If the central banks did not show the bullion swapped as [being] gold in their possession and if the bullion banks showed the reserve ratio of fiat gold to bullion, just like banks do with fiat money, this could not be called a manipulation. Even with consistent selloffs at 8:20 a.m. ET or 4 a.m. ET we would still not be able to call this a manipulation. ...

"How would the market react therefore if there was full disclosure? Physical gold would trade at a premium."

Sibileau's analysis seems to match GATA's pretty closely. He concludes that gold market manipulation probably can continue far longer than most observers expect.

This 3-part story is all contained in one GATA release from yesterday...and it includes an extensive preamble by Chris Powell.  It's a must read.

Read more...

Sprott's Thoughts: Silver's Investment Demand Conundrum

The silver market is increasingly becoming an exercise in contradiction. On one hand, the silver spot price has disappointed thus far in 2013, falling from the low-thirties in early January down to its current level around US$29.00/oz. Given that price direction, one would be forgiven for assuming that the silver ETFs had experienced outflows over that time - but they have not. While we have seen the SPDR Gold Trust (GLD) shed 141 tonnes of gold year-to-date with the price of gold reacting accordingly, silver ETFs have in fact ADDED to their stockpiles since January 2013, representing more than 20 million ounces of additional silver.

In addition to the ETFs, we are also seeing this divergence play out in the physical market, where the US Mint's silver coin sales have already reached an all-time high of 13.2 million ounces in the first three months of 2013. If annualized, the Mint is on track to surpass 52.8 million ounces of silver sales by the end of the year - which would represent a new all-time annual record. These are certainly not the levels of physical sales one would expect to see during a prolonged doldrums phase for silver. In fact, when we compare the dollars invested in silver eagles vs. gold eagles, the divergence becomes even more pronounced. On a year-to-date basis, investors have spent slightly more on one-ounce silver eagle coins ($383mm) than they have on one-ounce gold eagles ($360mm). In other words, more dollars are going into physical silver than gold, implying that investors are buying 56X more silver ounces than gold ounces - and yet the silver price continues to languish. Silver is not 56X more available than gold on a supply basis either.

This short, but very excellent article on silver written by David Baker over Sprott Asset Management, quotes Ted Butler's work at length...with attribution, for a change.  It's a must read as well, of course.

Read more...

 

¤ The Funnies

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¤ The Wrap

There are no market anymore...only interventions. - Chris Powell, GATA

Today's pop 'blast from the past' takes me back to my last year in high school in 1966.  This 'Go-Go' tune got seemingly endless air time when it was first released...and it's still a classic to this day.  The group was basically a one-hit wonder...but what a hit it was!  It's old enough that the youtube.com video clip is in black in white.  I hope you enjoy it...and the link is here.

Today's classical selection is a tone poem by Finnish composer Jean Sibelius.

The Swan of Tuonela was originally composed in 1893 as the prelude to a projected opera called The Building of the Boat. Sibelius revised it two years later as the second of the four sections of the Lemminkäinen Suite (Lemminkäis-sarja), also known as the Four Legends from the Kalevala, Op. 22, which was premiered in 1896. Sibelius revised the tone poem twice, once in 1897 and again in 1900.

Here's the Norwegian Radio Orchestra under the baton of Avi Ostrowsky. This recording is as good as it gets...as is the divine playing of the cor angl'e soloist.  The link is here. Enjoy.

Well, it was another case of JPMorgan et al moving the markets because they could...not because there were any fundamental changes in supply and demand in both gold and silver.  If you take a quick peek at platinum and palladium, their chart patterns were unscathed yesterday.

As I mentioned earlier this week, "da boyz" can move these market any which way they want...as there are no adults in charge anymore...either at the CFTC or in the mining companies.  Gold seems to have topped out just above the $1,600 price mark for the moment...and silver is safely back under the $29 spot price mark.  Where these markets go from here is unknown, but whatever direction we go in, will have nothing to do with real supply and demand fundamentals.

That's all I have for today.  As I mentioned at the top of this column, I'll be out of town for a large portion of next week...and I can absolutely guarantee that the columns I post while gone, will be much shorter.

I await the Sunday night opening in New York with some degree of interest.