Gold & Silver Daily
"To tell you the truth, I'm not sure what to make of yesterday's price action in the precious metals."
 

¤ Yesterday In Gold & Silver

Gold did nothing in Far East trading on their Friday, but the moment that London opened, the high-frequency traders went to work.  The low tick [$1,418.80 spot] came less than a minute before 10:30 a.m. in New York...and from there the gold price recovered rather vigorously into the close, but did not come close to regaining all its loses on the day.

Gold closed at $1,448.10 spot...down $10.40 from Thursday's close...and $30 off its low.  Net volume was huge at 195,000 contracts.

It was much the same story in silver, although the low tick [$23.11 spot] came a minute or two after the open of the equity markets in New York.  From there the price traded sideways until noon EDT...and then away it went to the upside, before getting capped thirty minutes later.  At that point the rally continued, but at a much more modest pace.

However, silver did manage to finish the Friday trading session above the its Thursday closing price, at $23.87 spot...up 12 whole cents and slightly off its high, which Kitco recorded as $24.01 spot.  Gross volume was a very chunky 55,000 contracts.

With some minor variations in their low price ticks for the day, the platinum and palladium charts looked similar.

The dollar index closed at 82.69 on Thursday afternoon...and traded pretty flat until 1:30 p.m. in Hong Kong. From there it rallied until its high tick of the day [83.40] was printed about 11:15 a.m. in New York.  From there the index slid a bit into the close...finishing the Friday session at 83.15...up 46 basis points.

It's my opinion that this was a bear raid on the precious metals behind the fig leaf of a engineered rise in the dollar index, because the whole thing fell completely out of bed by at 9:30 a.m. in silver...and 10:30 a.m. in gold.  Besides which, this smallish rally in the dollar index was out of all proportion to the attack on the precious metals...as were the rallies that followed.  And as I just mentioned, if you examine their respective low ticks of the day, all four of them hit their nadirs at entirely different times.

The stocks gapped down over 3 percent at the open...and then chopped around that mark until 11:30 a.m. in New York.  From there they began to rally and never looked back...and the HUI only finished down only 0.32%.

Every stock in Nick Laird's Intraday Silver Sentiment Index closed in the black yesterday...but Nick's calculations showed that the index closed down 0.91%.  I sent him an e-mail asking him about that, but didn't hear back before I hit the 'send' button.

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Here's the long-term Silver Sentiment Index, so you can see how things look in the longer term.

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The CME's Daily Delivery Report showed that 39 gold and 138 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  In silver, the big short/issuer was ABN Amro with 120 contracts...and the two biggest long/stoppers were, as usual, Canada's Scotiabank and JPMorgan Chase with 86 and 35 contracts respectively.  The link to yesterday's Issuers and Stoppers Report is here.

After one day of gains, the GLD ETF was back to withdrawals again, this time an authorized participant withdrew 81,344 troy ounces...almost everything that was deposited on Thursday.  As of 11:20 p.m. Eastern time yesterday evening, there were no reported changes in SLV.

Much to my amazement, there was no sales report from the U.S. Mint for the second day in a row.

Over at the Comex-approved depositories on Thursday, there was no silver added, but 878,025 troy ounces were withdrawn.  The link to that activity is here.

In gold, 64,232 troy ounces were added...and 6,430 troy ounces were shipped out.  The link to that activity is here.

The Commitment of Trader Report for silver was almost a non-event.  The Commercial traders only increased their short position by 1.13 million ounces...and the Commercial net short position now stands at 72.3 million ounces.  The small traders in the Nonreportable category increased their short positions by 6.18 million ounces...and are only net long the market by an statistically insignificant 402,500 troy ounces...another new record low in Comex history, I believe.

Ted Butler says that JPMorgan Chase is still short around 18,000 contracts...90.0 million ounces...or 125% of the Commercial net short position in silver, which is no improvement from the previous COT report.  It appears that they are stuck at this level with no means of extricating themselves...at least not by the methods they've been using to date.

In silver, the Big 4 are short 33,300 contracts, or 166.5 million ounces...and the '5 through 8' traders are short an additional 10,307 contracts, or 51.5 million ounces of silver.

In gold, the Commercial net short position declined by a chunky 784,000 ounces...bringing the Commercial net short position in gold down to 8.77 million ounces.

The Big 4 in gold are short 8.85 million ounces of gold...and as reader E.W.F. pointed out to me yesterday..."The Big 4 net short position in gold is greater than the Commercial net position for the first time since July 20, 2010."

Ted Butler mentioned that most of the improvement in the gold COT report was because of the raptors buying long positions.  The raptors are the Commercial traders other than the Big 8.

As far as concentration in gold is concerned, once you remove all the market-neutral spread trades from the COT data, the Big 4 are short 24.5% of the entire Comex gold market...and the '5 through 8' traders are short an additional 6.4 percentage points of the gold market.  Reader E.W.F. also pointed out that..."The headline Big 4 gold concentration hasn't been this low since November 2000."

When you see record numbers like this, you know that a major price bottom is in.

Here's Nick Laird's "Days to Cover Short Positions" for all physically traded commodities on the Comex.

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The May Bank Participation Report in silver showed little change from the April report, which is a shocker considering the hammering that the silver price took during April.  Don't forget that the BPR is derived from the same data set as this week's COT Report, so on this one day of the month we can see what the bullion banks are up to.

In silver, in the May BPR, three U.S. Banks are net short 21,873 Comex silver contracts...a decrease of only 2,213 contracts from the April BPR.  Since JPMorgan holds about 18,000 of those contracts all by itself, that leaves about 3,900 contracts between the other two reporting U.S. banks...and I'd bet that HSBC USA holds at least 3,600 of those...and I'd guess that Citigroup holds the insignificant remainder.

There are 14 non-U.S. banks net short 11,618 Comex silver contracts, an increase of 2,204 contracts from the April BPR.  I'd be prepared to bet serious money that Canada's Bank of Nova Scotia hold 75 percent of that position on its own...and the remaining 2,900 contracts or so, are spread out between the other 13 non-U.S. banks...which means that their positions in the grand scheme of things, are immaterial.

Here's Nick's graphic for the Silver Bank Participation Report going back 13 plus years.  Note the addition of JPMorgan's short position in silver back in August 2008...and the addition of the Bank of Nova Scotia's short position in October 2012.  The 'click to enlarge' feature is useful here.

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But the big changes in this month's Bank Participation Report were in gold.  I was expecting the same kind of positive changes in silver as well, but that never happened.

In gold, 3 U.S. banks are net short 16,781 Comex contracts...a whopping decline of 24,885 contracts from the April BPR...a 60% drop.  It's a good bet that JPMorgan and HSBC USA hold about 90 percent of that position themselves...and the remaining bank, probably Citigroup as well, would hold the immaterial remainder.

There are 23 non-U.S. banks that report holding Comex gold contracts.  Their net short position in the May BPR was 22,474 Comex contracts...a decline of 21,979 Comex contracts from the April BPR...a 50% drop.  The lion's share of those 22,474 Comex contracts would be held by Canada's Bank of Nova Scotia, which renders the remainder of the positions [split up between the remaining 22 banks] immaterial.

Here's Nick Lairds' chart for the Gold Bank Participation Report going back 13 plus years.  Note the addition of the Bank of Nova Scotia's short position back in October of 2012.

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Ever since the October 2012 Bank Participation Report disclosed and added the positions of a non-U.S. bank to their report, it has become clear to me that the gold and silver price management scheme is controlled by just three banks...JPMorgan Chase, Canada's Bank of Nova Scotia...and HSBC USA.  But of those three, JPMorgan Chase is the tallest hog at the trough by far.  I would guess that these controlling short positions extend into platinum and palladium as well...and here are their Bank Participation Report charts, also courtesy of Nick Laird.

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Here's the weekly chart of the US90% Silver Coins..."Weekly Premium/Discount to Melt Value"...courtesy of Richard Nachbar.  Richard pointed out that the premiums have essentially remained unchanged for the last month now.

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I received an e-mail from Endeavour Silver yesterday...and here's the first paragraph..."Endeavour Silver has produced a short educational (not promotional) video about how silver is used in the production of solar panels.  It explains the basics of how solar panels work, and what silver and silicon are used for in that process.  We think that it would be of interest to you and your readers.  If you find it useful, we invite you to share it with your readers by embedding or linking to it on your web site."

It certainly is worth watching...and the link is here.  But if they and the other silver miners really want to make their collective shareholder's hearts go pitter patter, then a short video about how they plan on ending the price management scheme by JPMorgan et al would be more useful.  I don't know about the management and staff of all the silver miners, but I'm tired of being screwed over while they do nothing.  How about you?

Peter Grandich sent this screen shot of the front page of the latest edition of The Economist...and this is what he had to say about it..."30 years of experience tells me when this is front page, start heading for the exits!"  Amen to that, bro'!

Here's your "cute quota" for the day...

With all the other 'stuff' in today's column, I've slashed the stories down to the bare minimum...bare minimum for me, that is.

 

¤ Critical Reads

The Hilsenrath "Tapering" Article Is Out

On Thursday, the rumor turned out to be a joke. Today, there was no rumor, but as we warned four hours ago, it was only a matter of time. Less than four hours later, the time has come, and Jon Hilsenrath's "Fed Maps Exit from Stimulus", conveniently appearing after the close, has just been released.

From Hilsy, and one of his final attempts to remain relevant, pointing out what everyone already knew: Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.

Don't expect an imminent announcement.

Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.

This article was posted on the Zero Hedge website early yesterday evening...and will certainly move the markets on Sunday evening when Tokyo opens, so it's definitely worth reading.  I thank Phil Barlett for today's first story.

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Student Debt Slows Growth as Young Spend Less

The anemic economy has left millions of younger working Americans struggling to get ahead. The added millstone of student loan debt, which recently exceeded $1 trillion in total, is making it even harder for many of them, delaying purchases of things like homes, cars and other big-ticket items and acting as a drag on growth, economists said. 

Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts.

Mr. Gill owes about $45,000 in federal student loans, plus another $40,000 to his parents. That investment in his future has led to a secure job with decent pay and good benefits. But it has left him with tremendous financial constraints, as he faces chipping away at the debt for years on end.

This short essay was posted on The New York Times website yesterday...and it's the second offering in a row from Phil Barlett.

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Doug Noland: Thoughts on the Electronic Printing Press

Traditional printing press or the newfangled version, monetary inflations always have unintended consequences. Incentivizing speculation is a prominent flaw in current (inflationist) central bank doctrine. And the larger and longer that speculative Bubbles are nurtured, the more precarious they become. This is a major part of the trap that global central bankers have fallen into. And the more fragile maladjusted global economies become the more aggressively they resort to the electronic printing press. The upshot has been increasingly unstable market Bubbles on a globalized basis – which translates into only greater systemic fragilities.

Highly speculative markets become really unpredictable affairs. Greed, fear and gamesmanship take over. Short squeezes, dislocations and melt-ups wreak havoc with market stability. “Greater fool” dynamics take on a life of their own. And never has there been such a massive pool of highly sophisticated speculative finance seeking to extract wealth from an equally massive pool of unsophisticated “money” searching for markets returns - on a global basis. On the one hand, years of manipulated interest rates, markets backstops and interventions ensured that sophisticated market operators accumulated astronomical wealth and assets under management. And, going on five years now, Fed zero interest rate policy has pushed the unsuspecting saver out into the risk market jungle.

A must read every week.  That's what Doug Noland's Credit Bubble Bulletin is for me.  It was posted on the prudentbear.com Internet site yesterday evening...and I thank reader U.D. for sharing it with us.

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The Stockholm Syndrome and Printing Money

We are hostages to the destructive actions of central banks. Printing money destroys value. The puzzle is not economic, but rather psychological. Why do we allow Central Bankers to make us poorer and endanger us physically?

The answer lies in our non-rational brains. One aspect of our psychology, labeled the Stockholm Syndrome, is the human propensity to develop positive feelings towards captors in a form of traumatic bonding.

Nils Bejerot coined the phrase after a 1973 Stockholm bank robbery where four hostages were held for close to a week. Even after being released, the hostages showed sympathy for the robber, and blamed the police. The most famous U.S. incident is that of Patty Hearst, who joined the organization that kidnapped her and took part in a bank robbery with her abductors.

The phrase "economy supported by central banks" generates more than half a billion Google hits. Can it really be true that printing money is going to make us rich? No.

This short essay by Terry Burnham is well worth reading...and was posted on the pbs.org Internet site on May 8th.  It's courtesy of West Virginia reader Elliot Simon.

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Banking: Protect the Value of Your Cash Assets

Cyprus was a game changer. Almost overnight, anyone who was paying attention learned (or re-learned) that money deposited in a bank is not without risk and that deposited funds are not the property of the depositor.  Uninsured depositors in Cyprus’ two largest banks received haircuts of up to 80% of their account value.  Not only were these “bail-ins” of customer deposits authorized, but it was revealed that euro-zone ministers had adopted bail-ins as an acceptable strategy for failing European banks.  Further disclosures included bail-ins as a component of the proposed Canadian budget for 2013, for “systemically important banks.”  A message for Americans is that if one of our “too-big-to-fail” (TBTF) American banks is in danger, the threat of deposit confiscation is real, especially for depositors with accounts containing money in excess of FDIC coverage limits.

What does the FDIC cover?  The Federal Deposit Insurance Corporation is a quasi-government agency responsible for protecting bank depositors from loss in the event of bank failures.  Coverage is generally limited to $250,000 per account, per bank.

Recommendation:  Use multiple banks to stretch protection for accounts exceeding FDIC coverage limits.  If the amount of money to be protected exceeds the number of viable banks, you could consider foreign jurisdictions (even though additional reporting is required).

This commentary is very informative...and I thank reader Wayne Peterson over at familybusinesssoffice.net for bringing it to my attention.

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Sorry Congress, Defense Dept Sticking With Russian Helicopter Deal

Despite protests from a bipartisan group of lawmakers in late March, the Defense Department is buying Russian military helicopters whether they like it or not.

“The Department of Defense has notified Congress of its intent to contract with Rosoboronexport for 30 additional Mi-17 rotary-wing aircraft to support the Afghanistan National Security Forces (ANSF) Special Mission Wing,” Pentagon spokesman James Gregory told RIA Novosti in emailed comments.

A team of 10 lawmakers sent a letter to new Secretary of Defense Chuck Hagel on March 25, urging him not to purchase additional helicopters from the state-owned Russian arms dealer Rosoboronexport. They argue that the company has continued to transfer weapons to Syria’s government, which is in the midst of a civil war.

This very interesting read was posted on the Forbes website a bit over a month ago...and I thank reader Bill Busser for finding it for us.

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In Hours, Thieves Took $45 Million in A.T.M. Scheme

It was a brazen bank heist, but a 21st-century version in which the criminals never wore ski masks, threatened a teller or set foot in a vault.

In two precision operations that involved people in more than two dozen countries acting in close coordination and with surgical precision, thieves stole $45 million from thousands of A.T.M.'s in a matter of hours.

In New York City alone, the thieves responsible for A.T.M. withdrawals struck 2,904 machines over 10 hours starting on Feb. 19, withdrawing $2.4 million.

On Thursday, federal prosecutors in Brooklyn unsealed an indictment charging eight men — including their suspected ringleader, who was found dead in the Dominican Republic last month. The indictment and criminal complaints in the case offer a glimpse into what the authorities said was one of the most sophisticated and effective cybercrime attacks ever uncovered.

This story was posted on The New York Times website on Thursday...and it's courtesy of reader Michael Cheverton.

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Master of doom Marc Faber is feeling gloomy about Canada

Marc Faber, editor and publisher of The Gloom, Boom and Doom Report, was late to arrive to our Tuesday live discussion at Inside the Market alongside David Rosenberg. But we posed some of the questions you left for him in a later telephone conversation.

Before we did, however, we couldn’t resist asking him about his views on Canada. Not surprisingly, the famed economist known for his contrarian and often pessimistic bent didn’t exactly offer an uplifting view.

“I think Canada is a case where you have huge leverage in the private sector and where the economy is slowing down, where you have a strong currency and where the price levels are now relatively high,” Dr. Faber told us from Thailand. “I don’t think Canada is very inexpensive any more. I travel there all the time, it’s rather on the expensive side. I think there’s significant risk to the Canadian economy.”

This news item was posted on theglobeandmail.com Internet site on Wednesday...and I thank Elliot Simon for his second offering in today's column.

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Ruling on Tymoshenko must not derail Ukraine ties

The European Union stands on the edge of a decision that may have profound implications for the continent and on relations between the European Union and Russia, not to mention the United States.

What will the European Union decide? And in particular, will that decision be made on the basis of the fate of one famous individual?

Of all the countries to emerge from the former communist bloc, the most important (besides, obviously, Russia) is Ukraine. The future course of the so-called "borderland" (which is what "Ukraine" means) as a bridge between Europe and Russia is of crucial importance to both sides.

Ukraine's current government under President Viktor Yanukovych hasn't locked in a final commitment to either orientation. Moscow offers Ukraine immediate full membership in a Customs Union comprised of Russia, Belarus (Ukraine's neighbor), and Kazakhstan. The European Union would like to sign an Association Agreement) with Ukraine, as well as a free trade pact -- but only if certain conditions are met before the end of this month.

This UPI story from yesterday falls into the must read category for any student of the New Great Game...and I thank Roy Stephens for his first offering in today's column.

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Pepe Escobar: Israel rescues Mujahid Obama

Just when the red line charade was reaching fever pitch - but still buried in the sand - and he had to choose between the US "exercising restraint" or "directly involving itself" in the Syrian war, (see The Syria-Iran red line show, Asia Times Online, May 2, 2013) President Obama was saved by Bibi Netanyahu's Israeli government.

The temptation was oh so great for Obama to replay Ronald Reagan and gloriously wear the mantle of Obama The Syrian Mujahid, just as Reagan did in the 1980s with his beloved freedom fighters of the Afghan jihad. That will have to wait - perhaps not too long.

Let's cut to the chase. Israel's bombing of Syrian army installations at Jamraya near Damascus is a provocation and an act of war. Israel acted as a Washington proxy - which may have even provided the list of targets. And Washington - not to mention those useless puppets in Brussels - won't condemn the bombing, which for the umpteenth time makes a mockery of international law.

Not one to guild lilies, or suffer fools gladly, Pepe calls it the way it is in this must read commentary...and especially a must read for all serious students of the New Great Game.  This essay was posted on the Asia Times website on Tuesday...and I've been saving for it today.  It's courtesy of Roy Stephens, of course...and I thank him on your behalf.

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Pakistan High Court: US Drone Strikes Illegal

Pakistani High Court Chief Justice Dost Muhammad Khan has issued a ruling today declaring the ongoing US drone strikes against the tribal areas illegal under international law, adding that they amount to a “war crime” when they kill innocents.

Khan said that the government was obliged to ensure that no future drone strikes take place against Pakistani territory, and ordered the Foreign Ministry to bring a resolution to the UN Security Council demanding their halt. He added that if the US vetoed the resolution the government ought to consider severing diplomatic ties with them.

The ruling came as the result of a case filed by an Islamabad legal aid charity on behalf of victims of the March 2011 attack on government officials and tribal elders in North Waziristan.

This very short story...and you've already read the important bits...was posted on the antiwar.com Internet site on Thursday...and I thank Michael Riedel for bringing it to my attention...and now to yours.

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DISPATCHES FROM AMERICA: And then there was one

It stretched from the Caspian to the Baltic Sea, from the middle of Europe to the Kurile Islands in the Pacific, from Siberia to Central Asia. Its nuclear arsenal held 45,000 warheads, and its military had five million troops under arms. There had been nothing like it in Eurasia since the Mongols conquered China, took parts of Central Asia and the Iranian plateau, and rode into the Middle East, looting Baghdad. Yet when the Soviet Union collapsed in December 1991, by far the poorer, weaker imperial power disappeared.

And then there was one. There had never been such a moment: a single nation astride the globe without a competitor in sight. There wasn't even a name for such a state (or state of mind). "Superpower" had already been used when there were two of them. "Hyperpower" was tried briefly but didn't stick. "Sole superpower" stood in for a while but didn't satisfy. "Great Power," once the zenith of appellations, was by then a lesser phrase, left over from the centuries when various European nations and Japan were expanding their empires. Some started speaking about a "unipolar" world in which all roads led... well, to Washington.

To this day, we've never quite taken in that moment when Soviet imperial rot unexpectedly - above all, to Washington - became imperial crash-and-burn. Left standing, the Cold War's victor seemed, then, like an empire of everything under the sun. It was as if humanity had always been traveling toward this spot. It seemed like the end of the line.

This longish must read essay by Tom Engelhardt is another article from the Asia Times website earlier this week...and I thank Marshall Angeles for digging it up for us.

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This Is What Could Drive Platinum Higher, Very Soon

The likelihood of strikes this May and June by workers in South Africa's strategic mining sector may curb output from the world's largest supplier of platinum, presenting an upside risk for the precious metal, analysts said.

The catalyst for any upswing may come as early as this week when Anglo American Platinum (Amplats) - the world's top platinum producer and a unit of Anglo American - reveals the outcome of talks with the government and unions about restructuring plans that may involve cutting up to 14,000 jobs and mothballing two mines in South Africa.

"Whenever someone mentions restructuring to me, I get a bit nervous," Jonathan Barratt, editor and founder of commodities newsletter Barratt's Bulletin, told CNBC Asia's "Squawk Box"on Monday.

This news item was posted on the cnbc.com Internet site early yesterday evening EDT...and I thank Elliot Simon for his last offering in today's column.

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Sprott's Thoughts: The Golden Answer to Chinese Import Data

When we strip out the ‘gold effect’, we find that 37% of the increase in imports over the last 12 months into China is due to the massive amount of gold that’s being imported. In Table A, gross imports increased by $82 billion, but $30 billion of this increase was from gold alone.  Put another way, more than one third of China’s import growth has been solely from its citizens’ desire to own gold and not from a growing domestic economy.

Many analysts have attributed China’s increasing imports as signs of a healthy manufacturing sector, or increasing investments in infrastructure and property. Our simple analysis shows that more than one third of the increase in imports is due to China’s increasing gold consumption. We expect this will only increase in the near future when the explosion of gold buying in April is accounted for. New reports have suggested that Chinese housewives (affectionately known as ‘aunties’ according to the Beijing Daily newspaper) have purchased as much as 300 tons of gold in the past three weeks alone, worth almost $16 billion USD.3 This new gold buying could have a significant impact on Chinese import statistics and force analysts to reconsider the strength of the Chinese domestic economy.

This short essay was posted on the sprottgroup.com Internet site on Friday...and it's definitely worth reading.

Read more...

 

¤ The Funnies

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¤ The Wrap

The duty of a true patriot is to protect his country from its government. - Thomas Paine

Today's pop 'blast from the past' is instantly recognizable.  Few singers ever built their careers around one song...but this guy is one of them.  This song is fifty years old...and I remember it like it was yesterday.  Where the hell did the time go?  The link is here.

Today's classical selection is somewhat older than that, of course.

Ludwig van Beethoven's Violin Concerto in D major, Op. 61, was written in 1806.

The work was premiered on 23 December of that year in the Theater an der Wien in Vienna. Beethoven wrote the concerto for his colleague Franz Clement, a leading violinist of the day, who had earlier given him helpful advice on his opera Fidelio. The occasion was a benefit concert for Clement. However, the first printed edition (1808) was dedicated to Beethoven’s friend Stephan von Breuning.

It is believed that Beethoven finished the solo part so late that Clement had to sight-read part of his performance. Perhaps to express his annoyance, or to show what he could do when he had time to prepare, Clement is said to have interrupted the concerto between the first and second movements with a solo composition of his own, played on one string of the violin held upside down; however, other sources claim that he did play such a piece but only at the end of the program.

The premiere was not a success, and the concerto was little performed in the following decades.

The work was revived in 1844, well after Beethoven's death, with performances by the then 12-year-old violinist Joseph Joachim with the orchestra conducted by Felix Mendelssohn. Ever since, it has been one of the most important works of the violin concerto repertoire, and it is frequently performed and recorded today.

That it is...and if I had to pick just one violin concerto as a desert island recording, it would be Beethoven's "great fall upwards"...with all due respect to Johannes Brahms!

Here is violinist Arabella Steinbacher doing the honours with an unnamed orchestra...and the link is here.  The video runs for 47 minutes.

To tell you the truth, I'm not sure what to make of yesterday's price action in the precious metals.  To hang it all on what was going on in the currency markets is more than a stretch...as there certainly was nothing free-market about it as far as I was concerned.  Almost all of the volume was of the HFT variety, but it's fair to say that a large number of newly-minted long positions in all four precious metals were forced to liquidate as sell stops were hit, which was probably the object of the exercise.

I'm also more than suspicious of the silver numbers reported in the May Bank Participation Report, as there were monstrous improvements in gold, as one would expect after the violent engineered price decline in mid-April...but the positions in silver barely changed from the April report...almost to the contract.  What the U.S. banks managed to liquidate during the month, was made up entirely of new short positions added by the non-U.S. banks.  Something does not compute.

But, having said all that, the COT structure is still beyond wildly bullish...and even more so in gold after this week's improvement...and as I've said several times in this space, it only remains to be seen when the next rallies begin in all four precious metals...and how JPMorgan et al respond to them when they do.  Nothing else matters.

Despite all the "happy talk" out there about how things are "improving", it's still more than obvious to any serious market observer that the world's economic, financial and monetary systems are close to collapse...and the only thing keeping them levitated is oceans of free money, helped along by computer algorithms.  This situation can't last forever.  Only the timing of the end game is unknown...but my guess is that it's close at hand.

Here's one last chart for you today.  It's Nick's "Total PMs Pool"...and there's virtually no sign of the mid-April price massacre in the precious metals, nor the big withdrawals of gold from the world's major ETFs.

(Click on image to enlarge)

That's more than enough for today...and I await the opening in Tokyo on their Monday morning with great interest.

Enjoy what's left of you weekend...and I'll see you here on Tuesday...Wednesday west of the International Date Line.