Casey Research Publication
Gold & Silver Daily
"What they do, are instructed to, will determine prices going forward"

¤ Yesterday In Gold & Silver

The gold price sold off $5 or so during early Far East trading, but had gained it all back by shortly after 9 a.m. in London---and after that the price didn't do a thing until the Comex open.  The rally that began at that point got dealt with in the usual manner less than 15 minutes later---and that was it for the remainder of the Wednesday trading session.  The lows and highs aren't worth the effort of looking up.

Gold closed in New York at $1,302.20 spot, down 20 cents from Tuesday's close.  Volume, net of May, was around 127,000 contracts.

Naturally enough, the silver price got manhandled the most of all four precious metals.  The silver price hit its low of the day about 30 minutes before the London open---and the rally that began shortly before the Comex open got dealt with in the usual manner as well---and at the exact same time as the tiny rally in gold got put in its place.  After that, the silver price traded pretty flat.

The CME Group reported the low and high ticks as $19.325 and $19.805 in the May contract, an intraday move of well over 2%.

Silver closed yesterday at $19.63 spot, up 7 cents from Tuesday.  Volume, net of roll-overs, was 30,500 contracts.

Platinum didn't do much yesterday---and palladium closed up a bit over a percent.  Here are the charts.

The dollar index closed late on Tuesday afternoon in New York at 79.79---and after flopping around a bit on either side of unchanged on Wednesday, finished the day at 79.83.  Nothing to see here.

The gold stocks opened up a bit, but there was someone there to happily sell them down---and they never saw positive territory again, although they finished off their lows, as the HUI closed down "only" 1.00%.  I spoke with John Embry yesterday---and we're both of the opinion [and have always been] that the precious metal equities are almost as managed as the metal prices themselves.

And despite the fact that the silver price did much better, that didn't help the silver equities one bit, as Nick Laird's Intraday Silver Sentiment index closed down another 1.47%.

Over at the Comex-approved depositories they reported that 76 gold and one silver contracts were posted for delivery on Friday within the Comex-approved depositories.  The largest of the short/issuers was Jefferies once again---and the two biggest long/stoppers were the two usual suspects, JPMorgan and Canada's Scotiabank.  Between them, they stood for delivery on 65 contracts. The link to yesterday's Issuers and Stoppers Report is here.

The GLD ETF had a monster withdrawal yesterday, as 269,731 troy ounces were removed.  What the bullion banks giveth, they can also taketh away---and they did.  GLD is now back at the same level it was at the beginning of 2014.  And as of 9:27 a.m. EDT, there were no reported changes in SLV.

Over at Switzerland's Zürcher Kantonalbank for the period ending 14 April, they reported a smallish increase in their gold ETF of 6,211 troy ounces.  That's the first increase since February 7.  Their silver ETF went in the other direction, as 64,752 were removed.

The U.S. Mint had another sales report yesterday.  They sold 2,500 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---200 platinum eagles---and 50,000 silver eagles.

There wasn't a lot of activity at the Comex-approved depositories on Tuesday.  Once again, there were no reported in/out movements in gold---and in silver, a smallish 170,873 troy ounces were removed.  The link to the silver activity is here.

I don't have a large number of stories for you today, but some of them are definitely worth reading.


¤ Critical Reads

Path to Extinction: Only Three US Companies Still Have AAA Credit Ratings

Their numbers have been dwindling for years, and now only three U.S. companies have the coveted AAA credit rating from Standard & Poor's.

Automatic Data Processing was the latest U.S. blue chip to lose its pristine AAA rating from S&P, downgraded this week after it spun off its auto-dealers services unit, USAToday noted.

That leaves only Johnson & Johnson, Exxon-Mobil, and Microsoft as companies rated AAA, which is reserved for companies with the unassailable financial strength and discipline.

In 1980, there were more than 60 U.S. companies with AAA ratings. That number declined to six in 2008. Since then, General Electric, Pfizer, and now ADP have fallen out of that esteemed ranking.

Today's first news item was posted on the Internet site early yesterday morning EDT---and it's courtesy of West Virginia reader Elliot Simon.


Yellen: Fed Stimulus Still Needed for Job Market

Federal Reserve Chair Janet Yellen said Wednesday that the U.S. job market still needs help from the Fed and that the central bank must remain intent on adjusting its policy to respond to unforeseen challenges.

In her first major speech on Fed policy, Yellen sought to explain the Fed's shifting guidance on its interest-rate policy, which at times has confused or jarred investors. She said the Fed's policies "must respond to significant unexpected twist and turns the economy may make."

"Thus far in the recovery and to this day, there is little question that the economy has remained far from maximum employment," Yellen told an audience at the Economic Club of New York.

She said the Fed's forecast for moderate growth has changed little since last fall despite the severe winter. Fed officials still see only a gradual return to full employment over the next two to three years, Yellen said.

This AP news item was picked up ABC News yesterday---and it's the second offering in a row from Elliot Simon.


Spain ETF Grows as Rajoy Attracts Record US Investments

The iShares MSCI Spain Capped ETF attracted almost $238 million in the period ended April 11, the most for any country, according to data compiled by Bloomberg going back to 2002. Traders have poured money into the exchange-traded fund every week in 2014. The $1.9-billion ETF tracking companies from Banco Santander (SAN) SA to Telefonica SA has gained 5.3% this year, compared with declines in the Standard & Poor’s 500 Index and the Stoxx Europe 600 Index.

Confidence is growing that Prime Minister Mariano Rajoy will make good on his pledge to complete an overhaul of Spain’s economy as the nation that sought a bank bailout in 2012 returns to growth. A manufacturing report this month pointed to the fastest expansion since at least April 2011, and lenders from Santander to Banco Popular Espanol SA (POP) are benefiting from European Central Bank President Mario Draghi’s policy to keep interest rates at a record low.

This longish Bloomberg article, filed from London, was posted on their Internet site late yesterday morning MDT---and that makes it three in a row from Elliot Simon.


Regional Unemployment Highest in Spain

Over two dozen regions throughout the Union have an unemployment rate twice the EU average.

The data, published on Wednesday (16 April), by the EU’s statistical office Eurostat, says the jobless rate in 27 regions in 2013 was higher than 21.6%.

Thirteen are found in Spain, 10 in Greece, three in the French Overseas Departments, and one in Italy.

Five of the worst affected are found in Spain alone.

This story, filed from Brussels, showed up on the Internet site yesterday morning---and it's the first offering of the day from Roy Stephens.


Eurozone Inflation Stuck in "Danger Zone," Keeps Pressure on the ECB

A shock drop in March eurozone inflation to its lowest level since November 2009 was confirmed on Wednesday, keeping pressure on the European Central Bank to intervene should prices not rebound.

The year-on-year inflation rate in the 18 countries sharing the euro was 0.5% in March against 0.7% in February, the European Union's statistics office Eurostat said.

Inflation has now been in the ECB's "danger zone" of below 1% for six consecutive months, fuelling speculation that the ECB will need to take further action.

ECB policy makers said the bank stood ready to deploy unconventional measures to ensure that inflation did not stay low for too long.

This short, but must-read commentary, was posted on the Internet site early yesterday morning EDT---and it's the fourth and final offering of the day from Elliot Simon.


Out of Ammo? The Eroding Power of Central Banks

Since the financial crisis, central banks have slashed interest rates, purchased vast quantities of sovereign bonds, and bailed out banks. Now, though, their influence appears to be on the wane with measures producing paltry results. Do they still have control?

Once every six weeks, the most powerful players in the global economy meet on the 18th floor of an ugly office building near the train station in the Swiss city of Basel. The group includes United States Federal Reserve Chair Janet Yellen and her counterpart at the European Central Bank (ECB), Mario Draghi, along with 16 other top monetary policy officials from Beijing, Frankfurt, Paris, and elsewhere.

The attendees spend almost two hours exchanging views in a debate chaired by Bank of Mexico Governor Agustín Carstens---and the central bankers talk about the economy, growth and market prices.

But ever since many central banks lowered their interest rates to almost zero, bought up sovereign debt and rescued banks, a new, critical undertone has crept into the dinner conversations. Monetary experts from emerging economies complain that the measures taken by Europeans and Americans are pushing unwanted speculative money their way. Western central bankers say they have come under growing political pressure. And recently, when the host of the meetings -- head of the Basel-based Bank for International Settlements Jaime Caruana -- speaks in one of his rare public appearances, he talks about "chronic post-crisis weakness" and "risk." Monetary institutions, says Caruana, are at "serious risk of exhausting the policy room for manoeuver over time."

This longish five-page essay showed up on the Internet site early yesterday afternoon Europe time---and it's the second offering of the day from Roy Stephens. It's definitely worth reading.


EU Countries to Boost Defence Budgets in Light of Ukraine

Military chiefs have said the Ukraine crisis is a “wake-up call” for E.U. countries’ defence spending, as the US backed Ukraine’s use of force in eastern regions.

Speaking to press after a regular meeting of E.U. defence ministers in Luxembourg on Tuesday (15 April), the deputy chief of the EU’s external action service, Maciej Popowski, said: “We’ve had 70 years of peace now [in Europe], but we see that power politics is back with a vengeance, so it’s a wake-up call and now we need to get serious about defence.”

He noted that “this was the feeling around the table” at the Luxembourg event.

He added that E.U. foreign relations chief Catherine Ashton told the ministers: “If Ukraine is not a trigger to get serious about spending, about pooling and sharing, about smart defence, then what more do we need to get real?”

Blah, blah, blah.  I'll be amazed if this amounts to anything more than talk.  This "news" item was posted on the Internet site yesterday morning Europe time---and I thank Roy Stephens once again for sending it our way.


Three King World News Blogs

1. Grant Williams: "Remarkable Road Map From $5,000 to $20,000 Gold"  2. Eric Sprott: "Crisis, Gold---and an Incredible Opportunity No One is Looking At"  3. David P: "One of the Greatest Opportunities in More Than a Decade"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]


Scientists Verify World's Largest Single Crystal Piece of Gold

Scientists at Los Alamos National Laboratory in the U.S. have confirmed a 7.68 oz (217.78 g) piece of gold is in fact a single crystal, increasing its value from around US$10,000 to an estimated $1.5 million. The specimen, the largest single crystal piece of gold in the world, was discovered in Venezuela decades ago, but it is only by using advanced probing instruments that experts can now verify its authenticity.

Gold found in the ground will generally have a polycrystalline structure, meaning it is made up of many crystallites, varying in shape and size. Gold of a mono-crystalline structure, where the material is unbroken, are rarer and of significantly higher value. The US-based owner provided geologist John Rakovon with four gold specimens, hoping to determine whether they were of a polycrystalline or mono-crystalline structure.

This very interesting news item, complete with an embedded video, showed up on the Internet yesterday---and my thanks go out to Saskatoon, Saskatchewan reader Marvin Weiler for bringing it to my attention---and now to yours.  If you don't read the article, you should at least look at the picture.


How Marriage Is Keeping Gold’s Prospects Bright in China

Last year was a big one for gold in China. As Chinese middle-class families, particularly aunties, bought up gold bars and jewelry for their use as accessories as well as investments, China became both the number-one producer and consumer of the precious metal—surpassing even India where yearly bullion demand had long been the world’s highest.

This year, with prices up of gold up, a government campaign against conspicuous spending by officials, and financial reforms designed to increase the availability of other investment opportunities, a new report from the World Gold Council predicts that demand for the metal won’t be as strong as last year.

But there’s one segment of the market that has and should continue to underpin China’s appetite for gold—newlyweds and the people who want to wish them well.

This short, but rather interesting gold-related article showed up on the Internet site on Tuesday---I found it posted over at the Sharps Pixley website---and here's another article on the same subject from the Internet site.


Gold Import Curbs Seen Continuing in India to Help Currency

India, the world’s second-largest gold consumer, will probably keep restrictions on imports to control the current account deficit and defend the rupee, said the managing director of the country’s biggest refiner.

The limits would result in shipments of 650 metric tons to 700 tons in the 12 months started April 1 from 650 tons a year earlier, according to Rajesh Khosla at MMTC-PAMP India Pvt. Purchases were 845 tons in 2012-2013, the finance ministry says. While the form of restrictions may change, the government will continue to restrain buying, he said in an interview.

India represented about 25% of global demand in 2013, the World Gold Council says. Prime Minister Manmohan Singh requires importers to supply 20% of purchases to jewelers for export and sell 80% on the local market. Singh also raised import taxes and only allows banks and government-nominated entities to ship in gold. The new finance minister may review the rules after elections in progress now.

This news item, filed from New Delhi, was posted on the Bloomberg website just before midnight last night Denver time---and it's another story that I "borrowed" from the Sharps Pixley Web site.


India’s Gold Demand Surges as Supply Declines

Amidst high import duties, the gold demand in India likely to stay high in this year. Last year, India consumed 975 tons and it expects to be between 900 and 1,000 metric tons in 2014.

According to the World Council, last year China overtook India as the biggest consumer of gold in the world and both countries seem to want more gold for further days.

As per the report, India’s current account deficit was narrowed by the stringent import restrictions over the last year whereas the gold smuggling increased, approximately 200 tons of gold. The customs department seized less than 1% of smuggled gold in the last year.

This very short gold-related news item, filed from Mumbai, showed up on the Internet site in the wee hours of the morning British Summer Time [BST].  It's another story I found over at the Internet site just after midnight Denver time [BST-7].


India's Pain Is UAE's Gain - Indian Expats Buy Up Gold Jewellery

If any nation is happy about India's gold import curbs it is the UAE, where bullion traders are registering brisk sales given the restrictions on the import of the precious metal in India.

The curbs on gold in India have raised demand for gold and diamond-studded gold jewellery among expatriate Indians and visitors from India to the UAE.

"The UAE’s gold trade has become the de facto beneficiary of the Indian government’s tough stance on domestic consumption. There is almost a 16% difference on a per gram basis, in buying gold ornaments in the UAE as compared to buying gold in India," said an official at a store in Dubai's gold souk.

This interesting, but not surprising story, was posted on the Internet site yesterday---and it's worth reading.


Lawrence Williams: Jansen Sticks By China Gold Demand Figures

There has been a considerable amount of disagreement over China’s real gold demand figures – with some of the differences being accounted for by what is actually being included in the varying estimates, with different analysts coming up with figures between around 1,100 tonnes from organisations like GFMS to over 4,000 tonnes from Alasdair Macleod of Gold Money. While the 1,100 tonne estimates seem on the face of things to be unaccountably low given some of the published statistics on known Chinese imports, the Macleod figures seem unaccountably high.

Somewhere in the middle comes the detailed analyses from China gold watcher Koos Jansen as published on his In Gold we Trust website, and he has now put out a detailed response confirming his own figures and commenting that Macleod’s high figures include unintentional double counting – and given that Chinese sources for this information can be confusing and contradictory, this is not too surprising!

This commentary by Lawrie is definitely worth reading---and it was posted on the Internet site sometime yesterday.



¤ The Funnies

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¤ The Wrap

As regular readers know, it is not just the fact that gold, silver, copper, platinum, and palladium are traded on the Comex/Nymex; it is in how each are traded that most reasonably explains why all five declined sharply on Tuesday. The pricing in each is determined by the same technical fund/commercial paper trading tango that I harp on continuously in Comex silver and gold. The price of all five metals went sharply lower yesterday as a direct result of the commercials (led by JPMorgan) rigging prices lower in order to induce technical fund selling (so that the commercials could buy). This is the essence of the price control that the commercials possess. I know it seems counterintuitive and difficult for many to grasp, but on the big down days like yesterday, the commercials were not the big sellers, but were the big buyers. In fact, the sole reason for the big price decline was for the purpose of allowing the commercials the opportunity to buy. - Silver analyst Ted Butler: 16 April 2014

After Tuesday's engineered price decline, "da boyz" decided to take a breather on Wednesday.  I wouldn't read much of anything into yesterday's price action, except to point out that the tiny rallies in all four precious metals that began at the Comex open in New York, all ran into a not-for-profit seller at 8:37 a.m. EDT, which was less than 15 minutes after the open.  This was particularly noticeable in silver.

Here are the six-month gold and silver charts once again.

As I mentioned yesterday, silver is pretty much washed out to the downside---and it's impossible to know what's in store for the other three precious metals going forward.  JPMorgan has short-side corners in silver, platinum, and palladium---and long-side corners in gold and copper.  What they do, are instructed to do, will determine prices going forward.

I would suspect that not much will happen, or be allowed to happen, at least until we get past first notice day for the May delivery month.  Of course things could go bump in the night sooner than that, but as we know, the real world supply and demand pricing mechanism is no longer functioning in these five metals---and if there is market-moving news to the upside, "da boyz" are there to kill any rallies before they get even close to getting out of hand.

And as I type this paragraph at 3:20 a.m. EDT, I note that both gold and silver got sold down a bit in Far East trading---and are still down now that London has been open for 20 minutes.  Gold is lower by about four bucks---and silver is down another 15 cent.  Platinum and palladium are within a dollar of unchanged.  Volumes are very light in both gold and silver---15,000 contracts in one and 5,000 contracts in the other, so I wouldn't read a thing into the current price action.  The dollar index took a bit of a header about 9 a.m. Hong Kong time---and is down 15 basis points as of this writing.

I've been looking at the CME's Daily Bulletin closely starting on Wednesday to see if there's a clue in the volume/open interest numbers to indicate if the figures from Tuesday's big sell-off were reported in a timely manner or not---and it's not possible to tell.  And as Ted Butler has mentioned on numerous occasions over that last ten years, the bullion banks [besides withholding data] can hide their tracks very well using spread trades.  This could be one of those times---and any speculation in advance is fraught with danger, as I've had egg on my face a number of times over the years from attempting to divine what the Commitment of Traders numbers will show.  Whatever they are, I'll have them for you on Saturday.

And as I hit the send button on today's column at 4:55 a.m. EDT, there hasn't been much change in either gold or silver prices, but platinum and palladium are now both down a few dollars from Wednesday's close in New York.  Volumes in both silver and gold are heavier now, of course, but nothing really out of the ordinary for this time of day---and the dollar index is still down the same amount as it was a bit over 90 minutes ago.

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

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