Casey Research Publication
Gold & Silver Daily

¤ Yesterday In Gold & Silver

[Note: After three years without a break, I'll be taking some time off.  There will be no Gold and Silver Daily next week.  Ed]

The gold price action on Wednesday was a real yawner.  The only activity worthy of mention was the small rally that began at the London a.m. gold fix---and "da boyz" took care of that at exactly 1 p.m. BST---20 minutes before the Comex open.  From there it got sold down to its 10:35 a.m. EDT low---and then recovered a bit before trading sideways for the remainder of the day.

The highs and lows aren't worth looking up.

Gold finished the Wednesday trading session at $1,283.70 spot---unchanged on the day.  Volume, net of April and May, was only 113,000 contracts.

It was pretty quiet in silver yesterday as well---and there really isn't anything to talk about here.  Like gold, the highs and lows aren't worth looking up.

Silver closed yesterday afternoon in New York at $19.45 spot, up 6.5 cents on the day.  Volume, net of roll-overs was pretty quiet at 19,000 contracts.

The price action in platinum and palladium barely had a pulse, either.  Here are the charts.

The dollar index closed around 79.90 on Tuesday in New York---and didn't do much until moments before London opened yesterday.  By 9:30 a.m. BST, the 79.70 low was in---and the index rallied quietly back to almost unchanged, as it closed on Wednesday at 79.86---down a whole 4 basis points.

The gold stocks opened in the black---and then began to rally convincingly about an hour after the equity markets opened in New York.  Their highs came about 2:20 p.m. EDT---and then they gave up a bit going into the close.  The HUI finished up 2.07% on the day.

The silver equities price path looked similar, but Nick Laird's Silver Sentiment Index closed up only 1.02%

This is the second day in a row that the precious metal equities vastly outperformed the metals themselves---and I've very encouraged by that.

The CME Daily Delivery Report showed that 56 gold and a whopping 151 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  Once again the largest short/issuer in gold was Jefferies and, once again, the two biggest long stoppers were JPMorgan and Canada's Scotiabank.

But the totally out-of-the-blue surprise was the 151 silver contracts that were posted for delivery, as there was no hint of it in the current CME's Daily Information Bulletin.  I would guess that this delivery was arranged privately---and left until the last possible moment.  It was the biggest Comex silver short [JPMorgan] delivering to the second largest Comex silver short [Canada's Scotiabank].  One crook lending a helping hand to another crook, methinks.  The link to yesterday's Issuers and Stoppers Report is here---and it's worth a quick peek.

While on the subject of deliveries, according to the current CME Daily Information Bulletin, there are around 600 gold contracts still open in April---and that's netting out the deliveries due today, plus the 56 contracts posted for delivery tomorrow.  Any bets that JPMorgan and Scotiabank are long/stoppers on what's left to deliver this month?  The only other unknown would be the identity of the short/issuer.  Jefferies, perhaps---but that's a lot of contracts for a company their size.  In the end, it doesn't really matter who they are, but it's fun to speculate, now that we're down to the final days before all and sundry have to make their intentions known.

There were no reported changes in either GLD or SLV yesterday.

The U.S. Mint had a smallish sales report.  They sold 50,000 silver eagles---and that was it.

There was no in/out movement in gold at the Comex-approved depositories on Tuesday---and only smallish in/out movement in silver, as 20,717 troy ounces were received---and 88,852 troy ounces were shipped out.  The link to that activity, such as it was, is here.

Here are two more gold and silver charts courtesy of Nick Laird that he whipped up for us yesterday.  The top chart in both is the spot price in each metal going back about 8 years.  The 2-colour charts below that show the long and short positions of the Big 4 and Big 8 traders in each in the Commitment of Traders Report over the same time period.  Note the short positions of the Big 8 in gold vs. the Big 8 in silver over time---especially over the last six months or so.

I have very few stories for you today---and the final edit is yours.


¤ Critical Reads

Weapon of Last Resort: ECB Considers Possible Deflation Measures

One of European Central Bank President Mario Draghi's most important duties is watching his mouth. One ill-considered utterance is enough to sow panic on the financial markets.

But during a press conference earlier this month, Draghi allowed himself a telling slip.

Speaking to gathered journalists at the Spring Meetings of the International Monetary Fund and the World Bank, Draghi twice almost uttered a word he has been at pains to avoid. "Defla…", Draghi began, before stopping himself and continuing with the term "low inflation."

Yet despite Draghi's efforts, the specter of deflation was omnipresent in Washington during the meetings. And it is one that is making central bank heads and government officials nervous across the globe. The IMF in particular is alarmed, with Fund economists warning that there is currently up to a 20 percent risk of a euro zone-wide deflation. IMF head Christine Lagarde has called on European central bankers to "further loosen monetary policy" to address the danger.

This longish article is worth reading---and it showed up on the German website very early yesterday evening Europe time---and it's the first offering of the day from Roy Stephens.


Europe braces for gas showdown with Russia, helped by Japan's nuclear restart

The Western powers are scrambling to bolster defences against a halt in Russian gas supplies after the Kremlin tightened the energy noose on Ukraine, and paramilitary actions in eastern Ukraine increased the risk of a full-blown sanctions war.

The Geneva deal reached last week to defuse the crisis is close to disintegration, with the U.S. government openly accusing Russia of carrying out covert operations across the Donbass region.

Two key U.S. senators have already called for sanctions on large Russian banks, mining companies and energy groups, including the state gas monopoly Gazprom. Any such move would freeze gas deliveries to the E.U., since few European banks would risk defying U.S. regulators by handling Gazprom transactions.

Dmitry Medvedev, Russia’s premier, accused the Americans of “pure bluff”, challenging the U.S. to show its teeth. “You can, of course, continue to expand the 'black list’: it will lead absolutely nowhere,” he told the Duma.

This commentary by Ambrose Evans-Pritchard is definitely worth reading---and it was posted on the Internet site late on Tuesday evening BST.  It's the second offering in a row from Roy Stephens.


Putin Has Taken Control of Russian Facebook

Russian president Vladimir Putin has essentially taken control of VKontakte, the home-grown Russian social network which is that country's version of Facebook.

The founder and CEO, 29-year-old Pavel Durov, posted on his VK page that he had finally given up control of the company to two investors allied with Putin, Buzzfeed reported:

Announcing his firing on his VKontakte page, Durov said: “Today, VKontakte goes under the complete control of Igor Sechin and Alisher Usmanov.” Usmanov is a metals tycoon who expanded into tech via his company, which has steadily upped its stake in the Russian social network. Until recently, Usmanov owned a 10% stake in Facebook. Sechin is the leader of the hardline silovik faction that backs Putin, is CEO of Rosneft, the state-owned oil company, and is believed to be one of the Russian president’s closest advisors.

Generally, Putin has maintained his control of Russia by allowing his allies to control vast chunks of the economy, like Rosneft. This appears to be an extension of that control into social media.

This very interesting news item was posted on the Internet site at noon EDT on Tuesday---and I thank West Virginia reader Elliot Simon for pointing it out.


Putin's Dilemma: Fending off the United States' Imperial Hand

The United States is in the opening phase of a war on Russia. Policymakers in Washington have shifted their attention from the Middle East to Eurasia where they hope to achieve the most ambitious part of the imperial project; to establish forward-operating bases along Russia’s western flank, to stop further economic integration between Asia and Europe, and to begin the long-sought goal of dismembering the Russian Federation. These are the objectives of the current policy. The US intends to spread its military bases across Central Asia, seize vital resources and pipeline corridors, and encircle China in order to control its future growth. The dust-up in Ukraine indicates that the starting bell has already been rung and the operation is fully-underway. As we know from past experience, Washington will pursue its strategy relentlessly while shrugging off public opinion, international law or the condemnation of adversaries and allies alike. The world’s only superpower does not have to listen to anyone. It is a law unto itself.

The pattern, of course, is unmistakable. It begins with sanctimonious finger-wagging, economic sanctions and incendiary rhetoric, and quickly escalates into stealth bombings, drone attacks, massive destruction of civilian infrastructure, millions of fleeing refugees, decimated towns and cities, death squads, wholesale human carnage, vast environmental devastation, and the steady slide into failed state anarchy; all of which is accompanied by the stale repetition of state propaganda spewed from every corporate bullhorn in the western media.

Isn’t that how things played out in Afghanistan, Iraq, Libya and Syria?

This  commentary by Mike Whitney falls into the absolute must read category---and is by far the most important story in today's column.  It was posted on the Internet site yesterday---and it's another contribution to today's column from Roy Stephens, for which I thank him.


Three King World News Blogs

1. Art Cashin: "Fed's Plan to Use Stocks to Boost U.S. Economy Has Failed"  2. James Turk: "Western Central Banks To Run Out Of Gold This Year"  3. Grant Williams: "West Hemorrhaging Gold But Here's Its True Achilles' Heel"

[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]


Goldman Sachs Stands Firm as Banks Exit Commodity Trading

Goldman Sachs Group Inc., whose three top executives began their careers at the firm in the commodity-trading unit, is poised to gain market share as pressure from regulators drives competitors to scale back.

Barclays Plc, the U.K.’s second-largest bank, said that it’s exiting commodities businesses other than trading precious metals and derivatives tied to oil, U.S. gas and commodity indexes. In January, the London-based bank cut jobs in the group that traded raw materials and in February shut power-trading desks in the U.S. and Europe.

JPMorgan Chase & Co. last month announced the $3.5 billion sale of its raw-materials trading unit to Mercuria Energy Group Ltd. and Morgan Stanley plans to sell its physical oil business to Russia’s OAO Rosneft. Goldman Sachs, Morgan Stanley, Barclays and JPMorgan were the biggest traders of commodity derivatives among banks, according to a Greenwich Associates survey last year.

“The more banks that exit commodities trading, the less competitive it becomes for the banks which stick with it,” Jeffery Harte, an analyst at Sandler O’Neill & Partners LP, said in a phone interview. Goldman Sachs has “the bigger franchise to be a winner. It now has a much bigger piece of a much smaller pie.”

This Bloomberg story showed up on their website late on Tuesday afternoon Denver time---and it's the second offering of the day from Elliot Simon.


So central bank gold is being held in investment bank vaults

Yesterday's Reuters report about changes at the gold and currency trading desks of investment banks is notable for more than its acknowledgment that central banks are surreptitiously trading gold every day, an acknowledgement made last September by the Banque de France.

For in reporting that "banks that serve central banking customers with large bullion reserves to manage will have a greater need to offer gold trading and storage services," Reuters also has acknowledged that much central bank gold is now held outside central bank vaults.

That's what the reference to "storage services" is about.

Presumably the central bank gold being vaulted by investment banks is gold that central banks have leased or swapped into the market for market-rigging purposes.

This commentary by Chris Powell, with two embedded must read links, was posted on the Internet site yesterday.


The Secret World of Gold

This 42:34 minute video has been around the block, as it has been viewed over 179,000 time on the Internet site, but I don't ever remember seeing it before, or even posting it in this column, although I'm sure I did.  However, based on the viewings, you've probably already seen it.

[I just watched it from start to finish right now---and I don't remember seeing it before---however I do remember posting it.]

But just in case you were on some other planet when it was made public, like I obviously was---here it is again---and I thank Casey Research's own John Grandits for bringing it to my attention on Monday.  And if you haven't seen it yet---it's certainly a must to view.


Chorus to lower gold curbs grows louder in India

India's Commerce Ministry came out in favour of axing restrictions on gold imports.

"The present gold import policy is workable only for a short distance. When this policy was conceptualised, it was for a limited objective...the Department of Commerce has taken a very clear decision that this policy is not sustainable in the long run," Commerce Secretary Rajeev Kher told media persons.

He further said that the policy needed to be appropriately amended. In order to check India's rising current account deficit (CAD), the government had raised import duties on bullion, while the Reserve Bank of India had imposed additional curbs on the import of the metal to jewellery exporters.

Almost in tandem, as the Commerce Ministry pitched for the removal of restrictions on gold imports, came the news that India's gems and jewellery exports fell by about 9% to $39.5 billion in 2013-14.

This gold-related news item, filed from Mumbai, was posted on the Internet site yesterday.



¤ The Funnies


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¤ The Wrap

Once in a while you will stumble upon the truth, but most of us manage to pick ourselves up and hurry along as if nothing had happened. - Winston Churchill

There's not a lot to read into yesterday's price action---and it was just another day off the calendar as Ted Butler is wont to say from time to time.

Here, once again, are the 6-month charts for gold and silver.  With no new lows being set---and price action subdued on top of that---I doubt very much if yesterday's trading meant much as far as the Commitment of Traders Report is concerned.

There are four trading days left for contract holders in the May delivery month in silver to either sell, roll, or stand for delivery---and there are still about 44,000 contracts left open.  Only 5,577 were rolled yesterday, at least according to the preliminary report from the CME Group.

When I checked the CME's preliminary Daily Information Bulletin that was posted on their website in the wee hours of this morning EDT---it showed the big increase in silver open interest for the April delivery month that appeared on their Daily Delivery Report late last evening.  As I said earlier, it's obvious, at least to me, that this delivery from JPM to Scotiabank was privately arranged and hidden from public view until the last possible moment.  As to what it portends for the future, I don't really know for sure, although I do have my suspicions---which I'll keep to myself, as it falls into the "wild-ass speculation" category.

Not much of anything happened in Far East trading on their Thursday---and the same can be said now that London has been open about 20 minutes.  Volumes in both gold and silver are very light---about 18,000 contracts in gold, and 4,000 contracts [net of roll-overs] in silver.  The dollar index is down a handful of basis points.

And as I send this out the door to Stowe, Vermont at 4:55 a.m. EDT, all four precious metals are now down a bit from yesterday's close in New York.  I see that JPMorgan et al are still trying to beat up the technical funds to the down side in silver---and it remains to be seen how successful they are.  But at these volume/price levels, they're picking up nickles in front of the proverbial steamroller.  Volumes in gold and silver are still on lighter side, so it's not wise to read too much into this price action, even in silver---although the volume in that has picked up quite a bit, as has the roll-over action.  The dollar index is still down the same handful of basis points it was 90 minutes ago.

Here's the Kitco silver chart as I hit the 'send' button.

That's all I have for today---and as the April delivery month winds down---and the May contract goes off the board---the price/volume activity between now and the Comex close on Tuesday, could prove interesting.

See you tomorrow.