Harvey's blogspot - news and data regarding gold and silver and non redundant news items of the day....

http://harveyorgan.blogspot.com/2012/09/german-constitutional-court-oks-esm-but.html

Good evening Ladies and Gentlemen:

Gold and silver suffered from a mini raid today.  Gold finished the comex session at $1730.60 down only $1.20 on the day.  Silver finished  the session at $33.23 down 28 cents.  Silver at one point was down to $32.40.  Tomorrow is a very important day (FOMC statement) with respect to whether the Fed engages in  official QEIII  or not.  I believe that there will be some sort of announcement on that front.  The USA is already witnessing a massive 1.2 trillion deficit this year and this will continue for quite some time. There is nobody on the planet capable of buying the bonds with that type of quantity.  So the Fed hides the purchases probably through the swap arrangements with Europe.  The only difference between official QE III or unofficial QE III is that in unofficial QE III, the purchases of the bonds are kept off the balance sheet.  The USA finances continue in a mess as the fiscal cliff approaches.  Gold and silver are always hammered around key events like tomorrow's FOMC statement. In Europe today we heard from our famous German constitutional court that it is OK for the ESM but the amounts that Germany can fund is capped at 192 billion euros.  Also the ESM cannot function as a bank by borrowing euros from the ECB and  purchasing secondary sovereign bonds on the  market. We will be going over these and other stories but first..................


Let us now head over to the comex and assess trading today.
The total comex gold open interest rose by 3618 contracts from 456,913 to 460,531. The non active month of September saw its OI remain constant at 49. Since we had zero delivery notices we neither gained nor lost any gold standing.  The active October gold contract lowered in OI to the tune of 204 contracts from 25,266 to 25,062 as most rolled into December.   The big December contract rose by 2982 contracts from 309,626 to 312,608.  This level will be closely watched by our bankers.  Today, they felt it was necessary to try and relieve some of the gold leaves from the gold tree but they failed.  The demand for metal was just too great for them.  The estimated volume today was much better than of late coming in at 192,876 contracts and no doubt the mini raid was the reason for the higher volume.  The confirmed volume yesterday was very subdued a 118,893.

The total silver comex OI rose marginally from 120,620 to 121,050 contracts.  The front active month of September saw it's OI fall from 742 to 694 for a loss of 48 contracts.  We had 23 delivery notices yesterday so we lost another 25 contracts or 125,000 oz to cash settlements. The non active silver delivery month of October saw its OI fall by 3 contracts from 257 to 254. The big December contract saw it's OI rise by 338 contracts from 78,378 to 78,716.  The estimated volume at the silver comex today was extremely good at 70,713. The confirmed volume yesterday came in at 38,248.

I would have to say that the raid today was a complete failure as the bankers used up a lot of ammunition and their efforts were futile. 

*   *   * 

Activity was quite light today.
We had the following customer deposit:

i) Into HSBC 1323,152.497 oz
ii) Into Scotia:  7006.947

total deposit:  139,159.444 oz

we had the following withdrawal:  

i) 192.90 oz out of HSBC
ii) 64.3 oz out of Manfra

total customer withdrawal:

758.64 oz
we had no adjustments.
The dealer or registered inventory rests at 2.521 million oz (78.07 tonnes of gold)




The CME notified us that we had again zero notices filed for zero ounces.
The total number of notices remain at 701 for 70,100 oz.

and....

Activity was quite heavy in the silver vaults today.

We had the following customer deposit:

i) Into Brinks:  300,047.28 oz
ii) Into HSBC:  541,033.34 oz

total deposit:  841,080.62 oz

we had the following withdrawal:

i) out of Brinks:  300,682.02 oz
ii) out of Scotia:  30,797.1 oz

total withdrawal:  331,479.12 oz

we had another dandy of an adjustment whereby a monstrous 1,396,574.85 oz was adjusted out of the dealer and back into the customer.  No doubt that this will be used in the settling process. 

The registered or dealer silver inventory rests tonight at 39.438 million oz
The total of all silver rests at 141.185 million oz. 


The CME reported that we had a chunky 270 notices for 1,350,000 oz of silver served upon our longs.


*   *   * 

Platinum Soars As Spreading South African Miner Strike Cripples World's Biggest Platinum Firm

Submitted by Tyler Durden on 09/12/2012 08:08 -0400

• Ben Bernanke
   
• Reuters

Ten days ago, when describing the latest casualty of the ongoing South African miner revolution, we said: "Expect more South African mines to shutter, as gold production in the world's third largest gold producer grinds to a halt, and the local workers grasp they had the leverage all along. Should the South African example spread to other countries, then expect the price of gold to soar regardless of how much printing the central planners engage in the coming weeks and month." Fast forward to today: "Labour unrest sweeping across South Africa's mining sector hit top world platinum producer Anglo American Platinum on Wednesday, with striking miners blockading roads leading to shafts belonging to the mining giant, police said. The platinum price jumped as much as 1.5 percent to $1,624.74 an ounce, its highest since mid-April amid fears of more disruption to supplies of the precious metal used in jewellery and vehicle catalytic converters." The good news: the complete mining shut down has not spread to other countries. Yet. The bad news: as expected, one after another South African mine is going offline. Why is this an issue? Because Chinese demands is soaring, even as the world is about to lose its third largest producer of gold. Not even the CME hiking gold margins to infinity will do much to prevent what will inevitably be a surge in precious metal prices. Factor in what is likely to be more easing by Bernanke tomorrow, and it may be time to eye the all time nominal high of just over $1,900 gold hit a year ago.

and....

(Courtesy of Jessie of American cafe):


Metals Bear Raid - Sprott Raises $392 Million To Buy Gold for PHYS

On the bright side, the Sprott Physical Gold Trust (PHYS) completed its secondary offering and the underwriters allotment, raising $392 million to buy additional gold bullion to be held in the trust.

The report does not indicate if they have secured title to the gold yet. Even after they have secured title, it often takes weeks and even months to achieve actual delivery to their vaults. The recent lag times in their Silver Trust expansion, and the types of bars they received, suggested a tight market for the real thing.

As you may recall, I think that it will be in the high quality bullion bar bulk market where the initial signs of failure to deliver will occur. The peripheral and coin markets will stay relatively healthy until the dawning comes, and then dry up overnight. The retail crowd are always the last to know. So lets keep an eye on this.

The metals were smacked hard today in what *looked like* a secondary reaction to the complications in Europe over their rescue funds. What initially looked like good news for the fans of Draghi was tarnished by the requirement that the use of funds be put to a vote by the Bundestag on each occasion, essentially giving the German parliament a line item veto.
This was also an excuse for the traditiona pre-FOMC metals smackdown. As you know the FOMC is in a two day meeting with their announcement coming tomorrow. The violence of the selling was concentrated and hard as you can see from the intraday silver chart below. It looks like a straightforward "Dr. Evil" strategy where a big player just comes in to a thin market and runs the stops with a mass of sell orders.

JPM must be quaking in their shoes over the rumoured exposé.

Sprott Physical Gold Trust Announces Completion of Its Follow-on Offering of Trust Units
Sep 12, 2012

TORONTO, Sept. 12, 2012 /CNW/ - Sprott Physical Gold Trust (the "Trust") (NYSE: PHYS / TSX: PHY.U), a trust created to invest and hold substantially all of its assets in physical gold bullion and managed by Sprott Asset Management LP, today announced that it has completed its follow-on offering of 26,450,000 transferable, redeemable units of the Trust (the "Units") at US$14.84 per Unit for gross proceeds of US$392,518,000 (the "Offering"). This includes the exercise in full by the underwriters of their over-allotment option.

The Trust will use the net proceeds of the Offering to acquire physical gold bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to the Offering. The net proceeds of the Offering per Unit are greater than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering, as required under the trust agreement governing the Trust...

and......

And from Dave from Denver from his GoldenTruth website, comments that one of the world's largest hedge funds Bridgewater, controlled by Ray Dalio is now seeking gold:
(courtesy GATA/Dave from Denver/the GoldenTruth/Business Insider)
Dave from Denver on the importance of my friend Ray Dalio advocating GOLD…
Ray Dalio, who runs/owns the wildly successful Bridgewater hedge fund firm, is now openly advocating investing in gold. This is what will trigger a big instutional movement into allocating assets in a major into gold, silver and mining stocks: http://www.businessinsider.com/ray-dalio-on-the-1-reason-to-own-gold-2012-9
Institutional investing is "monkey see, monkey do," and Ray Dalio is well-respected by his peers. I've been patiently waiting for the time when big institutions would start herding some of their investing capital into the precious metals markets. It will only take a small percentage of institutional money to cause a huge move in the price of the metals and the mining stocks. You want to be positioned ahead of this.

and non redundant news of the day.....

Farage's Berating Rebuttal Of Barosso's 'State-Of-The-Union' Banalities

Submitted by Tyler Durden on 09/12/2012 09:34 -0400

• European Union
   
• Reality

MEP Nigel Farage provided a much-needed dose of reality to the peculiar pontifications of Barroso's state of the union speech last night. Concerned at the fanaticism of Europe's ever more concentrated power-base, summed up by his interpretation of Barroso's call for a federal union of states (cue Darth Vader music): "while the nation state should continue to exist, it mustn't have any democratic power," the Englishman goes on to deride Mario Draghi's unlimited money bazooka - though we suspect Farage's belief that "money doesn't grow on trees" will soon come into question day after day.  Super Mario as much as implied that he "will fight to the last German taxpayer to keep the Mediterranean countries, that should never have been in the Euro, in there," but for a sense of just how ludicrous things are becoming in the EU, this clip is important as he reminds us of Monti's (monstrous Mario) recent statement that "nation-state democracy will bring down the European Union." Farage fears this rumbling facade over a crisis could go on for a decade, we can only hope not - one way or another.

Farage's rebuttal...

and.....

The Central Banks Are Fast Running Out of Bullets

Submitted by Phoenix Capital Research on 09/12/2012 12:39 -0400

• Agency MBS
   
• Bond
   
• Central Banks
   
• European Central Bank
   
• Federal Reserve
  
• Federal Reserve Bank
   
• Germany
   
• Global Economy
   
• Italy
 
• Reality
   
• St Louis Fed

Yesterday we worked through the illusion to reality for the ECB’s unlimited bond purchases, the end result being that the ECB:

1. Didn’t announce anything new
2. Is implementing the same policies it’s tried twice before with no success
3. Is implementing policies that neither Spain nor Italy will go for

And finally…

4. Has solved nothing due to the fact that of the two mega-bailout funds, one has only €65 billion in firepower left and the other has yet to be ratified by Germany

Today we turn our attention to the US’s Federal Reserve where the whole world expects the Fed to announce QE 3 at its FOMC meeting this Wednesday and Thursday.

There is a small problem of math with this. The Fed currently owns all but just $650 billion of the outstanding 10-30 year Treasuries. At this point, even a $200-300 billion QE program would create serious liquidity problems for the financial system.

Of course, the Fed could potentially implement another agency/MBS QE program. But that would be a very politicalmove with the Presidential election so close. This, combined with current food and energy prices, makes it unlikely the Fed would want to do this.

Indeed, we’ve seen some striking admissions from the Fed recently. St Louis Fed President James Bullard:

“I am a little – maybe more than a little bit – worried about the future of central banking,” said James Bullard, president of the Federal Reserve Bank of St Louis, in a Financial Times interview at Jackson Hole. “We’ve constantly felt that there would be light at the end of the tunnel and there’d be an opportunity to normalise but it’s not really happening so far.”

The biggest worry on display at Jackson Hole was whether these bureaucrats, sitting at the heart of every mature economy, still have the power to influence demand now that interest rates cannot fall much further. Lurking behind many debates was this question: if central bank policies are so effective, why is the global economy not growing faster?

http://www.ft.com/intl/cms/s/0/a0e397b6-f8dd-11e1-b4ba-00144feabdc0.html

Here’s a Fed official, not only openly admitting that Fed policies aren’t working, but even calling the future of Central Banking into question. Take note: underlying realities are beginning to be asserted by officials at Central Banks around the globe. They’re running out of bullets.

So where does this leave us? Well, it’s highly unlikely the Fed will actually implement anything major this week. What we could see is a large, but hollow promise for action, much like the ECB’s promise of “unlimited” bond purchases based on certain “conditions” being met (an empty promise if ever there was one).

If this kind of empty promise is made, look for the market to top soon after.

And if the Fed fails to deliver this week… buckle up.

and.....

South African Army Put On High Alert In Response To Nationwide Miner Strike

Submitted by Tyler Durden on 09/12/2012 08:17 -0400

• Corruption
   
• Reuters

That didn't take long. BBC reports that "Military bases in South Africa have been placed on high alert for the first time since the advent of democracy in 1994, defence officials have confirmed. The move comes as firebrand politician Julius Malema prepares to address disgruntled soldiers near Johannesburg. The defence minister accused him of trying to "mobilise against the state"." In other words, striking miners are about to be considered enemies of the state, if they hinder record high profit margins at various international precious metal conglomerates. Hopefully South Africa does not test the theory that the worker exterminations (as a reminder tens of striking workers were previously killed by local police) will continue until worker morale improves, because i) it won't, and ii) it will lead to a complete shut down of commodity extraction in the country.

From BBC:

Mr Malema has addressed several rallies in recent weeks, demanding President Jacob Zuma's removal from power after police shot dead striking miners.

Defence department spokesman Sonwabo Mbananga told the BBC that all bases were on high alert to "keep vigilance over the movement of our armed forces".

It is an extraordinary move, all because Mr Malema is due to address some soldiers, the BBC's Andrew Harding reports from Johannesburg.

Mr Malema was expelled from the ruling African National Congress (ANC) party in April, and is under investigation for alleged corruption.

But Mr Malema has seized on the killings at the Marikana platinum mine last month - when police shot dead 34 protesting workers - to launch a ferocious campaign against South Africa's elites, and to call for an economic revolution, our reporter says.

The army's shrill reaction to his latest move underlines Mr Malema's apparent power, he adds.

South Africa is in a jittery mood right now, partly because of fears that labour unrest could spread, and partly because the government appears preoccupied with infighting, as factions plot ways to unseat President Zuma, our correspondent says.

On Wednesday, Mr Malema called for a national strike in the mining sector, South Africa's economic backbone.

Police spokesman Thulani Ngubane said on Thursday that workers at a platinum mine in North West province, owned by the world's top platinum producer, Anglo American Platinum (Amplats), have launched a strike, AFP news agency reports.

"They are rioting, barricading the roads with tyres, trees trunks and rocks," Mr Ngubane is quoted as saying.

Amplats spokesman Mpumi Sithole told the BBC the protesters were not employees of the company.

"Our employees have been moved to a neutral place away from the mine. Some operations are not operating," Reuters news agency quotes Ms Sithole as saying.

The conflict has led to a fall in the price of Amplats shares.

Perhaps the margin hiker in chief can chime in here. Wouldn't want (lack of) supply and (soaring) demand to set the equilibrium price of a product that is considered the replacement of infinitely printable fiat now, would we.

and.....