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SILVER COT REPORT 10/26/12: COMMERCIALS COVER ANOTHER 8 MILLION OUNCES OF SILVER!
Submitted by Marshall Swing:
Silver COT Report 10/26/12
Commercial paper stacks sold off a small 435 longs on the week but led short covering raids utilizing -2,030 shorts to drop the price to end the week with 45.18% of all open interest, a decrease of -0.63% in their share since last week, and now stand as a group at 277,495,000 ounces net short, which is a decrease of just about 8,000,000 net short ounces from the previous week.
Large speculators were forced out of 1,578 longs by the downward prices but added 414 short contracts decreasing their net long position to 190,680,000 ounces, an increase in their net long position of just under 10,000,000 ounces from the prior week.
Small speculators sold off a small 544 longs and took advantage of the price drop to make some money by covering 941 short contracts for a net long position of 86,815,000 ounces a decrease of over 1,000,000 ounces net long from the prior week.
At the close of the COT reporting period on Tuesday afternoon, silver was about $31.70. The beginning of the COT period saw silver at about $32.98 so the drop in price is about $1.30 for the reporting week. However, looking at price from Friday to Friday saw no change with silver at about $32.09 though there was plenty of volatility during the week.
While the price drop definitely hurt the large speculator’s profit margins, I believe the real story to be told this week is that for a mere 8,000,000 ounce reduction in the commercial’s net short position they were able to achieve a $1.30 drop in the price of silver. They had a little help with the small speculators covering a huge number, close to 10% of their shorts.
8,000,000 ounces change for the commercials is less than 3%. If they were able to get away with another 5 weeks of price reductions of this magnitude, silver would be trading under $26 and they would still hold a very high net short advantage, historically speaking, as compared to when silver was just above $26 a few short months ago.
As I have reported the last couple of weeks, the price reduction in the metals seems to be much more fueled by the battles going on for the gold price than what our silver commercials are doing here. What happens in these wars is that when the gold commercials attack their automatic trading systems set off like trades and affect silver speculators and Blythe and her boys enjoy a huge reduction in the silver price without having to expend much of their short position on the silver desk.
It sure has the appearance of a commercial tag team match to me…
and Vietnamese Banks get into the gold theft business.....
http://www.zerohedge.com/news/2012-10-26/vietnamese-banks-who-paid-dividend-stored-gold-were-quietly-selling-it-appear-solven
Vietnamese Banks Who Paid Dividend On Stored Gold, Were Quietly Selling It To Appear Solvent
Several months ago, we reported about atroubling development in Vietnam, happy inflationary host of one of the world's most rapidly devaluing and best named currencies, that in direct refutation of Ben "Gold is not money, it is tradition" Bernanke's claim that gold is just a trinket one can fondle with no inherent value, the local banks had gone as far as paying the local residents a dividend to "store" their gold (recall all those charges against gold that it never, ever pays a dividend....). However, as we subsequently warned, any time a bank, and especially an entire banking sector, is willing to pay you paper "dividends" for your gold, run, because all this kind of (s)quid pro quo usually ends up as a confiscation ploy. Sure enough, as Dow Jones reports today, the gold, which did not belong to the banks and was merely being warehoused there (or so the fine print said),was promptly sold by these same institutions to generate cash proceeds and to boost liquidity reserves using other people's gold, obtained under false pretenses.
And now, it is time for the forced sellers to become forced buyers, as "the State Bank of Vietnam, the country's central bank, may allow local banks to buy up to 20 metric tons of gold over the next two months to improve their liquidity ahead of a ban soon on their use of gold as a means of boosting their operating capital." What they mean is that having been caught engaging in an illegal reserve boosting operating, the banks are now "allowed" to undo their transgressions ahead of a "ban" on what inherently was not a permitted practice. What is left unsaid, of course, is that any gold anywhere in the world, that isnot in one's physical possession, and has been handed over to an insolvent bank (virtually all of them) for "safekeeping", is currently being sold, lent out, rehypothecated and otherwise traded with, in a way that any demand for full delivery will generally be met with silence, blank stares and phone calls going straight to voicemail.
From Dow Jones:
Banks have bought more than 60 tons of gold during the past six months and still need to buy more to meet their liquidity needs, Deputy Central Bank Governor Le Minh Hung said in the statement, posted on the central bank's website.Local banks received gold deposits from the public in previous years and sold the gold in the local market for cash. Now they will have to buy gold to pay back their depositors at a time when global gold prices have been rising sharply. The central bank wants to prevent banks from this kind of risky operation, so it plans to ban banks soon from being involved in gold trading operations.This is called being "caught with your pants down" while you are selling gold bricks..."Demand for capital is usually strong in the fourth quarter. It's risky for the banking system if banks are forced to buy gold to meet their needs," Mr. Hung said.The central bank will closely monitor and stabilize the domestic gold market and will soon ban banks from using gold as a way to boost their operating capital, he added.This however begs the question: if the local banks can't fool the gullible public into handing over truly valuable assets in exchange for a "dividend" that is literally being created out of thin air, and then monetize said assets to appear solvent, just how will they appear solvent? Crickets...Finally:Though the central bank's gold management policy is making retail gold prices in the local market higher than global prices, there has been no smuggling of gold and therefore no increased demand for the U.S. Dollar so far this year, Mr. Hung said, adding that this has helped keep the exchange rate between Vietnam's dong the U.S. Dollar stable so far.In other words, not only is gold money, it is better than money. But first you need: i) inflation; ii) collapsing currency and iii) insolvent banks. Luckily, the developed world has neither of these...In summary: this...
when you see things like this appear , yu know the Fed has no gold in storage.....
CNBC MOPE: ACTUAL EXISTENCE OF GOLD RESERVES IS IRRELEVANT, IT’S THE BOOKKEEPING THAT MATTERS!
With this week’s reports that Germany repatriated 1,000 tons of its gold reserves from the Bank of England between 2000-01, and is repatriating 150 tons of its gold reserves from the NY Fed over the next 3 years, clearly the awake participants have realized the music stopped long ago, and are grabbing their physical gold chairs.
It is now inevitable that an avalanche of central banks, hedge funds, and wealthy investors worldwide will begin to emulate Venezuela and Germany and request physical delivery of their unallocated (rehypothecated) ‘gold’.
In an amazingly weak and futile attempt to stem the inevitable onslaught of delivery and repatriation requests, CNBC’s senior editor John Carney has released an editorial claiming that it matters not whether the gold held at the NY Fed and the BOE is filled with tungsten, has been leased or swapped, or that it even exists- all that matters is the Fed’s bookkeeping ledger that states the gold is there. CNBC begins by attempting to claim that it doesn’t matter whether Germany’s gold reserves held at the NY Fed are actually there and tungsten free, as long as the Fed says it’s there:
In reality, it does not matter one bit whether the Federal Reserve Bank of New York actually has the German central bank’s gold or whether the gold is pure. As long as the Fed says it is there, it is as good as there for all practical purposes to which it might be put. It can be sold, leased out, used as collateral, employed to extinguish liabilities and counted as bank capital just the same whether it exists or not.
Carney then attempts to claim the gold serves no actual purpose unless the Bundesbank wants to go into the gold watchmaking business:
The actual presence of the gold wouldn’t make a lick of difference unless, say, Germany’s central bank decided it wanted to start using the gold for some practical, non-monetary purpose like making watches.
CNBC would love investors to believe it’s not the actual physical Central Bank gold reserves that matter, it’s their book ledgers!
For almost all imaginable operational purposes, the actual existence of the gold in Fort Knox or in the vault beneath the FRBNY’s Liberty Street headquarters is irrelevant. The bookkeeping is what really matters here. So long as the Fed says Bundesbank owns X tons of gold, the Bundesbank can act as if it did own the gold—even if the gold had somehow been swallowed into a gold-eating galactic worm hole.At least Carney is rational enough to acknowledge what happens when the jig is up:I’m sure the Bundesbank officials understand this quite well, even though the German Audit Court does not. There is nothing to be gained by inspecting the gold. If it is all there and pure, there is no difference from an undiscovered absence. But if the gold isn’t there, well, calamity could follow as trust in the central bank gold depositories evaporated instantly.Where there is smoke, there is always fire. Rather than investigating the source of the smoke, CNBC goes into overdrive MOPE denying the existence of the smoke.
Unfortunately for the Fed and the BOE, Hugo Chavez & now the German Audit Court have triggered a coming avalanche of physical gold delivery and repatriation requests.
CHINESE & INDIA SILVER DEMAND TO REACH ALMOST 12,000 METRIC TONNES IN 2012
By SRSrocco:
According to this GoldCore article posted on SD this morning, the Chinese silver demand will hit 7,700 metric tonnes in 2012. Last year India’s silver demand was 4,000+ metric tonnes. We can safely assume they should have about the same figure in 2012.
This means Indian and Chinese silver demand alone will account for 50% of global silver mine supply!!! [Read more...]
http://www.silverdoctors.com/max-keiser-goodbye-germanys-gold/#more-16072
MAX KEISER: GOODBYE GERMANY’S GOLD?
Max Keiser and Stacy Herbert discuss how it is that Gordon Brown’s Bottom turned into an audit the gold movement in Germany. They also discuss the mother of all bond bubbles getting set to burst and all that will be left in the Bank of England ‘gold’ vaults are a big pile of gilts. In the second half of the show, Max Keiser talks to Dominic Frisby, author of Life After the State, about Germany’s gold quest, the future of relations between the US and Germany if the gold is not there and about ‘life after the state.’
http://www.silverdoctors.com/germanys-gold-repatriation-and-browns-bottom/#more-16036
Germany’s Gold Repatriation and Brown’s Bottom
Submitted by SD reader Jack
Sometimes we need to look back in history to “connect the dots”. In 1999 Gordon Brown started selling England’s gold into the market place. This was done by auction and announced. Coordinated as if it was meant to keep prices low. Most people think Gordon Brown was just stupid. It would now appear that we have now found the reason for this market manipulation of gold at the time.
The 400 tons of gold that Gordon Brown dumped on the market between 1999 and 2001 (60% of the UK’s gold reserves) likely went DIRECTLY TO THE BULLION BANKS FOR THE SOLE PURPOSE OF MEETING THE BUNDESBANK’S 1000 TON GOLD REPATRIATION REQUEST!!
If Germany was demanding it’s gold of roughly 1000 tons, which likely had already been rehypothicated, it would have caused an explosion in prices to accumulate that much gold to cover Germany’s demand.
Mind you, this request for the repatriation of their gold probably came years before they received it. England was obligated to see to it’s return and coordinated with it’s Bullion Banks who were in trouble as they had already sold it into the market place and could not get it back.
Mind you, this request for the repatriation of their gold probably came years before they received it. England was obligated to see to it’s return and coordinated with it’s Bullion Banks who were in trouble as they had already sold it into the market place and could not get it back.
England publicly announces it is selling its gold which catches the market by surprise and keeps prices low, while the Bullion Banks accumulate enough gold to honor Germany’s request of the return of 1000 tons.
The 400 tons of gold that Gordon Brown dumped on the market between 1999 and 2001 (60% of the UK’s gold reserves) likely went DIRECTLY TO THE BULLION BANKS FOR THE SOLE PURPOSE OF MEETING THE BUNDESBANK’S 1000 TON GOLD REPATRIATION REQUEST!!
Once all the dots are revealed, they start to make sense. China probably learned of this some time ago and another reason they have been accumulating so much gold.
http://www.silverdoctors.com/chinese-mint-increases-silver-panda-production-an-astonishing-1233/
CHINESE MINT INCREASES SILVER PANDA PRODUCTION AN ASTONISHING 1233%!!
By SRSrocco:
In less than two years, the Chinese Mint has increased the production of its 1 oz Chinese Silver Panda 1233%, from 600,000 per year to 8 million in 2012.
Even though this is certainly a massive increase in just two short years…. this may only be the beginning of something really big that is being planned by the Chinese Mint.
According to Louis Golino’s article “China Strives to Make Silver Pandas as Popular as American Silver Eagles“, we have just begun to see just how many Silver Pandas the Chinese plan on minting.
If we take a look at the chart below, we can see that the Chinese Silver Panda production figures have increased substantially since 2010:
According to Jim Orcholski who runs J & T Coins LLC Blog.com, quoted from the article above:
The main reason the mintage of these coins was increased so much starting last year is that it became legal in 2011 for Chinese citizens to own silver coins. This means that a lot of 2011 and 2012-dated coins remain in China.
Jim went on further to say:
Despite the major increase in mintage the coins are not getting any easier to locate in the U.S. Mr. Orcholski said supplies are tight and that he was only able to secure one-third of the quantity he requested. He added that his distributor was unable to say when more coins might be available.
———————–
I had an email exchange with Jim over the past few days and I asked him what he thought might be the 2013 mintage forecast for the Chinese Silver Panda. He stated they he and a few other coin dealers thought it would be at least 10 million.
If the Chinese want to make their Silver Panda as popular as the American Silver Eagle, I would imagine they would want to increase its production to over 40 million eventually… and this may be just for starters.
We must remember the Chinese Population is three times that of the United States. Once silver becomes popular in China, demand for the 1 oz coin could reach an easy 75-100 million in a single year. Of course, I doubt this would occur in the next few years, but I could possibly see these sort of figures within the next 4-5 years.
This chart is part of my upcoming SILVER ARTICLE. It is only one aspect of many showing the HUGE INCREASE of SILVER INVESTMENT DEMAND…. over the past several years, and onwards.
one man's opinion on the way forward......
http://www.tfmetalsreport.com/blog/4283/forward
Forward
Thursday, October 25, 2012 at 11:14 am
And not in a politically progressive sense.
Forward is the direction of the price of precious metal. We have been in a 3-week mini-correction, almost identical in duration and magnitude to the counter move of January 2011. Back on Saturday, I gave you projected lows of $1700 + 10 in gold and $31.50 in silver. So far this week, we have seen the Dec12 gold trade down to a low of $1698.70 and the Dec12 silver reached $31.53. That ought to do it.
I firmly believe that we have now seen the bottom of this pullback. Though a V-shape with no retest is possible, we must still expect some angst and volatility over the next 3-5 days. The fresh shorts will not give up easily so expect them to attempt to game every opportunity to restart the momentum to the downside. Again, as The Old Man says: Let om. They won't be successful.
There are clear lines on the chart now where, above which, shorts will begin to capitulate and cover. Eventually, it becomes apparent to nearly all market participants that a bottom has been reached and the rebound begins to create its own momentum. Soon, bargain hunters begin to charge in as they realize that fundamentals are once again in control. As we finish October and head into November, I then expect a consistent and, at times, sharp rebound.
Here are your charts. Let's start with silver where the bottom is more clear and the breakout through the downtrend line appears to be more imminent.
And note that on the daily chart with the Relative Strength Index, silver has reached a level of "oversoldness" not seen since the price bottom of late last summer.
The gold chart isn't quite as compelling...yet...as gold likely has a little more work to do in building a base. Regardless, I'm extremely confident that we saw the lows yesterday.
And, like silver, gold is quite oversold, from a momentum standpoint.
So, what does this mean? History and current fundamentals tell us that this correction has now run its course. From here, though, do not expect a rapid recovery, at least not initially. Let this play out over the next week or so. Traders should be utilizing this time period to begin building positions by buying dips and adding incrementally.
History also suggests, though, that this next move in the metals will be significant. Let me just remind you that, after a nearly-identical rally and pullback in the post-QE2, 11/10 - 1/11 time period, silver soared nearly 90% in 90 days and gold rallied from $1308 to $1920 in 7 months. And I would further add that the current fundamental case for acquiring precious metal is even stronger than it was then. Be ready.
Lastly, you may have noticed that I've not yet commented on this "German gold repatriation" story. (http://www.dw.de/germany-to-check-gold-reserves-stored-abroad/a-16329995 &http://www.washingtonpost.com/business/german-auditor-office-urges-central-bank-to-control-gold-reserves-held-in-us-france-britain/2012/10/22/a986448c-1c63-11e2-8817-41b9a7aaabc7_story.html). That's by design because, quite frankly, I can't decide how significant the story is. Is it just more anecdotal evidence of conspiracy and proof ongoing swaps, leases and manipulation of the metals OR is it the final straw, the first major crack in the facade of illusion regarding unallocated and allocated gold? Below is the story from yesterday by Ambrose Evans-Pritchard. The brief article is worth reading but this seems to me to be the key paragraph:
"Peter Hambro, chair of the UK-listed gold miner Petropavlovsk, said the Bundesbank may have withdrawn its bullion in self-protection since it did not, apparently, have its own specifically allocated bars in London. "They may have decided that the Bank of England had lent out too much gold, and decided it was safer to bring theirs home. This is about the identification. Can you identify your own allocated gold, or are you just a general creditor with a metal account?"
As you might expect, Bill and Chris are all over this story and their site is rich with links for you to ponder. Here are just a few that you should make time to review:
But I urge you to take the time to read all of the way through this:http://www.gata.org/node/11862. Here, let me get you started...
By Lars Schall
Wednesday, October 24, 2012
It's strange what you encounter when you try to take a serious look at the gold policy of central banks and their agents, the bullion banks.
Some observers, including the Gold Anti-Trust Action Committee (GATA), estimate that Western central banks have on hand nowhere near as much gold as they claim. These observers suspect that much Western central bank gold has been sold or leased largely surreptitiously to restrain the gold price over the last two decades.Here is the explanation provided to me in an interview by the Canadian financial analyst and fund manager Marshall Auerback when I asked: Do you think that the Western central banks and the International Monetary Fund really have in their vaults the gold they say they have?
Wednesday, October 24, 2012
It's strange what you encounter when you try to take a serious look at the gold policy of central banks and their agents, the bullion banks.
Some observers, including the Gold Anti-Trust Action Committee (GATA), estimate that Western central banks have on hand nowhere near as much gold as they claim. These observers suspect that much Western central bank gold has been sold or leased largely surreptitiously to restrain the gold price over the last two decades.Here is the explanation provided to me in an interview by the Canadian financial analyst and fund manager Marshall Auerback when I asked: Do you think that the Western central banks and the International Monetary Fund really have in their vaults the gold they say they have?
Marshall Auerback: "In a strict accounting sense they might, but it might be irrelevant. I suspect that the central banks have not been selling much gold over the past few years since the inception of the Washington Agreement on Gold, but I think they have still been leasing considerable amounts into the gold market. From a flow standpoint, it's irrelevant whether the gold is sold or lent, as it still appears as supply in the market. So the key question becomes: Can the leased gold be recovered by the central banks? The work of GATA and others such as Bob Landis and Reg Howe suggests that the gold cannot be recovered. In effect you have a 'prison of the shorts' situation, whereby the gold that has been lent out and melted down to become, say, part of some Indian bride's dowry will not be coming back into the market.
Ultimately, I think, the central banks will ratify this in an accounting sense by reclassifying the leased gold as sold, so from a stock standpoint, that will validate GATA's argument that there is far less gold being held by the central banks than is commonly believed...
Ultimately, I think, the central banks will ratify this in an accounting sense by reclassifying the leased gold as sold, so from a stock standpoint, that will validate GATA's argument that there is far less gold being held by the central banks than is commonly believed...
And here is the author, Lars Schall, being interviewed by Max Keiser last week:
If you have the time, here are some more links for you to look over:
Again, I'm not certain yet as to how big of a deal this is. Form your own opinion and act accordingly.
As I close, I see that prices are holding firm at $1715 and $32.15. This is good. Buy a little more today and get ready for an explosive end of the year and an historic 2013.
TF
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