Ed Steer's and Harvey's blogspots for Wednesday October 3rd and noteworthy items of the day....

Ed Steer's report for Wednesday.....

Eye on Equities: Gold Bears Head For the Hills

Oct

4

• Yesterday in Gold and Silver
• Critical Reads
• The Funnies
• The Wrap

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"How the current situation resolves itself...or is allowed to resolve itself...either up or down, remains to be seen."

¤ YESTERDAY IN GOLD AND SILVER

Once again the movie "Groundhog Day" starring actor Bill Murray came to mind after watching Wednesday's gold [and silver] price action, which was the same as Tuesday's price action...and almost the same as Monday's.
Once again, gold made many numerous attempts to rally through the $1,780 sport price during the Comex trading session in New York...but was not allowed to venture too far above that mark before running into a willing seller.  The high tick of the day [$1,782.80 spot] came within ten minutes of the Comex open...and got squashed immediately.
Gold closed at $1,779.00 spot...up $4.60 on the day.  Volume was 132,000 contracts, a lot of which would have been of the HFT variety.

It was exactly the same story in silver...and watching "da boyz" close the Wednesday silver price inside the 3 cent price gap between Monday and Tuesday's closes, was just too cute for words.  Silver's high tick of $34.99 spot came at the same time as gold's high of the day...just minutes after the Comex open.
Then, shortly after 12 o'clock noon in New York, the silver price got sold down to around $34.60 spot...and then traded sideways into the close.
Silver closed at $34.64 spot...up a whole 2 cents on the day.  Volume was around 34,000 contracts.

The dollar index opened at 79.75 in early Far East trading on Wednesday...and immediately began to climb back towards the 80.00 level.  That rally died at 79.96 just minutes after the 8:00 a.m. BST London open...and by 10:00 a.m. BST had fallen all the way back to 79.72.
The subsequent rally off that low made it back to the same 79.96 level shortly before 9:00 a.m. in New York, before more or less trading sideways for the remainder of the day.  The dollar index closed at 79.89...up about 14 basis points from Thursday.

*   *   * 

The CME Daily Delivery Report was another yawner, as only 2 gold and 11 silver contracts were posted for delivery on Friday.  According to the CME's preliminary volume report, there are only about 700 gold and a bit more than 300 silver contracts left to deliver in October...plus what may be added as the month progresses.  The bulk of the October deliveries in gold are already done...but most of the silver deliveries are yet to come.
An authorized participant added 58,161 troy ounces of gold to GLD yesterday...and there were no reported changes in SLV.
And, for the third day in a row, there was no sales report from the U.S. Mint.
The Comex-approved depositories reported adding 610,809 troy ounces of silver to their inventories on Tuesday...and shipped a smallish 25,990 ounces out the door.  The link to that activity is here.

a few stories selected for Ed's offerings....

California Gas Stations Begin to Shut on Record-High Spot Prices

Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs.
Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline yesterday and was selling premium fuel at the price of regular, Jeff Cole, Costco’s vice president of gasoline, said by telephone. The company hasn’t been able to find enough unbranded summer-grade gasoline to keep its stations supplied, he said.
Spot, or wholesale, gasoline in Los Angeles has surged 70 cents this week to a premium of $1.15 a gallon versus gasoline futures traded on the New York Mercantile Exchange, data compiled by Bloomberg show. That’s the highest level for the fuel since at least November 2007, when Bloomberg began publishing prices there. On an outright basis, the fuel jumped to $3.9495 a gallon.
Gasoline at the pump cost $4.232 a gallon in California on Oct. 2, according to AAA.com, 45 cents more than the national average of $3.782. In Los Angeles the price was $4.259.
This Bloomberg story was posted on their Internet site early yesterday evening...and my thanks go out to West Virginia reader Elliot Simon...and the link is here.

Iran in grip of currency crisis as trading stops

Iran is in the grip of economic meltdown, with trading in its currency halted after it dropped 40pc in a week.
After the rial on Tuesday hit a record low of around 37,500 to the dollar, from about 24,600 just eight days earlier, riot police in Tehran today ordered exchange bureau to close and arrested illegal money changers, witnesses said.
The state-backed news agency Mehr reported the rial had opened at a new low of 36,100, but currency websites said that to “comply” with central bank policies they would not provide price updates.
Shopkeepers refused to open as they did not know how to price their goods. Inflation is thought to be running far higher than the official 25pc rate.
This story was posted on the telegraph.co.uk Internet site yesterday afternoon BST...and I thank Roy Stephens for sending it. It's worth reading...and the link is here.

Iran crackdown on money changers after currency slide

A protest and scuffles with police occurred in central Tehran on Wednesday in the first sign of public unrest over Iran's plunging currency, which this week has lost more than half of its value.
Hundreds of police in anti-riot gear stormed the capital's currency exchange district of Ferdowsi, arresting illegal money changers and ordering licensed bureau and other shops closed, witnesses told AFP.
Several arrests were seen, carried out by uniformed police or plain-clothes security officers.
Individuals threw stones at police officers and a police car before running away, witnesses said.
This longish AFP story was picked up by the uk.finance.yahoo.com Internet site yesterday morning Eastern time...and I thank Scott Pluschau for bringing it to our attention.  It's worth your time if you have it...and the link is here.

Vietnam's gold market uncertain as gold deposit ban approaches

The deadline when local commercial banks will be prohibited from mobilizing gold deposits is now just a month and a half away, but the question of how the State Bank of Vietnam will deal with the massive amount of public gold reserves after the ban comes into effect remains unanswered.

On April 29, 2011 the central bank halted gold mobilization at banks, but lifted the ban a year later, ruling that the credit institutions would still be able to accept savings in gold bullion until November 25, 2012.

Although the deadline is approaching, banks are currently still mobilizing gold deposits, and even at attractive interest rates of up to 3 percent a year.

Experts have demanded that banks be given an extension to continue mobilize gold deposits, as some banks still have outstanding loans in gold, and others are in gold liquidity trouble.

“The lack of gold liquidity has forced banks to offer high interest rates for gold bullion,” said Nguyen Thanh Long, chairman of the Vietnam Gold Business Association.

This story was posted on the Vietnamese website tuoitrenews.vn early on their Thursday morning...and I thank Manitoba reader Ulrike Marx for sending it along.  The link is here.

http://harveyorgan.blogspot.com/2012/10/poor-service-pmi-numbers-from.html

WEDNESDAY, OCTOBER 3, 2012

Poor Service PMI numbers from China/UK/Good ADP number but poor manufacturing additions/USA adds 93 billion to debt on day l of fiscal year/

Gold closed up today by $4.80 to $1777.30.  Silver rose 3 cents to $34.63.
As you all can see, the bankers have dug in their heels and are defending $1780 gold and 35.00 dollar silver.
There must be huge derivative consequences for the bankers at these levels as the fight is fierce. On the news front, I guess we can say that today was a snoozer as there was no real earth shaking reports.  China did report a poor service PMI report which confirms that this nation is having a tough time as it spirals into a recession.  They have huge numbers of workers coming into the major cities seeking work of which there is none and that will bother the higher echelon over there in Beijing.

Over on this side of the pond, the USA opened its first day of the new fiscal year with a huge 93 billion addition to debt.  It looks like we will reach debt ceiling around December 1st or so.
We have many stories to relay to you but first............................

Let us head over to the comex and assess trading today.

The total comex gold open interest fell by quite a bit today to the tune of 5,426.  The open interest for the gold complex rests tonight at 480,908 from yesterday's level of 486,334.  It is hard to say why the large fall as gold was not hurt too badly yesterday.  The active October gold contract month saw its OI fall by 2,654 contracts.  We did have 2696 delivery notices yesterday so we actually gained 42 additional gold contracts standing or 4200 oz.  It seems that Blythe is having difficulty convincing some longs into accepting cash settlements. The non active November contract saw its OI rise by 6 contracts from 1367 to 1373.   The all important December contract saw its OI fall from 351,295 to rest tonight at 348,559.  The estimated volume at the gold comex was quite weak at 123,793.  The confirmed volume yesterday was also very anemic at 125,475.The total silver comex still rests at very lofty levels.  The attempted raid yesterday saw a slight drop in OI to the tune of 1120 contracts from 140,237 to 139117.  The bankers were unsuccessful in their attempt to cause silver leaves to fall from the silver tree.  The non active October contract saw its OI fall from 320 to 316 for a loss of 4 contracts.  We had 15 notices filed yesterday so in essence we gained 11 additional silver contracts standing or an additional 55,000 oz.  The non active November contract saw its OI rise by 5 contracts to 44.  The big December contract saw its OI fall by 1359 contracts to rest tonight at 87,317.  The bankers are quite concerned over this very lofty OI for December.

* * * 

Yesterday, I reported the following:

"Today, we had a major activity inside the gold vaults today with respect to a
customer withdrawal of a massive 58,349.974 oz from JPMorgan."

Well it seems that the massive 58,349.974 oz withdrawal from JPMorgan landed as a deposit in a Scotia vault and note the slight variance in weight.

Customer deposit:  58,350.009 oz (Scotia)


Actually that was all the transactions inside the gold vaults as we had no dealer withdrawal nor did we have a dealer deposit.  We had no withdrawal by the customer and no adjustments.

Thus the dealer inventory rests tonight at 2.56 million oz

The CME notified us that we had 150 notices filed for 15000 oz of gold.  The total number of notices filed so far this month is represented by 6,375  or 637,500 oz of gold.  To obtain what is left to be served upon, I take the OI standing for October (857) and subtract out today's delivery notices (150) which leaves us with 707 or 70700 oz left to be served upon our longs.

Silver:

Again, we had fair activity inside the silver vaults today.

However we had no dealer deposit and no dealer withdrawal:

We had the following customer deposit:

i) Into JPM:  610,809.20 oz

We had the following customer withdrawal:

i) 25,000.36 out of Scotia.

we had no adjustments.
Thus the dealer inventory rests tonight at 41.426 million oz
The total of all silver rests at 143.434.


The CME notified us that we had 11 notices filed for 55,000 oz of silver.  The total number of notices filed so far this month is represented by 159 contracts or 795,000 oz.  To obtain what is left to be served upon, I take the OI standing for October (316) and subtract out today's delivery notices (11) which leaves us with 305 notices or 1,525,000 oz.

*  *  * 

gold , silver and other noteworthy items of the day...

Gold at critical price point, Arensberg says in Got Gold Report

Submitted by cpowell on Wed, 2012-10-03 02:14. Section: Daily Dispatches

10:13p ET Tuesday, October 2, 2012

Dear Friend of GATA and Gold:

Gold is at a critical price point, running into resistance that has held twice before, and the large commercial traders are now heavily short, Gene Arensberg says in the latest edition of the Got Gold Report. Still, Arensberg thinks that all big dips should be bought. The Got Gold Report is in audio format and posted in the clear here:

http://www.gotgoldreport.com/2012/10/video-got-gold-report-courtesy-rele...

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc

http://www.silverdoctors.com/massive-gold-short-squeeze-imminent/#more-14900

MASSIVE GOLD SHORT SQUEEZE IMMINENT??

OCTOBER 3, 2012 BY THE DOC 2 COMMENTS

By SD Contributor SRSrocco:

As we can see from the action in Sept 2011, right before gold went vertical, the commercial net short positions were at a peak.  But, when the price moved up it caused a HUGE SHORT SQUEEZE,  forcing the commercials to cover. 

Here we can see that the BULLS won the battle.  Presently, the gold price could go either way as we are seeing extreme high levels in the commercial net short positions. However, if we do see large buying coming in from the Hedge Funds and etc, it could cause a huge short squeeze, similar to what took place back in Sept 2011.

Well, it looks as if gold production from the Top 5 gold companies declined 5% in the first half of 2012 compared to the same period last year:

Barrick had less gold production due to less ore processed and GoldCorp was dealing with the drought in Mexico which cut back their production.  Regardless, it will be difficult for these top 5 miners to make up the shortfall in the second half of 2012… especially with 39% of the gold production offline in South Africa.

If global gold production increases in 2012, it will be due to increases in other countries and in smaller gold producers.  We shall see.

WHERE’S THE PRICE OF GOLD HEADING??

That’s a good question.  According to Clive Maund, both gold and silver are overbought and have extremely high COMMERCIAL NET SHORT POSITIONS:

Of course Clive is guilty of reading the gold and silver charts in a vacuum.   If we look at one of Gene Arensberg’s charts from GotGoldReport.com, we find that during the big move up in Gold in Sept 2011, the commercial net short position actually declined:

The Pink line denotes the gold price, while the Blue line is the COMMERCIAL NET SHORT.  As we can see from the action in Sept 2011, right before gold went vertical, the commercial net short positions were at a peak.  But, when the price moved up it caused a HUGE SHORT SQUEEZE,  forcing the commercials to cover. 

Here we can see that the BULLS won the battle.  Presently, the gold price could go either way as we are seeing extreme high levels in the commercial net short positions.  However, if we do see large buying coming in from the Hedge Funds and etc, it could cause a huge short squeeze, similar to what took place back in Sept 2011.

On-the-other-hand, if we do get a correction… it won’t be much.  Anyhow, we are in it for the long term.  We got Ben Bernanke on our side.

IS THE US MINT ON VACATION??

The last time the US Mint updated their gold and silver eagles sales was back on Tuesday, Sept 25th.  For some very odd reason, they haven’t even updated in the beginning of a new month.  This is very strange if you ask me.  I have never seen a new month come and go without an update either on the first or second day of the month.

I just contacted Michael White, PR spokesperson for the US Mint about the delay in updating their figures… all I got was an answering machine.  I left a message.  Maybe we may see an update here soon.

BATTLE IS ON AS CARTEL DEFENDS CRUCIAL $1780 & $35 LEVELS AGAIN ON COMEX OPEN

OCTOBER 3, 2012 BY THE DOC 15 COMMENTS

Gold had already cleared $1780, trading at $1783, and silver had traded to within pennies of $35 at today’s COMEX open, so to no one’s surprise, Blythe and her monkey’s immediately sprang into action on the COMEX open, defending the crucial levels as gold was knocked back under $1780 to $1775, and silver back to $34.65.
We have repeatedly discussed the importance to the cartel of $1780-$1800 gold and $35 silver, as once these levels are cleared lack of resistance will see gold run straight back to it’s all-time nominal high of $1915, and silver should make a $2.50 move to $37.50.

Today marks approximately the 95th time the cartel has defended $1780 and $35 over the past 2 weeks.

Unfortunately for the cartel, both metals are currently heading back for another challenge of $1780 and $35.  It is only a matter of time before the cartel defense is broken, and they are forced to retreat and set up their defenses again at a higher level.  There is simply too much physical gold and silver purchasing pressure at these levels currently.

[Read more...]

ROUBINI: COULD FRANCE BE NEXT TO FAIL?

OCTOBER 3, 2012 BY THE DOC 4 COMMENTS

Nouriel Roubini was on Bloomberg this morning discussing the issues with the Euro-zone.  Roubini stated that while right now Euros are rushing to the perceived safety of France, fundamentally France is no different than any of the other peripheral Euro nations which are failing.

We expect France will become the center of the crisis once Greece and Spain have completed the cycle, as focus must be kept off of the UK and the US.  Once France is fully engulfed in the debt crisis flames, then-and only then, attention will focus to the US and the UK, and the real crisis will begin.  The debt crisis will become F UK US PIIGS. [Read more...]

CARTEL’S 3 WEEK EFFORT TO CAP GOLD & SILVER PRICES ‘IS ABOUT TO BLOW UP IN THEIR FACES’

OCTOBER 2, 2012 BY THE DOC 8 COMMENTS

Our friend TF from TFMetalsReport.com has released an excellent update this afternoon regarding the persistent cartel capping we have been seeing near $1780 in gold, and $$34.50-$35 in silver over the past 3 weeks.
TF states the cartel’s effort to keep gold under $1800 (and subsequently preventing a gap up to the nominal high near $1915) and silver under $35 (and subsequently preventing a gap up in silver to $37.50) is ‘about to blow up in their faces‘.

TF states the price capping of gold and silver has become desperate as once $1800 is taken out in gold, Paper price is extremely vulnerable to a quick, $100+ move but the banks can’t jack the price lower because of the continuing, robust demand for physical in London

TF absolutely nails the current gold and silver price action, as both metals are getting ready to explode once the cartel caps are breached. [Read more...]