Gold and Silver news & views - December 6th.....

http://www.caseyresearch.com/gsd/edition/gold-morgan-stanley-buying-what-goldman-selling

On Gold: Morgan Stanley is Buying What Goldman is Selling

Dec

7

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

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"JPMorgan et al are riding shotgun over these markets every minute and hour of the day."

¤ YESTERDAY IN GOLD AND SILVER

The gold price didn't do much of anything during Far East and most of the London trading day on Thursday, as it sort of wandered around aimlessly within a ten dollar trading range below Wednesday's New York close.
However, a rally of some substance began to materialize about 8:40 a.m. Eastern time...about twenty minutes after the Comex open.  The fun ended at the London close at 4:00 p.m. GMT...11:00 a.m. Eastern time.  From there it more or less traded sideways into the close of electronic trading.
Gold's low and high ticks, which are obvious on the chart below, were $1,684.90 and $1,704.40 spot.
Gold finished the Thursday session at $1,700.00 spot right on the button...up $5.70 from Wednesday.  Net volume was pretty decent...around 140,000 contracts.

The silver price traded down about a percent by mid-afternoon in Hong Kong...before rallying back to almost unchanged by 11:00 a.m. in London.  From there it got sold off once again, with the low price tick [$32.46 spot] coming at the same as time as the low tick in gold...8:40 a.m. in New York.
The subsequent rally lasted until the same 11:00 a.m. Eastern time...$33.38 spot...and that proved to be silver's high tick of the day.  Then it got sold off until noon, before trading sideways into the close.
Silver closed at $33.03 spot...up a whole 12 cents.  Volume was pretty decent...around 41,500 contracts.

The dollar index closed on Wednesday at 79.82...and then traded a hair lower up until 8:00 a.m. in New York.  The subsequent rally took the index back up to around the 80.30 mark...and it hung around that number for the rest of the Thursday session...closing at 80.25.
There was little co-relation between the precious metal prices and the dollar index at all yesterday...especially considering the fact that gold and silver rallied together with the dollar index during the New York morning session.  I'm sure that had something to do with bad new on the euro front.

*  *  * 

The CME's Daily Delivery Report showed that 53 gold and 156 silver contracts were posted for delivery on Monday within the Comex-approved depositories. The biggest short/issuer in gold was Jefferies with 50 contracts...and JPM and the Bank of Nova Scotia were the largest long/stoppers.  It was the same in silver as Jefferies and JPM were the two biggest short/issuers [149 contracts] and JPM and the Bank of N.S. were the biggest long/stoppers.  The link to that activity is here.
There were no reported changes in GLD yesterday...but a rather chunky 1,258,182 troy ounces of silver were deposited in SLV by an authorized participant.
The U.S. Mint had its third sales report in a row yesterday.  They sold 4,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 25,000 silver eagles.
Over at the Comex-approved depositories on Tuesday, they reported receiving 614,504 ounces of silver...and shipped 452,643 ounces of the stuff out the door.  The link to that activity is here.
Here are a couple of very interesting charts that Nick Laird sent my way yesterday evening...and they're definitely worth sharing.  Neither needs any further embellishment from me.  All comments regarding these charts should be directed at Nick...not me.

and selected news items....

Wall Street Job Reductions Seen Persisting After Citigroup Cuts

Wall Street’s cost cuts and dismissals, which have helped erase more than 300,000 financial- industry jobs in the past two years, are far from over.
Citigroup Inc.’s announcement yesterday of plans to eliminate 11,000 positions in units spanning equities trading to consumer banking is the latest sign of strain from a market slowdown, stiffer capital rules and weak economic growth. Lenders around the globe are likely to trim more jobs if revenue doesn’t rebound sharply next year, analysts and recruiters said.
“The knives are sharpened and ready,” said Jason Kennedy, chief executive officer of London-based search firm Kennedy Group. “These institutions are too big for the business they are generating but they are still quite bullish that the market will return by mid-2013. Unless the markets picks up, there will be more cuts in the first half.”
This Bloomberg story from early Wednesday evening Mountain time is worth reading...and I borrowed it from yesterday's edition of the King Report.  The link is here.

ECB mulls negative rates as Europe's economic crisis deepens

The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar.
Mario Draghi, the ECB’s president, said the governing council had discussed a cut in overnight deposit rate to below zero for the first time, and was "operationally ready" to do so if needed.
The comment sent the euro into a nosedive, dropping from $1.3075 to $1.2950 in just two hours. "A negative deposit rate is the mother of all sell signals for a currency," said Hans Redeker, currency chief at Morgan Stanley.
"You only do it if your purpose is to drive down the exchange rate to help exports. We know from Japan’s experience that you lose control of monetary policy if you go that route. We don’t think it will happen because the cost is too high, so we expect the euro to rebound."
This Ambrose Evans Pritchard commentary was posted on the telegraph.co.ukInternet site early yesterday evening...and it's certainly worth reading.  I thank Ulrike Marx for her second offering in today's column...and the link ishere.

Two King World News Blogs

The first blog is with Citi analyst Tom Fitzpatrick...and it's headlined "Despite Choppiness, Gold to Have Massive Breakout in 2013".  The second is with Ben Davies.  It's entitled "Gold Shorts Are Now Exposed to a Price Spike".

On Gold; Morgan Stanley Is Buying What Goldman Is Selling

Just yesterday, Goldman Sachs suggested its clients should sell their gold (to them?) as the precious metal cycle had turned. It seems Morgan Stanley disagrees; the firm's preferred fundamental metal exposure for 2013 is Gold.
Expecting Silver to outperform also (given its 'cheaper' store of value), MS believes nothing has changed on the fundamental thesis for owning gold as the adoption of QE 3 (and 4...) and the ECB's commitments (and BoJ) remain the most important factors for a continuation of weakness in the TWI trend for the US Dollar.
They also add that low nominal and negative real interest rates, ongoing geopolitical risk in the Middle East and continued mine supply issues are also supportive.
The analysts at Morgan Stanley have a keep grasp of the obvious.  This Zero Hedge story was posted on their Internet site yesterday afternoon...and I thank reader U.D. for being the first through the door with it.  The link is here.

*   *   * 

¤ THE WRAP

The highbrows are also scared...and that's the way it should be.  They should be more afraid than all us regular folk put together.  We don't understand a thing...and they understand how much we don't.  They look into the bottomless pit and know that it's inevitable. They  must go down into it. Their hearts catch, but they must go down...and descend they do. But how? And what will they find at the bottom...and most important, will they be able to climb out? - Arkadi and Boris Strugatskii...Roadside Picnic [1972]
One has to wonder how high the prices of all four precious metals would have climbed if left to their own devices once London closed for the day at 11:00 a.m. Eastern time yesterday.  A lot more, would have been my guess.  It should be obvious to just about everyone now that JPMorgan et al are riding shotgun over these markets every minute and hour of the day.
I have nothing much to add to what I said yesterday in this space. Except for palladium, which is now in overbought territory, the other three precious metals are below their respective 50-day moving averages...and it's still a big unknown whether "da boyz" will be gunning for the 200-day moving averages between now and the new year.
This afternoon at 3:30 p.m. sharp, we'll get both the Commitment of Traders Report and the December Bank Participation Report...and it will be interesting to see how much short covering that the Commercial traders [read bullion banks] have been able to achieve during the reporting week, which ended at the Comex close on Tuesday.  Whatever the numbers are, I'll have them in tomorrow's column.
There wasn't a lot of price action during the Friday trading session in the Far East.  Gold and silver prices rose a bit until lunchtime was over in Hong Kong...and then got sold back to just about unchanged by the London open.  London has been open for more than two hours since I wrote that last sentence...and both metals are now slightly below their closing prices in New York on Thursday.  Volumes are pretty light, so I wouldn't read much into the price action.  The dollar index, which had been flat through almost all of Far East trading, ticked up shortly before 3:30 p.m. Hong Kong time...about half an hour before the London open...and is now up about 13 basis points from Thursday's close as I hit the 'send' button at 5:15 a.m. Eastern time.

Today is Friday, December 7th...the 71st anniversary of the Japanese attack on Pearl Harbor...and I'm hoping the JPMorgan et al don't use this occasion to bomb the precious metal markets in New York in remembrance.
I don't want to end yet another column on a gloomy note, so here's a 35-secondyoutube.com video clip to lighten things up a little.  I thank my friend Stan Connolly for sending it along last evening...and the link is here.
Enjoy your weekend, or what's left of it...and I'll see you here tomorrow.

and....






http://www.silverdoctors.com/cftc-files-charges-against-12-firms-for-selling-phantom-paper-gold-silver/#more-18375

CFTC FILES CHARGES AGAINST 12 FIRMS FOR SELLING PHANTOM (PAPER) GOLD & SILVER

DECEMBER 6, 2012 BY THE DOC 2 COMMENTS

The CFTC has filed a civil injunctive enforcement action in US District Court against 12 commodities firms for allegedly selling phantom precious metals to clients.  The CFTC complaint states that:  The defendants claim to sell physical metals, including gold, silver, platinum, palladium, and copper, to retail customers in retail commodity transactions. Under the defendants’ retail commodity transactions investment contract, customers allegedly make a down payment on certain quantities of physical metals, usually 25 percent of the total purchase price. Defendants allegedly claim to arrange loans for the balance of the purchase price, and advise customers that their physical metals will be stored in a secure depository.

The complaint further alleges that these statements were false, and that the defendants do not purchase any physical metals, arrange loans for their customers to purchase physical metals, or arrange for storage of physical metals for any customers participating in their retail commodity transactions. Instead, all the transactions are just paper transactions.

Sounds remarkably like the COMEX.

The Consumer Fraud Advisory further cautioned consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.

Ah, it is remarkably like the COMEX, except the 12 firms charged are not a part of the good ole boys club.

From the CFTC:

CFTC Charges Hunter Wise Commodities, Lloyds Commodities, C.D. Hopkins Financial, United States Capital Trust, Newbridge Alliance, Blackstone Metals Group, and their Principals in Multi-Million Dollar Fraudulent Precious Metals Scheme
CFTC alleges that defendants conducted illegal, off-exchange commodity transactions, and deceived customers in connection with financed transactions in precious metals

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on December 5, 2012, it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Hunter Wise Commodities, LLC; Hunter Wise Services, LLC; Hunter Wise Credit, LLC; Hunter Wise Trading, LLC; Lloyds Commodities, LLC; Lloyds Commodities Credit Company, LLC; Lloyds Services, LLC; C.D. Hopkins Financial, LLC; Hard Asset Lending Group, LLC; Blackstone Metals Group, LLC; Newbridge Alliance, Inc.; United States Capital Trust, LLC; Harold Edward Martin, Jr.; Fred Jager; James Burbage; Frank Gaudino; Baris Keser; Chadewick Hopkins; John King; and David A. Moore. The complaint charges these entities and individuals with fraudulently marketing illegal, off-exchange retail commodity contracts. The complaint alleges that Hunter Wise Commodities, the orchestrator of the fraud, has taken in at least $46 million in customer funds since July 2011.

According to the CFTC complaint, the defendants claim to sell physical metals, including gold, silver, platinum, palladium, and copper, to retail customers in retail commodity transactions. Under the defendants’ retail commodity transactions investment contract, customers allegedly make a down payment on certain quantities of physical metals, usually 25 percent of the total purchase price. Defendants allegedly claim to arrange loans for the balance of the purchase price, and advise customers that their physical metals will be stored in a secure depository.

The complaint further alleges that these statements were false, and that the defendants do not purchase any physical metals, arrange loans for their customers to purchase physical metals, or arrange for storage of physical metals for any customers participating in their retail commodity transactions. Instead, all the transactions are just paper transactions, according to the complaint. Defendants allegedly do not own or sell metals to customers; customers are charged storage and insurance fees on metals that do not exist; and are charged interest on loans, which are never made by the defendants.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 expanded the CFTC’s jurisdiction over transactions like these, and requires that such transactions be executed on or subject to the rules of a board of trade, exchange or commodity market, according to the complaint. This new requirement took effect on July 16, 2011. The complaint alleges that all of the defendants’ financed commodity transactions after July 16, 2011, were illegal. The complaint also alleges that the defendants defrauded customers in all of these financed commodity transactions.

David Meister, the CFTC’s Director of Enforcement stated: “Here is a prime example of how the Dodd-Frank Act provided the Commission with additional strong authority to go after wrong-doers, such as, as alleged in the complaint, individuals who prey on people looking to make retail investments in commodities like gold and silver. We will use this new authority to the fullest extent possible.”

In January 2012 the CFTC issued a Consumer Fraud Advisory (see Advisory under Related Links) regarding precious metals fraud, saying that it had seen an increase in the number of companies offering customers the opportunity to buy or invest in precious metals. The CFTC’s Consumer Fraud Advisory specifically warned that frequently companies do not purchase any physical metals for the customer, instead simply keeping the customer’s funds. The Consumer Fraud Advisory further cautioned consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.

In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief, including restitution to customers.

The CFTC thanks the Florida Office of Financial Regulation, the Florida Department of Agriculture and Consumer Services, and the United Kingdom Financial Services Authority for their assistance.

The CFTC Division of Enforcement staff responsible for this action are Carlin Metzger, Joseph Konizeski, Heather Johnson, Stephanie Reinhart, Jennifer Smiley, Judith McCorkle, Jeff LeRiche, Peter Riggs, Jennifer Chapin, Steven Turley, Brigitte Weyls, Joseph Patrick, Susan Gradman, Theodore Glotfelty, William Janulis, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

and.........

GOLD & SILVER REGAIN $1700 & $33 ON 10 TON PHYSICAL GOLD ORDER

DECEMBER 6, 2012 BY THE DOC 13 COMMENTS

After being treated to the standard COMEX open waterfalls that saw gold smashed as low as $1684 and silver under $32.50, both metals made a vertical move to the upside around 10am EST. 
Gold cleared $1700 trading as high as $1704, and silver is back above $33, reaching $33.38.

The impetus for the move appears to be a massive physical gold buy order in the range of 10 metric tons.  

We can also confirm that SDBullion was in fact approached Wednesday by a UK hedge fund manger seeking the acquisition of 20 metric tons of gold in good delivery bar form, which had been physically tested for purity above .9995 within the past 5 years.
The fact that a London fund manager has resorted to contacting US retail bullion dealers in attempt to fill a 20 ton gold order speaks volumes to the availability of physical gold (or lack thereof) for delivery in London and the extreme tightness in the physical market.

Silver’s strong move through $33:

Gold has regained the critical $1700 level, after seeing massive buying on the dip to $1684:

The worst of the 3 day sell-off appears to be over, as silver and gold appear to have at least temporarily bottomed at $32.50 and $1684.  
We won’t be out of the woods until Friday’s NFP has passed, as the NFP release has traditionally been one of the cartel’s favorite times to raid the metals. 

and......

NEARLY 3/4 MILLION SILVER EAGLES, 20,000 GOLD EAGLES SOLD FIRST 3 BUSINESS DAYS OF DECEMBER!

DECEMBER 6, 2012 BY THE DOC 11 COMMENTS

The US Mint has updated its December sales totals, and not surprisingly, both gold and silver sales are extremely strong, with 728,000 silver eagles, and 19,500 oz of gold eagles sold through the first 3 business days of December!
This compares to 2.009 million silver eagles, and 65,500 gold eagles sold for the entire month of December 2011!

It’s no wonder the paper futures price continues to correct with no one buying any physical metal! (sarc off) [Read more...]

and....

http://www.gata.org/node/12000

Downside manipulation in gold gets noticed in Dubai

Submitted by cpowell on Thu, 2012-12-06 16:12. Section: Daily Dispatches

Will Gold Sink to $1,650 as 'Mystery Sellers' Dump Yellow Metal?

By Vicky Kapur
Emirates 24/7, Dubai
Thursday, December 6, 2012

http://www.emirates247.com/markets/gold/will-gold-sink-to-1-650-as-myste...

Spot gold prices tumbled to a near 30-day low of $1,687 a troy ounce Thursday morning, down $63 per ounce from last week's high of $1,750 per ounce as rumours of a mystery seller unwinding a major hedged position gained currency.

"We're actually seeing a fairly mysterious seller in the Asian time zone over the last week on two occasions," said Jeff Rhodes, CEO of the Dubai-based INTL Commodities.

According to Rhodes, the "mystery seller" times his deals in the "twilight period," or after the London market closes and just before the Asian markets really get going, when the trading is thin. "We've seen some fairly large sell orders hit the market in this twilight zone," he told the Dubai Eye 103.8 radio station.

The large sell orders in a thinly traded market have had "quite an impact," says Rhodes, with gold plunging from $1,750 to just above $1,690. "It's mysterious. I can't explain it," he says. "It's almost as though there is a speculator or speculators who are just trying to trigger a technical move to the downside," Rhodes maintains.

The yellow metal continued to edge down on Thursday, holding near a one-month low of $1,684 that it made yesterday, as a stronger dollar kept the pressure on precious metals in general.

While physical bargain buying was evident in Asian markets, thin volumes failed to make any positive impact on gold prices and the metal remains in a short downtrend that analysts are partly blaming on the stalemate in "fiscal cliff" negotiations in the United States.

The large mystery sell orders aimed at triggering a downside move in prices may be "a prelude to buying gold," Rhodes says. "I don't know, but there are definitely some funny games going on at the moment," he suggests, and adds that he thinks these games will continue through year-end.

If indeed the mystery sales continue for another couple of weeks as Rhodes suggests, gold prices are in for further downside, perhaps inching toward the $1,650/oz mark. "It's going to be an interesting market for the next three weeks," Rhodes reckons, as his experience shows that this is the thinnest period of the year.

"Many players are closing their books for the year -- they've either made what they've made for the year or they've lost and don't want to lose anymore. ... Either way, they take to the sidelines and that results in exactly the kind of market conditions where you see erratic price movements."

Nevertheless, on Wednesday Goldman Sachs cut its 2013 gold forecasts and said gold's current bullish price cycle could take a U-turn next year as a rise in real interest rates on the back of improved growth offsets any further balance sheet expansion from the Federal Reserve.

Goldman cut its three-, six-, and 12-month forecasts for gold prices to $1,825/oz, $1,805/oz, and $1,800/oz, respectively.

The investment bank also introduced a 2014 forecast of $1,750 an ounce, suggesting price growth could tail off.

and....

http://harveyorgan.blogspot.com/2012/12/europe-has-gdp-contractionitaly-set-to.html


*   *   * 

Good evening Ladies and Gentlemen:

Gold closed up $7.10 to $1700.30.  Silver rose by 16 cents to $33.04.

Gold was languishing throughout the European session until this hit the wires:


08:42 ECB cuts 2012-13 GDP forecast -- press conference
GDP:
2012 GDP forecast cut to (0.6%)-(0.4%) vs. prior (0.6%) to (0.2%)
2013 GDP guided to (0.9%) to +0.3% vs. prior (0.4%) to +1.4%
2014 GDP forecast initiated at +0.2% to +2.2%
HICP:
2012 guided to +2.5%
2013 revised to +1.1% to +2.1% vs. prior +1.3% to +2.5%
2014 forecast initiated +0.6% to +2.2% * * * * *


gold and silver never looked back.  What is really encouraging is that gold and silver rose despite the huge drop in the Euro.

In the news today from Europe, it looks like Italy is ready to jettison Mario Monti. That news sent the Euro/USA cross plummeting.  The GDP forecast drop plus the Italian news set the tone in Europe today.
I hope you caught the big news on the 12 billion euros of  losses that Deutsche bank hid in 2008-2009.

What is interesting in this story is the fact that 3 individuals wrote to the SEC separately on this very issue and these individuals never told the other two what they were doing.  The SEC, of course, did nothing.
The head of compliance at the SEC was an alumni of Deutsche Bank who was still receiving remuneration.
Talk about conflicts of interest.  The loss was so great, that it should have brought down Deutsche Bank in a similar fashion to what happened to Lehman Brothers.

In the USA the jobless rate (unadjusted) rose by 140,000 even though the adjusted claims fell.


let us head over to the comex and assess damage today.

The total comex gold OI fell by 5,898 contracts from 434,416 down to 428,518.
It sure looks like many investors are fleeing the paper arena.  The active December contract saw it's OI fall by 1247 contracts from 2047 down to 800.  We had 329 contracts served yesterday so we lost a monstrous 918 contracts or 91,800 oz of gold standing in December. No doubt we probably had massive cash settlements as Blythe was giving away bonus fiat.  The non active January contract saw it's OI rise 44 contracts up to 1125.  The next big active contract is February and here the OI fell by 7,115 contracts from 285,649 down to 278,534.  The estimated volume at the gold comex today came in at a lame 140,001 contracts.
The confirmed volume yesterday was also lame at 169,174 contracts. It sure looks like investors have caught on to the crooked antics of the bankers as they shun the comex.


The total silver comex OI fell considerably, down 815 contracts from 141,738 down to 140,923.  The active December contract saw it's OI rise from 681 up to 718 for a gain of 37 contracts.  We had 79 notices filed yesterday so we gained 116 contracts or 580,000 oz of silver standing.  The non active January contract saw it's OI rise 4 contracts up to 553.  The next big contract month is March and here the OI fell  from 86,640 down to 85,399.  The estimated volume today came in at 39,132 which is fair.  The confirmed volume yesterday was also at 42,720 contracts.

Comex gold figures 
Dec 6.2012    The  December contract month

Today, we  had  tiny activity  inside the gold vaults which is strange for a big delivery month.

The dealer had 1 deposit  and no   withdrawals.

Dealer deposit into Brinks:  4999.76 oz

We had 2 customer deposits:

i) Into Brinks: 932.35  oz
ii) Into Scotia:  1060.95 oz

total customer deposit:  1,993.3 oz
we had 0 customer withdrawal:

Adjustments:  0:

Thus the dealer inventory rests tonight at 2.607 million oz (80.93) tonnes of gold.

The CME reported that we had 64 notices  filed  for 6,400 oz of gold. The total number of notices filed so far this month is thus 2401 notices or 240,100 oz of gold. To obtain what will stand for December, we take the open interest standing for December (800) and subtract out today's notices (64) which leaves us with 736 contracts or 73,600 oz of gold.

Thus the total number of gold ounces standing for delivery in December  is as follows:

240,100 oz (served)  + 73,600 oz (to be served upon)  =  313,700 oz  (9.75 tonnes of gold).

we lost 91,800 oz of gold standing which is huge and it sure looks like we had some major cash settlements yesterday.

Silver:

Dec 6.2012:   The December silver contract month

Today, we had huge activity inside the silver vaults.
Please note the difference between the gold vaults and the silver vaults.

 we had no dealer deposits and no  dealer withdrawals:

We had 2 customer deposits of silver:


i) Into Brinks:  14,001.1 oz

ii  Into Scotia:  600,503.45 oz

total customer deposit:  614,504.55 oz

we had 2 customer withdrawal:

i) out of Brinks: 993.55 oz
iii) out of Scotia;  451,649.48 oz

total customer withdrawal:
452,643.03 oz

we had 2 huge adjustments:

 i)  Out of CNT:  381,055.000 oz another perfectly round number.  The silver
left the customer account and landed in the dealer account.
 ii) Out of Scotia: 261,971.20. landed in the dealer account from the customer account.

Registered silver remains today at :  39.836 million oz

total of all silver:  145.29  million oz.

now we still await the deliveries which should subtract out of the dealer accounts.  

The CME reported that we had 60 notices filed for 300,000 oz. 

To determine the number of silver ounces standing for December, I take the OI standing for December  (718) and subtract out today's notices (60) which leaves us with 658 notices left to be filed or 3,290,000 ounces .
Thus the total number of silver ounces standing in this  active month of December is as follows:

9,835,000 oz (served) + 3,290,000 (oz to be served upon)  =  13,125,000 oz
we gained 580,000 additional ounces of silver  today.

*   *   *