http://www.caseyresearch.com/gsd/edition/the-gold-standard-wasnt-so-bad/
¤ YESTERDAY IN GOLD & SILVER
As I mentioned in my closing comments in yesterday's column, the high-frequency traders showed up around 9:00 a.m. Hong Kong time on their Wednesday morning...and dropped the price a bit over ten bucks in short order. From there, the gold price more or less traded flat until the London open.
The smallish rally in London lasted until shortly after the p.m. gold fix, before the high-frequency traders showed up once again. By 1:15 p.m. Eastern time...fifteen minutes before the Comex close...they had engineered enough tech fund selling to drop the gold price to its low tick of the day, which Kitco recorded at $1,549.10 spot.
The subsequent rally died around 4:00 p.m. in electronic trading...and the price traded flat into the close.
Gold finished the Wednesday session at $1,557.90 spot...down another $18.30 from Tuesday. Net volume was immense...around 222,000 contracts.
It was slightly different in silver, as the price quietly began to slide almost right from the Far East open, with an interim low coming moments before the London open. After that, the chart looked almost identical to the gold chart...with the absolute low tick in silver [$26.64 spot] coming at 1:10 p.m...five minutes before gold hit its low.
Silver closed at $26.98 spot...down 28 cents from Tuesday's close. Net volume was pretty heavy...around 52,500 contracts, give or take.
For whatever reason, the lows on Wednesday in both gold and silver came at precisely the same moments as they did on Tuesday, which is not possible in a free market. These phenomena are even more obvious on the New York Spot [Bid] charts for both metals.
Up until about lunchtime in New York yesterday, neither platinum nor palladium were doing much price wise...and both were down a few dollar and that was about it. Then a not-for-profit seller/high-frequency trader showed up and hauled them down by brute force. The charts tell all.
When all was said and done on Wednesday, gold closed down 1.16%...silver was down 1.03%...and platinum and palladium were down 2.42% and 1.83% respectively.
The dollar index opened at 82.88 in Far East trading yesterday...and it's high tick of the day [83.06] came a exactly 1:30 p.m. Hong Kong time. From there it chopped lower, with its nadir [82.65] coming shortly after 10:00 a.m. Eastern time...corresponding almost exactly with the London p.m. gold fix. From there it rallied a handful of basis points into the close, finishing the Wednesday trading session at 82.75...down 13 basis points from where it started the day.
The CME's Daily Delivery Report showed that 1,455 gold and 11 silver contracts were posted for delivery within the Comex-approved depositories on Friday. Deutsche Bank...and JPMorgan Chase out of its client account...were the two big short/issuers yesterday with 992 and 460 contracts respectively. The three largest long/stoppers were HSBC USA with 745 contracts...Barclays with 474...and Canada's Bank of Nova Scotia with 210 contracts. In short, it was "all the usual suspects"...five of the 'Big 8' all in one report. The link to yesterday's Issuers and Stoppers Report is here.
There was another reported decline in GLD yesterday, as an authorized participant withdrew 87,064 troy ounces. SLV showed a withdrawal of 826,225 troy ounces, which wasn't reported on their website until about midnight last night Eastern time. I didn't discover this fact until long after I'd filed my column this a.m...and because of that, I had to change the paragraph below.
In the last seven or eight business days, silver has been smacked for about three bucks...and during that period, SLV has only declined by 300,000 ounces or so. I'd love to be a fly on the wall over there just to get a quick peek at what is going on internally in that ETF. I'm sure that what I'd see would be amazing...as what is happening there is as far from normal as you can possibly get.
There was another sales report from the U.S. Mint yesterday. They sold 8,500 ounces of gold eagles...and 1,500 one-ounce 24K gold buffaloes.
Over at the Comex-approved depositories on Tuesday, the didn't receive any silver at all...but they did ship 238,735 troy ounces of the stuff out the door. The link to that activity is here.
Here's a chart of JPMorgan Chase's Comex silver inventories. They started at zero in late April 2011...less than a week before the drive-by shooting in silver on May 1st...and look where they were as of April 1st this year. You have to wonder who the real owners of all this silver might be. Is it the company itself...or its clients?
(Click on image to enlarge)
And here's a chart of total Comex silver stocks going back a bit over ten years. A goodly portion of the rise in warehouse stocks since late April of 2011...more than 50 percent, actually...can be attributed to the silver pouring into the newly established JPMorgan depository that opened up at that time.
(Click on image to enlarge)
* * *
Doug Casey: All Banks Are Bankrupt
L: Doug, there is considerable disagreement over the significance of the Cyprus crisis. A lot of people are saying that it's just a flash in the pan; Cyprus is a small country, far off, and doesn't really matter. Other people are saying it's very significant. The European Central Bank took unprecedented steps. What do you think?
Doug: I think this could be the spark that ignites the keg of dynamite under the current financial system. All banks, all around the world, are bankrupt, and have been for years. That's because all the world's banks run on a fractional reserve basis.
Yesterday's edition of Conversations with Casey is definitely worth your time.
Dr. Marc Faber: What Happened In Cyprus Will Happen Everywhere
Growing wealth inequality means that the wealthy have nowhere to hide and that events like those in Cyprus will happen in more countries around the world, including developed nations, said Marc Faber, the contrarian investor and publisher of the Gloom, Boom & Doom Report.
"It will happen everywhere in the world, in Western democracies," Faber said on "Squawk on the Street" on Tuesday. "You have more people that vote for a living than work for a living. I think you have to be prepared to lose 20 to 30 percent. I think you're lucky if you don't lose your life."
"If you look at what happened in Cyprus, basically people with money will lose part of their wealth, either through expropriation or higher taxation," he added.
"The problem is that 92 percent of financial wealth is owned by 5 percent of the population.
This CNBC video clip from late Tuesday morning runs for 6:31 minutes...and there's also a tiny transcript posted below it. I thank reader Ken Hurt for sending it.
Canadian Government Looking at 'Cyprus Solution' for Canada's Big Banks
Buried deep in last month's federal budget is an ambiguously worded section that has roiled parts of the financial world but has so far been largely ignored by the mainstream media.
It boils down to this: Ottawa is contemplating the possibility of a Canadian bank failure — and the same sort of pitiless prescription that was just imposed in Cyprus.
Meaning no bailout by taxpayers, but rather a "bail-in" that would force the bank's creditors to absorb the staggering losses that such an event would inevitably entail.
If that sounds sobering, it should. While officials in Ottawa are playing down the possibility of a raid on the bank accounts of ordinary Canadians, they chose not to include that guarantee in the budget language.
This story finally went main stream in Canada yesterday, as this most excellent commentary was posted on the CBC website in the wee hours of yesterday morning. I sent my Member of Parliament [who I've known personally for years] a copy of it...and I'll be discussing it with him face-to-face on April 13th...along with the letter I sent him on this issue on Monday. I thank reader Henry Federau for bringing this news item to our attention.
Ambrose Evans-Pritchard: Helicopter Q.E. will never be reversed
Readers of the Daily Telegraph were right all along. Quantitative easing will never be reversed. It is not liquidity management as claimed so vehemently at the outset. It really is the same as printing money.
Columbia Professor Michael Woodford, the world's most closely followed monetary theorist, says it is time to come clean and state openly that bond purchases are forever, and the sooner people understand this the better.
"All this talk of exit strategies is deeply negative," he told a London Business School seminar on the merits of Helicopter money, or "overt monetary financing".
"If we are going to scare the horses, let's scare them properly. Let's go further and eliminate government debt on the bloated balance sheet of central banks," he said. This could done with a flick of the fingers. The debt would vanish.
Lord Turner, head of the now defunct Financial Services Authority, made the point more delicately. "We must tell people that if necessary, QE will turn out to be permanent."
As Richard Russell so eloquently put it many years ago before anyone ever heard of Q.E..."the world's central banks have only one option...print, or die!" And that dear reader, is precisely where we're at. This AE-P offering was posted on the telegraph.co.uk Internet site yesterday evening BST...and I thank Manitoba reader Ulrike Marx for sending it. It's a must read for sure.
Portuguese government survives no-confidence vote
The motion was defeated by the ruling coalition, which enjoys a comfortable majority, but the move exposes growing dissent over the austerity policies imposed on Portugal since it received a €78bn international bailout agreed in May 2011.
"The time has come to put an end to the austerity policies that are impoverishing our country and demand heavy sacrifices from the Portuguese people without them seeing any results," the Socialist Party said in a motion prior to the vote.
The Socialists were in power when Lisbon sought the bailout but they now accuse Prime Minister Pedro Passos Coelho's government of an "excess of austerity", which they blame for worsening the recession and unemployment.
According to official forecasts, the Portuguese economy will shrink by 2.3pc this year and the unemployment rate, now at 16.9pc, will climb to 18.2pc.
This is another story from The Telegraph yesterday evening BST...and I thank Roy Stephens for this one.
IMF sets terms of Cyprus bailout
The International Monetary Fund has demanded that Cyprus cut state pension costs and reform its welfare system as the price of a €1bn (£854m) loan to help bail out the stricken island.
The IMF's managing director, Christine Lagarde, said the poorest Cypriots would be protected from the worst of the cuts, but Cyprus must press ahead with measures to bring its annual state budget into surplus by 2018.
The deal, agreed in principle by the Cypriot government, provoked an immediate reaction from trade unions, which called on bank workers to strike over potential pension cuts. Officials from the Cyprus Union of Bank Employees called on bank staff in Nicosia to walk off their jobs at lunchtime on Thursday, and gather in a protest march towards the parliament.
Underlining the sense of panic, the Cypriot central bank was reportedly preparing to extend capital controls to prevent a run on the banks despite previously lifting some more draconian elements earlier in the week.
Capital controls in Cyprus will become a permanent fixture, because the moment they are relaxed, the money will vanish and leave the island a bigger smouldering ruin than it already is. This article was posted on the guardian.co.ukInternet site at 6:00 p.m. BST yesterday evening...and it's another offering from Roy Stephens.
Tallest Skyscraper In Chechnya Engulfed By Huge Fire
A 475-foot tall skyscraper in Chechen capital of Grozny caught fire Wednesday, according to multiple reports.
Russia Today reported the 40-story-high Olympus Tower in the Grozny City complex is the tallest building in Chechnya, and the tallest in South Caucasus region. Another 65-story building in the same complex will be the tallest Russian building outside of Moscow when it is completed.
The building houses apartments and a five-star hotel, identified by Radio Free Europe/Radio Liberty as the Olimp Hotel. All people inside the building have been evacuated and Ria Novosti reports that none of the evacuees needed medical treatment.
There are a couple of excellent pictures...plus a few embedded videos as well. This Russia Today story was posted on the businessinsider.com Internet site late yesterday morning Eastern Time...and it's also courtesy of Roy Stephens.
Bank of Japan Doubles Bond Purchases in Kuroda’s First Salvo
Bank of Japan Governor Haruhiko Kuroda began his campaign to end 15 years of falling prices by doubling monthly bond purchases in a bid to reach 2 percent inflation in two years.
With Kuroda presiding over his first meeting, the board today temporarily suspended a cap on some bond holdings and dropped a limit on the maturities of debt it buys. The BOJ will purchase 7 trillion yen ($74 billion) of bonds a month along with more risk assets, the central bank said in Tokyo.
Stocks surged and the yen weakened, signaling Kuroda is winning investors’ confidence as he targets a doubling of the monetary base over two years to revive the world’s third-biggest economy. The central bank set a two-year horizon for achieving the price goal under a “new phase of monetary easing,” as the new governor won the support of a board mostly appointed by the previous government.
It's print, or die...Japan style! This Bloomberg story was posted on their website just minutes after midnight this morning...and I thank Ulrike Marx for finding it for us.
Four King World News Blogs/Audio Interviews
The first blog is with Louise Yamada...and it's headlined "Cyprus, Key Chart Plus Gold and Silver Commentary". Next comes two interviews with Dr. Paul Craig Roberts. The first is headlined "Former U.S. Treasury Official - Fed Desperate to Save System"...and the second is entitled "The Fed is Facing a Wipeout". The audio interview is with Dr. Stephen Leeb.
The Gold Standard Wasn't So Bad
David Stockman, a former Republican congressman and director of the Office of Management and Budget, has been receiving a lot of criticism for his apocalyptic take on the state of American capitalism. Some of the critiques are justified, but others go too far. It is incorrect to describe the U.S. under the classical gold standard (roughly 1870 to 1913) as a "dystopia," as Matt O'Brien did in the Atlantic. Even if you think that the gold standard would be inappropriate right now, the data do not indicate that it was obviously inappropriate then.
Academics have investigated this before. Christina Romer, a Berkeley professor and former adviser to President Barack Obama, wrote the go-to paper in 1999. She found that "real macroeconomic indicators have not become dramatically more stable between the pre-World War I and post-World War II eras." In other words, even if you exclude the Great Depression and the recent crisis, the classical gold standard didn't make the economy more volatile.
The gold standard wasn't bad for growth, either. The most reliable information comes from an annual index of industrial production from 1790 to 1915. We can compare that index against the monthly industrial production data collected by the Federal Reserve since 1919 to get a sense of how rapidly the economy grew under different monetary arrangements. It turns out that industrial production grew much more rapidly under the gold standard than in the years since. This doesn't change even if you exclude the world wars and the Great Depression.
This commentary was posted on the Bloomberg website late yesterday morning Mountain Time...and I consider it a must read. I thank Roy Stephens for his final offering in today's column.
¤ THE WRAP
If you need a "yardstick" of present Gold "prices" as they appear on the markets for paper claims to Gold, consider this. In January 1980, Gold reached a "price" of $US 850. Today, Gold is "priced" at less than twice that level at $US 1595. Yet over the intervening thirty-three and a bit years, the debt of the US Treasury has risen by a factor of more than 17. That huge increase in money creation is faithfully reflected on the markets for paper assets. The Dow, for example reflects it almost exactly. The paper Gold price does not even approach it.
Nor do we know if the Gold "price" ever will approach an accurate reflection of the degree of monetary debauchery which has gone on since 1980. But we do know that it is impossible to inflate Gold into oblivion. Gold is financial insurance and with each passing day, the need for that insurance becomes more acute. - Bill Buckler...Gold This Week...30 March 2013
Nor do we know if the Gold "price" ever will approach an accurate reflection of the degree of monetary debauchery which has gone on since 1980. But we do know that it is impossible to inflate Gold into oblivion. Gold is financial insurance and with each passing day, the need for that insurance becomes more acute. - Bill Buckler...Gold This Week...30 March 2013
It was another blood bath yesterday...a belated "Happy Easter" from "da boyz". Are we done yet? Again the answer is...I don't know. But as Ted Butler said on the phone yesterday, this is a clean-out of historic proportions. Friday's Commitment of Traders Report will tell us a lot...and it's most unfortunate that yesterday's price/volume numbers won't be in it.
Here's a paragraph that I 'borrowed' from silver analyst Ted Butler's mid-week commentary yesterday...
"If there is a unique aspect to the current takedown, it is the emergence of new technical fund short selling, not only in gold and silver, but in COMEX copper as well. I don’t know why the technical funds (in the managed money category of the disaggregated COT report) have chosen this time to establish record gross short positions in these markets, but that is secondary to the fact that they hold such positions in COMEX silver and copper...and after this week’s COT, may hold new record gross short positions in all three markets. Remember, the scam is that the commercials aren’t selling; they are duping the technical funds into selling...and selling short."
I took a quick peek at the preliminary open interest numbers from yesterday, which were posted on the CME's website in the wee hours of this morning...and it's impossible to read anything into them. I doubt very much whether the final numbers that are posted later this morning will tell us much, either.
Further up in this column I was talking about the dichotomy that existed between the inventory levels of GLD and SLV since the beginning of the year. I asked Nick if he had any relevant charts...and these are the two he provided...both of which are self-explanatory. The differences in inventory levels of these two ETFs is beyond amazing, considering the severity of the engineered price decline in both metals over the last many month. It's for that reason that I would love to be a fly on the wall over at SLV HQ...as whatever is going on under the hood is something that I think would amaze us all if we knew.
(Click on image to enlarge)
(Click on image to enlarge)
I sure hope that the precious metal miners will finally wake up and do something, instead of watching their/our companies get ground into the dirt by JPMorgan et al. However, I'm not holding my breath. And we certainly won't get any help from either the World Gold Council or The Silver Institute, as you have to be thoroughly corrupted by the dark side of The Force before you ever get nominated to chair those organizations. That includes their current executives...and all prior executives. You couldn't make this stuff up.
In Far East trading on their Thursday, I note that the high-frequency traders showed up once again in these thinly-traded markets...and took all four precious metals to new lows for this move down. Although they all recovered somewhat, the procedure was repeated shortly after London began to trade. Once again both gold and silver were taken to new lows for this move down. And as I hit the 'send' button at 5:20 a.m. Eastern time, gold is down about ten bucks...and silver is down less than a dime. Volumes are already over the moon...with gold volume north of 62,000 contracts...and silver's net volume above 10,000 contracts. Shortly after 12:00 o'clock noon in Hong Kong, the dollar index took off...and is currently up 56 basis points...but that currency move is nowhere to be seen in the precious metals, as they are dancing to a tune played by JPMorgan et al.
What lies ahead for the rest of the Thursday trading day is unknown...but Ted's comments about the Comex paper clean out being of "historic" proportions are worth keeping in mind when New York opens for business at 8:20 a.m. Eastern Daylight Time, as the pain may not be over yet.
However, I can't shake the feeling that we're heading for some sort of dénouement in the precious metal markets in the very near future, as it's my opinion that "da boyz" are heading for the exits...and this is their swan song. We'll find out soon enough if that's the case or not.
See you on Friday...or on Saturday if you live just west of the International Date Line.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_04/04/2013_491799
Meeting with troika postponed until Thursday afternoon
A meeting between Greek officials and representatives of the so-called troika of foreign lenders was postponed until the afternoon on Thursday, a day after the conservative-led coalition government announced a compromise over an emergency tax seen as a symbol of harsh austerity measures.
After talks late Wednesday with Prime Minister Antonis Samaras and PASOK chief Evangelos Venizelos, Democratic Left leader Fotis Kouvelis said that the coalition would approach the troika with a “common position that the emergency property tax be replaced with a new unified property tax.”
His party had been vehemently opposed to extending an unpopular emergency property tax introduced in 2011 and levied via electricity bills.
The new tax would also be attached to electricity bills but only for this year, Kouvelis said. Tax offices will be responsible for collecting the levy from next year.
The new levy will combine all property taxes and could lead to some owners paying less overall. Kouvelis added that the tax would be levied on a wider property base, including farmland.
Finance Minister Yannis Stournaras told reporters that the government would propose to the troika changes to the charges faced by property owners. Venizelos suggested that a tax-free threshold might be introduced. However it was not clear late Wednesday which of these two options the government would choose.
The troika is due to begin its latest visit to Greece by holding talks with Stournaras. It will be the first chance for the two sides to re-examine several issues that have remained unresolved since European Central Bank, European Commission and International Monetary Fund officials left Athens in March.
These include the reduction of the number of civil servants, with 25,000 workers expected to enter a mobility scheme this year.
Also, the recapitalization of Greek banks has yet to be completed, with the troika harboring doubts about the merger between National Bank and Eurobank. There will also be discussions about how many installments Greeks should be allowed to pay off their overdue taxes.
Kathimerini understands that the two sides hope to conclude talks by April 16 so that the Eurogroup can then decided whether to approve the delayed March tranche of 2.8 billion euros and the next installment of 6 billion euros.
On Wednesday, the leader of Greece's largest industry group challenged government forecasts that the country will return to growth next year.
“The numbers don't add up ... the recession in 2013 is deepening, and the return to growth in 2014 will not happen,” Dimitris Daskalopoulos, leader of the Greece Federation of Enterprises, said.
He argued that Greece's private sector had been too badly weakened by austerity measures to recover this year, and that the banking crisis and bailout of nearby Cyprus had also taken an unexpected toll on Greek public finances. [Combined reports]
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_04/04/2013_491829
|
No comments:
Post a Comment