Tuesday, May 21, 2013

Ed Steer's Gold and Silver Report for May 21 , 2013 ! Data from May 20 , 2013 , News and views.....

http://www.caseyresearch.com/gsd/edition/paul-craig-roberts-no-bear-market-in-gold

(  a look at yesterday's wide day in the PM markets.... )


"It was more than obvious that silver was the metal that they were after."
 

¤ YESTERDAY IN GOLD & SILVER

The gold price jumped up about five bucks right at the 6:00 p.m. Sunday evening open in New York, but that rally got crushed immediately by the high-frequency traders...and in less than a hour, gold was down a bit over twenty bucks from its Friday close.
After that, the gold price chopped around the $1,345 spot price mark until the London open.  Then a rally began that tried to break out a couple of times before it really took off at noon in New York, as the market went 'no ask'...and the price went vertical.  But, as has always been the case in the past, a not-for-profit seller stepped in and became the short seller of last resort.  If they hadn't been there, the price would have gone supernova.
Then shortly before 3:00 p.m. in the thinly-traded New York access market, the rally resumed, hitting its zenith at precisely 4:00 p.m. before sliding a hair into the close.
The low tick [around $1,339 spot] came just before 8:00 a.m. in Tokyo on their Monday morning...and the high tick came in New York.  However it's impossible to tell from the N.Y. gold chart below, whether the high tick came at noon or 4:00 p.m. EDT.  Not that it matter, I suppose.  Kitco recorded the high tick at $1,400.60 spot.
Gold closed at $1,394.10 spot...up $33.90 according to Kitco's numbers...and an intraday move of fifty-five bucks.  Net volume was an immense 222,000 contracts.  It was a wild and crazy day...and I'll have much more about it in 'The Wrap'.
Here's the New York Spot Gold [Bid] chart on its own...and the big price spike at noon is even more noticeable.
Of course it should come as no surprise that it was silver that JPMorgan et al were after.  In less than an hour, the high-frequency traders had the price down to its low tick of the day, which the CME reported as $20.25 in the July contract, which is the next front month for silver.  That's a two dollar drop from the spot closing price on Friday...and it all happened in about forty-five minutes.  Ted Butler said that only about 1,600 contracts were sold between the Sunday night open...and the low tick.  In such a thinly-traded market, that's all it took to drop the price that low.
Silver recovered a bit as morning trading wore on in the Far East...and from about noon in Hong Kong, the silver price began a rally that ended with a vicious 'no ask' price spike at noon in New York...just like gold.
After the seller of last resort showed up, the silver price chart looked more or less the same as the gold chart for the rest of the trading day...right down to the rally that ended at precisely 4:00 p.m. in electronic trading in New York.
As I mentioned above, the low tick in the July contract was $20.25...and Kitco recorded the spot high price as $23.40 spot...an intraday move of $3.15.
Silver closed at $22.92 spot...up 66 cents from Friday.  Gross volume was immense...96,000 contracts.
Platinum did not go unscathed either...although palladium was pretty much spared the beating that the other three precious metals got.  Palladium had its price capped shortly after 12:00 o'clock noon in New York as well, or all four precious metals would have closed the Monday trading session at prices that would have made your eyes glaze over.  Here are their respective charts from yesterday.
What we saw in all four precious metals were key-reversals to the upside so big that no T.A. analyst could possibly miss them.  And as I said on Saturday, "da boyz" can print any chart pattern they want...and yesterday's example, especially in silver, will be talked about for centuries.
The dollar index closed at 84.21 on Friday afternoon in New York...and got hit for a bit more than 10 basis points the moment that trading began at 6:00 p.m. in New York on Sunday night.  It's high of the day [84.25] came three hours later at 9:00 a.m. in Hong Kong trading on their Monday morning...and it was all down hill from there.  The low tick [83.72] came a few minutes after 3:00 p.m. in New York...and the index rallied a hair from there.  The dollar index closed at 83.76...down 45 basis points from Friday's close.
As is most often the case, the dollar index had zip to do with yesterday's moves in the precious metals.


The CME's Daily Delivery Report showed that 3 gold and 65 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  In silver, JPMorgan was the short/issuer on 57 contracts...and they and the Bank of Nova Scotia stopped 55 contracts.  The link to yesterday's Issuers and Stoppers Report is here.
Another day...another withdrawal from GLD.  This time an authorized participant took out 222,371 troy ounces...and there was also a withdrawal from SLV.  This time it was 1,738,029 troy ounces.
The U.S. Mint finally had another sales report.  They sold 2,000 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 611,500 silver eagles.
Over at the Comex-approved depositories on Friday, they reported receiving 1,260,558 troy ounces of silver...and shipped 211,435 troy ounces of the stuff out the door.  The link to that activity is here.
In gold on Friday, these same depositories did not report receiving any, but shipped 32,001 troy ounces out the door...all from Scotia Mocatta.  The link to that activity is here.
Since yesterday was the 20th of the month, The Central Bank of the Russian Federationupdated their website with their April data.  It showed that they added another 200,000 troy ounces of gold to their reserves...bringing their total up to 31.8 million troy ounces.  Here's Nick Laird's most excellent chart updated with that data...
(Click on image to enlarge)
Here's a chart that reader 'David in California' sent our way yesterday.  It's a comparison of the 1976 bull market in gold compared to the one going on right now.
(Click on image to enlarge)

*   *   * 

selected news and views......

Ceiling suspended: US takes on $300bn in new debt after hitting $16.7 trillion

America’s ticking debt bomb has been reset. Washington has suspended the debt ceiling, setting a date, and not a concrete dollar sum as a deadline, an unprecedented first in US history.
Citing ‘extraordinary measures’, the US Treasury has further delayed tackling America’s debt, and will wait until Labor Day, September 2nd, to revisit the burgeoning crisis. The ceiling has been lifted, and the Treasury has promised it will keep cash pumping into government spending programs beyond the debt limit through a series of emergency cash tools.

“It will not be until at least after Labor Day" when Washington will have reached their full borrowing capacity, Treasury Secretary Jacob Lew, told CNBC television on May 10th.
Elliot Simon also sent me this Russia Today story.  It was posted on their website mid-morning Moscow time.

Caterpillar North America Sales Collapse Suggests US Economy Back To 2010 Levels

While we have wondered on numerous occasions previously if the collapse in lumber prices is the far more accurate indicator of end demand for housing (as confirmed by the recent collapse in multi-family housing starts), perhaps an even better indicator of trends in housing (and by implication the broader economy) is private sector intermediate end demand, such as Caterpillar North America sales, which unlike government data, are far less subject to political intervention, interpolation, guesswork, seasonal adjustments and otherwise, general manipulation.
And even though we have previously reported on the woes ailing the world's largest seller of bulldozers, excavators and wheel loaders, such focus was primarily targeted in the offshore markets, and especially China (the abysmal European market needs no mention). So maybe the time has come to shift attention to the US, where as Caterpillar just reported, not only are all foreign markets still trending at several impacted levels, but where US machine retail sales just saw the biggest tumble in three years, falling 18% Y/Y: the most since early 2010. What is more disturbing is that CAT equipment is used in far-broader economic activities than merely housing, and likely is a far more accurate indicator of true industrial end-demand than any other number cherry-picked by the government.
This short article was posted on the Zero Hedge website...and I thank 'David in California' for sending it our way.

Jim Rickards: Fed Up With Bernanke...Economy in Depression

“We don’t have to worry about a recession — we are in a depression,” says James Rickards.
“If you take the classic definition of a sustained, long-term downturn with economic growth below trend, then we are in the midst of a depression,” says the senior managing director of Tangent Capital and author of “Currency Wars.”
Rickards doesn’t see Fed Chairman Ben Bernanke as having the solution to the economic malaise gripping the county.
“Bernanke’s not a trader, so doesn’t think like a trader; he has no exit plan,” Rickards points out.
“There’s a good possibility I may never see another rate hike in my lifetime,” says Rickards.
This very short item was posted on the New York Post website late on Saturday night...and my thanks go out to Harold Jacobsen for bringing it to our attention.

Hackers From China Resume Attacks on U.S. Targets

Three months after hackers working for a cyber-unit of China’s People’s Liberation Army went silent amid evidence that they had stolen data from scores of American companies and government agencies, they appear to have resumed their attacks  using different techniques, according to computer industry security experts and American officials.
It is not clear precisely who has been affected by the latest attacks. Mandiant, a private security company that helps companies and government agencies defend themselves from hackers, said the attacks had resumed but would not identify the targets, citing agreements with its clients. But it did say the victims were many of the same ones the unit had attacked before.
In interviews, Obama administration officials said they were not surprised by the resumption of the hacking activity. One senior official said Friday that “this is something we are going to have to come back at time and again with the Chinese leadership,” who, he said, “have to be convinced there is a real cost to this kind of activity.”
This article was posted in the Sunday edition of The New York Times...and it's Roy Stephens' first offering in today's column.

Rumors Spark Bank Run, Break-Ins in Brazil

Rumors that Brazil's social security fund called Bolsa Familia was to be cancelled led thousands of people to rush to withdraw money from a Brazilian bank over the weekend.
Customers lined up at ATMs at dozens of bank branches of Caixa Economica Federal, a government-owned bank, which pays the social security subsidy on Saturday and Sunday.
"The bank branches themselves aren't open on Saturdays. What happened is that once the rumor gained momentum, people flocked down to their local branches to try to withdraw money from the ATMs," Rafael Carregal, a journalist at Brazil's main TV network Globo told CNBC.
Brazilian newspaper Estado de Sao Paulo reported that at five branches in the northeastern city of Sao Luiz and four others in the state of Maranhao, depositors broke into branches. Most of the branches that were affected were in the poorer northeast region of the country.
This short CNBC article was posted on their website early on Monday morning EDT...and I thank U.A.E. reader Laurent-Patrick Gally for sliding this into my in-box in the wee hours of this morning.

BIS and IMF attacks on quantitative easing deeply misguided warn monetarists

Monetarists across the world have warned that the International Monetary Fund and the Bank for International Settlements are making an historic error by calling for a withdrawal of emergency stimulus before the global economy has fully recovered.
The two watchdogs launched broadsides against central bank largess last week. The BIS -- the forum of central banks -- was particularly blunt, seeming to imply that quantitative easing "does not work".
Critics say this risks undermining the credibility of radical measures when more may yet be needed. They fear central banks could repeat the mistake made in 1937 when the Federal Reserve lost its nerve and tightened too soon, tipping America back into depression.
"The BIS and the IMF are deeply misguided and risk doing the world a grave disservice. The biggest threat right now is irrational fear of bubbles among central banks," said Lars Christensen, a monetary theorist at Danske Bank.
This longish piece by Ambrose Evans-Pritchard was posted on thetelegraph.co.uk Internet site on Sunday afternoon BST...and it's Roy Stephens' second offering of the day.

Tories begin defecting to Ukip over 'loons' slur

Conservative activists have begun defecting to the UK Independence Party in protest at the Tory leadership’s “arrogant and insulting” attitude towards grassroots members.
Local Conservative party campaigners, including the chairman of one constituency association, will this week pledge their support for Nigel Farage after one of David Cameron’s allies described grassroots Tories as “mad, swivel-eyed loons”.
Mr Farage uses an advertisement in Monday's Telegraph to urge Conservative voters to back Ukip. The “loons” description, he says, is “the ultimate insult” from a party leadership that has betrayed the trust of its own supporters.
He writes in the advertisement: “Only an administration run by a bunch of college kids, none of whom have ever had a proper job in their lives, could so arrogantly write off their own supporters.”
This short article appeared on The Telegraph's website late on Sunday evening...and is also courtesy of Roy Stephens.

Eight King World News Blogs/Audio Interviews


Paul Craig Roberts: Fed defends dollar, QE, by suppressing gold price

In his new commentary former Assistant U.S. Treasury Secretary Paul Craig Roberts squarely accuses the Federal Reserve of using the futures markets to suppress gold and silver prices to protect the U.S. dollar and the Fed's "quantative easing" policy.
"What," Roberts asks, "does this illegal manipulation of markets by the Federal Reserve tell us? It tells us that the Federal Reserve sees no way out of printing money in order to support the federal deficit and the insolvent banks. If the dollar came under attack and the Federal Reserve had to stop printing dollars, interest rates would rise. The bond and stock markets would collapse. The dollar would be abandoned as reserve currency. Washington would no longer be able to pay its bills and would lose its hegemony. The world of hubristic Washington would collapse."
Roberts' commentary is headlined "Washington Signals Dollar Deep Concerns" and it was posted on his Internet site on Saturday.  I thank Chris Powell for the above introductory paragraph...and the headline...but the first reader through the door with this story was Rob Bentley.

Hong Kong futures exchange closes, plans cash settlements

The Hong Kong Mercantile Exchange will go ahead with a planned US$100 million rights issue and be ready within months to reapply for the trading licence it handed back to regulators at the weekend after it became clear the struggling commodity trader could no longer meet crucial financial criteria.
HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Post that the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured.
"There is no question of not getting your money back or anything like that," Cheung said. "People absolutely do not have to worry about that and I don't think they are. The only thing they will want to know is what settlement price will be used."
This story, filed from Hong Kong, was picked up by the South China Morning Poston Sunday...and I found it in a GATA release.

Alasdair Macleod: Bank balances and gold

The sudden vulnerability of bank deposits to confiscation for bank rescues is sending money out of banks and into equities, bonds, and gold, GoldMoney's Alasdair Macleod writes on Sunday.  But for the time being, bullion banks are coping with increased demand for gold delivery by rationing metal to customers. Macleod's commentary is headlined "Bank Balances and Gold" and it's posted at the goldmoney.com Internet site.
I found this commentary in a GATA release on Sunday.

Silver Halted 4 Times Overnight Amid Flash Crash

While we have become used to the almost daily trading-halts in Japanese government bonds, when the CME reports that Silver trading was halted four times overnight, it is increasingly clear that this market is anything but 'normal'.
This very short piece was posted on the Zero Hedge website yesterday morning...and I thank Elliot Simon for sending it along.

Casey has been given the evidence of gold market rigging but won't respond to it

Interviewed yesterday by The Daily Bell, Casey Research Chairman Doug Casey once again dismissed complaints of gold market manipulation.
"I don't doubt that the powers-that-be would prefer to have the price of gold lower," Casey says, "just like they would prefer to have the price of wheat and copper and lumber and everything else lower. But there's no evidence that I've ever been shown other than, frankly, just assertions."
This is distressing but maybe, to get Clintonistic, it depends on the meaning of "shown." Though GATA has sent to Casey -- and once even handed to him face to face -- all sorts of documentation of gold market manipulation, if he has not looked at it, has he ever been "shown"? But then the question becomes whether he wants to look at it, though one might hope that anyone might want to look at the evidence before commenting on an issue.
In his interview with The Daily Bell, Casey acknowledges the likely motive of central banks in wanting gold and commodity prices lower. But he refuses to acknowledge their opportunity along with the evidence lest faith in markets be shaken.
GATA believes in markets as much as anyone could. Indeed, gold price suppression is a catastrophe for the world precisely because it is the prerequisite for the destruction of all markets, the mechanism by which a few unelected grandees strive to control the price of all capital, labor, goods, and services in the world, resulting in their worldwide misallocation.
This commentary [with multiple links] by GATA's secretary treasurer Chris Powell, was posted on the gata.org Internet site yesterday evening and...along with Doug's interview at The Daily Bell...it, too, is worth reading.

James Turk: Some Answers to Doug Casey’s Questions

The last time that Doug got up and spoke against the price management scheme by JPMorgan and a small handful of bullion banks, was back in April of 2012.  GATA's Chris Powell had a lengthy response then as well...but has updated in his comments above, so it would serve no purposed to link that older article.
But James Turk had something to say about Doug's comments back then...and Mr. Turk's commentary, although rather long, are still as relevant today as they were back then...so I've decided to include it in today's column.
As I said, it's a long read, so top up your coffee before you get started.

Ted Butler: How the Silver Manipulation Scheme Works

Here's another item I've posted before.  This is an audio interview with silver analyst Ted Butler by Jim Puplava over at financialsense.com that was recorded on March 17, 2012.  In it, Ted describes in minute detail how the silver [and gold] price management scheme is orchestrated on the Comex/Globex futures market.
It explains exactly how every waterfall decline in silver [and gold] happens...and the sequence of events that precede it...and follow it.  It's been the same pattern for over twenty years.  Ted has been following the goings-on in silver on the Comex futures market for about 30 years...and is a world authority on it.
So if you want to know what happened on April 12/15th...and yesterday in the thinly-traded Far East market...Ted has the answers.
Because of his work, the Commitment of Traders Report is now widely followed just about everywhere, even if some of the commentators using it don't interpret the data correctly.  The other report that Ted uncovered was the Bank Participation Report...and as Ted put it in a commentary for paying subscribers within the last week...if JPMorgan could kill these two reports, they would...as it exposes their movements [and others] to the naked light of day.
If you've listened to this before, it's time for a refresher...and if you haven't, it's a must listen.

Paul Craig Roberts: No Bear Market in Gold

You know that gold bear market that the financial press keeps touting? The one George Soros keeps proclaiming? Well, it is not there. The gold bear market is disinformation that is helping elites acquire the gold.
Certainly, Soros himself doesn’t believe it, as the 13-F release issued by the Securities and Exchange Commission on May 15 proves. George Soros has significantly increased his gold holding by purchasing $25.2 million of call options on the GDXJ Junior Gold Miners Index.
In addition the Soros Fund maintains a $32 million stake in individual mines; added 1.1 million shares of GDX (a gold miners ETF) to its holdings which now stand at 2,666,000 shares valued at $70,400,000; has 1,100,000 shares in GDXJ valued at $11,506,000; and 530,000 shares in the GLD gold fund valued at $69,467,000. [values as of May 17]
The 13-F release shows the Soros Fund with $239,200,000 in gold investments. If this is bearish sentiment, what would it take to be bullish?
This commentary by Paul was posted on this website yesterday...and I thank reader Ken Hurt for bringing this to our attention.

¤ THE WRAP

If I am correct in my assumption that JPMorgan has established big long gold positions in COMEX futures, actual metal and gold derivatives as a hedge against their remaining COMEX silver short positions, that may be especially bullish for gold prices once we get the turn up. That’s because JPMorgan is more likely to let gold prices rip higher than they might normally. And if JPMorgan escaped regulatory action for manipulating silver prices lower, there is little chance the bank would face any actions for letting prices soar. Also in mind is that these big long gold positions were only established because of the brutal nature of the sell-off this year. This suggests to me that this is not something that can be replicated easily...or at will...and may make it a unique circumstance that must be taken advantage of accordingly. In other words, I don’t know how often JPMorgan or the commercials will be able to so favorably positioned in the future as they are currently. They better make hay while the sun is shining. - Silver analyst Ted Butler...18 May 2013
Just when I thought it was over, JPMorgan et al came calling one more time.  Although gold and platinum got hit a bit, it was more than obvious that silver was the metal that they were after.  A drop of two bucks in about 45 minutes...about a 10 percent move...and not a word from the CFTC, the CME Group, or the miners.
Now if the Dow had dropped that percentage in 45 minutes, all hell would have broken loose as everyone would want to get to find out what happened.  But when it comes to the precious metals...zip, nada, nothing.
But under the hood, there was, without doubt, more speculative long selling...but not too much, as there's almost nothing left to sell on the long side.  It's a good bet that there are now more short positions in place, especially in silver...and JPMorgan et al were going long against all comers.
Today is the cut-off for Friday's Commitment of Traders Report...and if we can get through the rest of the trading day today with little or no price activity, then we should see another COT Report for the record books.  But as we found out after the smash of April 12/15th...the volume data associated with that event was not reported to the CFTC in a timely manner...and it took two more weeks of reports before we finally got to see the whole thing.  That may happen again this time...and it will be the first thing I check for when it's posted on Friday.
And as I pointed out further up, the powers-that-be painted key reversals to the upside so large, that even Stevie Wonder could see them.  All that remains is the upside triggering event...and I'm sure not looking forward to that...whatever it may be.
Here are the 6-month gold and silver charts from stockcharts.com...and the silver chart is one for the record books.
(Click on image to enlarge)
(Click on image to enlarge)
As Ted pointed out in the paragraph I borrowed from this Saturday commentary to his paying subscribers, he feels that JPMorgan is now massively long the gold market...and with that, has basically covered its remaining short position in silver.  I would guess that they added to their comfort level with Sunday evening's engineered price decline at the New York open.
There was no follow-through in Far East trading on their Tuesday...nor during the first couple of hours of London trading, either.  The one attempt that gold made to break above the $1,400 spot price mark got turned back in short order...and the prices of both gold and silver have been in slow, but steady, decline since.  Gold is down about ten bucks...and silver is down 40 cents as I hit the 'send' button on today's column at 4:55 a.m. EDT.  Volumes are over 40,000 contracts in gold and 11,000 contracts in silver...with almost all of it of the HFT variety.  The dollar index, which hadn't done much all night long, took off around 9:00 a.m. BST in London...and is up 28 basis points as of this writing...and north of the 84.00 mark again.
Before heading out the door, I'd like to remind you that TODAY at 2 p.m. Eastern Daylight Time, Casey Research is premiering a must-see online video event for anyone with a drop of contrarian blood in their veins.  It's entitled: The Myth of America's Energy Independence: Is Nuclear the Ultimate Contrarian Investment?  If you have the time and the interest, it will certainly be worth it.
See you on Wednesday.
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