libertyblitzkrieg.com / By Michael Krieger / May 13, 2013
The disconnect between the massive physical buying of gold versus the falling paper derivatives price has now become nothing short of extraordinary. While we have all seen the figures describing the gold buying frenzy in China and India, now we have some more detailed information about what is happening on the ground in Dubai. Incredibly, we find that since the April paper price crash, 50 tons of gold has been purchased, which is the equivalent of the entire amount of 51.8 tons purchased in all of 2012.
One of the most comprehensive looks at the massive physical versus paper disconnect I have read is courtesy of Goldbroker.com, a company that specializes in physical bullion stored in Switzerland. I suggest checking outtheir latest Gold Market Report.
Now from Emirates 24/7 we find that:
Dubai demand for gold has been witnessing a massive surge since the price collapse of last month, with demand far outstripping supply.
kingworldnews.com / May 14, 2013
Today one of the savviest and well connected hedge fund managers in the world told King World News that global banks are involved in a criminal conspiracy in the gold market. Outspoken Hong Kong hedge fund manager William Kaye also spoke with King World News about what is really taking place behind the scenes in the war on gold. Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in part II of an extraordinary written interview series which will be released today.
Kaye: “The paper gold price has been driven well down. We’re nowhere close to when gold peaked above $1,900. We’re in the low $1,400s as I speak now, Eric.
So price has gone down, but what about volume (in gold)? Well, I can tell you that volumes in China year over year are up four to five times. I can tell you that volumes in Thailand, a similar amount (to China, up four to five times).
http://www.caseyresearch.com/gsd/edition/paul-craig-roberts-gold-market-rigging-exposes-a-gangster-state
¤ YESTERDAY IN GOLD & SILVER
Gold was under selling pressure right from the 6:00 p.m. EDT time open in New York on Sunday evening...and by shortly after 10:00 a.m in Tokyo, gold was down about twenty bucks...and traded very close to the $1,430 spot price mark for the rest of the Monday trading session. The gold price got sold off every time it got a sniff of the $1,440 spot price mark.
Gold closed at $1,430.80 spot...down $17.30 on the day. Net volume was pretty light, around 106,000 contracts.
Silver suffered pretty much the same fate...however it began to rally from its low of the day, which came shortly before 10:00 a.m. in London. The rally lasted until noon in New York...and then got sold down into the 5:15 p.m electronic close. Nothing much to see here.
Silver closed at $23.65 spot...down 22 cents from Friday's close. Gross volume was 36,000 contracts.
The dollar index closed at 83.15 on Friday afternoon in New York...and when it opened on Sunday evening, it flopped around either side of 83.20 for all of Monday...closing in New York at 83.22...up a whole 7 basis points from Friday's close. Not much to see here, either. Here's the 2-day chart from the ino.com Internet site...
The CME's Daily Delivery Report showed that 1 gold and 23 silver contracts were posted for delivery tomorrow.
There were no reported changes in GLD or SLV yesterday and, once again, there was no sales report from the U.S. Mint. I think that's the fourth day in a row they've reported no sales. Very strange indeed.
However, there was big movement in silver within the Comex-approved depositories on Friday. They reported receiving 894,527 troy ounces of the metal...and shipped 1,500,716 troy ounces out the door. The link to that activity is here.
In gold, they reported receiving one kilobar [32.15 ounces] at Brink's, Inc. on Friday...and shipped 64,227 troy ounces out the door. The link to that activity is here.
Selected news and views.......
No Mo' PoMo? - James Howard Kunstler
Whenever the Federal Reserve wants to tweak the dials of the economy -- or pretend that it can -- it turns first to its sock puppet at The Wall Street Journal, John Hilsenrath, and "leaks" a rumor of policy change. They like to do this late on Fridays when financial markets are about to close, so that market players will have a whole weekend to ponder the Fed's actions like medieval viziers reading goat entrails.
Last Friday's puddle of steaming guts was a supposed preview of the Fed's "exit strategy" from its reckless policy of "quantitative easing" or "money" creation (or "liquidity," if you like). In other words, they supposedly intend to stop juicing the financial markets with fake wealth, i.e. capital not accumulated from real productive activity, but just fictively created on computer hard drives. For the past year they have been doing this to the tune of $85 billion a month, "buying" US Treasury bonds and bills and an assortment of miscellaneous securities (mostly trash that can't be pawned off on anyone else) through their so-called "primary dealer" bank cohorts, the too-big-to-fail usual suspects, who "earn" hefty transaction fees in the process of conveying all these pixels from Point A to Point B. These interventions are called Permanent Open Market Operations, or PoMo.
The theory all along has been that this $85 billion a month would seep down to Main Street to provoke spending (increasing the "velocity of money) and therefore "jump start" the economy. The theory has proven itself to be complete horseshit, of course. All it has done is suppress interest rates on bonds, depriving old people of income off their savings by so doing. It also artificially jacked up reckless lending on loans for houses, cars, and college degrees, juiced the share price of stocks, and boosted food prices. Meanwhile, an increasingly former middle class languishes in a purgatory of foreclosure, penury, and desperation. The Fed can't really do anything to help them. It can only burden them with more easy-credit debt, especially their college-age children. But ours is a financialized economy and finance is too abstruse for most ordinary people to understand, so they just muddle along in a fog of dashed hopes and repossession.
Wow! Mr. Kunstler lets it all hang out...no shades of grey at all...and a Matt Taibbi-style 'pithy prose' warning is in effect here. I hate to start out with a must read, but that's what it is...and I thank reader Richard Sypher for today's first story.
IRS Conservative Witch-hunt Started In 2011 With High-Level Officials Involved
The IRS conservative targeting scandal is going from bad to worse.
Following the Friday revelations that despite all prior appeals to the contrary, the IRS did in fact apply political bias and prejudice in targeting conservative groups who had applied for exempt status (and who knows what other prejudice when targeting non-liberals entities - perhaps it is time to do an analysis of what the ratio of conservatives to liberals audited each year is?), culminating with the farcical response by an IRS official during the Friday press meeting...
... this may be just the beginning of a major political scandal which in addition to tangential fallout crushing the alleged "impartiality" of the Obama administration, additionally validates many of the heretofore right-wing "conspiracy theories." And as Zero Hedge has shown time and again, it is not a conspiracy theory if it is a conspiracy fact.
What makes things worse for the IRS, the US Treasury, its then-head Tim Geithner, and of course, Barack Obama, is that according to a draft report prepared by the Treasury Department's inspector general for tax administration, expected to be released this week, and seen by AP, is that senior IRS officials knew agents were targeting tea party groups as early as the spring/summer of 2011, well before the 2012 election as we announced before. What makes matters worse, is that it was not only "low-level" employees as the IRS tried to justify its prejudice on Friday, but high level personnel, among which at least one head of division that oversees tax-exempt organizations, and likely all the way to the very top, that were well aware of the witch hunt.
This news item was posted on the Zero Hedge website on Saturday evening...and it's courtesy of Marshall Angeles.
Watergate Was For Amateurs: Justice Department Spied For Months On Associated Press Reporters
And so the final curtain falls on the myth of what was supposed to be, in its own words, the "most transparent administration" in history.
As it turns out, the big Friday story of Bloomberg journalists snooping on clients was just amateur hour compared to what the AP was about to serve. In fact, the Watergate affair may soon appear like a walk in the park compared to the First Amendment shitstorm that is about to be unleashed following the just reported news that the US Department of Justice had "secretly obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative's top executive called a "massive and unprecedented intrusion" into how news organizations gather the news."
First amendment? Freedom of speech and press? Surely not when it comes to the Nobel-peace prize winning President and those who dare to expose his secret ways.
And what's worst, is that the AP breach has all the makings of a spiteful hack driven by personal vengeance against one of America's premier news outlets.
Wow! The rot continues...and these are only the things that we know about. Rest assured, dear reader, that it's probably far worse than this, as one can only imagine the stuff that's going on that we don't know about. This news item is another from Zero Hedge...this one from late yesterday afternoon...and the third article in a row from Marshall Angeles.
CFTC launches broad investigation of energy and metals derivatives
A top US financial regulator has launched a broad inquiry into the legitimacy of more than 1 million energy and metals transactions by the biggest traders in commodities markets over the past two years.
The Commodity Futures Trading Commission has issued a "special call" asking Wall Street banks and other traders to provide documents that would prove recent derivatives transactions known as "exchanges of futures for swaps" were legal. Lawyers at the CFTC enforcement division are also scrutinising the trades for possible violations.
"They are looking at a huge amount of trading," an industry lawyer said.
The CFTC push shows how authorities are clamping down on previously unregulated derivatives dealing in markets from commodities to interest rates after the financial crisis. The CFTC this week is set to impose new trading rules for over-the-counter markets, even as the Group of 20 industrial countries seeks to shift more derivatives to electronic platforms.
Another meaningless investigation, as the CFTC's fifth anniversary of the silver price fixing investigation approaches. This article appeared in the Financial Timesof London yesterday...and it's posted in the clear in this GATA release.
EU targets tax evasion on savings
The European Commission wants to tighten tax loopholes on savings of EU citizens who hold accounts in member states and in Switzerland, Andorra, San Marino, Monaco and Lichtenstein.
"We are looking for an ambitious approach by member states. In our view, a strong and united approach from the European Union against tax havens is very important," European Commission spokeswoman Emer Traynor, told reporters in Brussels on Monday (13 May).
Current EU legislation under the 2005 savings tax directive aims to tackle cross-border tax evasion through an information exchange system for tax authorities among member states. The system helps authorities identify people that receive a savings income but in a member state where they do not live.
This story, filed from Brussels, was posted on the euobserver.com Internet site late yesterday afternoon Europe time...and I thank Roy Stephens for his second contribution to today's column.
Chinese Power Consumption Collapses: Economic Growth Slowest Since Early 2009
Not much to add here. If there still is any confusion why China is desperately manipulating its economic data, so blatantly in fact that virtually everyone has now noticed, this chart should put all doubt to rest. According to CLSA's Chris Wood using NEA data, China's monthly power consumption (the most accurate proxy for underlying economic strength according to the current premier) growth slowed from 5.5% YoY in Jan-Feb 2013 to 1.9% YoY in March, the slowest growth rate since May 2009.
This Zero Hedge news item was posted on their website late yesterday morning EDT...and my thanks go out to reader 'David in California'.
William Kaye: Disappearing Gold Inventories, Financial Collapse and the Fed [Parts 1 & 2]
Outspoken Hong Kong hedge fund manager William Kaye spoke with King World News about disappearing gold inventories, financial destruction and the Fed. Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions and who is the founder of Pacific Group, had this to say in Part I of an extraordinary written interview series which will be released today. Part 2 is linked here.
Pacific Group's Bill Kaye: Gold plunge was an operation by Fed, big banks
April's abrupt plunge in the gold price was an operation of the Federal Reserve and major banks to protect the Fed's "quantitative easing" and paper gold shorts that can't deliver the metal they have sold, Pacific Group founder and fund manager William S. Kaye writes in the May market letter of Pacific Group's Greater Asian Hedge Fund.
Kaye, who in January announced his fund's commitment to a major purchase of gold, adds that gold exchange-traded funds are being used to manipulate the gold price and essentially are being looted by the banks that are short the metal. He expects paper gold to default this year and the gold price to be reset upward.
By Pacific Group's kind permission, Kaye's letter is posted at gata.org Internet site on Saturday...and it falls into the absolute must read category. I thank Chris Powell for wordsmithing the preamble.
Alasdair Macleod: GLD and SLV are not havens against crisis
GoldMoney research director Alasdair Macleod writes about how his inquiry to the United Kingdom's Financial Services Authority produced an acknowledgment that the custodianship of the metal nominally held by the gold and silver exchange-traded funds GLD and SLV is not regulated by government.
As a result, Macleod concludes, there is enormous counterparty risk for GLD and SLV investors, in a financial crisis central banks more easily can seize metal held by bullion banks, and the two ETFs should not be considered havens against such a crisis. His commentary is headlined "The Role of GLD and SLV" and it's posted at GoldMoney's Internet site.
India Trade Deficit Deteriorates As Gold Imports Soar 138%
India's economic boogeyman, the monthly trade deficit, continues to rear its ugly head, this and every time, driven be the country's insatiable desire for gold which is so powerful, the country took full advantage of the plunge in gold prices, and saw business imports of gold soar by 138% y/y in April, forcing the trade deficit to hit a 3 month high of $17.8 billion as more fiat left the country in return for bringing in more of the "barbarous relic." Gold imports more than doubled on both a Y/Y and sequential basis, with gold accounting for $7.5 billion, or 18% of total imports, compared to $3.1 billion in March.
As long as the price suppression of paper gold prices continues, don't expect any notable changes to both of the above trends.
This Zero Hedge posting from early yesterday morning is courtesy of Phil Barlett...and is definitely worth reading.
Gold Bears Pull $20.8 Billion as BlackRock Says Buy: Commodities
Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc., the world’s biggest money manager, said it’s still bullish.
Gold is having its worst start to a year since 1982 after dropping 14 percent and sliding into a bear market in April. Holdings in exchange-traded funds backed by bullion tumbled to the lowest since July 2011 even as central banks print money on an unprecedented scale to boost growth. BlackRock’s President Robert Kapito said May 9 he would still buy the metal, echoing billionaire John Paulson, who’s sticking with a bullish view even after losing 27 percent in his Gold Fund last month.
This Bloomberg article was posted on their website early yesterday afternoon MDT...and I thank reader Ken Hurt for bringing it to our attention.
Paul Craig Roberts: Gold market rigging exposes a gangster state
Yesterday, former Assistant U.S. Treasury Secretary Paul Craig Roberts condemned the rigging of the gold and silver markets by the Federal Reserve as emblematic of a gangster state protecting banks at the expense of the public. Roberts' commentary is headlined "Gangster State America" and it's posted at his Internet site. This is a must read for sure...and I found it posted over at the gata.org Internet site.
¤ THE WRAP
It looks like JPMorgan is still net short 18,000 COMEX silver futures (90 million oz). If you recall, this is the level of short positions that JPMorgan held going into the big two-day price smash of mid-April. I had originally anticipated that JPM covered ferociously into the silver price smash, maybe even eliminating that concentrated short position for the very first time. Even though there were obvious delays in the proper reporting in the COT report by the CFTC in the aftermath of the price plunge...never acknowledged by the agency...it is clear now that JPMorgan did not reduce its concentrated silver short position at all. This is the most significant market consideration at this time. - Silver analyst Ted Butler...11 May 2013
Except for the early morning sell-off in both gold and silver early in Far East trading on Monday, it was a 'nothing' sort of day yesterday. Volumes were pretty light, with a large percentage of what volume there was, being of the HFT variety.
One thing I have noticed over the last week, is that gold was not allowed to seriously breach its 20-day moving average...and silver's 20-day moving average is still unviolated on a closing price basis. As long as this remains the case, there won't be much short covering by the technical funds that are predisposed to cover at this moving average. Of course the 50 and 200-day moving averages are the big ones, but Ted says that what goes on at the 20-day moving average should not be discounted. Here are the 6-month charts in both metals with the 20 and 50-day moving averages plotted.
(Click on image to enlarge)
(Click on image to enlarge)
Today, at the 1:30 p.m. EDT close of Comex trading, is the cut-off for Friday's Commitment of Traders Report. If prices in both gold and silver are kept subdued, then we might see a bit more improvement in the Commercial net short position in both metals in Friday's COT Report. But if we have a big rally and JPMorgan et al go short [or sell long positions] against all comers...then all bets will be off. We'll see.
There was a bit of a rally in gold in early Far East trading, probably precipitated by a 25 basis point dollar index slump, but some of that smallish gain disappeared before the London open. What gains silver had during the same period, disappeared by the London open, as the dollar index has recovered somewhat. Volumes are 'average'...and mostly of the HFT variety. London has been open about twenty minutes as I type this paragraph.
And as I hit the 'send' button at 5:15 a.m. Eastern time, London has been open a couple of hours...and nothing much has change. Trading is quiet...both in price and volume. The dollar index has regained a bit more of its early morning Far East loses. Of course it's always what happens in New York that really matters...and I look forward to the Comex open with some interest.
See you tomorrow.
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