Catharsis Ours: Ed Steer's Gold and Silver Report for September 6 , 2013 - Data , news and views pertaining to the PMs !

http://www.caseyresearch.com/gsd/edition/gold-imports-to-china-from-hong-kong-climb-on-physical-demand

¤ YESTERDAY IN GOLD & SILVER

The gold price did nothing in Far East trading until 1 p.m. in Hong Kong. Then, during the next hour, gold got sold down ten bucks.

The subsequent rally lasted until the Comex open, and shortly after that the high-frequency traders did their thing. The bottom came at 10:45 a.m. EDT, and the smallish rally that began at that point got sold off starting shortly after 2 p.m. in electronic trading. Kitco recorded the low tick as $1,364.50 spot.

Gold closed the Thursday session in New York at $1,367.70 spot, down $23.90 from Wednesday. Net volume was pretty decent, around 171,000 contracts.

The silver price action was virtually the same, so I'll spare you the details. Silver closed yesterday at $23.205 spot, down 25.5 cents. Net volume was around 41,000 contracts.

****

The dollar index closed at 82.16 in New York late on Wednesday afternoon. It rallied up to 82.39 by 8:30 a.m. BST in London on their Thursday morning, before rolling over and hitting its 82.13 low just minutes before the Comex open in New York. The index rallied strongly from there, hitting its high tick of 82.67 a few minutes after 10:30 a.m. EDT. After that the index traded ruler flat into the close, finishing the Thursday session at 82.63, up 47 basis points from Friday.

It's my opinion that this manufactured dollar index rally was used to mask the bear raid on gold and silver that occurred at the same time, as the price declines during that time period were out of all proportion to the "rally" in the index. But if you feel otherwise, I certainly won't argue with you, as you're entitled to your opinion.

*****

The CME's Daily Delivery Report showed that 19 gold and 60 silver contracts were posted for delivery within the Comex-approved depositories on Monday. In gold, JPMorgan was the issuer on 14 contract and Canada's Bank of Nova Scotia stopped 17 of those contracts. In silver, the big short/issuer was Jefferies with 56 contracts, and the two biggest long/stoppers were Canada's Bank of Nova Scotia with 31 contracts, and JPMorgan with 15 in its client account. The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in either GLD or SLV yesterday.

Joshua Gibbons, the "Guru of the SLV Bar List," updated his website with the changes in SLV for the reporting week ending Wednesday, 04 September. Here, in part, is what he had to say: "Analysis of the 04 September 2013 bar list, and comparison to the previous week's list -- 1,988,213.5 troy oz. was removed (all from Brinks London) and 1,446,237.8 troy ounces was added (all to Brinks London), no bars had a serial number change."

"There was also a withdrawal of 128,364.2 troy ounces that has not yet been reflected on the bar list, and that should appear on the next bar list (as it normally takes a day or two for the bar list to get updated)."

He also reported that "03 September 2013: Another unusual Sunday update, removing 1.99M oz. This was around 1:30PM EDT. Very strange." Ted Butler mentioned that to me as well, and we were both quite amazed by that fact, as they mostly update their website late in the evening EDT, which is the wee hours of the morning in London, which is where the fund, and the vaults, are located. Why would they be open on that day, or at that time of day?

The rest of what Joshua has to say is posted on his website linked here. His June 23 comments are worth reading as well, as it's similar to what happened on Sunday night.

The U.S. Mint had a tiny sales report. They sold 1,000 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Wednesday, there was no in/out activity in gold. But in silver they reported receiving 2,011 troy ounces, and shipped out 159,078 troy ounces. The link to that activity is here.

The big news yesterday was that the Chinese imported 116.4 tonnes of gold through Hong Kong in July, and thanks to Nick Laird, here's the appropriate chart.

(Click on image to enlarge)

Just eye-balling the graph, I note that China has imported, on average, a bit more than 100 tonnes of gold for each of the last five months. There's also a Bloomberg story in the Critical Reads section about July's imports, and it's definitely worth reading.

Here's another chart courtesy of Nick. This one shows the dollar value in gold eagles sales vs. the dollar value of silver eagles sold. As Nick pointed out, the dollar value of silver coins sold has exceeded the dollar value of gold coins sold for the last two months.

(Click on image to enlarge)

*****

Selected , non redundant news.....

Fed's Kocherlakota Says Economy Needs More Accommodation

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, who has backed the Fed’s $85 billion in monthly bond buying, said the central bank’s outlook for inflation and unemployment calls for more accommodation.

The Federal Open Market Committee’s “own forecasts suggest that it should be providing more stimulus to the economy, not less,” Kocherlakota said in a speech in La Crosse, Wisconsin. He doesn’t vote on monetary policy this year.

“The Committee is failing to provide sufficient stimulus to the economy,” Kocherlakota said, citing the FOMC outlook for inflation and unemployment. FOMC participants in June predicted “that inflation will remain below 2 percent over the medium term and that unemployment will decline only gradually.”

This is another story from Elliot Simon...and it was also posted on the moneynews.com Internet site early yesterday morning.

European Central Bank Chief Tamps Down Optimism

The president of the European Central Bank issued a sober assessment of the euro zone economy, saying on Thursday that he was “very, very cautious” about prospects for growth and acknowledging concern about shock waves from the civil war in Syria.

“I can’t share the enthusiasm” about budding growth in the euro zone, Mario Draghi, the bank president, said at his monthly news conference. “These shoots are still very, very green.”

The central bank kept its benchmark interest rate at a record low of 0.5 percent on Thursday, which had been expected after recent economic indicators showed the euro zone economy was beginning to recover, albeit weakly. But Mr. Draghi said the bank had not ruled out future rate cuts. “We certainly are alert to the geopolitical risks that may come from the Syrian situation,” he added.

It's obvious that he read the Ambrose Evans-Pritchard story in The Telegraph on Wednesday evening that I posted in Thursday's column. This New York Times news item, filed from Frankfurt, was posted on their Internet yesterday sometime...and I thank Phil Barlett for bringing it to our attention.

Poland starts expropriating private pension fund assets

Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.

The changes went deeper than many in the market expected and could fuel investor concerns that the government is ditching some business-friendly policies to try to improve its flagging popularity with voters.

The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.

This Reuters story, filed from Warsaw, was posted on their website very early on Wednesday afternoon EDT. I found it buried in a GATA release yesterday. The actual headline reads "Poland reduces public debt through pension funds overhaul". No matter how one describes it, it's still called theft.

Falling Economic Tide in India Is Exposing Its Chronic Troubles

India had seemed tantalizingly close to embarking on the same dash for economic growth that has lifted hundreds of millions of people out of poverty in China and across East Asia.

Its economy now stands in disarray, with the prospect of worse to come in the next few months.

Vinod Vanigota, a Mumbai wholesaler of imported computer hard drives, said sales dropped by a quarter in the last two weeks. The rupee, India’s currency, has been so volatile in recent days that he began revising his price lists every half-hour.

Business activity at Chip Com Traders, where he is the managing director and co-owner, has slowed so sharply that trucking companies plead for business. “One of the companies called today and said, ‘Don’t you have a parcel of any sort for us to deliver today?’ ” Mr. Vanigota said.

This must read 2-page essay, filed from Mumbai, was posted onThe New York Times website on Thursday...and I thank Roy Stephens for sharing it with us.

Four King World News Blogs/Audio Interviews

1. John Ing: "Gold and Silver Pullback, Declining COMEX Inventories and Syria". 2. James Turk: "Historic Event As Gold Slips Into Backwardation Once Again". 3. Ron Rosen: "The Real Carnage the World Will Have to Face is Still to Come". 4. Theaudio interview is with Pierre Lassonde.

Gold Imports to China From Hong Kong Climb on Physical Demand

Gold shipments to China from Hong Kong increased in July as importers took advantage of local prices that were an average 2.1 percent higher than global markets and as mainland investors bought jewelry and coins.

Net imports, after deducting flows from China into Hong Kong, were 113 metric tons, from 101 tons a month earlier, according to calculations by Bloomberg. Mainland buyers purchased 129 tons in July, including scrap, compared with 113 tons in June, data from the Hong Kong government showed today.

Gold prices that advanced 18 percent from a 34-month low in June are attracting buyers in China, which is on track to overtake India as the world’s top bullion consumer this year. Premiums paid by jewelers on top of spot prices on the Shanghai Gold Exchange to take physical delivery of the metal were an average $27 an ounce in China during July, according to calculations by Bloomberg.

This short Bloomberg story, filed from Beijing, was posted on their website in the wee hours of the morning Denver time...and it's amust read. I found it in a GATA release yesterday.

Unpacking India's new gold import restrictions

In a very useful note out this morning, UBS attempts to clarify the main points of the slew of new gold import regulations emanating from India.

UBS says ,while these various new measures have resulted in a drying up of import activity in recent months but, while there seems little incentive for importers to bring new gold into the country when prices continue to flirt with fresh highs in rupee terms, it is expected that imports will pick up again as traders become more familiar with the measures and, importantly, the country enters the strongest seasonal period for gold demand.

Based on a circular issued by the country's customs department yesterday, which is designed to answer many of the questions generated by the new measures, UBS has broken out a number of specific points of interest.

I must admit that I really don't fully understand these 'new and improved' guidelines...and if your eyes start to glaze over while you're reading it, don't be overly concerned. This story was posted on the mineweb.com Internet site yesterday...and I thank Ulrike Marx for bringing it to our attention.

Gold-rich temples refuse to unlock idle assets to help India's government bring down gold import

Some of India's richest temples such as Tirumala Tirupati, Sree Padmanabhaswamy, Shree Krishna temple of Guruvayur, Shree Siddhivinayak and Vaishnodevi are in no mood to part with their treasure to ease the supply crunch and control the outflow of dollars.

The gold trade is keen to get a slice of a possible 20,000 tonne of gold stashed away in peoples' homes and temples, which at the current gold price it worth around $980 -$1,000 billion.

Tirumala Tirupati Devasthanam receives 80-100 kg of gold and 100-120 kg of silver as offerings every month. "Tirupati has a treasure trove of Rs 70,000 crore in the form of gold bars, coins and jewellery," said Swamy Kamalananda Bharati, head of Hindu Devalaya Parirakshana Samity. It deposits the gold in banks to earn interest. It submitted 493.702 kg of ornaments to the Indian Overseas Bankfor the purpose of conversion into gold bars last December , which is equivalent to 338 kgs of pure gold after melting and purification at the government mint at Mumbai.

The decision by the temples to tell the Indian government to stick it, should come as no surprise to anyone. This must read news item was posted on the Economic Times of India website yesterday morning IST...and I thank Ulrike Marx for her final contribution to today's column.

¤ THE WRAP

The simple glaring fact being overlooked is that banks shouldn’t be involved in trading any commodities, including gold and silver, either for clients or for their own account. Banks have more important things to do for society as a whole and for their shareholders and employees than trade commodities. Under no circumstance should anyone be allowed to corner or control a market, bank or otherwise. That JPMorgan has come to corner both gold and silver trading on the COMEX is doubly unacceptable; it is the unspoken scandal that can’t be openly discussed. - Silver analyst Ted Butler, 31 August 2013

I hope you weren't overly surprised by the price action in New York yesterday, as it pretty much turned out the way I said it would in The Wrap in Thursday's column. There was nothing free-market about it, and as I mentioned earlier, the small rally in the dollar index that occurred at the same time was the fig leaf that "da boyz" hid behind while they did the dirty.

One question remaining is how bad a hit will the precious metals get at the 8:30 a.m. EDT jobs number release today. Normally the price smash that occurs at that time involves only silver and gold. As a general rule, platinum and palladium are spared. We'll find out pretty quick if that turns out to be the case this time around. Of course I'd love to be proven wrong!

It's a given that JPMorgan Chase et al are gobbling up every Comex long contract in gold and silver that the technical funds and small traders are being stopped out on. And as I pointed out yesterday, none of this volume data will be available until next Friday's Commitment of Traders Report, which is a lifetime away in these markets.

Another question is, how long will this engineered price decline continue? Blythe Masters and Jamie Dimon would know for sure, but they're not returning my calls. It's possible that they may be gunning for the 50-day moving averages in both gold and silver. Here are the 6-month charts for both metals so you can get an idea what the price points are. If that's their target, I would guess that they would get taken out just before the first Tomahawk cruise missile slams into Damascus.

(Click on image to enlarge)

Today we get the new Commitment of Traders Report for positions held at the 1:30 p.m. Comex close on Tuesday. I'm guessing that we'll see a small decline in the Commercial net short position in gold, but silver is too hard to call because of the big price rally on Tuesday. The September Bank Participation Report is coming out as well, and since the data in that report is extracted directly from the COT Report, for this one day a month [Tuesday] the banks long and short positions as a percentage of total open interest are exposed for all to see. I'll report on this tomorrow.

In Far East trading on their Friday, it was as quiet as the proverbial church mouse, both in price and volume. Nobody wants to stick their neck out in front of today's jobs report. Can you blame them, dear reader! London has been open about forty-five minutes as I write this paragraph, and this same price/volume pattern continues. The dollar index is down a handful of basis points.

And as I hit the send button on today's effort, London has been open for two hours and fifteen minutes, and nothing has changed in the interim. Prices are still flat and volumes light. The dollar index is marginally lower, down 14 basis points.

That's all I have for this Friday. I hope your weekend, or what's left of it, goes well, and I'll see you here on Saturday.