Tuesday, June 4, 2013

Ed Steer's Gold and Silver report - June 4 , 2013 - Data from monday , News and views !

http://www.caseyresearch.com/gsd/edition/after-the-correction-gold-stocks-set-for-the-biggest-gains

( Gold resistance around 1413 seems to be fiercely blocking upward momentum.... )


"The precious metals should have skyrocketed on the decline of the dollar index."
 

¤ YESTERDAY IN GOLD & SILVER

Gold rose to around $1,395 spot by 9:00 a.m. in Hong Kong.  The first attempt to break above the $1,400 spot price mark shortly after 9:00 a.m. in London got turned back...but the moment that the dollar index headed south shortly before 10:00 a.m. in New York, the gold price finally made it above that price...but not by as much as one would expect.  The rally topped out around 11:20 a.m. EDT...and then sold off as the New York trading day progressed.
The low of the day was at the open of trading in New York on Sunday night...$1,388.30 spot...and the high tick [$1,418.00 spot] came at 11:20 a.m. Eastern time in New York.
Gold closed at $1,411.20 spot...up $22.90 on the day.  Gross volume was a very healthy 154,000 contracts, so this rally was certainly not of the short covering variety.
Silver also rallied in early Far East trading on their Monday...and chopped around the $22.40 spot mark in a very tight range up until a rally developed at what appeared to be a slightly early London silver fix at noon BST.  That rally lasted until 8:30 a.m. in New York...and then got sold down until 9:45 a.m...and from there it followed the gold price action like a shadow for the rest of the day.
The low, around $22.15 spot, came shortly after trading began in New York on Sunday night...and the high tick [$23.08 spot] came at the same moment as gold...at 11:20 a.m. EDT.
Silver closed at $22.74 spot...well off it's high...and up 48 cents from Friday's close.  Net volume was around 36,000 contracts.
Here are the charts for platinum and palladium...and if you can see any dollar index-driven rally in these charts, then you've got a better imagination then I do.
The dollar index closed on Friday at 83.28...and by 9:00 a.m. in London on their Monday morning it had drifted down to 83.00.  Then away it went to the upside until 9:45 a.m. in New York.  The high at that point was 83.50.  But by 11:15 a.m...only 90 minutes later...the index had collapsed all the way down to 82.49.  After that, it recovered a bit of its losses, finishing the New York trading session at 82.68...down 60 basis points from its Friday close, but it fell 101 basis points during the 90 minute swan dive that began shortly before 10:00 a.m. EDT.
If you check the charts on all four precious metals above, the prices of all four went exactly nowhere starting shortly after 10 a.m. and lasting until shortly after 11:00 a.m. in New York...and it's more than obvious in the gold and silver charts.  What are the chances that this was accidental?


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The CME's Daily Delivery Report for 'Day 3' of the June delivery month showed that 63 gold and zero silver contracts were posted for delivery on Wednesday within the Comex-approved depositories.  The link to yesterday's Issuers and Stoppers Report is here.
For the third day in a row there were no reported changes in either GLD or SLV.
The U.S. Mint had a sales report for the first business day of June.  They sold 5,000 ounces of gold eagles...2,000 one-ounce 24K gold buffaloes...and 583,500 silver eagles.  I'd be prepared a goodly sum that these sales actually occurred in May, but were pushed into June so that silver eagles sales for May didn't break above the 4.0 million mark for the second month in a row.
The CME Daily Delivery Report for silver on Friday showed that 553,069 troy ounces were received...and 1,787,473 troy ounces were shipped out for parts unknown.  The link that activity ishere.
It was a lot quieter in gold on Friday.  They received 500 troy ounces...and shipped out 12,963 troy ounces.  The link to that activity is here.
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selected news and views.....

BIS records startling collapse of eurozone interbank loans

Foreign bank loans fell by $472bn (£311bn) in rich countries in the fourth quarter of last year, contracting at an 8pc annual rate. The retrenchment was led by a collapse of interbank loans in the eurozone, where lenders in the creditor states continue to pull back from periphery countries.
Volumes fell by $284bn across the eurozone, a 20pc rate of contraction. Belt-tightening by banks is a key reason why the region remains stuck in recession for the seventh quarter in a row.
The BIS said in its quarterly report that the markets are “under the spell of monetary easing”, convinced that central banks will keep the asset boom going despite signs of “broad deceleration” in the US economy and fatigue in China.
This Ambrose Evans-Pritchard offering was posted on the telegraph.co.ukInternet site on Sunday evening...and it worth reading.  It's anther news item that I found in yesterday's edition of the King Report.

Political chaos pushes Turkey to front of emerging market rout

The political crisis comes at a highly sensitive moment as emerging markets across the world face intense pressure, with a sudden exodus of capital flows from those deemed most at risk from trade deficits and political risk.
The Turkish lira fell to a 17-month low against the dollar last week while yields on 10-year Turkish bonds spiked 40 basis points. “We may see some further sell-off in Turkish assets. The Istanbul 100 index may start trading [today] with a sharp drop,” said Tufan Comert from Garanti Securities.
The moves so far reflect the broader flight from emerging markets as hedge funds liquidate their bond holdings on fears over a dollar rally and a withdrawal of dollar-based liquidity as the US Federal Reserve prepares to slow its bond purchases. Morgan Stanley called it a “mini sudden stop” in external funding across the world.
This is the first of three stories about the goings-on in Turkey over the last several days.  This one is by Ambrose Evans-Pritchard...and was posted on The Telegraph's website mid-morning BST.  It's the first offering of the day from Roy Stephens.

Revolt in Turkey: Erdogan's Grip on Power Is Rapidly Weakening

For a decade, Prime Minister Recep Tayyip Erdogan has had a tight grip on power. But it suddenly looks to be weakening. Thousands have taken to the streets across the country and the threats to Erdogan's rule are many. His reaction has revealed him to be hopelessly disconnected.
For years, Erdogan seemed untouchable and, at least until the recent demonstrations began, was the most popular politician in the country. He entered office amid pledges to reform the country and introduce even more democratic freedoms. In his gruff dealings with foreign powers, he gave Turkey a new kind of confidence. He broke the grip on power held by the country's old elite, he kick-started the economy and he calmed the conflict with the country's Kurdish minority.
But one thing got lost in the shuffle: Democracy. Success made Erdogan even more power-hungry, thin-skinned and susceptible to criticism. Indeed, he began governing in the same autocratic style for which he had bitterly criticized his predecessors. And now, he is faced with significant dangers to his power from several quarters.
The biggest danger facing the Turkish premier is his own high-handedness. Though he said on Monday that he understood the message being sent by the protesters, there is little evidence that is true. Indeed, his response thus far has shown the degree to which he has become distanced from realities in his country. With hundreds of thousands of people taking to the streets, Erdogan has opted for confrontation rather than de-escalation. On Monday morning, he threatened that he would be unable to keep the 50 percent of Turks who voted for him from taking to the streets themselves. Critics see the comment as nothing less than a threat of civil war.
This story about Turkey was posted on the German website spiegel.de early Monday evening Europe time...and I consider this one to be the must read of the three...but all three stories bring a different perspective, so the other two shouldn't be discounted.  It's also courtesy of Roy Stephens.

Seven King World News Blogs/Audio Interviews


Jaco Schipper: Nationalized ABN Amro offers fool's gold

Analyzing the new terms under which the Netherlands bank ABN Amro offers to trade and hold gold, the Dutch economist Jaco Schipper finds that the bank's customers can have little idea of what they really own, where it is being kept, and what they can be sure of being able to liquidate.
This short commentary was posted on the jcashcipper.nl Internet site about three weeks ago...and I found it hiding in a GATA release on Sunday as well.

Another Strong Month for U.S. Mint Gold and Silver Bullion Sales

Although the United States Mint's gold and silver bullion sales receded from the exceptionally strong levels seen in April, the monthly sales for May handily exceeded year ago levels. The lower market prices for gold and silver continue to result in higher demand for physical precious metals.
During May 2013, sales of the popular one ounce American Silver Eagle bullion coins reached 3,458,500. This was a decline compared to the prior month when 4,087,000 coins were sold. However, it represented an increase of 20.3% compared to the year ago period when sales were 2,875,000.
The monthly sales total for Silver Eagles still may not be a reflection of total overall demand for the coins. The US Mint continues to conduct sales under their allocation program, which rations the available supplies amongst authorized purchasers. In January an initial burst of demand was strong enough to exhaust the Mint's entire inventory of coins. After an eleven day suspension, sales had resumed under a rationed basis and have remained so through the current date.
This short news item, which is definitely worth skimming, was posted on the coinupdate.com Internet site yesterday...and it's courtesy of Elliot Simon.

Redemptions in the GLD are, oddly enough, Bullish for Gold

Recent outflows from physical gold exchange traded products (we use the SPDR Gold Shares, GLD) have been interpreted by the financial press as a sign of weakness in the demand for gold as an investment vehicle.
However, a closer look at the evidence suggests otherwise: the largest outflows in the history of the GLD (see Figure 1) started well before the large drop in the price of gold we observed on April 15th, 2013 (-9%, which represents a 1 in 11 years event). In fact, the net redemption of shares of GLD started as early as the second week of January 2013 (on a 3-month cumulative rolling basis). In this note, we will explore the theory that it was the shortage of physical gold and the ensuing arbitrage opportunity that drove market participants to redeem shares of GLD.
So why are the bullion banks that act as Authorized Participants for GLD, a group that includes JP Morgan and HSBC and others (who by-the-way were mostly bearish on gold leading to the April Crash), redeeming so many shares of GLD?
This month's edition of Markets at a Glance was posted on the sprott.comInternet site yesterday...and it's certainly worth reading.

¤ THE WRAP

Sales of Silver Eagles finished the month at high levels, both absolutely and relative to Gold Eagles, but with no updates for the final days for the silver version. I suppose there could be a revised total given that Friday was the last day of the month and the US Mint can report erratically. There was a separate report of record sales of Canadian Maple Leaves, both gold and silver. If sales continue at the pace of the year so far, it is projected that total sales of silver coins by the US and Royal Canadian Mints will equal or exceed the combined silver mine production of both countries. So much for poor fundamentals being responsible for silver price weakness. -Silver analyst Ted Butler...01 June 2013
If you knew what to look for, it was easy to spot the footprints of JPMorgan et al, as they were apparent in several spots during the Monday trading session in the precious metals.  But it was the activity between about 10:10 a.m. and 11:10 a.m. EDT that was the most in your face.  "Da Boyz" didn't even try to hide it.  The precious metals should have skyrocketed on the decline of the dollar index, but that wasn't allowed to happen.
The 20-day moving averages, which were taken out of the loop on Friday's price activity, were suddenly back in play yesterday...and it was obvious from the volume numbers that fair a amount of Comex paper was thrown at the prices of both these metals to prevent them from taking out these two moving averages with any authority.  That goes for platinum and palladium as well.  We'll have to wait and see what develops from here.  However, it appears that this moving average is being strongly defended at the moment.
(Click on image to enlarge)
(Click on image to enlarge)
Since today is Tuesday, it's also the cut-off for this coming Friday's Commitment of Traders Report, so I'll be more than interested to see how the precious metal prices react today...or are allowed to react.
And while on the subject of the COT Report, I spent some time on the phone with Ted Butler yesterday...as the previous time we spoke was when we had a poor connection on his cell phone in transit between Florida and Maine on Saturday.
Ted says that the COT Report from last week, especially in gold, has some really "squirrelly" things about it...and he's hoping that the CFTC will issue a corrected report sometime today.  I told him that there was fat chance of that...and any revisions would have to wait until the new report on Friday.  Since Ted has been following this report for about 30 years, I bow to his superior knowledge, as he knows this report better than anyone.  He also said that it was not only the numbers "under the hood" that will change, but it may also affect the headline numbers that I commented at length on in Saturday's missive.
So, we wait.
In Tuesday trading in both the Far East and early morning in London, gold and silver are under a bit of selling pressure.  Volume's are on the lighter side...and the dollar index is up about 12 basis points.  And as I hit the 'send' button at 5:10 a.m. Eastern time, gold is down about six bucks...and silver is down about 20 cents.
I have no idea what to expect during Tuesday trading on the Comex in New York later this morning...so nothing will surprise me when I switch my computer on after I get out of bed.
That's more than enough for today...and I'll see you here tomorrow.
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