Gold Speculator - Ed Steer

It's Time to Devalue the Dollar Against Gold: Jim Rickards

GoldInvestor — Sun, 05 Sep 2010 04:05:29 GMT

Well, we got the obligatory job numbers hit on the gold price. But the sell-off actually started at 8:00 a.m. sharp... and at 8:30 a.m. on the button the bids got pulled... and the price fell $11 in just a few minutes to its low of the day at $1,237.10 spot. The price recovered quickly... and by noon, the gold price had gained back almost all its losses on the day... but got sold off a bit going into the New York close. Gold's New York high of $1,252.10 spot was at 8:00 a.m. Eastern time.

Silver's sell off was barely noticeable, with its low [$19.46 spot] coming at the same time as gold... a few minutes after 8:30 a.m. Eastern time. From its low, gold pretty much traded sideways... but the second that London trading closed for the weekend, a buyer of substance showed up... and in no time at all, silver was up 35 cents. Then, once floor trading was through for the weekend, silver went on to set its high price of the day at $19.97 spot. Whoever the buyer was, they were most careful not to drive the price above the magic $20 spot price.

Here's the New York silver chart that shows Friday's action in far more detail.

The world's reserve currency was flat through all of Far East and most of London trading... but headed south starting just before 9:00 a.m. in New York... losing about 40 basis points by the close. Nothing to see here, folks.

The gold stocks gapped down at the open, but the HUI regained almost all its loses by lunchtime... and closed virtually on its high of the day... but still down 0.17%. Here's the HUI graph for the week just past. It's only up a couple of points... but the silver stocks had a great week.

Friday's CME Delivery Report showed that 2 gold and 125 silver contracts were posted for delivery on Wednesday. JPMorgan was the big stopper in silver with 87 contracts... all of which were in their house account... so they haven't shut down their proprietary trading system just yet. Once JPMorgan [and now Goldman] stop trading in their house accounts, then you'll know that they're completely out of it... but not before. The link to that report is here... and be sure to check out JPMorgan's and Bank of Nova Scotia's proprietary trades. 'C' is for client... and 'H' is for house.

There were more withdrawals reported from both ETFs yesterday... both of them small. In GLD, they reported 14,982 ounces withdrawn... and in SLV it was 117,862 ounces. Both might have been fee payments.

The U.S. Mint reported their first sales for September yesterday... and they weren't much. They reported 6,500 ounces were sold in the gold eagle program... plus 1,000 24-K gold buffaloes. Although they didn't report any silver eagles sales yesterday, Ted Butler pointed out that they revised August's silver eagle sales upward by quite a substantial amount. Their original month end report showed 1,906,000 silver eagles... and now its been revised up to 2,451,000.

Over at the Comex-approved depositories they reported receiving 492,243 ounces of silver on Wednesday... and the link to that action is here.

Well, the Commitment of Traders report [for positions held at the close of trading on Tuesday, August 31st] was ugly in both metals. There was absolutely no sign that any bullion bank was covering short positions in either metal during the prior week. The bullion banks increased their net short position in silver by a whopping 8,525 contracts... 42.6 million ounces. The Commercial net short position is back up to 296.9 million ounces of silver. The '4 or less' bullion banks are short 244.0 million ounces... and the '8 or less' bullion banks are short 321.8 million ounces. You can easily see the deterioration in the full colour COT silver chart linked here.

In gold it was just as ugly, as the bullion banks went short against all comers... increasing their net short position by 20,261 contracts... or 2.0 million ounces. The Commercial net short position in gold is back up to 28.5 million ounces. Of that amount, the '4 or less' traders hold 20.4 million ounces short... and the '8 or less' traders are short 27.2 million ounces. The full-colour COT graph is linked here.

But, as Ted Butler mentioned to me on the phone yesterday, a lot of this deterioration had to do with the Raptors [the '9 or more' Commercial traders] selling long positions and taking profits. This has the same affect as increasing the net short position... as selling a long position has the same net impact in the COT as going short a contract. We won't really get a true sense of what's happening out there until next Friday when we get two things... a new COT report, plus the September Bank Participation Report. The combination of those two reports will tell us a lot more about what JPMorgan et al are up to. It always seems like we're waiting for just one more report... doesn't it, dear reader?

Here's Ted Butler's "Days of Production" graph courtesy of Nick Laird over at sharelynx.com that shows how many days of world production it would take for the '4 or less' or '8 or less' traders to cover their short position in all Comex-traded commodities. In silver and gold, it has risen quite a bit compared to last week's numbers.

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My first story of the day is one that I dug up over at Bloomberg yesterday... and that I alluded to further up in this column. Hard on the heels of a similar move by JPMorgan, comes the news that Goldman Sachs is also removing itself from the proprietary trading business... making bets with the firm's own money. As you know dear reader, I'd like to think that they're actually going to do this... but I'll leave this in the 'I'll believe it when I see it' category. They're talking the talk... but I want to see them walking the walk. As I've said many times, I must have been born in Missouri in another life. The headline reads "Goldman Sachs Said to Be Shutting Proprietary-Trading Division"... and the link is here.

The next item for you today is from the Friday morning King Report. It's a story from yesterday's edition of the Financial Times out of London. It expands on the rioting that occurred in Mozambique the other day... and also notes the fact that Russia has decided to extend its grain export ban until the 2011 harvest is in the bins... which is over a year away. The headline states "Fears Grow Over Global Food Supply". This is a must read... and the link is here.

I have a couple of real estate-related stories for you next. The first is courtesy of reader U.D. and is posted over at businessinsider.com. The headline reads "Pending Home Sales Reconfirm The Housing Market is Crashing". The article is a must read... and the graph is a stunner... and the link is here.

The second real estate-related story will bring a smile to your face, dear reader. It appears that JPMorgan's top guy is having some trouble selling his chicken shack in the Windy City. The headline reads "Jamie Dimon Slashes His Chicago Mansion Down To Half Price". There's a nice slide show of the place as well... and I thank reader 'David from California' for sharing it with us... and you can check it all out here.

Following those two real estate stories, I now have four international stories courtesy of reader Roy Stephens. The first one is from yesterday evening's edition of The Telegraph. Once again China is publicly wringing its hands over all the U.S. dollars that it holds... as this story offers a rare insight into its foreign exchange reserves. The headline reads "China fears depreciation of $2.45 trillion of reserves still heavy in dollars". This piece is definitely worth your time... and the link is here.

The next offering from Roy Stephens is this chilling piece that was filed by Ambrose Evans-Pritchard late last night in The Telegraph. Greece’s austerity measures cannot prevent default and will lead to a breakdown of the political order if continued for long, a leading German economist has warned. The headline reads "EU austerity policies risk civil war in Greece, warns top German economist Dr Sinn". This rather short piece is a must read... and the link is here.

Roy's next story is posted over at upi.com. Things are just going from bad to worse in Pakistan... and relations with the United States took another big hit last week, as this story explains. The headline reads "Commentary: Cry for me Pakistan"... and its definitely worth your time... and the link is here.

The last story from Roy Stephens is one that popped up over at the German website spiegel.de. This story has been around for about a hundred years... but has seen a revival this past week. The headline reads "The Czar's Lost Gold: Russian Submarine Hunts Clues to Century-Old Mystery". It's a fascinating read... and the link is here.

Well, Nick Laird over at sharelynx.com slipped the updated PM Funds Index graph into my in-box late last night... and I couldn't resist posting it. The graph goes back to early 2007... and although the index has decisively broken above the red line... I'll save my cheering for when it breaks decisively above its old high.

The next gold-related item is a blog from over at King World News. Eric sent it to me early yesterday morning... but I just couldn't fit it in anywhere, so here it is today. As you may be aware, dear reader... Goldcorp just announced that it had acquired Andean Resources for $3.6 billion. Eric has more to say about it in his blog headlined "Pac-Man" Phase In Gold Continues... and the link is here.

Lastly today is an interview that was just posted over at King World News in the wee hours of this morning. The interview is with Jim Rickards of Omnis, Inc. Right up front Jim says that the equity markets no longer perform their primary function of price discovery because of all the market interventions by government. Rickards goes on to say that our equity markets have been destroyed... and he no longer takes them seriously, because they only entities trading are indexers and robots! He also says that the Fed and the Treasury still have "The Golden Bullet" left. As you already know, dear reader, anything Jim has to say is well worth your time... and this interview is no exception. So clomp on the old feed bag one more time... and click here.

Well, that was my last story until Scott Pluschau slid the following item into my in-box about 5:30 a.m. Eastern time this morning. It's a story that was filed from Kuala Lumpur during their Saturday... and is posted over at asia.news.yahoo.com. The headline reads "Islamic gold dinar gains ground in Malaysia: official". Umar Ibrahim Vadillo, chief executive officer with Kelantan Golden Trade, said the first batch of gold and silver coins worth two million ringgit (625,000 dollars) had been sold out in less than a month. "There is enormous response in Malaysia. Their reaction is unbelievable," he told reporters. The link is here.

I quote from the Progressive platform: 'Behind the ostensible Government sits enthroned an invisible Government, owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics, is the first task of the statesmanship of the day.... This country belongs to the people. Its resources, its business, its laws, its institutions, should be utilized, maintained, or altered in whatever manner will best promote the general interest.' This assertion is explicit. We say directly that 'the people' are absolutely to control in any way they see fit, the 'business' of the country. - Theodore Roosevelt, 1913

Today's 'blast from the past'... and the person who sings it, needs no introduction. The singer and the song are instantly recognizable. The light show that goes with it is the most fantastic I've ever seen. I would have loved to have been at that concert. Turn up your speakers and click

.

I have one other video for you today that's a real hoot... and reader Peter Faulconer from Argentina sent it to me yesterday. As my two cats would tell you, I'm not a dog fan. Don't get me wrong... I love dogs, but they are such a high maintenance pet, I just have time to give them the attention they so richly deserve. When I'm retired and living on an acreage someplace, then I'll be happy to have one.

Having said that, when I saw that this video was about a dancing dog, my finger was only seconds away from the 'delete' button. But I know Peter really well, so I endured... and was glad I did. My wife told me, with some glee in her voice, that the dog was a better dancer than I was... which, by the way, is not far from the truth, dear reader. Anyway, you just have to see this to believe it... and be sure you watch this dog dance the Merengue right to the end. The link is

. Enjoy!

Nothing that happened yesterday in the gold and silver market surprised me. To tell you the truth, I really don't know what to make of it all. Both gold and silver are at their most recent highs... and the COT sucks. Will we get a bullion bank-orchestrated sell-off here? I'd bet money on it. But there's also a chance that they could get blown out of the water with a full short position on. I would also suspect that any sell-off would be short and shallow, as there are just too many buyers waiting to buy the dips... some of which are only hours long.

In his interview above, Jim Rickards referred to the "Golden Bullet" that the Fed and Treasury could use if they so wished. Long-term readers of this column know that I've spoke of that option for years now as one of three possibilities... 1] a deflationary collapse, 2] a hyperinflationary depression or, 3] a re-pricing of gold. And there's a good chance that we could experience all three of these phenomena in one form or another... either individually or collectively... over the coming months and years.

With the precious metals indexes either breaking out... or about to break out to new highs... I'm still urging you to put your investment dollars to work. The first place I'd start would be with a subscription to either Casey's Gold and Resource Report... or Casey Research's flagship publication... the International Speculator. Please click on the links, as it costs nothing to check them out... and the subscriptions come complete with CR's usual money-back guarantee.

I'm still 'all in'... and nothing will change that.

Enjoy the rest of your long weekend... and I'll see you here on Wednesday morning. I might even have something on Tuesday morning if something goes 'bump in the night' over the weekend, as not all of the world's gold markets are closed on Monday.

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Future Gold Hysteria: Richard Russell

GoldSpeculator — Fri, 03 Sep 2010 14:19:19 GMT

Gold lost all its small Far East gains beginning at the London a.m. gold fix yesterday morning [10:30 a.m. local time/5:30 a.m. Eastern time]. But from that point, gold climbed slowly... hitting its high of the day [$1,254.50 spot] around 9:30 a.m. in New York... before dropping to its New York low price [$1,245.70 spot] at the London p.m. gold fix at 10:00 a.m. Eastern... 3:00 p.m. local time in London. Gold tested the $1,253 spot level several times during the rest of the trading day [including once in electronic trading]... but got turned back at every attempt.

Here's the New York market on its own. It shows a lot more detail of what goes on in the only gold market that really matters.

Silver developed an upward price bias by 3:00 p.m. Hong Kong time during their Thursday afternoon trading session. Seven hours later, at 9:00 a.m. in New York, silver spiked up a further 15 cents to $19.65 spot... and, after meandering around a bit, closed at that price. The New York high in silver [$19.73 spot] occurred around 2:10 p.m. during electronic trading.

The dollar flat-lined all day long... and was not a factor in gold's Thursday's price action. It's been many, many months since there was much [if any] relationship between precious metals prices and the 'value' of the world's reserve currency. There's the odd day that the relationship returns, but one has to presume that's more by good luck than by good management.

The HUI double-bottomed at the London p.m. gold fix at 10:00 a.m. Eastern. That point is very visible on the chart below. After the 'fix' was in, the HUI rallied along with the gold stocks and closed almost on its high of the day... up 1.37%... but not quite gaining back everything that was lost on Wednesday.

Thursday's CME Delivery Report showed that 20 gold and 83 palladium and zero silver contracts were posted for delivery on Tuesday. That's really strange for silver, as only 709 contracts have been posted for delivery in September so far. September is normally a big delivery month... and, according to the CME's latest report, it shows that there are still 1,804 contracts left to deliver in September. What are the issuers waiting for, one wonders?

Over at the GLD ETF yesterday, there was a big surprise, as 293,206 ounces of gold were reported withdrawn! That's almost every ounce that's been deposited in GLD going all the way back to August 17th. There's been absolutely nothing in the gold price action that would indicate why that withdrawal happened. Maybe it was an error. I'll update you on this in my Saturday column. There were no changes reported in the SLV ETF.

The U.S. Mint had nothing to say on Thursday... and over at the Comex-approved depositories they showed that 90,433 ounces of silver [net] were withdrawn on Wednesday. The link to that action is here.

I don't have a lot of reading for you today, which is fine by me.
Today's first story is about another bank run. This one is in Afghanistan. "As depositors thronged branches of Afghanistan’s biggest bank, Mahmoud Karzai, the brother of the Afghan president and a major shareholder in beleaguered Kabul Bank called on Thursday for intervention by the United States to head off a financial meltdown." The Federal Reserve rescuing the Afghan banking system? Why not... it wouldn't be the first foreign bank they bailed out... and it certainly won't be the last. You can't make this stuff up... and I thank Florida reader Donna Badach for sharing it with us. It's a story in yesterday's edition of The Washington Post that was filed from Dubai... and the headline reads "Karzai urges Afghans not to panic as bank withdrawals accelerate". It's a longish story, but definitely worth the read... and the link is here.

The next item is a short AFP story filed from Maputo in Mozambique... and posted at news.yahoo.com. The headline reads "Mozambique riots toll: 7 killed, 288 hurt: government". Apparently there were riots over rising prices in Maputo... and things got pretty ugly. This certainly isn't the first time this has happened somewhere in the world in the last year or so... and won't be the last. The story is only three paragraphs long... and I thank reader Scott Pluschau for sending it along... and the link is here.

The next story is a Bloomberg offering that I managed to dig up on my own. The headline reads "SEC Said to Probe Role of Canceled Orders in Crash"... The U.S. Securities and Exchange Commission is examining whether high-speed traders helped destabilize equity markets during the May 6th crash by repeatedly placing and canceling orders in an attempt to manipulate share prices. Isn't manipulating share prices illegal, dear reader? Anyway, high frequency trading and 'quote stuffing' as it's called, gets a fair amount of ink in this story. It's a longish read, but I think it's worth your while. Try a few paragraphs and see for yourself. The link is here.

Reader 'David from California' sent me this next piece. It's a posting over at zerohedge.com... where the very long headline says it all... "Can You Hear Me Now? 17th Weekly Fund Outflow As Equity Fund Redemptions Accelerate". The story, which has an excellent graph, is very short... and is a must read. The link is here.

Here's your big read [3 pages] of the day... and is courtesy of Australian reader Wesley Legrand. It's a posting from Ian Gordon's website longwavegroup.com. The story is dated July 26th, so it's about six weeks old, but still very relevant... and about to become more relevant in the months ahead. The title reads "Winter Warning: In One Hell of a State [2]"... "From the smallest to the greatest in size, many American states are seeking direct and immediate financial assistance of an historic magnitude, from the Federal Government." The situation is almost beyond desperate... and will get several orders of magnitude worse... with no end in sight. The link is here.

Lastly today is this very short blog over at King World News that Eric slid into my in-box in the wee hours of this morning. The headline reads "Russell - Future Gold Hysteria... Williams - Job Loss 150,000+" Richard Russell has some excellent gold commentary... and John Williams of shadowstats.com fame, talks about this morning's jobs numbers. It's a must read... and the link is here.

When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain. - Napoleon Bonaparte

Yesterday was an OK day... but nothing to write home about... although better than the alternative. There wasn't a lot of volume in gold... but silver volume was pretty decent. Without question there was more deterioration in the Commercial net short position in both metals, as the bullion banks went short against all long positions that were placed.

We are now back into overbought territory... especially in silver... and it remains to be seen whether we power higher from here... or get a 'correction' courtesy of 'da boyz'. We have a double top from May's high... so if JPMorgan et al are setting the markets up for a fall based on chart patterns... they're doing a pretty nifty job. Here's the 1-year silver chart that makes my point.

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It's Time to Devalue the Dollar Against Gold: Jim Rickards

Future Gold Hysteria: Richard Russell

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The True Value of Gold

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Gold Demand Up 36% in the Second Quarter: WGC

JPMorgan Buys Back More of Its Silver and Gold Short Positions

More Ignorant Snickering About Gold

Russia's Central Bank Buys Another 500,000 Ounces of Gold in July

Silver Velocity -- the Coming Bullet

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