Ed Steer this am.

Welcome To The Golden Minerals HUB On AGORACOM

Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.

Reply New Message

Prev Message Back To Forum Threaded View Next Message

Scruffy

Rank: President [?]

Points: 8381 [?]

Votes: 69 Score: 3.7 [?]

Your Vote:

Please Log In to Vote

Did you know? You can earn activity points by filling your profile with information about yourself (what city you live in, your favorite team, blogs etc.)

Ed Steer this am.

posted on Oct 16, 2010 06:32PM

Yesterday in Gold and Silver

The gold price didn't do much in Far East or early London trading during their Friday... and was down about five bucks by 8:00 a.m. in New York. But minutes before the Comex opened at 8:20 a.m... the dollar cratered by more than 30 basis points in a heart beat... and then turned on a dime, soaring 90 basis points. The dollar rally ended at precisely 2:00 p.m. Eastern time... with the bulk [75 basis points] of the rally occurring by 10:25 a.m.

The gold price followed the gyrations of the dollar almost to the tick... with the low of the day [$1,361.40 spot] coming at 10:25 a.m. Eastern time. The high of the day [$1,385.20 spot] was also set in New York... the moment the Comex opened... when the dollar was at its lowest point.

As you can tell, pretty much all of yesterday's price 'action' in gold was dollar related.

Silver followed gold in lock step, with the highs and lows of the day occurring at the same times. Silver's New York high was $24.77 spot... with its absolute low of the day [$24.07 spot] coming at 10:25 a.m. Eastern time.

Here's the dollar chart. All of the reasons for Friday's price action in both silver and gold is contained in this graph.

The precious metals shares pretty much followed the gold price... with most of the damage occurring in the first 55 minutes of trading. The HUI finished down 1.46% on the day. Here's the graph for the week that was.

Well, after taking in 610,000 ounces of gold on Thursday, the GLD ETF had a withdrawal of 78,153 ounces on Friday. But over at the SLV ETF, they reported receiving another big chunk of silver. This time it was 1,956,276 troy ounces... more than one full day of world silver production. Since August 5th, the SLV has taken in 34.5 million ounces of silver... a 17% rise in just over two months.

The U.S. Mint reported selling another 185,000 silver eagles on Friday... but nothing in gold eagles.

The Comex-approved depositories reported a net withdrawal of 322,954 ounces of silver on Thursday. The link to that action is here.

The great expectations for the Commitment of Traders report was all for nothing. The report was basically market neutral in both silver and gold... as there was no sign whatsoever that any major short covering occurred during the prior week.

In commentary to his subscribers last night, silver analyst Ted Butler had this to say... and I'm paraphrasing a lot. "...over the past 7 weeks, gold has climbed by $140... and silver is up by $6.30. The commercials didn't increase their short positions materially on those rallies... nor did they reduce them. It is important to understand how the futures market operates. Every day, all long and short position holders have their holdings marked to market. If a position moves in one's favor, the mark to market amount is credited to each account. If a position is adversely impacted by the daily mark to market, each account is debited by the appropriate amount. Additional funds covering the adverse move are required to be immediately deposited to make up for the market to market paper loss. This is a margin call. If you don't cover margin calls immediately by depositing additional funds, the brokerage house will close out a sufficient portion of your position to cover the margin deficiency. If you hold long positions, they will sell you out. If you hold short positions, they will buy back your short position."

"As of the end of trading on Friday, the total collective margin call to the silver shorts was $3.78 billion... and to the gold shorts it was $7 billion. Since I believe that many of the gold shorts also hold silver shorts, it is reasonable to look at the silver and gold total margin calls on a combined basis of almost $11 billion. Because the big 8 commercial silver and gold shorts [read bullion banks - Ed] hold a concentrated short position of more than 50% of the true net total open interest, these 8 trading entities have been hit with $6 billion in margin calls. JPMorgan is out almost a billion dollars on silver alone."

Ted feels that these killer margin calls have already claimed many casualties... but it's too soon to know who they are, as "the bodies haven't floated to the surface yet."

Ted also says that this has created a dangerous situation for the market itself... as the '8 or less' traders are more desperate than ever to rig a sell-off. Can they, or will they? As I've said many times in this column, the resolution of these obscene and grotesque short positions will determine the future price of silver and gold... and timing is running out.

Critical Reads

Take It To The Limit

While Ted Butler's comments are still fresh... my first story of the day is an old essay of Ted's that was written on December 30, 2003. This is probably the fourth or fifth time that I've posted it in this column over the last three years... and this is the perfect point in time to post it again. The title of this essay is "Take It To The Limit". If you've read it before, I urge you to read it again. If this is the first time you've laid eyes on it... read it slowly and carefully... and more than once. This is an absolute must read... and this short essay, posted over at silverseek.com, is linked here.

U.S. Mint to release first 5-oz silver bullion coin shortly

The next story is also silver related... and I thank reader Charley Orr for sending it to me. This one is posted over at mineweb.com... and the headline reads "U.S. Mint to release first 5-oz silver bullion coin shortly". I ran a similar story to this about a week ago, but this one is more specific in its detail. It's not a long read... and the link is here.

Fed Wants to Hoodwink Public, Only Fools Itself

My next story is a Bloomberg op-ed piece that I found posted over at Jim Sinclair's website jsmineset.com yesterday. I've never much cared for columnist Caroline Baum, as she's always dissed gold... and the gold bugs... at every opportunity. However, this time she rips "The Creature From Jekyll Island" a new one. I thought her entire commentary was first rate... and I'll toss this one in your must read basket as well. The headline reads "Fed Wants to Hoodwink Public, Only Fools Itself"... and the link is here. [And if you haven't read that book, you owe it to you to do so!]

Jim Sinclair: The top callers in gold have been wrong for eight years

Since I mentioned Jim Sinclair in the previous paragraph... here's one more thing from him. It's an interview posted over at King World News... and it's imbedded in a GATA release headlined "Jim Sinclair: The top callers in gold have been wrong for eight years"... and the link is here.

OPEC Members Seek $100 Oil to Counter Dollar Weakness

In other news, here's a Bloomberg story that I found on my own yesterday. The headline reads "OPEC Members Seek $100 Oil to Counter Dollar Weakness". I'm actually surprised that oil isn't over a $100/barrel already based on that. The story is linked here.

Nicklaus Golf Homes in Spain Offered at 50% Discount by Lenders

If you're a golfer, this Bloomberg story may be of interest. As you know, the real estate market in Spain is no great shakes, either... and the headline of this item echoes that fact. It reads "Nicklaus Golf Homes in Spain Offered at 50% Discount by Lenders"... and the link to this story is here.

Why the U.S. Has Launched a New Financial World War -- and How the Rest of the World Will Fight Back

I have a couple of big reads for you now. I've saved them for the weekend for obvious reasons... and both are very much worth your time. The first was sent to me by Nick Laird... and is posted over at the alternet.org website. The headline reads "Why the U.S. Has Launched a New Financial World War -- and How the Rest of the World Will Fight Back". "Finance is the new form of warfare -- without the expense of a military overhead and occupation against unwilling hosts... and computer keyboards are today's army appropriating the world's resources." It's extremely well written... and the link is here.

Money Is Power: An Inside View of the IMF's Massive Global Influence

Your next big read was sent to me by reader Roy Stephens while I was on vacation last week. It's a posting over at the German website spiegel.de... and the title of the essay reads "Money Is Power: An Inside View of the IMF's Massive Global Influence". It's a 9-part tome... so top up your coffee, then click here.

Felix Zulauf, founder and president of Zulauf Asset Management

The next offering today is another interview posted over at King World News. This time it's with Felix Zulauf, founder and president of Zulauf Asset Management. He's been a member of Barron's Round Table for over 20 years. This is mostly about gold and the end game of the current financial system as we know it... and any pull-back in gold [and silver] is a buying opportunity. This interview is a must listen... and the link is here.

Jim Rickards of Omnis Inc

Eric King also has an interview with Jim Rickards of Omnis Inc. You already know that I have a very high opinion of this guy... and it's also my opinion that everything he says is worth listening to. This interview is no exception. It's all about gold... and the link is here.

Bubblicious

Lastly today is this excellent 5-page commentary on gold that's posted over at a website called thepriceofeverything.com. I've never heard of the website, or the author of this piece. It's written by Tim Price of PFP Wealth Management in the U.K... and it's entitled "Bubblicious". It, too, is a must read... and I thank reader U.D. for sending it along... and the link is here.

Funnies:

"The liberals are asking us to give Obama time. We agree... and think 25 to life would be appropriate." - Jay Leno

"America needs Obama-care like Nancy Pelosi needs a Halloween mask." - Jay Leno

Q: "Have you heard about McDonald's new Obama Value Meal? A: Order anything you like and the guy behind you has to pay for it." - Conan O'Brien

Q: "What does Barack Obama call lunch with a convicted felon?" A: "A fund raiser." - Jay Leno

Q: "What's the difference between Obama's cabinet and a penitentiary?" A: "One is filled with tax evaders, blackmailers, and threats to society. The other is for housing prisoners." - David Letterman

Q: "If Nancy Pelosi and Obama were on a boat in the middle of the ocean and it started to sink, who would be saved?" A: "America!" - Jimmy Fallon

Q: "What's the difference between Obama and his dog, Bo?" A: "Bo has papers." - Jimmy Kimmel

Q: "What was the most positive result of the 'Cash for Clunkers' program?" A: "It took 95% of the Obama bumper stickers off the road." - David Letterman

The Wrap

The Founders of this country would not recognize the present government as their creation. We need not idealize them in order to recognize that the regime we live under now has severed any real connection with the original Republic... with its principles, its political culture, its love of peace and good relations abroad free of “entangling alliances.” At home and abroad, this government has wildly outrun any possible rationale for its power. It is something every American should be both afraid of and ashamed of. A patriotic American today ought to be “anti-American.” - Joe Sobran

Today's 'blast from the past' should need no introduction... and most readers will recognize it right from the opening bar. I believe this song was from 1978... but I wouldn't bet the ranch on it. Turn up your speakers and click here.

Despite the precious metal's dollar-based declines on Friday... nothing has changed in the grand scheme of things. The monstrous short positions on the Comex held by the '8 or less' bullion banks remain, as Ted Butler says... "untouched rocket fuel." How this will be resolved [as the shorts scream in financial pain] is the question of this, or any other century.

We just have to wait it out and see. My coin guy here in Edmonton has been doing a roaring business in silver for the last couple of weeks, but hasn't sold a lot of gold. If he's selling a lot of silver in this part of the world, I can only imagine how fast silver is flying off the shelves everywhere else in North America at the moment. I bought some more on Friday myself... and I hope you're getting your share as well.

Yesterday I mentioned Casey's TexTen... the new generation of serially successful entrepreneurs that's emerging within the natural resource sector. I have more on that... all of which I shamelessly stole from David Galland's column yesterday afternoon... Casey's Daily Dispatch... which you can read for free every day by clicking here.

Here's what David had to say about it...

A moment ago, I mentioned taking steps to protect yourself from what’s next. One of the best ways to do so is by getting to know Casey’s NexTen.

You may already be familiar with our Explorers’ League – an organization that Doug Casey and I founded some years ago to acknowledge serially successful mine finders and developers. In order to be inducted as an Explorers’ League Honoree, a person has to have first found or developed a minimum of three or more economic resource deposits (and most have many more than that – no small feat given that most people in the industry retire without a single discovery to their name). Honorees include professionals such as Ross Beaty, Lukas Lundin, Ron Parratt, Robert Friedland, Ron Netolitzky, and a handful of others. By following their career moves and buying early into their new projects, investors have literally made fortunes.

Similarly, Casey’s NexTen, launched at our just-concluded Gold & Resource Summit, recognizes the work of today’s hottest young resource professionals – all of whom have already achieved remarkable success despite being under forty years old.

Like the Explorers’ League, the mandate of Casey’s NexTen is to keep our subscribers tightly in the loop on the latest career moves of these up and comers. Imagine how much money you could have made if you had discovered Ross Beaty or any of the other Explorers’ League Honorees early on in their careers? Well, that’s the intent of Casey’s NexTen.

In conjunction with the launch of the NexTen, we’ve put together a special, deeply discounted offer that allows you to access the full details on the NexTen’s most promising projects through a bundled subscription to our two services Casey’s International Speculator and Casey’s Energy Report.

Plus, you’ll receive our next two exclusive special alerts having to do with a NexTen project. Normally, you’d have to subscribe to one of our premium Alert services at a cost of $4,500 to receive these alerts – but not when you take advantage of the special NexTen offer. Your alerts could be a heads-up on a private placement announcement or a new company a member of the NexTen is starting – but if history is any guide, these two alerts alone have the potential to pay for your subscription, and then some.

With that introduction, it’s my pleasure to introduce you to Casey’s NexTen, whom you can “meet” by clicking the link just below. Once you access the underlying page, use your mouse to roll over the photos to reveal who the NexTen are, and the career moves they have made to date that resulted in their being inducted into this very exclusive club.

Meet the NexTen by clicking here now.

So, another week has come and gone... and another week closer to whatever new position limits that the CFTC is going to impose on Comex silver futures. Short-term correction or not, there's nothing that would convince me to sell either one ounce or one share of my precious metal holdings... as once the election is over, all bets will be off.