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Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
Message: Ed Steer this morning
Silver Shortage Looms: Rick Rule
Oct
23
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The U.S. Mint sells another 350,000 silver eagles. FDIC asked to put Bank of America into receivership. Where can we find 20,000 tonnes of gold? The monetary breakdown of the west. From global depression to global governance... and much more.
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Yesterday in Gold and Silver
The gold price was pretty flat during Far East trading on Friday. This all changed the moment that London opened for business at 8:00 a.m. local time... which is 3:00 a.m. in New York... as the not-for-profit seller[s] showed up with a vengeance. Within an hour the gold price was at its low of the day... which was around $1,314 spot.
I filed my Thursday commentary at 5:00 a.m. Eastern time yesterday morning... and as I indicated in my closing paragraph, I feared the worst when New York opened. Nothing of the sort happened. Gold popped ten bucks at the Comex open, but got sold off beginning at 9:00 a.m. before resuming the quiet upward trend that had started earlier in London. Gold close almost at it's high of the day yesterday, which was reported as $1,329.50 spot.
Silver's price was a bit more entertaining than the gold price during Far East trading on Friday... but it, too, ran into the same not-for-profit seller at the London open. Silver's low of the day occurred at 9:00 a.m in London around the $22.80 spot level... and from that point climbed quietly [and unevenly] right into the New York close at $23.29 spot... which also happened to be silver's high price of the day.
There was very little net change in the world's reserve currency during the Friday trading day... and, in the broad strokes, the gold and silver prices were loosely co-related with the dollar... but it's a stretch to say it was the only factor in yesterday's precious metals price action.
The precious metals price action pretty much followed the gold price around while the New York equity markets were open. Most silver shares did better than their gold counterparts. The HUI managed to close a hair over five hundred at 500.06... up 0.95% on the day. Here's the chart for the week that was.
The graph speaks volumes. Tuesday's bear raid stands out like a sore thumb. But once the nervous longs hit the bid at the Tuesday open... and even though the gold price had declined even more since then... the HUI finished the week basically unchanged from its Tuesday morning low, which was around the 500 mark. Most investors were either buying the dips, or refused to be scared out of the market.
It's been ten days since I've mentioned the CME's Delivery Report, so I thought I'd throw Friday's report in here just for fun. They reported that 88 gold and 6 silver contracts were posted for delivery on Tuesday. In gold, Prudential and JPMorgan were the big issuers. JPMorgan is still trading for its house account. The link to the 'action' is here.
There were no changes reported for either the GLD or SLV ETFs yesterday.
The U.S. Mint had a sales report. They sold another 9,500 ounces of gold eagles and 350,000 silver eagles. Month-to-date... 78,500 ounces of gold eagles and 2,350,000 silver eagles have been sold.
Over at the Comex-approved depositories, they reported that a net 152,407 ounces of silver were withdrawn on Thursday. The link to this activity is here.
Well, the Commitment of Traders report was more positive than I expected. In silver, the bullion banks reduced their net short position by 3,354 contracts. Ted Butler pointed out to me that the Commercial net short position is back below 300 million ounces for the first time since the end of August... 290.8 million ounces to be exact.
The '4 or less' bullion banks are still short 247.0 million ounces... and the '8 or less' bullion banks are short 324.1 million ounces. Nothing has changed here, as these bullion banks are still trapped on the short side with these obscene and grotesque short positions that they can't get out of... and they haven't even started to cover them in any meaningful way.
There was also improvement in gold... with the bullion banks covering 6,940 short positions. As of Tuesday's cut-off, the total net Commercial short position sat at 29.3 million ounces. Of that amount, the '4 or less' bullion banks were short 21.7 million ounces... and the '8 or less' bullion banks were short 30.2 million ounces of gold.
Needless to say, the short positions in both gold and silver have fallen substantially since Tuesday's bear raid. Next week's report should tell us more.
Here's Ted Butler's "Days to Cover" graph that's courtesy of Nick Laird over at sharelynx.com. You can see at a glance just how outrageous these silver and gold short positions really are when you compare them against other commodities.
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¤ Critical Reads
SubscribeFDIC Called on to Put Bank of America into Receivership
I've been saving a lot of stories for the weekend because quite a few of them are pretty big reads... and I feel that it's better to post them now when you may have more time to spend on them.
My first story today is from 'David in California'. It's a posting over at the huffingtonpost.com website that's headlined "FDIC Called on to Put Bank of America into Receivership". Here's a paragraph from the story... William K. Black, a former regulator and white-collar crime expert who cracked down on massive fraud during the savings and loan scandal of the 1980s, and his fellow economics professor at the University of Missouri-Kansas City, L. Randall Wray, write that it's time to "foreclose on the foreclosure fraudsters". This is definitely worth the read... and the link is here.
The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America and Spawned a Global Crisis
This next piece, courtesy of reader Roy Stephens, falls into the 'big read' category. It's an excerpt from Michael Hudson's book "The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America and Spawned a Global Crisis". It fits in nicely with the prior story about the Bank of America. It's an 8-page essay... and it's an ugly read... and the link is here.
Dubai: Real Estate Crash Sends Prices, Rents Falling
Here's my last story on the real estate market. This one is courtesy of reader U.D... and is posted over at yahoo.com. It's an update on the desperate real estate situation that exists over in Dubai. "There's a half-off sale in the world's tallest building. Even with an address at the iconic Burj Khalifa, rents for residences in the tower are not immune from Dubai's real estate crash. Indeed, nearly a year after it was inaugurated with a massive water-and-fireworks display, about 825 of the tower's 900 ultra-luxury apartments remain unoccupied." I don't expect the real estate market to improve anywhere in the world for a couple of decades. This is a very interesting read. It's headlined "Dubai: Real Estate Crash Sends Prices, Rents Falling"... and the link is here.
Where can we find 20,000 tonnes of gold?
I only have two precious metals related stories for you today... and I'll insert them at this point in my column. The first is GATA release from yesterday... and I'll steal part of Chris Powell's preamble as an introduction. "In new commentary, the economist and former banker Alasdair Macleod examines the fractional-reserve nature of the London gold market and estimates that the major bullion banks have sold about 20,000 tonnes more gold than they have, the imaginary metal residing in "unallocated" accounts." [This is another nifty name for 'pool account'. - Ed]. The headline reads "Where can we find 20,000 tonnes of gold?" This is a must read commentary... and the link is here.
Silver shortage looms, mining stockbroker Rick Rule tells King World News
The second story is about silver. It, too, was a GATA release yesterday, but I'm just going to 'borrow' the preamble and insert the link. Mining stock broker Rick Rule told Eric King of King World News yesterday that shortages of silver may be developing. An excerpt from the interview can be found at the King World News blog. The headline reads "Silver shortage looms, mining stockbroker Rick Rule tells King World News" and the link is here. I'll have more to say about this silver shortage in 'The Wrap' section further down.
The Monetary Breakdown of the West
My last three offerings all fall into the 'big read' category... and one sort of leads into another in a natural progression. The first is from reader Brad Robertson. It's a piece that was posted over at mises.org earlier this month. It was written by Murray N. Rothbard... and is excerpted from What Has Government Done to Our Money? To understand the current monetary chaos, it is necessary to trace briefly the international monetary developments of the 20th century, and to see how each set of unsound inflationist interventions has collapsed of its own inherent problems, only to set the stage for another round of interventions. For all you newbie gold bugs out there... this is an absolute must read. And for those of you who have been around the gold world for a while [including your humble scribe]... it's an excellent review of how we got to where we are. So I urge you to spend the time on this essay that it deserves. The headline reads "The Monetary Breakdown of the West"... and the link is here.
Money Is Power: An Inside View of the IMF's Massive Global Influence
The next big read is a piece that's posted over at the German website spiegel.de. It's a 9-page expose on the IMF... and what it has morphed into over the last few years. The article pretty much spells out the fact that it will become the financial centre of a new world government... and the New World Order. It's a very disturbing read... and it's headlined "Money Is Power: An Inside View of the IMF's Massive Global Influence"... and the link is here.
From Global Depression to Global Governance
Even more disturbing is my last offering of the day which was sent to me by reader Julius Adams. This story ties together just about every story that I've posted in this column today... especially the last two. It's the text of Andrew Gavin Marshall's presentation at the book launch of "The Global Economic Crisis: The Great Depression of the XXI Century" in Montreal on September 29, 2010. It read like a combination of three books that I've read... G. Edward Griffin's "The Creature From Jekyll Island: A Second Look at the Federal Reserve"... James Perloff's "The Shadows of Power: The Council on Foreign Relations and the American Decline"... and John Perkins' "Confessions of an Economic Hit Man". In actual fact, this is not a very long read... but it's well worth your time. The headline of the story reads "From Global Depression to Global Governance"... and the link is here.
¤ The Wrap
Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences. - Susan B Anthony
Today's 'blast from the past' goes back about 35 years or so. Everyone knows it, so turn up your speakers and click here.
I must admit that I was surprised [but delighted] to wake up Friday morning and find that both precious metals were on the road to recovery after their little 'mishap' at the London open. Are we out of the woods yet? I don't know... nor does anyone else... except 'da boyz'.
The other surprise on Friday morning was just how poorly the general equity markets were doing. There was a POMO from the Fed... but as Bill King of King Report fame put it: "This makes today’s [Friday's] POMO interesting. If the NY Fed does another meager POMO, it leads credence to the notion that a currency deal with China has been struck and any further QE cannot be large enough to usurp the currency deal.
Another clue arrived on Thursday when St. Louis Fed President James Bullard made two key assertions. Bullard said the disinflation trend “has flattened out”. This means there is no ‘deflation’ excuse for QE. Bullard added, “We are not here to ratify what the markets think.” This is a crystal clear rebuke to all the Street creatures that have ordained that a massive QE 2.0 is an absolute certainty."
We'll find out on November 3rd what the real story is once the FOMC meeting ends and Bernanke & Co. make their announcement.
I mentioned earlier in this column that I would have more to say about the silver shortage in 'The Wrap'... and here it is. I keep in daily contact with my coin guy here in Edmonton. He's a major bullion dealer in western Canada... and certainly the largest in Alberta. He's been in the business for decades and is really plugged in to the delivery pipeline.
He mentioned a couple of times this past week that deliveries are starting to get pretty stretched out once again. One-ounce rounds, maple leafs, and silver eagles are three weeks at best... and everything else is six weeks or more. If you check Tulving, you'll see that product availability is becoming a problem once again... as the refiners obviously can't keep up with demand.
My coin guy says that as the price rose during the last month or so, buying activity increased... and as the price fell this week, buying activity increased even more... as buyers who had delayed purchases, hoping for a pull back, finally got their wish. He's taking their orders, but can't guarantee when he'll get the stock to fill them. The same situation exists in a lot of product coming out of A-Mark as well.
You can read into that whatever you want, but it just confirms what Rick Rule had to say earlier. So based on this news, dear reader, please take whatever action you deem to be in your best financial interests.
Here's the 1-year silver chart.
So... is it time to 'buy the dip' in the precious metal stocks? I don't know, but when the selling is finally all over, it will be another huge buying opportunity that may not last long. In my opinion you should make your preparations ahead of time, so you'll be ready when the bottom is in... and the first place I'd start would be with a subscription to either Casey Research's Big Gold report... or their 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've already had at least a 25 times return on my subscription investment just this year alone! These subscriptions don't cost... they pay!!!
I hope you enjoy what's left of your weekend... and I'll see you here on Tuesday morning.
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