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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
Class-Action Suit Accuses UBS of Charging Storage for Imaginary Silver
"But what these so-called experts don't comment on is the 25,000 contract short position that JPMorgan holds in the Comex silver futures market."
¤ Yesterday in Gold and Silver
The gold price didn't do much in early Far East trading on Wednesday...and its low of the day came around 2:00 p.m. Hong Kong time. From there it gained about eight bucks going into the London p.m. gold fix at 3:00 p.m. GMT...which is 10:00 a.m. in New York.
Once the 'fix was in'...a serious buyer stepped up...and within forty minutes, gold was up another ten dollars. This was its high of the day...$1,442.30 spot...which came about 10:40 a.m. Eastern. From that point, the gold price got sold off a few bucks...and then traded sideways for the rest of the Comex session...and the electronic trading session that followed.
Volume wasn't particularly heavy...about 104,000 contracts net of all roll-overs...but it was slightly more than Monday or Tuesday's volume. The rolls out of the April contract...and into future months...particularly the next front month, which is June...are getting heavier by the day.
And, on a closing price basis, gold set a new record high price in U.S. fiat yesterday.
Kitco's gold chart is the home page on my computer, so when I powered up 'the beast' yesterday morning and saw the gold graph, I knew what I would find when I brought up the silver chart...and I did.
The silver chart looks even more impressive than the gold chart, as silver just kept powering higher, even though the gold price ran into a brick ceiling around $1,440 spot yesterday.
Of course the big blast off came the moment that the London p.m. gold fix was in...and from there, silver went on to close at its absolute high of the day, which was $37.42 spot. That absolute high yesterday was also a new 31-year high price for silver.
The world's reserve currency gained about forty basis points on Wednesday...and it nearly goes without saying that what happened with the dollar yesterday had no effect whatsoever on what gold and silver were doing.
The gold shares were up a bit during the first half hour of trading in New York yesterday morning...but really took off once the London gold fix was in at 10:00 a.m...and you can almost set your watch by this. The HUI climbed steadily all day long...but sold off a hair in the last half-hour of trading, as some day traders closed their positions...and took their profits and ran. The HUI finished a very respectable 3.59%. Most silver stocks did at least that well...and quite a few of them were up a lot more than that.
The CME's Daily Delivery Report showed that 5 gold, along with 80 silver contracts, were posted for delivery on Friday. In silver, the biggest issuers were JPMorgan and Prudential...with Barclays being the largest stopper by far. The link to the action is here.
Neither GLD nor SLV had anything to say for themselves yesterday.
Over at the U.S. Mint, they reported selling another 2,000 ounces of gold eagles...along with 1,000 24-K gold buffaloes...but no silver eagles were reported sold. Month-to-date...56,500 ounces of gold eagles were sold, along with 32,000 24-K gold buffaloes...and 2,069,500 silver eagles.
After two big days on both Friday and Monday, things were a little quieter over at the Comex-approved depositories on Tuesday. They reported receiving 33,823 troy ounces of silver...and shipped 110,275 ounces out the door...for a smallish decline of 76,452 ounces.
I also note that JPMorgan Chase received some silver into their depository yesterday...a smallish 30,844 troy ounces. The link to yesterday's action is here.
Before I get into today's reading material, here's a nifty graph of house sales going back about fifty years or so. It's courtesy of Washington state reader S.A...for which I thank him. It's another graph that needs no embellishment from me.
¤ Critical Reads
SubscribeDoug Casey's Interview on The Money & Wealth Show
Washington state reader S.A. also has our first item today. It's not reading material at all...it's a 15-minute audio interview with Stirling Faux. Reader S.A. says that "Doug is on fire!"...and I don't doubt that for a second. The link is here.
The World from Berlin: 'A Costly Defeat for Deutsche Bank'
Germany's highest civil court has ruled that Deutsche Bank should have warned its customers of the risks of an exotic investment product it sold in the run-up to the financial crisis. The landmark ruling has huge implications for the banking industry and could unleash a wave of similar cases, with compensation possibly running into the hundreds of millions.
This is the same type of financial garbage that Goldman Sachs et al were peddling at the top of the real estate market a few years back. It's a longish read, but worth it...and I thank reader Roy Stephens for sharing it with us...and the link is here.
Currency market rigging on a vaster scale than ever
Here's a Financial Times story yesterday that's headlined "Yen Action Sets Scene for Return of Carry Trade". I much prefer Chris Powell's headline...as it's far closer to the truth.
Now that the world's richest nations have pledged to back Tokyo in its efforts to halt the yen's appreciation, some strategists are predicting a new set of trading patterns in foreign exchange markets. The yen, they say, could make a return as investors' currency of choice for making so-called "carry trades."
This story is a must read...and the link to the GATA release is here.
Who's in charge? Germans pull forces out of NATO as Libyan coalition falls apart
This story...and the next one...are two that I ripped from yesterday's edition of the King Report. The first was posted over at dailymail.co.uk. Deep divisions between allied forces currently bombing Libya worsened today as the German military announced it was pulling forces out of NATO over continued disagreement on who will lead the campaign.
A German military spokesman said it was recalling two frigates and AWACS surveillance plane crews from the Mediterranean, after fears they would be drawn into the conflict if NATO takes over control from the U.S.
This is turning ugly...and embarrassing. The story is worth the read...and the link is here.
Split on Libya averted as Nato given military control
This next King Report story comes out of yesterday's edition of The Guardian. The original title of this story read "Libya: US bid to hand control to Nato halted by infighting"...Turkey accused Sarkozy amid fractious talks over command structure for next phase, which Obama insists he will not lead.
But there were hopes in London and Paris that agreement will be reached, giving Nato the chance to avoid its worst split in years.
One observer of Anglo-American military adventures over the last 20 years tried to make light of the impasse. "It's a bit like a barn dance," the source said of the efforts to decide whether and how Nato would run the operation. "Half of the people can't dance, a couple are drunk and then there's always the characters at the back with their hands up various skirts."
You can't make this stuff up...and Muammar must be having a good laugh. This is worth the read...and the link is here.
How Silver is Mined
FT notices gold's rise in favor, Fed's fall, if ever patronizingly
Here's another Financial Times story that showed up as a GATA release yesterday. The FT headline reads "Utah Raises Standard in Anti-Fed Campaign". Shops in Salt Lake City will soon be able to accept gold Buffalo and Eagle coins [no foreign-minted Napoleons or Krugerrands allowed] after a bill to make gold and silver legal tender passed Utah's House and Senate.
This proto-gold standard in the American west is a rebuke and challenge to the Fed, and a reminder that easy monetary policy since 2007 has won the central bank many more enemies than friends. This is a must read story as well...and the link to the GATA release is here.
Silver's monetary role contributing to the metal's explosive growth
This story is posted over at the mineweb.com...and was sent to us by reader Roy Stephens. Experts point to a regaining of its role as a monetary metal, coupled with enormously growing demand, particularly in China and India, will keep the silver price rising and outperforming gold in the process.
But what these so-called experts don't comment on is the 25,000 contract short position that JPMorgan holds in the Comex silver futures market...not to mention the other seven bullion banks' being short 30,000 Comex contracts over and above that!
Regardless of that, the story is still worth reading...and the link is here.
The Lesson from Japan for PM Investors
BIG GOLD editor Jeff Clark had an interesting commentary in yesterday's Casey's Daily Dispatch...that bears the above headline. Jeff starts out his commentary with these words..."It feels a little callous writing about Japan with respect to precious metals after the country suffered such a terrible tragedy. However, I think it’s worth discussing because there’s a lesson in it for all of us. In fact, I think the moral could be couched in terms of a warning."
You have to scroll down a handful of paragraphs to get to the story, but it's worth the trip...and the link is here.
Turk and Embry prepare for metal's big move
Here's a GATA release that contains two King World News interviews...one with James Turk, the other with Sprott Asset Management's chief investment strategist, John Embry. I haven't had time to read either blog...but will get to it after I file this column. I'll leave the preambles and introductions up to Chris Powell...and the link is here.
Class-action suit accuses UBS of charging storage for imaginary silver
This lawsuit resembles one against Morgan Stanley for exactly the same offense that the investment house settled for $4.4 million three years ago. It's my opinion that UBS is one of the '8 or less' traders that's short both gold and silver in the Comex futures market. All the pertinent details of this lawsuit, along with Chris Powell's preamble, are contained in this GATA release, which is a must read...and the link is here.
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¤ The Wrap
The nasty things that you think are coming always take longer to arrive than you think they will, but once they get here, they make up for their tardiness by being worse than you thought they’d be. - Doug Casey
Gold volume was around 138,000 contracts yesterday, but once all the roll-overs and such are removed, the real volume traded was around 104,000 contracts. The preliminary open interest number was a very low 786 contracts, which leads me to believe that we'll see a fairly decent reduction in gold's o.i. when the final numbers are posted later this morning. Based on this data, I'd guess that yesterday's big spike in the gold price after the London p.m. gold fix yesterday was probably short covering...and we'll find out soon enough if that's true or not.
Tuesday's final open interest number in gold showed an increase of 3,198 contracts...which was quite a bit less than the preliminary number that I reported yesterday.
Silver's one dollar price increase occurred on volume of about 57,000 contracts net...and the preliminary open interest number is a rather chunky 3,479 contracts, which will not doubt be smaller once the final number goes up on the CME's website. But the question is...how much smaller?
Silver's final open interest number for Tuesday showed an increase of 2,239 contracts...which isn't a number that either Ted or I were happy about...so it's obvious that this rally in silver is not going unopposed.
March open interest is now down to 717 contracts, which is a decline of 126 contracts from yesterday's final number.
The backwardation situation changed a bit yesterday. The CME's settlement prices showed that there's a tiny backwardation from March through May...and then it disappears until the March 2012 delivery month. The backwardation from March 2011 out until December 2015 is sitting around 82 cents at the moment...about the same as Tuesday's figure.
Ted Butler pointed out that the Gold/Silver ratio hit a new low for this move, both on Tuesday...and of course, yesterday. Here's the ratio going back one year, which includes the start of silver's big rally in August of last year.
This chart shows just how much silver is outperforming gold...and it's not even a race anymore. I expect this ratio to get much smaller as time goes on, because silver will continue to outperform gold until this bull market in precious metals breaths its last...whenever that might be.
Gold and silver traded very quietly all through Thursday in the Far East...but is showing some signs of life now that London has been open for a bit. Volume in both metals is very light...and very similar to yesterday's volume numbers for this time of day.
And, as I said yesterday, most of the significant action in the precious metals, both in volume and in price movement, takes place during the New York trading session. That was certainly the case yesterday...and will likely be the case again today.
See you on Friday.
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