World Silver Survey: Investment, Industrial Demand Surge In 2010

Gold had another nothing kind of day yesterday. Gold's high, like Wednesday's, came at the London p.m. fix at 10:00 a.m. Eastern time. Volume was light.

Silver had the same kind of day as gold, and although the silver price had a spike up at the London p.m. gold fix...the actual high of the day [$39.72 spot] came around 4:00 p.m. in electronic trading in New York. Volume was also quite light.

The dollar rose about twenty-five points...with the high, such as it was, coming at 9:00 a.m. Eastern time...and then gave up almost all of that gain by the close of trading at 5:15 p.m. Eastern time. All in all it was an uneventful day.

Like Wednesday, the high in the gold stocks was the London p.m. gold fix, then they fell about a percent and hovered just below unchanged for the rest of the New York trading session...with the HUI down a smallish 0.24%. The silver stocks turned in a similar performance.

The CME Daily Delivery Report showed that 72 gold and 2 silver contracts were posted for delivery on Monday.

Both ETFs reported receiving metal yesterday. GLD took in a healthy 377,539 troy ounces...and SLV received 975,940 troy ounces.

The U.S. Mint reported selling another 44,500 silver eagles...and that was it.

On Wednesday, the Comex-approved depositories didn't take any silver into their respective inventories...but shipped out 205,562 ounces.

Before I get into my stories for today, here's a graph of the gold break-out that was sent to me by Washington state reader S.A...and it needs no further embellishment from me.

¤ Critical Reads

U.S. Going Same Route as Greece, Portugal: Economist

Today's first story is courtesy of reader Scott Pluschau...and was posted over at cnbc.com yesterday.

"To me—being in Europe for a few days—the plot in Greece and Portugalsounds an awful lot like the same plot that's going on in the United States. But the characters have different names," said John E. Silvia, chief economist at Wells Fargo, said on Wednesday.

There's a story...along with a video clip...and the link is here.

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ECB hikes rates, ready to move again if necessary

President Jean-Claude Trichet stressed the ECB had not decided that Thursday's move -- a 25 basis point rise in its main refinancing rate to 1.25 percent -- was the first in a series of moves, reassuring markets it was not about to embark on an aggressive tightening policy that could choke the euro zone's struggling periphery.

Reader Roy Stephens sent me this Reuters piece yesterday morning...and its well worth skimming. The link is here.

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Hidden state debts may push Portugal bailout to €90 billion

Portugal's bailout requirement is 20% higher than previously thought, with hidden debt in state companies and private-public partnerships possibly to blame, according to sources in Lisbon.

The bailout request would signal deeper debt problems buried inside the Portuguese administration, with economist Nuno Garoupa pointing to both troubled public companies and a lack of reporting on the state of public-private partnerships covering hospitals and roads which will not be revealed until 2013.

I thank Swiss reader G.B. for sharing this story out of yesterday's edition of The Guardian...and the link is here.

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Portugal prepares for a hangover without having the party

Here's another story about Portugal out of yesterday's edition of The Guardian...and it, too, is courtesy of Swiss reader G.B.

"The sad thing for the Portuguese is that, although Ireland and Spain are also suffering debt hangovers, they did at least have parties with a lot of growth over the previous decade," said one foreign real estate investor, pointing to spectacular growth rates over the past decade. "Portugal has the hangover, but it did not have the party first."

It's not an overly long read, but well worth it...and the link is here.

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Spain's tough stance makes it different from the rest

Once Portugal admitted the inevitable, the spotlight was always going to turn to Spain. Since Ireland sought aid in November, the Mediterranean neighbours have been talked of in the same breath as the euro economies next at risk of collapse.

Spain has the highest unemployment rate in Europe at 20.3pc. Yet it has done its utmost to differentiate itself from other risky-looking PIGS.

This story, posted late last night over The Telegraph, is a must read...and I thank Roy Stephens for sending it along. The link is here.

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World Silver Survey: Investment, Industrial Demand Surge In 2010

My first two precious metals-related stories are about silver...and the first is courtesy of reader George Findlay. It's an item posted over at Kitco...and it's the Silver Institute's World Silver Survey, as prepared by Gold Field Mineral Services.

The sharp jump in silver prices during 2010 was the result of big increases in both investment and industrial-fabrication demand, according to the World Silver Survey 2011 released by the Silver Institute Thursday. Global silver investment rose by 40% last year to 279.3 million troy ounces, said the report, for which data was compiled by the consultancy GFMS. This resulted in a net flow into silver of $5.6 billion, almost double the amount from 2009.

Of course there isn't a word in here about the huge bullion bank short positions on the Comex...but it's still a must read anyway...and the link is here.

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Silver industrial demand to grow 8% – GFMS

The second story about silver is from reader Matthew Nel...and it's a Reuters piece posted over at miningweekly.com. It's covers the same report, but from a slightly different angle...and it's a much shorter read as well. The picture alone is worth the trip...and the link is here.

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Embry tells King he's amazed at hedge fund shorts in mining shares

Interviewed by King World News yesterday, Sprott Asset Management's chief investment strategist, John Embry, was pretty optimistic that the breakout in gold and silver prices is under way. This blog is a must read...and the link is here.

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More interesting speculation about gold revaluation

For years I have speculated that the day may come when the central banks of the world may revalue their gold reserves in order not only to save their fiat currencies, but to prevent a devastating deflationary spiral.

I'm not the only person on this planet that has written about this...and here's the latest piece on this posted over at zerohedge.com.

The story, embedded in a GATA release, is a must read from one end to the other...as are Chris Powell's remarks...and links, which are must reads on this issue in their own right. Click here.

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I know the shorts must eventually buy back or deliver silver, although it is possible that there might be a COMEX default as well.- silver analyst Ted Butler...April 6, 2011

As I said at the top of the page, gold volume was very light yesterday...around 105,000 contracts net of roll-overs. The preliminary open interest number is a rather chunky 8,485 contracts...but I expect that to be reduced significantly when the final o.i. number is posted later this morning. The reason I say that is because the volume, along with the price action yesterday, just doesn't add up to a big o.i. change...although it is possible it could be spread related...but that won't be known until next Friday's Commitment of Traders report.

Wednesday's final open interest number in gold showed a small increase of 1,618 contracts...which was down a lot from the preliminary number of 6,024 contracts...and I was very happy to see that. Don't forget that Tuesday's $22 rally blew out gold's open interest by about 21,000 contracts.

I'm becoming more intrigued by the outstanding gold contracts left to be delivered in April...as it sits at 2,462 contracts...which is up 72 contracts from Thursday. As I said yesterday, I wonder what the shorts are waiting for, as there is no shortage of gold for delivery...and I can't figure out why they just don't deliver and get it over with. It bears watching...and I will.

What will be even more interesting is who will the issuers and stoppers be when it is finally delivered.

Silver's net open interest yesterday was a hair under 50,000 contracts...and the preliminary o.i. number shows up as 1,341 contracts. I also expect a reduction in this number when the CME does its final post later this morning.

Wednesday's final open interest number was marked down to 1,208 contracts, which was down substantially from the preliminary number of 3,969 contracts.

As far as the backwardation in silver goes, it's basically unchanged from Wednesday. But I do note, with some relish, that this issue is mentioned in the GFMS silver report, although the commentator tries to talk it down.

It nearly goes without saying that I've been watching the overnight action in gold, silver...and the dollar, with keen interest. London has been open for about two hours as I write these words...and silver is up 51 cents...and gold is up about ten bucks. Volume in both metals is getting up there.

Although I'm delighted to see precious metal prices rise...I'm always wondering who is taking the short side of all these new long positions, as I doubt there's much short covering going on at the moment. Using the past as prologue, I suspect that it's the '8 or less' bullion banks. As I said yesterday, these rallies in silver and gold are not going unopposed.

At 3:30 p.m. Eastern time sharp this afternoon, the new Commitment of Traders report will be posted at the CFTC's website. This report will be for positions held at the end of trading on Tuesday...and that was the big rally day in both metals. Ted and I are expecting deterioration in the Commercial category for gold and silver...and it's just a matter of how bad it is. If you're interested in following along, you can click here at the appointed time...and not a second before.

Also coming out today is the April Bank Participation Report...and I'll comment on its contents in Saturday's column as well. But, now that I've checked the website, I see that it's already posted. I don't have time to go into it at the moment, but what I did see is that JPMorgan/HSBC haven't changed their silver short position by very much over the last month...maybe down six hundred contracts...as it currently sits a bit under 25,000 contracts.

Once again, there's still a little time left to either readjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

With silver over $40...at least as of this writing...and gold north of $1,360 spot, I expect it will be an interesting day in New York when the Comex opens at 8:20 a.m. Eastern time.

Enjoy your weekend...and I'll see you here tomorrow.