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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: gold commentary from Midas report
Monday, May 09, 2011
How much difficulty will the shorts have covering?
The CME Final for Friday indicated that on volume of 299,896 lots (11.84% above estimate) open interest fell 4448 lots, 13.83 tonnes or 0.86%, to 512,700 lots Since gold spent most of the NY session trying to rise, and was up 1.23% basis stock market close, this supports the JBGJ thesis that last week was primarily a short-selling Bear raid.
Silver open interest fell 5,350 lots (4.1%) while silver was up 2.35% at the stock market close. The same analysis applies.
Indian ex-duty premiums: AM $3.83, PM $4.41, with world gold at $1,502.68 and $1,507.25. Adequate for legal imports. The rupee opened firm but gave some ground to close virtually unchanged at $1=R44.72 (R44.785). The stock market was also static, up 0.05%.
As noted earlier, local Vietnam gold this morning stood at an $8.39 premium to world gold of $1,503.40 (Friday $15.39/$1,489).
Shanghai gold closed at a premium of $3.31 to world gold of $1,504.90 on low volume equivalent to only 5,666 NY lots (Friday $10.10/$1,479.35). The Yuan was static, closing at a 5.11% post $US "depegging" appreciation (Friday 5.11%).
On day session volume equivalent to 12,868 NY lots the TOCOM public increased their net long by 4.54% or 1.6 tonnes, mainly by reducing their short. Open interest fell by 3.629 tonnes or 1,162 NY lots and the active contract added 40 yen. World gold gained $7.90 during the session to go out $10.15 above the Friday NY 4PM level – obviously not because of Japanese activity.
UBS today notes an interesting straw in the wind:
"Coin sales by our Swiss desk last week received a surprising boost from European clients. The reason for
the renewed rush to coins is…most likely related to the return of European sovereign concerns to the headlines… Sales of American Eagle gold coins reported by the US Mint website were also
high at a very respectable 62 koz for the first week of May. American Eagle sales so far in May already
equal 57% of April's total volume. Should this continue throughout the month - which admittedly is a big
assumption - American Eagle sales would be at their highest level since the 231.5 koz seen in December
2009"
In the FT John Dizard has an essay notable for using a link to GATA to access the infamous Gibson’s Paradox article. Dizard’s salient observation in JBGJ’s opinion is
"I have my doubts that this moment is comparable to the late conversion of the Carter administration and the Volcker Fed to a strong dollar and tight money.
This administration and this Fed are, respectively, not that desperate and not that principled"
If gold shares this view it is going higher. See
http://www.ft.com/cms/s/0/988fe886-782c-11e0-b90e-00144feabdc0,dwp_uuid=d8e9ac2a-30dc-11da-ac1b-00000e2511c8.html#axzz1LrnJxFXG
Reuters has followed up on its open interest story, this time with a usable link: "(Reuters) - When commodities melt down as abruptly as they did on Thursday, the first assumption is that big investors dumped massive long positions. This time around, that doesn't seem to be whole story, or even the right one. Exchange data shows that not all traders were running for the doors; some added to positions, many betting on more losses rather than locking in profits. In the hardest hit markets -- oil and silver -- the number of bets on the market rose even as prices crashed…" While some commentators seem apprehensive and puzzled, this is quite a familiar situation in gold. In essence, a gigantic Bear raid was triggered in commodities last week. Generally when this happens, the shorts have to cover on the way back up. How uncomfortable this isdepends on the underlying demand for the commodity in question. Today gold has held its early Asian gain and has three times approached the $1510 level in June gold, with the high being up $19.10 around 4-30AM NY time. Volume is moderate: estimated at 112,311 lots at 11AM of which more than a third was done pre-open.
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