Staggering Summer Rise Likely For Gold: James Turk

Not much happened in the gold market on Monday. The low of the day was shortly before New York trading began on the Comex...and the price worked its was slowly higher until shortly after 2:00 p.m. Eastern...and then traded sideways for the rest of the New York Access market. Volume was on the light side.

Silver's price, as some say, was more 'volatile' yesterday. It started off higher in the New York Access market on Sunday night...but that was it...because the moment that Far East trading began, the price began to head south...with the low coming at the same time as gold's low...shortly before the Comex open at 8:20 a.m. in New York.

Monday was the fourth day in a row that silver closed within a dime of $35.05. Volume was very light.

The U.S. dollar rally that began early on Friday morning, continued into the Monday trading day in the Far East...hitting its zenith [up about 65 basis points] shortly after 10:00 a.m. in London...while all of North America was asleep.

From there, it gave back about 20 basis points of those gains going into the close of electronic trading in New York at 5:15 p.m. Eastern time...and it's a bit of a stretch to say that there was much co-relation between the gold price and the dollar's movements yesterday.

The gold stocks pretty much followed the gold price until 11:45 a.m. Eastern. Then, as the gold price rose back into positive territory, the gold stocks did not follow suit...and it didn't seem like it had much to do with how the Dow was faring, as it fell out of bed in the first fifteen minutes of the trading day, even while the gold stocks rose into positive territory.

It seemed like every time the HUI tried to rise even a little, there was a willing seller about. Anyway, when the closing bell rang, the HUI was down 0.88%.

Most of the major silver stocks finished in negative territory...and I have no idea how well the junior silver producers did, because I follow the Canadian stock markets...and they were closed yesterday for the Victoria Day holiday. It's probably just as well, too. Here's Nick Laird's "Silver Sentiment Index" updated with yesterday's figures.

The CME's Daily Delivery Report showed that 30 gold, along with 1 whole silver contract, were posted for delivery tomorrow.

It certainly was an interesting day over at GLD and SLV yesterday. The GLD ETF showed another big increase. This time it was 243,648 troy ounces. GLD has added about 585,000 ounces of gold in the last two trading days...which is a heck of a lot considering the gold price hasn't risen much since last Thursday.

Over at the SLV ETF, their inventory went in the opposite direction, as an 'authorized participant' cashed in some shares and then withdrew 2,145,765 ounces of silver. SLV has had almost 10 million ounces withdrawn since last Thursday. This had nothing to do with the price action. Don't forget what I said above...that silver has closed within a dime of $35.05 spot every day for the last four days in a row. Someone obviously needed the silver more urgently somewhere else and withdrew it.

For the week that was at Switzerland's Zürcher Kantonalbank, they reported a decline of 25,069 ounces in the gold ETF...but their silver ETF showed an increase of 455,013 troy ounces. I thank Carl Loeb for those numbers.

The U.S. Mint had a sales report on Monday. They sold 3,000 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 640,500 silver eagles. Month-to-date the mint has sold 98,000 ounces of gold eagles...13,500 one-ounce 24K gold buffaloes...and 2,896,500 silver eagles. And there's still a week left in May.

On Friday, the Comex-approved depositories reported receiving 55,554 ounces of silver...and they shipped 248,667 ounces out the door, for a net decline of 193,113 ounces. The link to that action is here.

Here's a little snippet from silver analyst Ted Butler's weekly review on Saturday..."The liquidation of the 40 million ounces from the SLV is incredibly bullish to me. There was nothing coincidental or unintentional about the sudden 30% drop in silver prices. As I have previously written, getting as much silver from the world’s largest stockpile of silver was the reason behind the price plunge. This silver was forcibly taken from SLV shareholders, whether those shareholders were aware of it or not. It was taken by those who didn’t mind violating market laws in order to get the metal. That should give you a sense of how serious was the intent to secure this silver. Many will say this shows that the silver wasn’t in demand by the investors who sold it.. I would say nothing could be further from the truth. Breaking laws to secure something indicates a motivation bordering on desperation. The bottom line is that these 40 million ounces are now held in incredibly strong hands."

Since it's Tuesday, I have a fair number of stories for you today.

¤ Critical Reads

As Lenders Hold Homes in Foreclosure, Sales Are Hurt

My first story today is out of yesterday's edition of The New York Times...and is courtesy of reader Phil Barlett.

The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

This story is definitely worth your time...and the link is here.

View full GSD edition

Stocks Tumble, Euro Weakens on Debt Concern

Global stocks sank the most in two months, while the euro touched an all-time low versus the Swiss franc and commodities plunged, amid signs Europe’s government debt crisis is worsening and the economic recovery is slowing. Costs to protect Greek debt from default surged to a record.

As I've been hinting at for weeks...Greece is pretty much toast. I thank reader Ray Wiberg for this Bloomberg story from yesterday...and the link is here.

View full GSD edition

What happens when Greece defaults

It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s time, a year’s time, or two years’ time [it won’t be longer than that]. Given that the ECB has played the “final card” it employed to force a bailout upon the Irish – threatening to bankrupt the country’s banking sector – presumably we will now see either another Greek bailout or default within days.

What happens when Greece defaults. Here are a few things:

- Every bank in Greece will instantly go insolvent.

- The Greek government will nationalise every bank in Greece.

- The Greek government will forbid withdrawals from Greek banks.

And the list goes on and on. This story from last Friday's edition of The Telegraph is a must read from beginning to end. I thank Washington state reader S.A. for sharing this story with us...and the link is here.

View full GSD edition

S&P: Italy ratings outlook negative on debt fears

Standard & Poors cut its ratings outlook for Italy's debt from stable to negative Saturday, citing the country's poor growth prospects and concerns about the government's ability to reduce public borrowing.

The revision means there's a one-in-three chance that Italy's debt ratings could be downgraded in the next two years, raising fears that the debt crises that have struck Greece, Portugal and Ireland could be threatening Italy.

This is a story that I stole from yesterday's King Report. It's a posting over at newsvine.com...and the link is here.

View full GSD edition

Spain’s Socialists suffer worst defeat in 30 years

Spain's ruling Socialist Party suffered a humiliating defeat in Sunday’s regional elections, with their worst electoral outcome in over 30 years, according to preliminary results.

These elections also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.

Five months ago, a government change in Spain's Catalonia region revealed a budget deficit more than twice as big as previously reported. Now, a growing chorus of economists, local politicians and business leaders say that new governments are likely to discover, as Catalonia did, piles of "hidden debt".

This story was posted over at france24.com...and I thank Roy Stephens for sending it along...and the link is here.

View full GSD edition

Walker's World: Yes, we camp

The massed occupation of Madrid's central square by up 60,000 protesters in defiance of police orders to disperse may not presage a Cairo-style popular uprising in Spain. But it says something profound about European disgust with its political class.

The trigger seems to have been outrage at levels of political corruption, with a widely distributed map showing towns and districts where more than 1,000 politicians are standing for office in the weekend municipal elections despite being the subject of official investigation.

It's obvious that the corruption in Spain has reached outrageous levels. This UPI story from yesterday is also courtesy of Roy Stephens...and the link is here.

View full GSD edition

Yemen crisis escalates as deal falters

This Reuters piece posted over at the france24.com website is Roy's second-last offering in today's column.

Yemeni loyalist forces fought a gun battle on Monday with opponents of entrenched President Ali Abdullah Saleh one day after he backed out of a Gulf-brokered accord for him to step down.

The violence followed the collapse of a transition deal that Saleh was to have signed on Sunday and would have given him immunity from prosecution, ensuring a dignified exit.

The clashes in the capital Sana'a cast fresh doubt on prospects for a political solution to a three-month crisis in which youth-led demonstrators, inspired by protests that swept aside the leaders of Egypt and Tunisia, are demanding an end to Saleh's 33-year rule.

This is an interesting read...and the link is here.

View full GSD edition

Promise of Arab Uprisings Is Threatened by Divisions

This story was posted in the Sunday edition of The New York Times...and is Roy's final story of the day.

In the past weeks, the specter of divisions — religion in Egypt, fundamentalism in Tunisia, sect in Syria and Bahrain, clan in Libya — has threatened uprisings that once seemed to promise to resolve questions that have vexed the Arab world since the colonialism era.

From the fetid alleys of Imbaba, the Cairo neighborhood where Muslims and Christians have fought street battles, to the Syrian countryside, where a particularly deadly crackdown has raised fears of sectarian score-settling, the question of identity may help determine whether the Arab Spring flowers or withers. Can the revolts forge alternative ways to cope with the Arab world’s variety of clans, sects, ethnicities and religions?

This is an very eye-opening story...and the link is here.

View full GSD edition

Euro's father favors rigging the currency markets -- gold too?

Today's first gold story is a subscriber protected offering from yesterday's edition of The Wall Street Journal. Chris Powell was kind enough to post it in the clear...and he's already wordsmithed the preamble. It's well worth the read...and the link to the GATA release is here.

View full GSD edition

Amid monetary debasement, own monetary metals, Sperandeo tells Turk

Here's an interview that started off life as a GATA release and, as per usual, I just stole what Chris had to say...and inserted the link at the end.

Trader and market commentator Victor Sperandeo, interviewed the other day by GoldMoney's James Turk, remarked, among other things, that the U.S. economy and U.S. government debt can't survive higher interest rates, that government policy will remain to inflate the debt away, and that while silver is the most volatile financial market, the metal is terribly scarce. As long as monetary debasement is policy, Sperandeo says, precious metals and tangible assets are the things to own. Video of the interview is 30 minutes long and the link is here.

View full GSD edition

Gold, silver coins to be legal currency in Utah

This story is not new, of course...but the idea that's springing up behind it certainly is.

Entrepreneur Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository, and he thinks others will soon follow.

The idea is simple: Store your gold and silver coins in a vault, and Franco issues a debit-like card to make purchases backed by your holdings.

He plans to open for business June 1, likely the first of its kind in the country.

We can only wish him well.

I thank reader 'David in California' for this AP story that was filed from Salt Lake City on Sunday...and the link is here.

View full GSD edition

Gold bulls watching gold elephants

Here's an article posted by columnist Peter Brimelow over at marketwatch.com yesterday. Some of yellow metal’s investors see a stampede ahead. Gold’s gyrations on Friday were dramatic, probably exhausting to both sides — and possibly important. Some gold bugs think a new attempt on the highs of last month may have started.

Even Dennis Gartman has gone long again...adding another '2 units of gold' last Friday.

This short article is well worth reading...and the link is here.

View full GSD edition

GATA nails gold market, economist and money manager Auerback says

Interviewed about the world economic situation by German journalist Lars Schall, the frankly liberal and Keynesian economist and Toronto money manager Marshall Auerback fully credits GATA's work.

Chris Powell has already done the honours...and the link to this must read GATA release is here.

View full GSD edition

Staggering summer rise likely for gold, Turk tells King World News

Interviewed by King World News yesterday, GoldMoney founder and GATA consultant James Turk predicts a soaring summer for gold. Turk also thinks the bottom is in for silver. The link to this short, must read blog, is here.

View full GSD edition

Gold reserves are just for market rigging, so sell them all

My last gold-related story is this GATA release from Sunday...and Chris Powell has already done the honours...and there's a fair amount of reading...so you can click here and get started.

View full GSD edition

My overall take is that this may be an unusually bullish set up in all the metals, based upon COT structures. In addition, overall market sentiment for all the metals is downright rotten. Since sentiment is absolutely a contrary indicator, that is extremely bullish. That all these metals appear to be structured bullishly is rare. - silver analyst Ted Butler...21 May 2011

Gold volume yesterday was around 125,000 contracts net of all roll-overs. The June delivery month for gold is coming up hard...and first day notice for delivery into the June gold contract is a week from today, so the roll-overs out of the June contract are coming thick and fast now.

The preliminary open interest number for gold yesterday showed a whopping increase of 18,469 contracts...which is huge considering the price action, but will certainly be much reduced when the final figures are posted on the CME's website later this morning...fingers crossed!

Friday's final open interest number after gold's big price spike showed that o.i. increased a very chunky 8,776 contracts...which is a rather large amount. The preliminary number showed an increase of 19,055 contracts. As I said here on Saturday, it now appears that new longs came into the market on Friday, driving the price up...and the bullion banks were the sellers of last resort once again. Nothing is for sure until the next Commitment of Traders report on Friday, but at first blush, that's the way it reads at the moment.

In contrast, silver's net volume yesterday was a bit over 38,000 contracts...the lowest volume figure that I've seen in a very long time. Silver's preliminary open interest number only showed a small increase of 1,346 contracts. Hopefully this will be much reduced in the final total...and may actually show a decline. We'll see.

I was surprised [and delighted] to see that the final open interest number in silver on Friday actually showed a decline of 1,118 contracts...which I wasn't expecting...but was glad to see. The preliminary open interest number showed an increase of 3,507 contracts...so that was a big reduction indeed. That's what I'm hoping Monday's final o.i. number in silver will show as well.

The backwardation situation in silver showed a slight widening out of the premiums in the nearby months, but other than that, there wasn't much change from Friday. Don't forget that some commentators think this is wildly bullish...and others say it means nothing. I'm ambivalent, as I'm just reporting what the CME data shows. You can draw whatever conclusion you wish.

There are still 210 contracts left open in May that have not been delivered into by the shorts...and they've got four business days left to get it done. The other interesting data point is the fact that there are currently 637 silver contracts open for delivery in June...which is not a traditional delivery month for silver. This is unheard of...and, as I said last week on this issue, I'll be watching developments very carefully...which is exactly what I'm doing. There are more contracts open in the June delivery month than have been delivered in the May delivery month...and May is a rational delivery month for silver. Go figure!

Here's the 1-year silver chart. Even on this scale, you can see that the closing price in silver has been basically unchanged for the last four days in a row. Can we go lower in price from here? I suppose, but in order for the bullion banks to reduce their short position any significant amount, they would have to get the silver price to a new low [below $32.50 on this chart] before there would be any spec long liquidation of much significance...and based on Friday's COT report, Ted feels that we've already hit an important low for silver...and I agree completely.

The 1-year gold chart shows the 50-day moving average still unbroken. In his weekend commentary to his paying subscribers, Ted felt that there was a good chance that the 50-day moving average may not get broken on this move down...as most of the technical longs got out of Dodge long ago. But, you can never say never at the moment.

If you read Ted's quote just below today's cartoon, you'll see that he mentioned that platinum, palladium and copper are also all below their respective 50-day moving averages...a rare bullish combination which could turn into very positive price action on all fronts for all these metals. Just look how washed out copper got. Here's the 1-year chart for that metal as well.

Neither gold nor silver did much in Far East trading. But now that London is open, both metals are showing a bit of life...especially silver. Gold volume is very heavy, but that's mostly because of roll-overs out of the June contract. Once you remove them, there's not a lot of volume. Silver volume is getting heavier now that the price has notched higher...and the dollar is down a hair.

Unless something blows up between now and June 1st...I don't expect too much volatility in either gold or silver...but, after Friday's little hiccup in the gold price, I suppose anything is possible, considering how the supply/demand fundamentals in gold and silver are so grotesquely distorted. There's also a new kid in the gold futures market, as the Hong Kong Mercantile Exchange is now open for trading between 8:00 a.m. and 11:00 p.m. local time...15 hours. They officially close their trading day at the London p.m. gold fix...which is 3:00 p.m. in London and 10:00 a.m. in New York. It remains to be see how influencial they might be going forward.

I look forward to this morning's Comex open with great interest.

See you on Wednesday.