Saturday, November 20, 2010

FW: Bankers have a Silver Nightmare

Good morning Ladies and Gentlemen;

It seems that Sheila Bair of the FDIC was very busy last night as we added 6 new members to our banking morgue. May they rest in pieces:


Bank Name


City


State


CERT #


Acquiring Institution


Closing Date


Updated Date


Gulf State
Community Bank

Carrabelle

FL

20340

Centennial Bank

November 19, 2010

November 19, 2010


First
Banking Center

Burlington

WI

5287

First Michigan Bank

November 19, 2010

November 19, 2010


Allegiance Bank
of North America

Bala Cynwyd

PA

35078

VIST Bank

November 19, 2010

November 19, 2010


Copper Star
Bank

Scottsdale

AZ

35463

Stearns Bank, N.A.

November 12, 2010

November 19, 2010


Darby Bank &
Trust Co.

Vidalia

GA

14580

Ameris Bank

November 12, 2010

November 19, 2010


Tifton Banking
Company

Tifton

GA

57831

Ameris Bank

November 12, 2010

November 19, 2010



We have lots to cover today. Gold closed down marginally by 70 cents to $1352.20. However it was silver who took center stage refusing to buckle under the weight of another raid orchestrated by the banker hoodlums. Silver rose by 31 cents to $ 27.18, and rose even further in the access market finishing the day at $27.35 and gold at $1354.10. The bankers were covering as fast as their little feet would carry them to cover their massive shortage of supplied paper over the last few days. I will go over those numbers for you.

Yesterday was such a monstrous day of trading so let us go straight over there for the results so you can get a head start on Monday.

The gold comex total OI (open interest) for yesterday's reading which is basis Thursday night came at 629,605 contracts for a drop of 3619 contracts. This is very important as the drop occurred on Thursday with gold and silver rising with much force. The commercials even though they supplied much of the paper they covered more than they supplied.
The front delivery month of December which will be watched by all commentators fell to 243,665 from 255,883 a minor drop considering that the December contract goes off on the 23rd of November as does options expiry. The holders of long gold and silver contracts must pluck their money down next Friday night as Monday, Nov 29th is first day notice. This day the banking cartel see the total number of contracts standing and options exercised for a gold contract. Delivery notices are then sent the following day, Nov 30.2010 and the fun begins. Please keep these dates pinned to your wall as I will try and explain as much as I can what is happening in the comex physical world.
The volume on the front options expiry of November (not Dec) revealed that 20 contracts remain to be served.
The estimated volume of trading at the gold comex on Friday was 196,401. It will surely rise on Monday when confirmed. The total confirmed volume on Thursday was a monstrous 254,185 contracts.

Now for the star of the day, silver:

The total silver comex OI dropped marginally to 144,248 from 146,528 for a loss of 2280 contracts. Here we have the same story as gold with the bankers supplying the paper but covering more than they were supplying. The front December month is scary as it shows only a drop of only 3,000 contracts to 48,991 from 51,905. It seems our silver longs are resolute and are willing to take on the bankers.
In another strange reading, the front November month for options that are standing for silver metal rose from 22 to a huge 52 contracts.

I would like you to see how the deliveries and inventory changes added to our mix today:

Here is a chart for the 19th of November for gold and silver comex inventory and deliveries

Silver

Withdrawals from Dealers Inventory

5017 oz

Withdrawals from customer Inventory

22,898 oz

Deposits to the dealer Inventory

Zero

Deposits to the customer Inventory

1,006,720

No of oz served 49

245,000oz

No of notices to be served..3

15,000 oz



Gold

Withdrawals from Dealers Inventory

zero oz

Withdrawals from customer Inventory

15,395 oz

Deposits to the dealer Inventory

zero oz

Deposits to the customer Inventory

9484oz

No of oz served (contracts =1

100 oz

No of oz to be served 20

2000oz

Let us start with the silver inventories:

Please note the massive influx of 1,006,720 oz of silver into the customer. Most of the time the customer is removing the silver. Yesterday two customers (one customer added 424,336 and the second, 582,384) probably made deals with the dealers to supply silver to patiently waiting longs in the November and the upcoming December contract. We add two withdrawals of silver, a 5017 oz departure which represents one silver contract and that no doubt settled a long. The remainder 22,898 oz leaving the customer also left all registered vaults which seems the pattern of late.
Now the good stuff:

Strangely, 49 contracts were served upon options that were exercised but kept in the back pocket of the bankers. This represents 245,000 oz of silver. Even though 52 contracts are shown remaining to be served, this is basis Thursday, so I think I am safe to subtract the 49 contracts served. Thus only 3 contracts remain to be serviced plus any new ones still stored in the back pockets of the bankers and not revealed. The total number of notices sent down in silver this month total 841 or 4,275,000 oz.

I can now give you with assurance, that the total number of silver ounces standing for November is as follows:
4,275,000 oz (already served) + 15,000 oz (to be served) = 4,290,000 oz. (this number is rising by the day). At the conclusion of November I will add this number with the Oct number of oz standing to give the official standing of silver for the delivery month of December.

Now for gold:

Please note again, a very comatose comex gold vaults. We were informed that a customer added 9484 oz and another customer withdrew 15,394 oz so the net withdrawal of gold is 5910 oz. It looks like the customers of the comex silver and gold are voting with their feet and getting out of Dodge.
The comex folk informed us that only 1 contract of gold was served upon our options exercised holder for a total of 100 0z. The total number of notices sent down so far this month total 1141 or 114100 oz of gold. We have 20 contracts left to be served or 2000 oz of gold.

Thus the total number of gold oz standing in this non delivery month of November is as follows:

114,100 oz + 2000 oz = 116,100 oz or 3.61 tonnes of gold. (It looks like this will be the final total standing)

The usa mint revealed yesterday, a massive volume of sales so far this month equal to almost 3.8 million oz This is deadly to the bankers as the comex is not getting the silver it needs to satisfy long contracts. The USA produces around 40 million oz of silver per year out of the world's global production of 600 million-700 million oz. Silver is mainly produced as a bi-product as there are few purely silver producers.

Demand for silver has been rising and at last count it is 900 million oz. Scrap silver and officially hidden China silver, balance the difference.

The USA must use all of its domestic production in the minting of their silver eagle/silver commemoratives. If the mint continually has demand for 3.8 million oz this month,or 46 million oz for the year, then the USA must import silver from other sources to fulfil their needs. This will happen at the exact same time as Sprott scours the planet for his silver as will the Central Fund of Canada. Jewellers will also demand silver. Thus the comex and the mint must now import badly needed silver to fulfil their needs.

Below is zero hedge discussing the mints huge production in November:

US Mint Reports Soaring November Month-To-Date Silver Coin Sales Surpass 2010 High Following Massive Rush Into Precious Metal

Tyler Durden's picture

Is Max Keiser's attempt to put JP Morgan out of businessworking following the mother of all silver physical squeezes? The price of silver has been stable in the past few days, but if the US official precious metal seller is to be trusted, this will not last long. According to the US Mint, sales of 1-ounce American Eagle silver coins are headed for the strongest month since at least May, Bloomberg reports. And according to our update, the May total has not only been passed, but the November MTD total is already the highest in 2010. More details: a record 3,775,000 silver coins have been sold this month, compared with 3,636,500 in May, according to data on the Mint website. Silver futures in New York touched a 30-year high of $29.34 an ounce on Nov. 9. American Eagle coins also are available in gold and platinum. The Mint said 62,500 ounces of gold Eagles have been sold in November. What is interesting is that sales of the coins continue at an astronomic pace despite the nearly 10% premium one has to pay over spot. What is more interesting, is that the Mint has not run out yet. Yet the refreshing thing, is that instead of buying paper certficates promising that one's presumed purchases of gold is held by the DTCC, Americans are once again going straight into physical. Here is hoping Keiser's plan ultimately unravels whatever the RICO suit against JPM and HSBC leaves untouched.

From the Mint:

2010 Silver Sales Totals
(in ounces / number of coins)

Month

One
( oz. / #coins )

January

3,592,500
3,592,500

February

2,050,000
2,050,000

March

3,381,000
3,381,000

April

2,507,500
2,507,500

May

3,636,500
3,636,500

June

3,001,000
3,001,000

July

2,981,000
2,981,000

August

2,451,000
2,451,000

September

1,880,000
1,880,000

October

3,150,000
3,150,000

November

3,775,000
3,775,000

Total

32,405,500
32,405,500

5

end.

I have asked many of you out there to report to me on what they are paying for silver and gold and report delays. It seems that delays are now frequent and premiums are rising.

Many are reporting to me that they are paying over 3.00 dollars from spot on silver and also 30 dollars or so on gold. I would like to bring to you this commentary from Patrick Heller of Liberty Coins:

-END-

Widespread Silver Bar Shortages

By Patrick A. Heller on November 18th, 2010
Categories:
Featured Articles, Gold and Silver Commentary, Precious Metals

As of today, there are no longer any regular wholesale supplies of the 1 ounce through 100 ounce silver rounds and bars available for immediate delivery. It may be possible to locate incidental quantities of some product, but most wholesalers are now promising two to four weeks delivery to allow time for the silver to be fabricated.

http://news.coinupdate.com/wp-content/uploads/2010/11/silver-bar.jpg

As a result of the shortages, premiums have started to rise. So far, the increases have been modest, on the order of 0.5-2%. However, if the shortage grows, expect to see further and larger premium increases in the coming weeks. We could see a repeat of the late 2008 gold and silver buying frenzy, where product availability got as slow as 1-4 months after payment.

At the COMEX close yesterday, registered (dealer) silver inventories fell below 50 million ounces. Even if you include the eligible (investor) silver inventories in the COMEX bonded warehouses, which are not available to fulfill COMEX deliveries unless the investor specifically chooses to do so, there were barely 107 million ounces to fulfill around 725 million ounces of contractual obligations. COMEX silver inventories are now down more than 10% from mid-June even while the amount of silver owed has soared!

As the price of silver almost continuously rose from $17.98 on August 23 to $29.36 mid-day on November 9 (a 63% increase), the COMEX had not changed its minimum requirements for leveraged accounts. It would be a normal process to periodically bump us the minimum amounts for margin accounts as prices rise, but this was not done until November 9, when the margin requirement was increased from $5,000 per contract to $6,500.

On September 16, the COMEX further raised the silver contract margin requirement to $7,250—even though the price of silver had been dropping since November 9! What is suspicious is that a lot of "insiders" were liquidating their silver positions starting the afternoon of November 15. Is it possible that they may have received advance notice of the coming change in the minimum margin account requirement and sold in anticipation of lower prices the next day?

The next round of gold and silver options expiration occurs on Tuesday, November 23. The attempt to suppress gold and silver prices upon the release of the US jobs and unemployment report on November 5 was almost a complete failure. Unless something is done to knock down gold and silver prices before November 23, a lot of call options will be exercised, which would further increase the demand for physical precious metals.

I suspect, as do many others, that the two rounds of increasing gold and silver margin requirements were timed for no other reason other than to try to help hold down prices through November 23.

Don’t be surprised if supplies of other low premium physical silver products, especially US 90% Silver Coin, dry up, with those premiums also starting to rise. If you are looking to acquire some physical silver, I suggest you act sooner rather than later.

Patrick HellerPatrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes "Liberty’s Outlook," a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under "News & Articles". His radio show "Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know" can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.

-END-

In gold, this is the biggest story of the day. As I pointed out to you last month, the IMF at the end of August had only 75 tonnes left in their inventory to dispose of.

I hypothesized that by the end of November, they will be through. The IMF were selling an average of 30 tonnes each month and they also sold 10 tonnes to Bagladash. It seems that I am right.

Here is the story courtesy of Jack Farchy of the London times:

IMF speeds gold sales amid soaring prices

By Jack Farchy in London

Published: November 1 2010 18:17 | Last updated: November 1 2010 18:30

The International Monetary Fund has accelerated the rate at which it is selling its gold, taking advantage of the strong demand for the precious metal that has lifted prices to a series of record highs.

If sales continue at their current rate, the Washington-based lender could complete its planned disposal of 403.3 tonnes of bullion – or one-eighth of its total reserves – by the end of this year, ahead of earlier market expectations.

The IMF has been almost alone as a seller of gold from the so-called official sector, which includes central banks, governments and sovereign wealth funds as well as international organisations. As a whole, the sector is expected to be a small buyer of gold this year as purchases by Russia, the Philippines, Thailand and others outweigh the IMF’s sales.

Most analysts and advisers to central banks believe that buying will continue next year. Without the IMF’s sales as a counterbalance, the official sector could become a large net buyer.

"Barring something unexpected, central banks are going to be net buyers," said Tom Kendall, precious metals analyst at Credit Suisse. "Net purchases could be quite significant next year: 100-120 tonnes or more."

That would mark a sharp reversal from the trend of the past two decades, when central banks, mostly in Europe, sold about 7,500 tonnes of gold, equivalent to three years of mined output.

The IMF announced it would begin selling gold to the open market in February, after it had sold 212 tonnes in off-market deals with the central banks of India, Sri Lanka and Mauritius.

Between March and July, the IMF’s sales were fairly consistent, averaging about 25,000 ounces (0.8 tonnes) per trading day, according to a Financial Times analysis of the IMF’s monthly data. But in August and September the rate of on-market sales rose substantially. Moreover, the IMF sold a further 10 tonnes of gold in an off-market deal with the central bank of Bangladesh.

The acceleration came as gold prices rose sharply from about $1,180 at the start of August to a new nominal high of $1,387.10 in mid-October. "The appetite for gold was such that the market could happily absorb more than what they were selling over the summer," Mr Kendall said.

As of the end of September, the IMF had just 52.2 tonnes of gold left to sell.

IMF Sells 32.3 Tons of Gold in Sept, 22.3 Tons to Market

end.

It seems that our two fraudulent GLD and SLV funds with inventories supposedly in England both added to their inventories on Friday. First the GLD added 97,653 oz or 3 tonnes to its inventory which is now at record levels exceeding 1120 tonnes of gold. The Silver etf SLV added another 1.319 million oz to hold in excess of 347 million oz.

Over at the GLD ETF, they added 97,653 troy ounces of gold to their stash yesterday. Not to be outdone, the SLV ETF showed another big increase on Friday. This time it was 'only' 1,319,879 ounces.

end

In other physical news, the Russians added another 600 million oz to its inventory of gold: (courtesy of Ed Steer of GATA)

Let's get back to gold for just a minute. With the 20th of the month falling on a Saturday, The Central Bank of the Russian Federation updated their website for October on the business day prior to that... which was yesterday the 19th... a habit which I'm grateful for. They reported adding another 600,000 ounces of gold to their official reserves, which now stand at 24.9 million troy ounces. Year-to-date, the Russians have added 4.6 million ounces of gold to their reserves. That's a lot!!!

From what I remember of Russian gold production in 2009... it looks like they're buying everything that they're digging out of the ground... and maybe a bit more. This is basically an 'up yours' gesture from Russia to the west's central and bullion banks. The Chinese government is doing exactly the same thing, except they do it in secret. One has to wonder when their next big announcement of an increase in gold reserves is going to come... and how much it will be.

Here's the most excellent graph of 'all of the above'...

http://v3.caseyresearch.com/images/101120_Russian-October-Gold.gif

Click here to enlarge.

end.

That about ends the physical side of my report so now let us see the big economic stories of the day.

The news that that the IMF and the EU are visiting Ireland is the big story in that a big cheque will have to be written to bail out the banks that have lent gobs of money of which the collateral is worthless. It looks like the poor citizens of Ireland must bail out the banks and thus pay the price for the folly of the bankers:

Here is a story from yahoo news on the subject. (courtesy of James Sinclair commentary)

Irish, EU, IMF face marathon talks for loan deal
CIGA Eric

WTF??? How long does it take to open up the checkbook? Theatrics designed to provide time for trades to unwind and present the illusion that this is something other than a bailout.

DUBLIN – Irish, European and International Monetary Fund officials mounted tough negotiations Friday over terms of a massive credit line for Ireland’s debt-crippled banks — with the fate of Ireland’s prized low business taxes in the firing line.

Irish officials said talks were under way at several locations in Dublin involving different government departments and agencies and more than 40 officials from the European Central Bank and Washington-based IMF. Most arrived Friday.

Source: news.yahoo.com

More…

and then this commentary from Jim Sinclair himself;

You are resilient writing about this, the second act in an international financial farce.

This slapstick comedy is a rerun of a Greek tragedy which will without any doubt end in QE exactly the same way.

Maybe we could just let the euro drop from 1.40 to 1.3350 three times for a day each so the usual suspects can cover rather than having to bear this three more times with Portugal, Spain and Italy. They are all going to end in the same way.

This is so transparent that it it is comical. It is the height of redundancy.

Regards,
Jim

and these commentaries from Jim himself:

If the ECB called a secret weekend meeting and dictated a total euro clean up it would be the same amount of QE that they will do anyway.

However, that can’t happen because the Banksters want three more acts to play the euro both ways and pack that bonus account to new records.

Regards,
Jim

Thought For The Morning

Every act of the bailout play is a duplicate of all the time we wasted on Greece. I really hope that we do not have to go through this manipulation of the euro too many more times.

You would hope the international investment banks have packed their bonus accounts already.

The end will be the same. The entire Western world will go with QE to infinity.

The sheeple think this is all for real.

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end.

What Jim is stating that once they write the cheque for Ireland, then Portugal will be next followed by Spain. The whole world will be deluged with paper money.

end

Now we see the USA confront their major bankers the Chinese in a war of words: (courtesy of the Associated Press)

Bernanke defends bond-purchase plan, warns China

The Associated Press

Friday, Nov. 19, 2010 | 3:09 a.m.

Federal Reserve Chairman Ben Bernanke hit back at critics, both at home and abroad, who have challenged the central bank's $600 billion bond-purchase program.

In a speech in Germany, he argued that Congress must help support the Fed's program with further stimulus aid. And he issued a stern warning to China, saying it and other emerging nations are putting the global economy at risk by keeping their currencies artificially low.

Bernanke made the remarks Friday at a banking conference in Frankfurt.

Without more stimulus, high unemployment could persist for years, he said. But in making that argument, Bernanke risks heightening complaints that he's plunging the Fed into partisan politics.

The Fed's Treasury bond-buying program is intended to invigorate the economy in part by lowering interest rates, lifting stock prices and encouraging more spending. Lower interest rates on loans would prompt companies to borrow and expand.

And higher stock prices would boost the wealth and confidence of individuals and businesses, Bernanke has suggested. The additional spending would lift incomes, profits and growth.

But the Fed's program has triggered a barrage of criticism both within the United States and abroad.

Republican leaders in Congress and some Fed officials are among those who say they doubt the program will help the economy. They also worry it could unleash inflation and lead to speculative buying on Wall Street.

And at a summit of world leaders in South Korea last week, China, Germany, Brazil and other countries complained that the Fed's plan would give U.S. exporters a competitive price edge by flooding world markets with dollars. A weaker dollar makes U.S. goods more attractive to foreign buyers.

Emerging economies like Thailand and Indonesia also fear that falling Treasury yields will send money flooding their way in search of higher returns. Such emerging markets could be left vulnerable to a crash if investors later decide to pull out and move their money elsewhere.

Still, European Central Bank President Jean-Claude Trichet insisted during a panel discussion after Bernanke's speech that he and the Fed chairman "strongly share the view that a solid strong dollar ... is very important."…

-END-

I will leave you today, with this Dan Norcini account of trading yesterday. It is quite good!! (courtesy of James Sinclair commentary)

Dear CIGAs,

China this; China that; whatever. Yesterday it was hedgies running pell mell into risk trades once they figured that the ECB’s version of QE was on for Ireland. Today there were running back out of risk trades in many of the same markets. Let’s see – Wednesday these same nitwits were selling everything that moved on fears of Chinese interest rate hikes. They were convinced deflation was on the way. Yesterday they were buying everything in sight fearing inflation was on the way. Today they are selling fearing Chinese action regarding reserves will trigger an economic slowdown.

To give you an example of the madness that these fools have unleashed in the markets consider one commodity – cotton. Wednesday it was limit down. Yesterday it was limit up. Today it is limit down once again. I repeat – anyone who trades in this fashion is a total fool. This is the reason that a large number of hedge funds are going to be gone a year from now. They have no idea what they are trading or why. They simply chase motion. Once a price moves a certain amount, their computers all see the movement and unleash a barrage of buy or sell orders depending on the direction. There is no skill, no thought, no analysis, no nothing. There is only reaction.

That brings us to gold – in spite of all this idiocy caused by hedge fund algorithms, it is holding very well. It thus far has uncovered what appears to be reasonably solid buying support near the $1330 level. As the hedgies unload it, stronger-handed buyers are picking it up. The longer it can hold this level and track sideways, the more time it will give the technical oscillators time to bottom in the oversold zone and begin a slow turn higher. That will bring in some momentum based buying.

I have said it earlier this week and will say so again – China needs commodities, especially food such as grains and beans. They are struggling with rising food prices. One needs to know that the average Chinese family spends a larger percentage of their income on food than does the average American family. That in particular is why the rulers of China are very sensitive to rising food prices. If history has taught them anything, it is that the working classes must be kept relatively placated. Rising food prices are not conducive to a happy peasantry!

In the past, they have maintained massive reserves that they will draw from to add additional supply whenever prices seem to be getting out of control. That tends to damp down the rising price for a period. However, people need to eat whether or not bank reserve requirements are higher and interest rates are higher. Since China has been drawing down their reserves at a rapid rate, the only way that they are going to be able to keep prices from working even higher is to import more. That is a simple fact.

I believe that one of the things that they are doing is attempting to trip the hedge fund algorithms into a sell mode in the commodity sector so that they can secure what they need for feedstuff and metals for that matter, at a reduced price. After all, if we all here understand how the mindless hedge fund algorithms function, is it not reasonable to suspect that so do the Chinese, whom after all, are excellent traders and who never chase prices higher. I repeat – the Chinese NEVER buy when the hedge funds are buying. They buy when the hedge funds are selling. Whom do you think the hedge fund algorithms often end up selling to?

My guess is that during periods of sharp market sell offs across the various commodity markets, a change of ownership is occurring with grains, beans, silver and gold, moving into strong hands who are buying for the longer term and will continue to buy on any bouts of price weakness. The long term trend in the grains and the metals are all pointed upward, and that is why periods when prices are falling are going to continue to attract quality buying. That is where the floor of support under both gold and silver is going to come from.

As mentioned in yesterday’s post, silver has a stronger looking price chart than does gold as it has now managed to run more than $2.00 higher off an important technical support area near the $25 level on the price charts. It still needs to clear $27.80 on the upside to have a shot at another run towards $30. If it dips lower again and moves back down below $26, it will be important that it holds above $25 to cement that level as a strong floor of downside support. That will give buyers, especially from Asia, confidence to step into the market in large size.

For gold, the level on the downside to watch is $1,330. It need to hold there to forge a floor from which it can mount another climb back towards $1,400. A trip above $1,365 will spook out a few weaker shorts.

Bonds are back up today after going back down yesterday.

It seems nearly all of our markets are becoming yo-yos. In my mind this is perhaps the worst legacy of the easy money policies of the Fed and their QE foray. They have provided the huge sums of liquidity that are sloshing around in our markets. Under normal circumstances, we would not see this “free money” being used to speculate in such size. The markets would be tamer, more reliable and more closely matched to real world fundamentals. Instead we have markets which experience severe distortions in price and are wrecking havoc on legitimate hedgers and other commercial interests who have historically employed the futures markets to minimize risk exposure. Now, thanks to the machinations of these mindless wits tossing money in and out without any regard to much if anything, the legitimate hedgers are encountering hedges that are blowing up in their faces and causing them to experience the exact thing that they have been trying to avoid. The exchanges don’t seem to care because they are making lots of money thanks to the fees that they charge for every trade. The problem is that hedging interests are beginning to look more and more for some different venues to offset risk. What will happen down the road is that we will end up with less true commercial hedging leaving more and more of the funds to be trading against each other. That will not be a good thing for the long term welfare of the futures industry. But then again, who cares about the long term these days….

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

clip_image001

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end.

Sorry for being a little late today as there was a lot to cover.

I hope you have a grand weekend and I will see you Monday evening.

Harvey

FW: Bankers have a Silver Nightmare

 

 

From: Harvey Organ [mailto:harveyorgan@rogers.com]
Sent: November-20-10 12:57 PM
To: BLOG
Cc: Aaron Peters; al Grennell; alex vega; andrew wright; Angela Mann (angelarmann@gmail.com); anne (anne@nas.net); arctic experience; Banks Bourne; Barry.Fishman@tevacanada.com; Ben Ackerman; Ben Sauder (bsauder4@aol.com); Bob Acker; bryan somerville; chris page (chris-page@rogers.com); christopher crofoot the new entrepreneur; Connor Page; Dad; Dani Organ; david street (dstreet@lerners.ca); davidallanlanglois@hotmail.com; dawn; deanna waldenberg (deannapini@msn.com); Dong Shin (phoenix9@sympatico.ca); Dr Peter Aldor; Dwight.Fowler@td.com (Dwight.Fowler@td.com); eamon; Edward; fred lorusso; gary; gary kay; Gary Lovell; gordon.organ@utoronto.ca; Gregorio Velasco; Harvey Organ; HCHC; Heidi Brooks; hera neal; Herb Singer; ingrid@ghis.us; j chandler; Jack, Don (Heenan Blaikie); jeff mandlsohn; john Mull; Joseph Rudolph; larco; Laurie Hart; Lenny Organ; lorgan@ecgmedical.com; manish maingi; mark birta; Mark Organ; markrusic1@netscape. net (markrusic1@netscape.net); marv michaels; medi; Merrill Davidoff; Michael Dell Angelo; michael khozin; Michelle Dudzic; mike moore; Morley Weinberg (moeoless@sympatico.ca); Paul Jaggard; pcharal@allweatherlandscape.com; robert; ron kaplan; Shane Fowler; Shirley Don'tbenosy (peaceful_panda@hotmail.com); Skip Stephens; spiros (sgoussios@rogers.com); stan tick; stephen silman; stephen.organ@gmail.com; Steve Bruce; stuart waldenberg; swiseman@taylorleibow.com; Thomsons44@aol. com (Thomsons44@aol.com); varouj (vtabakian@sympatico.ca); vviravong@primus.ca; Warren.Roberts@tevacanada.com; willie molloy
Subject: Bankers have a Silver Nightmare

 

Good morning Ladies and Gentlemen;

 

It seems that Sheila Bair of the FDIC was very busy last night as we added 6 new members to our banking morgue.  May they rest in pieces:

 

Bank Name

City

State

CERT #

Acquiring Institution

Closing Date

Updated Date

Gulf State Community Bank

Carrabelle

FL

20340

Centennial Bank

November 19, 2010

November 19, 2010

First Banking Center

Burlington

WI

5287

First Michigan Bank

November 19, 2010

November 19, 2010

Allegiance Bank of North America

Bala Cynwyd

PA

35078

VIST Bank

November 19, 2010

November 19, 2010

Copper Star Bank

Scottsdale

AZ

35463

Stearns Bank, N.A.

November 12, 2010

November 19, 2010

Darby Bank & Trust Co.

Vidalia

GA

14580

Ameris Bank

November 12, 2010

November 19, 2010

Tifton Banking Company

Tifton

GA

57831

Ameris Bank

November 12, 2010

November 19, 2010

 

end.

We have lots to cover today.  Gold closed down marginally by 70 cents to $1352.20.  However it was silver who took center stage refusing to buckle under the weight of another raid orchestrated by the banker hoodlums.  Silver rose by 31 cents to $ 27.18, and rose even further in the access market finishing the day at $27.35 and gold at $1354.10.  The bankers were covering as fast as their little feet would carry them to cover their massive shortage of supplied paper over the last few days. I will go over those numbers for you.

 

Yesterday was such a monstrous day of trading so let us go straight over there for the results so you can get a head start on Monday.

The gold comex total OI (open interest) for yesterday's reading which is basis Thursday night came at  629,605 contracts for a drop of 3619 contracts. This is very important as the drop occurred on Thursday with gold and silver rising with much force.  The commercials even though they supplied much of the paper they covered more than they supplied. 
The front delivery month of December which will be watched by all commentators fell to 243,665 from 255,883 a minor drop considering that the December contract goes off on the 23rd of November as does options expiry.  The holders of long gold and silver contracts must pluck their money down next Friday night as Monday, Nov 29th is first day notice.  This day the banking cartel see the total number of contracts standing and options exercised for a gold contract.  Delivery notices are then sent the following day, Nov 30.2010 and the fun begins.  Please keep these dates pinned to your wall as I will try and explain as much as I can what is happening in the comex physical world.
The volume on the front options expiry of November  (not Dec) revealed that 20 contracts remain to be served.
The estimated volume of trading at the gold comex on Friday was 196,401.  It will surely rise on Monday when confirmed. The total confirmed volume on Thursday was a monstrous 254,185 contracts.

 

Now for the star of the day, silver:

The total silver comex OI dropped marginally to 144,248 from 146,528 for a loss of 2280 contracts.  Here we have the same story as gold with the bankers supplying the paper but covering more than they were supplying. The front December month is scary as it shows only a drop of only 3,000 contracts to 48,991 from 51,905. It seems our silver longs are resolute and are willing to take on the bankers.
In another strange reading, the front November month for options that are standing for silver metal rose from 22 to a huge 52 contracts.

 

I would like you to see how the deliveries and inventory changes added to our mix today:

 

Here is a chart for the 19th of November for gold and silver comex inventory and deliveries 

 

Silver

Withdrawals from Dealers Inventory 

5017 oz

Withdrawals from customer Inventory 

  22,898 oz

Deposits to the dealer Inventory

 Zero

Deposits to the customer Inventory

  1,006,720

No of oz served 49

245,000oz

No of notices to be served..3

15,000 oz

Gold

Withdrawals from Dealers Inventory 

 zero  oz

Withdrawals from customer Inventory 

  15,395 oz

Deposits to the dealer Inventory

 zero  oz

Deposits to the customer Inventory

 9484oz

No of oz served (contracts =1

 100 oz

No of oz to be served 20

2000oz

 

 

 

Let us start with the silver inventories:

Please note the massive influx of 1,006,720 oz of silver into the customer. Most of the time the customer is removing the silver. Yesterday two customers  (one customer added 424,336 and the second, 582,384) probably made deals with the dealers to supply silver to patiently waiting longs in the November and the upcoming December contract. We add two withdrawals of silver, a 5017 oz departure which represents one silver contract and that no doubt settled a long.  The remainder 22,898 oz leaving the customer also left all registered vaults which seems the pattern of late.
Now the good stuff:

Strangely, 49 contracts were served upon options that were exercised but kept in the back pocket of the bankers. This represents 245,000 oz of silver.  Even though 52 contracts are shown remaining to be served, this is basis Thursday, so I think I am safe to subtract the 49 contracts served.  Thus only 3 contracts remain to be serviced plus any new ones still stored in the back pockets of the bankers and not revealed. The total number of notices sent down in silver this month total 841 or 4,275,000 oz.

 

I can now give you with assurance, that the total number of silver ounces standing for November is as follows:
4,275,000 oz (already served)  + 15,000 oz (to be served) =  4,290,000 oz. (this number is rising by the day). At the conclusion of November I will add this number with the Oct number of oz standing to give the official standing of silver for the delivery month of December.

 

Now for gold:

Please note again, a very comatose comex gold vaults.  We were informed that a customer added 9484 oz and another customer withdrew 15,394 oz so the net withdrawal of gold is 5910 oz.  It looks like the customers of the comex silver and gold are voting with their feet and getting out of Dodge.
The comex folk informed us that only 1 contract of gold was served upon our options exercised holder for a total of 100 0z. The total number of notices sent down so far this month total 1141 or 114100 oz of gold.  We have 20 contracts left to be served or 2000 oz of gold.

 

Thus the total number of gold oz standing in this non delivery month of November is as follows:

114,100 oz +  2000 oz =  116,100 oz or 3.61 tonnes of gold.  (It looks like this will be the final total standing)

 

The usa mint revealed yesterday, a massive volume of sales so far this month equal to almost 3.8 million oz This is deadly to the bankers as the comex is not getting the silver it needs to satisfy long contracts.  The USA produces around 40 million oz of silver per year out of the world's global production of 600 million-700 million oz. Silver is mainly produced as a bi-product as there are few purely silver producers.

Demand for silver has been rising and at last count it is 900 million oz.  Scrap silver and officially hidden China silver, balance the difference.

The USA must use all of its domestic production in the minting of their silver eagle/silver commemoratives. If the mint continually has demand for 3.8 million oz this month,or 46 million oz for the year, then the USA must import silver from other sources to fulfil their needs. This will happen at the exact same time as Sprott scours the planet for his silver as will the Central Fund of Canada.  Jewellers will also demand silver. Thus the comex and the mint must now import badly needed silver to fulfil their needs.

 

 

Below is zero hedge discussing the mints huge production in November:

 

 

 

 

 

 

 

 

US Mint Reports Soaring November Month-To-Date Silver Coin Sales Surpass 2010 High Following Massive Rush Into Precious Metal

Tyler Durden's picture

  

Is Max Keiser's attempt to put JP Morgan out of businessworking following the mother of all silver physical squeezes? The price of silver has been stable in the past few days, but if the US official precious metal seller is to be trusted, this will not last long. According to the US Mint, sales of 1-ounce American Eagle silver coins are headed for the strongest month since at least May, Bloomberg reports. And according to our update, the May total has not only been passed, but the November MTD total is already the highest in 2010. More details: a record 3,775,000 silver coins have been sold this month, compared with 3,636,500 in May, according to data on the Mint website. Silver futures in New York touched a 30-year high of $29.34 an ounce on Nov. 9. American Eagle coins also are available in gold and platinum. The Mint said 62,500 ounces of gold Eagles have been sold in November. What is interesting is that sales of the coins continue at an astronomic pace despite the nearly 10% premium one has to pay over spot. What is more interesting, is that the Mint has not run out yet. Yet the refreshing thing, is that instead of buying paper certficates promising that one's presumed purchases of gold is held by the DTCC, Americans are once again going straight into physical. Here is hoping Keiser's plan ultimately unravels whatever the RICO suit against JPM and HSBC leaves untouched.

From the Mint:

2010 Silver Sales Totals
(in ounces / number of coins)

Month

One
( oz. / #coins )

January

3,592,500
3,592,500

February

2,050,000
2,050,000

March

3,381,000
3,381,000

April

2,507,500
2,507,500

May

3,636,500
3,636,500

June

3,001,000
3,001,000

July

2,981,000
2,981,000

August

2,451,000
2,451,000

September

1,880,000
1,880,000

October

3,150,000
3,150,000

November

3,775,000
3,775,000

Total

32,405,500
32,405,500

5

end.

 

 

I have asked many of you out there to report to me on what they are paying for silver and gold and report delays.  It seems that delays are now frequent and premiums are rising.

Many are reporting to me that they are paying over 3.00 dollars from spot on silver and also 30 dollars or so on gold.  I would like to bring to you this commentary from Patrick Heller of Liberty Coins:

 

-END-

Widespread Silver Bar Shortages

By Patrick A. Heller on November 18th, 2010
Categories: Featured Articles, Gold and Silver Commentary, Precious Metals

As of today, there are no longer any regular wholesale supplies of the 1 ounce through 100 ounce silver rounds and bars available for immediate delivery. It may be possible to locate incidental quantities of some product, but most wholesalers are now promising two to four weeks delivery to allow time for the silver to be fabricated.

http://news.coinupdate.com/wp-content/uploads/2010/11/silver-bar.jpg

As a result of the shortages, premiums have started to rise. So far, the increases have been modest, on the order of 0.5-2%. However, if the shortage grows, expect to see further and larger premium increases in the coming weeks. We could see a repeat of the late 2008 gold and silver buying frenzy, where product availability got as slow as 1-4 months after payment.

At the COMEX close yesterday, registered (dealer) silver inventories fell below 50 million ounces. Even if you include the eligible (investor) silver inventories in the COMEX bonded warehouses, which are not available to fulfill COMEX deliveries unless the investor specifically chooses to do so, there were barely 107 million ounces to fulfill around 725 million ounces of contractual obligations. COMEX silver inventories are now down more than 10% from mid-June even while the amount of silver owed has soared!

As the price of silver almost continuously rose from $17.98 on August 23 to $29.36 mid-day on November 9 (a 63% increase), the COMEX had not changed its minimum requirements for leveraged accounts. It would be a normal process to periodically bump us the minimum amounts for margin accounts as prices rise, but this was not done until November 9, when the margin requirement was increased from $5,000 per contract to $6,500.

On September 16, the COMEX further raised the silver contract margin requirement to $7,250—even though the price of silver had been dropping since November 9! What is suspicious is that a lot of "insiders" were liquidating their silver positions starting the afternoon of November 15. Is it possible that they may have received advance notice of the coming change in the minimum margin account requirement and sold in anticipation of lower prices the next day?

The next round of gold and silver options expiration occurs on Tuesday, November 23. The attempt to suppress gold and silver prices upon the release of the US jobs and unemployment report on November 5 was almost a complete failure. Unless something is done to knock down gold and silver prices before November 23, a lot of call options will be exercised, which would further increase the demand for physical precious metals.

I suspect, as do many others, that the two rounds of increasing gold and silver margin requirements were timed for no other reason other than to try to help hold down prices through November 23.

Don’t be surprised if supplies of other low premium physical silver products, especially US 90% Silver Coin, dry up, with those premiums also starting to rise. If you are looking to acquire some physical silver, I suggest you act sooner rather than later.

Patrick HellerPatrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes "Liberty’s Outlook," a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under "News & Articles". His radio show "Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know" can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.

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In gold, this is the biggest story of the day. As I pointed out to you last month, the IMF at the end of August had only 75 tonnes left in their inventory to dispose of.

I hypothesized that by the end of November, they will be through.  The IMF were selling an average of 30 tonnes each month and they also sold 10 tonnes to Bagladash.  It seems that I am right.

 

Here is the story courtesy of Jack Farchy of the London times:

 

IMF speeds gold sales amid soaring prices

By Jack Farchy in London

Published: November 1 2010 18:17 | Last updated: November 1 2010 18:30

The International Monetary Fund has accelerated the rate at which it is selling its gold, taking advantage of the strong demand for the precious metal that has lifted prices to a series of record highs.

If sales continue at their current rate, the Washington-based lender could complete its planned disposal of 403.3 tonnes of bullion – or one-eighth of its total reserves – by the end of this year, ahead of earlier market expectations.

The IMF has been almost alone as a seller of gold from the so-called official sector, which includes central banks, governments and sovereign wealth funds as well as international organisations. As a whole, the sector is expected to be a small buyer of gold this year as purchases by Russia, the Philippines, Thailand and others outweigh the IMF’s sales.

Most analysts and advisers to central banks believe that buying will continue next year. Without the IMF’s sales as a counterbalance, the official sector could become a large net buyer.

"Barring something unexpected, central banks are going to be net buyers," said Tom Kendall, precious metals analyst at Credit Suisse. "Net purchases could be quite significant next year: 100-120 tonnes or more."

That would mark a sharp reversal from the trend of the past two decades, when central banks, mostly in Europe, sold about 7,500 tonnes of gold, equivalent to three years of mined output.

The IMF announced it would begin selling gold to the open market in February, after it had sold 212 tonnes in off-market deals with the central banks of India, Sri Lanka and Mauritius.

Between March and July, the IMF’s sales were fairly consistent, averaging about 25,000 ounces (0.8 tonnes) per trading day, according to a Financial Times analysis of the IMF’s monthly data. But in August and September the rate of on-market sales rose substantially. Moreover, the IMF sold a further 10 tonnes of gold in an off-market deal with the central bank of Bangladesh.

The acceleration came as gold prices rose sharply from about $1,180 at the start of August to a new nominal high of $1,387.10 in mid-October. "The appetite for gold was such that the market could happily absorb more than what they were selling over the summer," Mr Kendall said.

As of the end of September, the IMF had just 52.2 tonnes of gold left to sell.

IMF Sells 32.3 Tons of Gold in Sept, 22.3 Tons to Market

 

end.

 

 

It seems that our two fraudulent GLD and SLV funds with inventories supposedly in England both added to their inventories on Friday. First the GLD added 97,653 oz or 3 tonnes to its inventory which is now at record levels exceeding 1120 tonnes of gold.  The Silver etf SLV added another 1.319 million oz to hold in excess of 355 million oz.

 

 

 

Over at the GLD ETF, they added 97,653 troy ounces of gold to their stash yesterday. Not to be outdone, the SLV ETF showed another big increase on Friday. This time it was 'only' 1,319,879 ounces.

end

 

In other physical news, the Russians added another 600 million oz to its inventory of gold: (courtesy of Ed Steer of GATA)

 

Let's get back to gold for just a minute. With the 20th of the month falling on a Saturday, The Central Bank of the Russian Federation updated their website for October on the business day prior to that... which was yesterday the 19th... a habit which I'm grateful for. They reported adding another 600,000 ounces of gold to their official reserves, which now stand at 24.9 million troy ounces. Year-to-date, the Russians have added 4.6 million ounces of gold to their reserves. That's a lot!!!

From what I remember of Russian gold production in 2009... it looks like they're buying everything that they're digging out of the ground... and maybe a bit more. This is basically an 'up yours' gesture from Russia to the west's central and bullion banks. The Chinese government is doing exactly the same thing, except they do it in secret. One has to wonder when their next big announcement of an increase in gold reserves is going to come... and how much it will be.

Here's the most excellent graph of 'all of the above'...

http://v3.caseyresearch.com/images/101120_Russian-October-Gold.gif

Click here to enlarge.

 

end.

 

 

That about ends the physical side of my report so now let us see the big economic stories of the day.

 

The news that that the IMF and the EU are visiting Ireland is the big story in that a big cheque will have to be written to bail out the banks that have lent gobs of money of which the collateral is worthless.  It looks like the poor citizens of Ireland must bail out the banks and thus pay the price for the folly of the bankers:

 

Here is a story from yahoo news on the subject. (courtesy of James Sinclair commentary)

 

Irish, EU, IMF face marathon talks for loan deal 
CIGA Eric

WTF??? How long does it take to open up the checkbook? Theatrics designed to provide time for trades to unwind and present the illusion that this is something other than a bailout.

DUBLIN – Irish, European and International Monetary Fund officials mounted tough negotiations Friday over terms of a massive credit line for Ireland’s debt-crippled banks — with the fate of Ireland’s prized low business taxes in the firing line.

Irish officials said talks were under way at several locations in Dublin involving different government departments and agencies and more than 40 officials from the European Central Bank and Washington-based IMF. Most arrived Friday.

Source: news.yahoo.com

More…

 

and then this commentary from Jim Sinclair himself;

 

You are resilient writing about this, the second act in an international financial farce.

This slapstick comedy is a rerun of a Greek tragedy which will without any doubt end in QE exactly the same way.

Maybe we could just let the euro drop from 1.40 to 1.3350 three times for a day each so the usual suspects can cover rather than having to bear this three more times with Portugal, Spain and Italy. They are all going to end in the same way.

This is so transparent that it it is comical. It is the height of redundancy.

Regards, 
Jim

 

and these commentaries from  Jim himself:

 

If the ECB called a secret weekend meeting and dictated a total euro clean up it would be the same amount of QE that they will do anyway.

However, that can’t happen because the Banksters want three more acts to play the euro both ways and pack that bonus account to new records.

Regards, 
Jim

 

Thought For The Morning

Every act of the bailout play is a duplicate of all the time we wasted on Greece. I really hope that we do not have to go through this manipulation of the euro too many more times.

You would hope the international investment banks have packed their bonus accounts already.

The end will be the same. The entire Western world will go with QE to infinity.

The sheeple think this is all for real.

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end.

 

What Jim is stating that once they write the cheque for Ireland, then Portugal will be next followed by Spain.  The whole world will be deluged with paper money.

 

end

 

 

 

Now we see the USA confront their major bankers the Chinese in a war of words: (courtesy of the Associated Press)

 

Bernanke defends bond-purchase plan, warns China

The Associated Press

Friday, Nov. 19, 2010 | 3:09 a.m.

Federal Reserve Chairman Ben Bernanke hit back at critics, both at home and abroad, who have challenged the central bank's $600 billion bond-purchase program.

In a speech in Germany, he argued that Congress must help support the Fed's program with further stimulus aid. And he issued a stern warning to China, saying it and other emerging nations are putting the global economy at risk by keeping their currencies artificially low.

Bernanke made the remarks Friday at a banking conference in Frankfurt.

Without more stimulus, high unemployment could persist for years, he said. But in making that argument, Bernanke risks heightening complaints that he's plunging the Fed into partisan politics.

The Fed's Treasury bond-buying program is intended to invigorate the economy in part by lowering interest rates, lifting stock prices and encouraging more spending. Lower interest rates on loans would prompt companies to borrow and expand.

And higher stock prices would boost the wealth and confidence of individuals and businesses, Bernanke has suggested. The additional spending would lift incomes, profits and growth.

But the Fed's program has triggered a barrage of criticism both within the United States and abroad.

Republican leaders in Congress and some Fed officials are among those who say they doubt the program will help the economy. They also worry it could unleash inflation and lead to speculative buying on Wall Street.

And at a summit of world leaders in South Korea last week, China, Germany, Brazil and other countries complained that the Fed's plan would give U.S. exporters a competitive price edge by flooding world markets with dollars. A weaker dollar makes U.S. goods more attractive to foreign buyers.

Emerging economies like Thailand and Indonesia also fear that falling Treasury yields will send money flooding their way in search of higher returns. Such emerging markets could be left vulnerable to a crash if investors later decide to pull out and move their money elsewhere.

Still, European Central Bank President Jean-Claude Trichet insisted during a panel discussion after Bernanke's speech that he and the Fed chairman "strongly share the view that a solid strong dollar ... is very important."…

-END-

 

 

I will leave you today, with this Dan Norcini account of trading yesterday.  It is quite good!!  (courtesy of James Sinclair commentary)

 

Dear CIGAs,

China this; China that; whatever. Yesterday it was hedgies running pell mell into risk trades once they figured that the ECB’s version of QE was on for Ireland. Today there were running back out of risk trades in many of the same markets. Let’s see – Wednesday these same nitwits were selling everything that moved on fears of Chinese interest rate hikes. They were convinced deflation was on the way. Yesterday they were buying everything in sight fearing inflation was on the way. Today they are selling fearing Chinese action regarding reserves will trigger an economic slowdown.

To give you an example of the madness that these fools have unleashed in the markets consider one commodity – cotton. Wednesday it was limit down. Yesterday it was limit up. Today it is limit down once again. I repeat – anyone who trades in this fashion is a total fool. This is the reason that a large number of hedge funds are going to be gone a year from now. They have no idea what they are trading or why. They simply chase motion. Once a price moves a certain amount, their computers all see the movement and unleash a barrage of buy or sell orders depending on the direction. There is no skill, no thought, no analysis, no nothing. There is only reaction.

That brings us to gold – in spite of all this idiocy caused by hedge fund algorithms, it is holding very well. It thus far has uncovered what appears to be reasonably solid buying support near the $1330 level. As the hedgies unload it, stronger-handed buyers are picking it up. The longer it can hold this level and track sideways, the more time it will give the technical oscillators time to bottom in the oversold zone  and begin a slow turn higher. That will bring in some momentum based buying.

I have said it earlier this week and will say so again – China needs commodities, especially food such as grains and beans. They are struggling with rising food prices. One needs to know that the average Chinese family spends a larger percentage of their income on food than does the average American family. That in particular is why the rulers of China are very sensitive to rising food prices. If history has taught them anything, it is that the working classes must be kept relatively placated. Rising food prices are not conducive to a happy peasantry!

In the past, they have maintained massive reserves that they will draw from to add additional supply whenever prices seem to be getting out of control. That tends to damp down the rising price for a period. However, people need to eat whether or not bank reserve requirements are higher and interest rates are higher. Since China has been drawing down their reserves at a rapid rate, the only way that they are going to be able to keep prices from working even higher is to import more. That is a simple fact.

I believe that one of the things that they are doing is attempting to trip the hedge fund algorithms into a sell mode in the commodity sector so that they can secure what they need for feedstuff and metals for that matter, at a reduced price. After all, if we all here understand how the mindless hedge fund algorithms function, is it not reasonable to suspect that so do the Chinese, whom after all, are excellent traders and who never chase prices higher. I repeat – the Chinese NEVER buy when the hedge funds are buying. They buy when the hedge funds are selling. Whom do you think the hedge fund algorithms often end up selling to?

My guess is that during periods of sharp market sell offs across the various commodity markets, a change of ownership is occurring with grains, beans, silver and gold, moving into strong hands who are buying for the longer term and will continue to buy on any bouts of price weakness. The long term trend in the grains and the metals are all pointed upward, and that is why periods when prices are falling are going to continue to attract quality buying. That is where the floor of support under both gold and silver is going to come from.

As mentioned in yesterday’s post, silver has a stronger looking price chart than does gold as it has now managed to run more than $2.00 higher off an important technical support area near the $25 level on the price charts. It still needs to clear $27.80 on the upside to have a shot at another run towards $30. If it dips lower again and moves back down below $26, it will be important that it holds above $25 to cement that level as a strong floor of downside support. That will give buyers, especially from Asia, confidence to step into the market in large size.

For gold, the level on the downside to watch is $1,330. It need to hold there to forge a floor from which it can mount another climb back towards $1,400. A trip above $1,365 will spook out a few weaker shorts.

Bonds are back up today after going back down yesterday.

It seems nearly all of our markets are becoming yo-yos. In my mind this is perhaps the worst legacy of the easy money policies of the Fed and their QE foray. They have provided the huge sums of liquidity that are sloshing around in our markets. Under normal circumstances, we would not see this “free money” being used to speculate in such size. The markets would be tamer, more reliable and more closely matched to real world fundamentals. Instead we have markets which experience severe distortions in price and are wrecking havoc on legitimate hedgers and other commercial interests who have historically employed the futures markets to minimize risk exposure. Now, thanks to the machinations of these mindless wits tossing money in and out without any regard to much if anything, the legitimate hedgers are encountering hedges that are blowing up in their faces and causing them to experience the exact thing that they have been trying to avoid. The exchanges don’t seem to care because they are making lots of money thanks to the fees that they charge for every trade. The problem is that hedging interests are beginning to look more and more for some different venues to offset risk. What will happen down the road is that we will end up with less true commercial hedging leaving more and more of the funds to be trading against each other. That will not be a good thing for the long term welfare of the futures industry. But then again, who cares about the long term these days….

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

clip_image001

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end.

 

Sorry for being a little late today as there was a lot to cover.

I hope you have a grand weekend and I will see you Monday evening.

Harvey

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