Good morning Ladies and Gentlemen:
Gold closed up today by $4.10 to $1664.00 by comex closing time. Silver also had a good day rising by 8 cents to $31.28. It seems that the global bourses are shrugging off bad news by the minute as I would guess that investors believe that we will have QEIII by just about all of the major financial central banks.
The euro has remained relatively strong these past few days despite the awful news coming from Europe.
This can only mean that the globe is expecting another QEIII in the USA of around $700 billion or so. Today the Spanish economy continues to contract as unemployment reached close to 25% and youth unemployment reaching 52%. Italy had an unsuccessful bond auction with yields rising to 5.84% but they settled back to par at 5.64%. Spanish 10 yr bond yield finished the session at 5.88%. It's debt rating got knocked down two notches to BBB plus from A, by the rating agency S and P.
The key buzz word circling Europe these past few days is "growth". We know what growth means but what the boys in power really mean is "printing" or inflating their mess away. These head honchos see that the USA is printing like mad and yet no real crisis is reported by the mainstream press (i.e. no real crisis yet until the debt ceiling is reached); England is undergoing QE without any backlash and we just witnessed another infusion by the Japanese central bank into Japan without comment from mainstream media. The Europeans witness that the Japanese yen has not fallen on its sword yet. Next week we will no doubt see the French election of the socialist Hollande who will no doubt persuade Europe to print Eurobonds backed by all 17 euro zone nations. This would certainly alienate Germany who then must decide to leave the Euro. It already has a firewall set up to bail out its banks if it decides to do so. Next Sunday will be a game changer and we will have front seats watching how the world's global finance will evolve. Gold will play a key role watching these events gleefully cheering them on.
Let us head over to the comex and assess trading today.
The total gold comex open interest rose by 4441 contracts from 401,203 to finish the week at 405,644.
The new front month of May saw an initial reading of 481 contracts.
We had only 26 delivery notices filed on Thursday,.
I looked at the CME delivery notices section last night and no additional notices were sent down for April.
Thus the total number of notices for the month of April is complete 4967 notices for 496,700 oz.
The next big delivery month for gold will be June and here the OI rose by only 409 contracts from 218,865 to 219,274. The estimated volume Friday was pathetic at only 96,273 compared to Thursday's better level of volume registering 142,263 contracts.
The silver complex continues to baffle all financial pundits. Surprisingly, out of nowhere, the OI dropped from 120,321 to 113,728 for a loss of 6593 contracts. This was done with silver rising on Thursday. It seems to suggest that some long holders refused to roll to a future month and gave up. But why not gold? This happened last month but not with silver but with gold!. Was Blythe a very busy girl by handing out the goodies early? Very strange indeed!
The May front delivery month of silver saw its OI fall from 19,778 to 9026 for a loss of 10,952 which is high for the day before first day notice as many rolled and some just disappeared. The next big delivery month of July saw its OI rise by only 3921 contracts from 51,500 to 55,421. The estimated volume today was pretty good at 55,280 as the rollovers will be a lot less than on Thursday. The confirmed volume on Thursday was also good at 79,497 but that day saw plenty of rollovers coupled with high frequency trading.
Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in
No of oz served (contracts) today
No of oz to be served (notices)
off the board
Total monthly oz gold served (contracts) so far this month
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month
Very little activity in the gold vaults today.
We only had one transaction and that a deposit to the dealer account at Brink for 6,999.73 oz.
We had no customer deposits nor any withdrawals of any kind.
We had no adjustments.
The dealer or registered inventory rises to 2.510 million oz or 78.07 tonnes
The CME late Thursday night alerted us that only 49 notices were filed for delivery of Monday.
We did not receive any late Friday night final notices. The total notices filed so far this month total 4967 for 496,700 oz. The month of April is now complete.
Thus the total number of gold ounces standing in this delivery month of April is as follows:
4967 contracts or 496700 oz or 15.4 tonnes of gold.
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||nil|
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||1,221,282.73 (JPM,Scotia)|
|No of oz served (contracts)||12 (60,000)|
|No of oz to be served (notices)||contracts fulfilled|
|Total monthly oz silver served (contracts)||407 (2,035,000)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||1,192,854.3|
|Total accumulative withdrawal of silver from the Customer inventory this month||959,955.34|
We had considerable activity again today.
A few of you have noted that many of the deposits or withdrawals have been considerable and always
in the 500,000 to 600,000 oz range. I have noted that and I do find it unusual.
Today we had no dealer deposit and no dealer withdrawal.
We had the following customer deposit of silver:
1. Into JPM 624,783.90 oz
2 Into Scotia: 596,498.83 oz
total deposit: 1,221,282.73 oz
We had no withdrawals but did have a dilly of an adjustment:
1. We had a large 386,262.66 oz adjusted out of the customer account at Scotia into the dealer account of Scotia.
2. We had a monstrous 4,991,883.65 oz adjusted out of the customer account of JPMorgan and into the dealer account of JPM . That means we must have some major deliveries this coming week.
The registered inventory thus rises to 34.427 million oz and the total of all silver rises to 141.869 million oz.
The CME reported no silver delivery as the month is now complete.
The total number of notices served for April number 407 for 2,035,000 oz which is a mediocre for a
'non delivery' month
***Last last night, the CME notified us as to the first day intent to deliver for first day notices:
Gold notices: 296 (for 29,600 oz of gold)
silver: 957 ( for 4.785 million oz.)
Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:
The following is an important interview for you to read.
Eric Sprott agrees with us that the 65 billion euros removed from Spanish banks by citizens who basically "get it", was the real reason for LTRO as everyone knows the banks cannot pay for withdrawals. He states that European confidence levels are low, the European PMI indices are awful and even the USA is seeing record deficits. If you add the USA 1.4 trillion deficit to just this years unfunded liability in social security of$2.5 trillion you have a true deficit of 4 trillion dollars in a 15 trillion dollar GDP economy.
His answer to this: metals will break through paper!
(courtesy Eric Sprott/KingWorld News)
Currencies will be devalued, metals will break through paper, Sprott says
Submitted by cpowell on 10:23AM ET Friday, April 27, 2012. Section: Daily Dispatches
1:20p ET Friday, April 27, 2012
Dear Friend of GATA and Gold:
Sprott Asset Management's Eric Sprott today tells King World News that the world economy is not improving, that Europeans are losing confidence in their banking system and governments, that the world's debts can be handled only through currency devaluation, and that despite price suppression efforts in the futures markets, the markets for real gold and silver will break through. An excerpt from the interview is posted at the King World News blog here:http://kingworldnews.com/kingworldn
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Here is a report from Ed Steer on the short positions in shares(metals) of both SLV and GLD.
The SLV short position declined by 4.59% from 11.78 million shares (oz) to 11.24 million shares (OZ)
In GLD it was the reverse: the short position rose by a huge 13.60% (11.03 million shares to 12.54 million)..a monstrous 40 tonnes of gold. It is amazing that the SEC refuse to listen to our complaints on the shorts as this vehicle is short the metal for all shareholders. I think that they do not listen to us is the fact that there is no metal at all, in these vehicles unencumbered. Here is Ed:
(courtesy Ed Steer)
"One thing that I forgot to mention in my Wednesday column were the changes in short positions in the shares of both SLV and GLD. The latest bi-weekly report showed that the short position in SLV declined by 4.59 percent from 11.78 million shares/ounces, down to 11.24 million shares/ounces. Not a lot, to be sure, but it's better than the alternative. The short position in GLD was up again...this time by 13.60 percent. The number of shares of GLD held short [with no metal backing them] rose from 11.03 million to 12.54 million. That's about 40 tonnes of the stuff, which is not an insignificant amount. In silver, the tonnage is far more substantial...a hair under 350 tonnes, which is more than five days of total world silver production."
Early this morning the results of the Italian auction were in as they auctioned off 4 to 10 yrs of bonds and all outside of the LTRO zone. The 10 yr yield jumped to 5.84% which certainly brought alarm bells to our central European bankers. The bid to cover ratio was also weak as they could not sell the number of bonds required. However at the end of the day, the Italian bond yields fell back to 5.64%.
(courtesy zero hedge)
Italy Sells 4, 5, 7 And 10 Year Bonds: Yields Jump, Bids to Cover Slump: Market Commentary
Submitted by Tyler Durden on 04/27/2012 05:46 -0400end
While Europe is still keeping up a facade that all is well in the aftermath of the Spanish downgrade, but far more importantly its sheer economic collapse as noted earlier, just so Italy could price €4.916 billion in two On The Run 5 and 10 year bond issues (compared to a target of €5 billion), the tension is there, as can be seen in a decidedly week Italian bond auction, which saw yields soar, Bids to Cover slide, and tails spike. Italy also sold less than the maximum in off the run 2016 and 2019 bonds. All in all, while the market may experience a brief recovery rally that Italy managed to sell anything at all (that was not a Bill of course - that gimmick always does the trick), the reality that these yields are not sustainable will slowly seep in within a few hours.
To wit, Italy sold:
- €2.5 billion of 5.5% 2022 bonds at a yield of 5.84%, a whopping tail to the trading price of 5.74%, much higher compared to the March 29 auction of 5.24%, and a weaker Bid to Cover of 1.48 compared to 1.65 before.
- €2.42 billion of 4.75% 2017 bonds at a yield of 4.86%, also much higher compared to the March 29 auction of 4.18%, and a far weaker Bid to Cover of 1.34 compared to 1.65 before.
Also, the country sold €1.03 billion in Off The Run 2016 and 2019 bonds, well less than the target size of €1.25 billion, as follows:
- €537mln of 2019 bonds at yield of 5.21%
- €493mln of 2016 bonds at yield of 4.29%
So... bonds that are just out of the LTRO's maturity are yielding 4.3%? And that for the fulcrum country of Italy? And there are still those who think the ECB will not do many many more indirect and direct monetizations...
The immediate spin is as follows, via Reuters, which apparently focuses that the debt sold at all, as opposed to such actual fundamentals as unsustainable yield, sliding bid to cover, and, oh yeah, a 10 basis point tail. But who needs fundamentals when one has the central planners such as the BOJ injecting random trillions into the market at a whim.
ACHILLEAS GEORGOLOPOULOS, STRATEGIST, LLOYDS BANK, LONDON
"It looks better than the market expected because there were quite a few negative comments coming after the Spanish downgrade."
"The 5.9 (billion euros) number is pleasing the market for now. Any number below five would have created a bit of a problem for them."
"In this environment, domestic banks are probably supporting the auction and that has been a feature for Italy since the start of this year."
MICHAEL LEISTER, RATE STRATEGIST, DZ BANK, FRANKFURT
"Overall the figures look okay, a decent auction. The bid/covers don't look great but they are in line with the averages so far this year. Volumes seem alright and both issues are overbid compared with secondary market levels.
"To sum up, at least no further bad news, nothing to provide further fuel to the sell-off we have had in periphery paper this morning."
RICHARD MCGUIRE, STRATEGIST, RABOBANK, LONDON
The auction was "reassuring in that any fears of a very poor outcome were misplaced. However, these acceptable results certainly came at a price which, in turn, leaves a question mark over how long Italy will be able to finance itself at levels that can be deemed sustainable."
MARC OSTWALD, RATE STRATEGIST, MONUMENT SECURITIES, LONDON
"The issue was always going to be how close to the top of their target would they sell. At 5.95 billion (euros) they are very close to what was a very wide band, which is great."
"The cover is fine but it's not amazing. It never is for Italy. The more impressive part was where the selling yields were struck relative to where the secondary market was at the closing time of the auction. With the exception of the '19s, everything was sold four to six basis points below market levels so it was bid up which was very encouraging."
"But ultimately we are selling at the highs of recent months...What the whole thing tells is domestic demand remains strong...That was always going to help this sale."
Also in the wee hours of Friday morning we got word that the Spanish economy was falling apart with the unemployment level at 24.44% and that youth under 24 years of age is 52%. These are official government numbers. The real numbers are probably much much higher:
(courtesy zero hedge)
Spanish Economy Crumbles: Unemployment Nearly 25%
Submitted by Tyler Durden on 04/27/2012 05:28 -0400
In a week that Spain can't wait to end, the country was just hit with the bad news bears Trifecta, starting with the Real Madrid loss, following with the second S&P downgrade of Spain's credit rating for the year last night (or is that now SBBB+ain?), and concluding with economic data released this morning which showed that the economy is in a free fall that is approaching that of Greece, after retail sales fell for the 21st consecutive month, while Q1 unemployment soared to, drumroll please, one quarter of the working population or 24.44% to be specific, trouncing consensus estimates of 23.8%, and up nearly 2% from the 22.85% as of December 31. Which likely means that the real unemployment is far higher, and confirms not only that the economy is in free fall mode, but that Moody's, which delayed its downgrade of the country's banks to May, will proceed shortly.
The BBG chart below can only invoke laughter.
And the same from Reuters:
Spain's unemployment rate shot up to 24 percent in the first quarter, the highest level since the early 1990s and one of the worst jobless figures in the world. Retail sales slumped for the twenty-first consecutive month."The figures are terrible for everyone and terrible for the government... Spain is in a crisis of huge proportions," Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.Spain has slipped into its second recession in 3 years putting it back in the center of the Euro Zone debt crisis storm.The government has already rescued a number of banks that were too exposed to a decade-long construction boom that crashed in 2008, and investors fear vulnerable lenders will be hit by another wave of loan defaults due to the slowing economy.
There is hope that things will change...
The government expects labor reforms passed in the first quarter that make it cheaper for firms to hire and fire to produce results next year. Many firms have taken advantage of new rules to lay off more staff."It's a very challenging situation. I don't think that the banks are cornered yet, but the government must come out soon to say how they will address them," said Gilles Moec, an economist with Deutsche Bank.The downgrade put Spain's credit rating at the same level as Italy. S&P now has Spain on a BBB+ rating, which means "adequate payment capacity" and is only a few notches above a junk rating. Fitch and Moody's still rate Spain's sovereign with a "strong payment capacity".S&P said it was likely the government would have to put more funds into banks and called on euro zone countries to better manage the sovereign debt crisis.The government is considering whether to create a holding company for the banks' toxic real estate assets as investors have not been convinced by three rounds of clean-ups and consolidations in the financial sector.
But, as a reminder, there was hope that things in the US would also turn better nearly 4 years ago.
I guess that about does it for today
I hope you all have a grand weekend
and I will see you Monday night.