For over a quarter of a century, legendary investor and best-selling author Doug Casey and his team at Casey Research have been helping self-directed investors to earn superior returns through innovative investment research designed to take advantage of market dislocations.

Quaintance and Brodsky: Fed’s Exit Can Only Be Debt and Currency Devaluation Via Gold

13th Mar 2013, 3:14 pm by Ed Steer

¤ YESTERDAY IN GOLD & SILVER

After doing nothing through all of Far East trading...and the first three hours of London action, the gold price went vertical at 12:00 o'clock noon GMT, which just happened to coincide with the London silver fix.

Then minutes before the Comex open, either the buyer disappeared, or a not-for-profit seller showed up to prevent the price from breaking through the $1,600 price ceiling.  Then about fifteen minutes after the London p.m. gold fix was in, the gold price rose sharply once again...only to run into another wall of selling that drove the gold price down to its 11:30 a.m. Eastern time low in New York.  From there, the gold price traded more or less sideways into the 5:15 p.m. electronic close.

Gold's high tick of the day [$1,599.70 spot] came just minutes before 10:30 a.m. in New York...and the New York low tick [$1,589.60 spot] was in about an hour after that.

When all was said and done, gold closed at $1,592.70 spot...up $10.90 on the day.  Net volume was rather light at 117,000 contracts, give or take a few thousand.  The scale of the Kitco chart below makes the price action look more impressive than it really was.  But, as I noted, it was obvious...at least to me...that there was a willing seller present to make sure that the gold price did not break above, or close above, the $1,600 spot price mark once again.

It was more or less than same price action in silver.  The low tick of the day was around $28.85 spot...and that price printed about 11:30 a.m. GMT in London...about thirty minutes before the noon silver fix.  Silver's high tick of the day...$29.47 spot...came just minutes after the Comex open...and from there the price pattern was virtually the same as gold's.

Silver closed at $29.15 spot...up a whole 16 cents on the day, so you can see that the price got sold down over a percent from its absolute high that came shortly after the Comex open.  No for-profit seller ever sells like that...ever!  Net volume was pretty light as well...around 28,500 contracts.

Here are the platinum and palladium charts as a comparison...

The dollar index opened on Tuesday at 82.62 in Far East trading.  The continuing rally took it up to its 82.77 high around 9:30 a.m. in London.  But at 8:00 a.m. in New York, it fell almost 30 basis points in just over an hour, hitting its nadir of 82.43 just before the equity markets opened in New York.  From that point it rallied back to just above unchanged, before sliding a hair into the close.  The index finished the Tuesday session at 52.58...down 4 whole basis points on the day.

It seems pointless to note [for the umpteenth time] that the currency moves had zip to do with what happened in the precious metal markets yesterday.

The gold stocks gapped up...and hit their high at the 10:30 a.m. New York high tick in the gold price, before selling off a bit after that.  From gold's New York low at 11:30 a.m. Eastern time, the gold stocks traded almost ruler flat into the close.  The HUIfinished up a very respectable 2.26%.

The same can be said for the action in the silver shares as well.  Nick Laird's Intraday Silver Sentiment Index closed up a very decent 2.41%...and a few junior producers didmuch better than that.

(Click on image to enlarge)

The CME's Daily Delivery Report for Tuesday showed that 133 gold and 1 lonely silver contract were posted for delivery tomorrow within the Comex-approved depositories.  In gold, JPMorgan Chase was by far the biggest short/issuer, with 132 of those contracts...and the only two long/stoppers were Canada's Bank of Nova Scotia with 68 contracts...and Barclays with 65 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

Well, it was another day...and another decline in the GLD ETF, as an authorized participant withdrew a smallish 13,586 troy ounces of gold.  However, the SLV ETF went the other direction...in spades...as it reported a deposit of 1,836,369 troy ounces of the stuff...almost one full day of world silver production!

While on the subject of both SLV and GLD...Ted Butler gently reminded me that I had forgotten to post the current short interest data for the end of February on both of these ETFs in my Tuesday column, so I will make amends here.  The short interest in SLV dropped by 4.07%...and the short interest in SLV stood at 2.34% of the outstanding shares as of February 28th, which is not a lot.  But the GLD ETF went in the other direction, as its short position blew out by a very chunky 32.94%.  As of the end of February, the short position in GLD was 6.40%.  That's quite a bit, but it has been worse.

The U.S. Mint had a smallish sales report yesterday.  They sold 39,000 more silver eagles, but nothing else.

Over at the Comex-approved depositories on Monday, they reported receiving 649,561 troy ounces of silver...and shipped 811,920 troy ounces of the stuff out the door.  The link to that activity is here.

I have the usual number of stories for a weekday but, as always, the final edit is up to you.

 

¤ CRITICAL READS

SEC testing customized punishments

The Securities and Exchange Commission is experimenting with punishments that more closely fit the wrongdoing at issue in a bid to give its enforcement cases more bite.

Criticized for its traditional practice of a broad ban on wrongdoers breaking securities law again, the SEC is testing injunctions that specifically bar certain behavior, such as giving advice to pension funds or profiting from presenting investment seminars.

Critics of the SEC's typical broad prohibitions say they are ineffective and not well enforced. Customized injunctions could also be a more precise tool than the blunt instrument of barring an individual from being a company officer or director.

Unless some serious jail time is involved with these punishments, this idea is another total waste of time.  I thank Ulrike Marx for thisReuters story...and the first one in today's column.

Read more...

Google fined $7 million for unauthorized Street View data collection

Google Inc will pay $7 million to 38 states and the District of Columbia to settle an investigation into a controversial incident in which its Street View mapping cars collected passwords and other personal data from home wireless networks between 2008 and 2010.

The deal, details of which were reported last week, ends a nearly three-year investigation.

Google, the world's largest Internet search engine, has said the incident was a mistake owing to a piece of experimental computer code included in the cars' software. It said the data was not used in any Google services.

Google agreed in Tuesday's deal to eventually destroy the data collected in the United States. It is working with various European countries to determine how to handle the data it collected there.

Seven million bucks?  That's not even a rounding error on their net income statement, so why bother with a fine at all?  ThisReuters story was posted in the Economic Times of India very late Tuesday night India Standard Time...and I thank Marshall Angeles for bringing this story to our attention.

Read more...

Gartman: I'm Staying Out Of Stocks, Because I'm Concerned About All The Insider Selling

Back in February Dennis Gartman, publisher of The Gartman Letterannounced the he was exiting all his bullish positions and rushing to the sidelines.

Now stocks have been hitting all-time highs.

In an interview with CNBC, Gartman said he was wrong on stocks, "wrong 3 percent", but that he's going to stay on the sidelines.

A wise move would be my comment...but only time will tell.  Thisbusinessinsider.com story was posted on their Internet site early yesterday morning...and I thank Roy Stephens for sending it.

Read more...

Falkland Islands vote 99.8% to stay British

The Falkland Islands have voted overwhelmingly to remain under British rule in a referendum aimed at settling tensions as Argentina steps up its claims to the territory.

Residents of the Falkland Islands voted almost unanimously to stay under British rule in a referendum aimed at winning global sympathy as Argentina intensifies its sovereignty claim, results showed on Monday.

The official count showed 99.8 percent of islanders voted in favor of remaining a British Overseas Territory in the two-day referendum, which was rejected by Argentina as a meaningless publicity stunt. Only three “no” votes were cast.

British Prime Minister David Cameron on Tuesday urged Argentina to “take careful note” and respect the wishes of the Falkland Islanders.

Those of us of the right vintage and long enough memories remember the Falklands war all too well.  This france24.comInternet story from yesterday brings back a lot of memories for me...and I thank Roy Stephens for sharing it with us.

Read more...

British banks may have £30bn hidden losses

British banks may be harbouring a black hole of as much as £50bn in undeclared losses that do not show up in their accounts but hamper their efforts to lend, a shareholder group has warned.

PIRC has calculated the amount of bad debts the banks may have to write off in coming years but have yet to subtract from profits, together with other items such as deferred bonuses not booked.

HSBC, which is the biggest bank by assets, was shown to have £10.4bn of hidden losses, the Royal Bank of Scotland has £9.4bn, and Barclays has £7.3bn. Lloyds Banking Group has £2.5bn and Standard Chartered £2.2bn. Together the undeclared losses total £31.8bn.

Efforts to make banks shore up their capital buffers have been led by the Bank of England’s Financial Policy Committee (FPC), which indicated at the end of last year that hidden losses could total £60bn.

So...which is it...£30 billion, £50 billion, or £60 billion?  My guess is...probably more. The makes British banks just as insolvent as their U.S. counterparts.  This article appeared in The Telegraphwebsite early yesterday morning GMT...and it's courtesy of Matthew Nel.

Read more...

Euro woes not over, says crisis-wary Bundesbank

A wary German central bank said on Tuesday it had set aside billions more euros against what it deems risky European Central Bank moves, and criticized France directly for "floundering" in its reform drives.

Presenting Bundesbank 2012 results, Jens Weidmann, the bank's chief, said the euro zone crisis, which has eased as a result of ECB funding promises, was not over. He urged governments to tackle the roots of their troubles with reforms.

Weidmann, a member of the ECB's Governing Council, opposed the bank's yet-to-be-used bond-buy plan agreed last September and believes euro zone governments must shape up their economies to exit the crisis rather than looking to the ECB for help.

This Reuters story was posted on their website during the New York lunch hour yesterday...and I thank Manitoba reader Ulrike Marx for her first offering in today's column.

Read more...

On the Brink in Italy

Emanuele Tedeschi wiped sawdust from his hands and gestured around the cavernous woodworking factory that has been in his family for two  generations. The big machines, which used to run overtime carving  custom furnishings for private homes, Roman palazzi  and even the  Vatican,  sat idle on a shop floor nearly devoid of workers.

'‘A year and a half ago, the noise from production was so loud that  you had to shout to be heard,’' said Mr. Tedeschi, walking amid  pallets of cherry and other fine woods stacked up and waiting for a purpose.

Since a government austerity plan designed to shield Italy from  Europe’s debt crisis took hold last year, the economy has tumbled  into one of worst recessions of any euro zone country, and Mr.  Tedeschi’s orders have all but dried up.  His company, Temeca, is still in business. For now.

But among Italy’s estimated six  million companies, businesses of all  sizes have been going belly up at the rate of 1,000 a day over the  last year, especially among the small and midsize companies that  represent the backbone of Italy’s 1.5 trillion euro, or $2 trillion, economy.

This 2-page article, filed from Rome, appeared in The New York Times on Monday...and is worth running through.  I thank Roy Stephens for his second offering in today's column.

Read more...

150,000 Greek Public Sector Job Cuts Pending As Greece Launches Another Grexit "Plan B" Movement

The eye of the hurricane over Southeast Europe may soon be shifting, exposing Greece to the same 150 mph gale turmoil everyone has grown to love and expect over the past three years as soon as this month, when a new proposal by Greece is due on how to cut a massive 150,000 public sector jobs: a move which will result in an immediate surge in public unrest, and an exponential jump in strike activity.

As Bloomberg reports, "Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing. Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a €2.8 billion (US$3.6 billion) aid installment due this month.

More than a week of talks on that has so far failed to clinch an agreement."

This Zero Hedge piece from yesterday is definitely worth reading...and I thank reader "David in California" for sending it our way.

Read more...

Japan to Hike Utility Prices by 14-19% as Inflation Surges in All the Wrong Places

First it was gas prices, then it was food prices, and now it is the turn of basic utilities to see costs surge by double digits.

Dow Jones reports that "Japanese utilities, forced to idle their nuclear power plants over the past two years and facing higher fuel costs due to a weak yen, are now looking to push through double-digit rate hikes for their commercial customers."

This means less disposable income, less corporate profits, less monetary velocity, less growth and ultimately less "inflation" in other things such as the much desired stock market, which was supposed to be the wealth effect offset to all staples price increases. At least on paper.

This very interesting story was posted on the Zero Hedge website yesterday morning Eastern time...and it's another item courtesy of Ulrike Marx.

Read more...

Japanese Hyperinflation 'Unthinkable' Even With Bold Easing: Abe

"If the rate of inflation exceeds the 2% target, the BOJ would naturally proceed with a policy to keep it within 2%," he told reporters.

At the same time, Abe noted that the government "must keep a keen eye on trends in prices and long-term interest rates." The prime minister stressed the need to improve the country's finances, indicating a stance of limiting monetary policy side effects with an eye on government bond prices.

He said the government would proceed with fiscal measures and growth strategies that would enable companies to increase hiring and wages.

To head off rising energy prices stemming from a yen weakened by monetary easing, Abe vowed to work "to lower import costs by diversifying resources." He is seeking exports of cheap U.S. shale gas to Japan, which he asked President Barack Obama to approve at their recent meeting, as a way to lower procurement costs.

I don't know what this guy is smoking, but I'd bet a bag of it from his local 'supplier' would be pretty pricy.  These four paragraphs is almost all there is to this short item posted on the e.nikkei.comInternet site yesterday...and I thank Ulrike Marx for her second offering in a row.

Read more...

Four King World News Blogs

The first blog is with Dr. Stephen Leeb...and it bears the headline "Silver to Eclipse $100 on Skyrocketing Chinese Demand".  The second blog is with Keith Barron.  It's entitled "Major Catalyst" About to Send Gold and Silver Prices Surging".  Next is Rob Arnott...and it bears the title "We Are Now in a Very Dangerous Environment".  And lastly is this interview with Paul Brodsky...and it's headlined "Gold, Destructive Hyperinflation and the Final End Game".

Read more...

Silver to recover faster than Gold from present slump

Silver could come back anytime even though it is in the same sinking boat with gold at the moment, analysts said.

The white metal dropped 0.6 percent in the first week of March and is down 5.8 percent so far this year, which is approximately 42.3% from its high 22 months ago.

However, the silver price outlook still remains bright, according to the forecasts of major financial and investment firms.

Register here to be notified of future Casey Research articles.

Connect with Facebook to view or add comments for this article