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Fed Shorting Gold to Support the Dollar, Former Assistant Treasury Secretary Roberts Says

2nd Apr 2013, 4:01 pm by Ed Steer

¤ YESTERDAY IN GOLD & SILVER

Easter Monday turned out to be a real yawner everywhere on Planet Earth yesterday, as most non-North American markets were closed.  Ted Butler said that both Hong Kong and London were shut tight...so it was pretty much all U.S. bullion banks trading on the Globex amongst themselves yesterday.

Gold made several weak attempts to break above the $1,600 spot price mark, but each one was easily turned back, as there was no volume worth mentioning.

Gold closed at $1,599.40 spot...up $1.80 on the day.  Gross volume was anemic...only 64,000 contracts.

The price pattern was pretty much the same in silver, but there were a couple of important differences.  The first was a new low price tick...$27.77 spot...which is a price we haven't been at since August of 2012.  And the second was much bigger gross volume...as 41,000 contracts were traded...which was pretty decent.  Silver finished the Monday trading day at $28.02 spot...down 28 cents from Thursday's close.

As you can see, the platinum and palladium markets had minds of their own yesterday.  But, like gold and silver, there was no currency related moves to explain yesterday's price action in either white metal.

The dollar index opened at 83.00...and then rose to its high of the day [83.16] around 10:00 a.m. Hong Kong time.  It hung in there for a bit before rolling over.  It hit its nadir [82.67] around noon in New York, before recovering a bit as the afternoon wore on.  The index closed around 82.73...down 27 basis points from its Thursday close.  It should have been obvious to anyone that, once again, there was no correlation between the dollar index and the precious metal prices again yesterday.

The gold stocks headed south the moment that markets opened in New York yesterday morning.  The HUI bounced off its lows for most of the morning before recovering a bit into the close, but the finished down 1.11% on the day nonetheless.

None of the silver stocks finished in positive territory yesterday...and Nick Laird'sIntraday Silver Sentiment Index closed down 1.65%.

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The CME's Daily Delivery Report for 'Day 2' of the April delivery month showed that 14 gold and 149 silver contracts were posted for delivery on Wednesday.  Jefferies was the short/issuer on all 149 silver contracts....and the two big silver shorts, JPMorgan Chase and Canada's Bank of Nova Scotia, were the only two long/stoppers that mattered, with 75 and 63 contracts respectively.  The link to yesterday's Issuers and Stoppers Report is here.

The GLD ETF reported another withdrawal by an authorized participant...the first one since March 21st.  This time the amount was 135,435 troy ounces.  There were no reported changes in SLV.

The U.S. Mint had a sales report to start off the month of April.  They sold 2,000 ounces of gold eagles...and a very chunky 812,000 silver eagles.  I would suspect that those silver eagle sales actually belonged in March, as none were reported sold for the last three days of that month.

Over at the Comex-approved depositories on Thursday, they reported receiving 300,180 troy ounces of silver...and shipped a smallish 16,387 troy ounces of the stuff out the door.  The link to that activity is here.

Well, despite the Good Friday holiday, the Commitment of Traders Report [for positions held at the close of Comex trading on Tuesday, March 26th] was posted on the CFTC's website just like Ted Butler said it would be.

In silver, the Commercial net short position declined by 2,398 contracts...and now sits at 120.2 million ounces, the smallest amount since the lows of last summer according to Ted.  What Ted also pointed out in his weekend commentary was that the raptors [the Commercial traders other than the Big 8] hold their biggest long position in history...a new record high...and the technical funds are holding a record gross short position...and the smallest long position that Ted can remember.  The elastic is stretched pretty tight.

In gold, the Commercial net short position was reduced by 389,100 troy ounces of gold...and now sits at 15.85 million ounces.  This is not a record low, but it's still very low comparatively speaking.  According to Ted, the raptors covered about 8,000 short contracts...and the did the '5 through 8' largest traders covered about 1,000 short contracts.  The 'Big 4' added more than 5,000 contracts to their short position.

Here's Nick Laird's "Days of World Production to Cover Comex Short Positions" of the largest 4 and 8 traders in each physically traded commodity on the Comex.  Palladium is now tied with silver at 124 days of world production to cover the short positions of JPMorgan et al...and platinum is only seven days of world production behind them.  Gold sits at only 61 days of world production to cover the short positions of the Big 8...almost a free market...LOL!

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While on the subject of Nick Laird's charts...here are two more he sent me late yesterday evening.  They show the intraday price movements for both gold and silver for the month of March.

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To give you and idea of what these charts look like over 12 months...here are the 12 month rolling averages for both gold and silver.

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And here's your cute photo of the day...

Because of the long weekend, I have a lot more stories than normal...and quite a few of them are must reads/watches, so I hope you can find the time.

 

¤ CRITICAL READS

State-Wrecked: The Corruption of Capitalism in America [Sundown in America]

Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.

So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.

When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.

This must read David Stockman op-ed piece was posted on The New York Times website on Saturday...and I thank Roy Stephens for today's first story.

Read more...

Money-Laundering Banks Still Get a Pass From U.S.

Money laundering by large international banks has reached epidemic proportions, and U.S. authorities are supposedly looking into Citigroup Inc. and JPMorgan Chase & Co.

Governor Jerome Powell, on behalf of the Board of Governors of the Federal Reserve System, recently testified to Congress on the issue, and he sounded serious. But international criminals and terrorists needn’t worry. This is window dressing: Complicit bankers have nothing to fear from the U.S. justice system.

To be on the safe side, though, miscreants should be sure to use a really large global bank for all their money-laundering needs.

There may be fines, but the largest financial companies are unlikely to face criminal actions or meaningful sanctions. The Department of Justice has decided that these banks are too big to prosecute to the full extent of the law, though why this also gets employees and executives off the hook remains a mystery. And the Federal Reserve refuses to rescind bank licenses, undermining the credibility, legitimacy and stability of the financial system.

This op-ed piece posted on the Bloomberg website on Sunday, was written by Simon Johnson.  He served as chief economist at the IMF in 2007/8.  I thank Washington state reader S.A. for sharing it with us.  It's certainly worth the read.

Read more...

Judge: Stockton, California Can File for Bankruptcy

A judge accepted the California city of Stockton's bankruptcy application on Monday, making it the most populous city in the nation to enter bankruptcy.

U.S. Bankruptcy Judge Christopher Klein said the bankruptcy declaration was needed to allow the city to continue to provide basic services.

"It's apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law," Klein said.

This article showed up on the CNBC website in the middle of yesterday afternoon Eastern time...and I thank Marshall Angelesfor bringing it to our attention.

Read more...

Venezuela's Move Seen as Currency Devaluation

A Venezuelan government foreign currency auction for local importers has triggered a de-facto currency devaluation, the second in less than 50 days, analysts said.

The government scrapped a program that exchanged currency at a rate of 5.3 bolivars per dollars because officials said it allowed for "speculation" and dollars wound up on the black market.

Instead, it launched a new plan known as SICAD through which it auctioned $200 million on Wednesday to a group of chosen companies. The government said that 383 companies participated, but did not name them.

Neither did they reveal the sale price of the dollar.

This AFP story was picked up the uk.finance.yahoo.com Internet site early Sunday morning British Summer Time...and I found it in a GATA release yesterday.

Read more...

Argentine Bonds Fall on Government Proposal to Default Holdouts

Argentina’s dollar-denominated debt dropped on speculation the government’s offer to pay defaulted debt holders on similar terms as past restructurings will spur a U.S. court to order the nation to pay in full.

The government’s restructured notes due 2033 fell 1.09 cents to 52.66 cents on the dollar at 3:30 p.m. in New York after earlier declining to 51.76 cents, according to data compiled by Bloomberg. The yield on the bonds jumped 33 basis points, or 0.33 percentage point, to 16.81 percent, the highest level on a closing basis since June 2009.

Concern is mounting that an appeals court order forcing Argentina to pay hedge fund Elliott Management Corp. and other holdout creditors in full would prompt the country to halt payments on the notes from the 2005 and 2010 restructurings. An attorney for Argentina told the appeals court in February that the nationwouldn’t obey a lower court order to pay the holdouts the full amount, which totals more than $1 billion. The lower court order forbids Argentina from servicing the restructured bonds without paying the holdout creditors, meaning an upholding of the full payment ruling could trigger a new default.

This Bloomberg story was posted on their Internet site early yesterday afternoon Mountain Daylight Time...and is courtesy of Manitoba reader Ulrike Marx.

Read more...

Jim Rogers: Depositors Globally Should ‘Run for the Hills’

The losses imposed on Cyprus bank depositors by the European Union, European Central Bank (ECB) and International Monetary Fund (IMF) bailout should be a warning shot to bank depositors around the world, says investment legend Jim Rogers, chairman of Rogers Holdings.

“What more do you need to know? Please, you better hurry, you better run for the hills. I’m doing it anyway,” Rogers told CNBC.

“I want to make sure that I don’t get trapped. Think of all the poor souls that just thought they had a simple bank account. Now they find out that they are making a ‘contribution’ to the stability of Cyprus. The gall of these politicians.”

No kidding!  I'll be following his advice real soon myself.  Thismoneynews.com item was posted on their Internet site early on Friday morning Eastern time...and my thanks go out to West Virginia reader Elliot Simon.

Read more...

Big depositors in Bank of Cyprus to be hit much worse than feared

Under the arrangement, depositors in Bank of Cyprus will receive shares in the lender worth 37.5pc of any savings over €100,000, while the rest may never be paid back, according to a statement from the Cypriot central bank.

Of the 62.5pc of uninsured deposits not converted to bank shares, 22.5pc will be frozen in non-interest accruing accounts until the restructuring plan is completed, which could take months, and 40pc will continue to accrue interest but will not be repaid unless the bank does well.

Government figures, including finance minister Michalis Sarris and central bank governor Panicos Demetriades, had previously indicated that depositors in the island's largest lender would lose around 40pc of their uninsured savings as part of an 11th hour agreement reached in Brussels in the early hours of Monday.

Meanwhile, account holders in Laiki Bank, the country's second largest, stand to lose up to 80pc of their money as the lender is wound down and insured deposits transferred to Bank of Cyprus.

This story has had a headline change since Roy Stephens sent it to me on Saturday.  It now reads "Cypriot authorities confirm raid on big depositors". This article was posted on the telegraph.co.ukInternets site late on Friday evening.

Read more...

Capital Flight Accusations: Probe Puts Cypriot President Under Pressure

Several Cypriot companies were allegedly able to move millions out of the country ahead of tight capital restrictions imposed as part of the recent bailout. President Anastasiades has been accused of passing on insider information to relatives to help them avoid losses.

A new list containing the names of dozens of companies and individuals who allegedly emptied accounts worth hundreds of million of euros held at Laiki Bank -- just days before Nicosia enforced capital controls and a steep losses on holders of savings accounts -- are causing a political earthquake in Cyprus.

The latest revelations come just days after the publication of another list containing names of businesses and prominent Cypriot politicians who allegedly saw their loans generously written off by Cypriot banks.

This must read commentary was posted on the German websitespiegel.de at 4:15 p.m. Europe time yesterday afternoon...and it's another offering from Roy Stephens.

 

Read more...

Alasdair Macleod: Cyprus triggers preference for goods

GoldMoney's Alasdair Macleod predicts that the financial debacle in Cyprus will push preferences in Cyprus and throughout the euro zone away from holding money and in favor of holding goods. This,Macleod writes, is likely to push prices higher. "The question," he adds, "then becomes: How will the European Central Bank respond? Will it raise interest rates to curb this unexpected price inflation, or keep them low for fear of precipitating a collapse of insolvent banks and governments?"

Macleod's commentary is posted at GoldMoney's Internet site...and I found it buried in a GATA release on Sunday.

Read more...

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