"You Cannot Find a Bank Safe Deposit Box in Germany"
YESTERDAY IN GOLD AND SILVER
Despite how bad the gold chart looks… all is not as it seems. With most gold traders at the bullion banks officially M.I.A. yesterday and Thursday, the volume associated with the price moves shown below were the smallest in memory. Over both trading days, the actual net volume [with all roll-overs removed] was well under 10,000 contracts total.
As I mentioned in my column yesterday, Thanksgiving day volume [with New York closed] was vapour. So was Friday's volume. Don't read a thing into this price action.
And no matter how bad the chart looks, exactly the same thing can be said about silver… although silver's net volume on both days was around 12,000 contracts. This is the first time I can remember silver volume exceeding gold volume over the same period… ever. But, regardless of that fact, it's basically no volume at all.
Ted Butler's comments on yesterday's price action in both metals was, quote… "they slammed the metals intentionally at a very thin time." But one has to wonder just how many short positions in both metals they were able to actually cover on such thin volume. Whatever amount it was, won't be known until the final CME open interest numbers are released late Monday morning Eastern time.
The world's reserve currency was already in rally mode when markets in the Far East opened on Friday morning. The absolute top in the dollar came at 8:40 a.m. Eastern time… up about 80 basis points from the open. The absolute lows for gold and silver on Friday came at 8:50 a.m. From there, the dollar basically traded sideways for what was left of the New York trading session. Here's the dollar chart from midnight Eastern time onward.
Despite the big down moves in both metals on Friday, the gold and silver stocks held their own quite nicely. Yes, the gold stocks gapped down, but overall it could have been far worse… especially for the silver stocks, which did admirably well, all things considered. Most Canadian precious metals mutual funds closed up on the day… and my own personal portfolio was flat. It was mostly a handful of the large cap gold companies that affected the overall index. The HUI finished down 1.65%. Here's the 5-day chart for the week that was.
The CME's Daily Delivery report had nothing of consequence in it.
There were no changes in GLD yesterday… but over at the SLV ETF, they reported that a very chunky 5,865,684 ounces of silver were withdrawn.
The U.S. Mint had another sales report on Friday. Another 13,500 ounces of gold bullion were turned into various sizes of gold eagles… but they only reported selling 60,000 silver eagles. They're obviously loathe to break through the 4 million-per-month silver eagles sales number… as they currently sit at 3,935,000. They've been close to this level all week… and this is despite the fact that gold eagles sales month-to-date total 100,500 ounces… which is 40% more than they had reported sold just one short week ago.
Things were sure quiet over at the Comex-approved depositories on Wednesday, as only 1,980 ounces of silver were reported withdrawn on that date. Obviously nothing came out on Thursday… and I'm sure that Friday's activity will show little activity as well when that report becomes available on Monday.
¤ CRITICAL READS
Early yesterday evening when I started this report, I didn't have too many stories… but as the night and early morning hours progressed, I received a lot more. As always, you can pick and chose.
The first four stories in today's column are all courtesy of reader Roy Stephens. The first one is out of Thursday's edition of The Telegraph in London. The headline reads "Ireland unveils austere €15bn budget to cut deficit". To describe the budget in one word, I would use the word 'draconian'. To give you a "for instance"… the VAT [Value Added Tax] will be raised from 21%-23% in 2013, with a further increase to 24% in 2014. Wow! Here in Alberta it's 5%. The link to the story is here.
The next offering from Roy is another story from The Telegraph. This one is from Ambrose Evans-Pritchard… and the headline reads "EU rescue costs start to threaten Germany itself". The escalating debt crisis on the eurozone periphery is starting to contaminate the creditworthiness of Germany and the core states of monetary union. "You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings." says Professor Wilhelm Hankel of Frankfurt University. I highly recommendthat you read this from start to finish… and the link is here.
Roy's next story is from the france24.com website and bears the headline "Merkel seeks to calm euro breakup fears as markets lose faith". If this isn't a classical example of 'whistling past the graveyard'… I don't know what is… and the link is here.
The last story from Roy Stephens is posted over at the German websitespiegel.de. This article bears the headline "Debt Crisis Woes: Merkel's Reputation on the Decline in Europe". It's obvious that the German media has the 'long knives' out, as the first paragraph reads "Everyone is talking about German Chancellor Angela Merkel these days — and most of what they have to say isn't complimentary. Her plan to create a bankruptcy mechanism for euro-zone countries, they say, has worsened the debt crisis in Ireland and elsewhere. Merkel's name, once widely respected, is now mud." This has now become an international pissing contest, with ugly images of the past resurfacing. This story is well worth the read… and the link is here.
The next item is a story that I stole from a GATA release yesterday. It's another piece from yesterday's edition of The Telegraph. The headline of this article reads "Putin: Russia will join the euro one day". Vladimir is visiting German Chancellor Angela Merkel at the moment and it's obvious that not only is trying to talk up the euro, but attempting to improve relations between Russia, Germany and the rest of Europe. I know enough history about Russian/German relations over the last 100 years or so, to put this story into the proper context. It's also another shot at the U.S. [and its currency] as well. The link is here.
My next offering is from reader 'David in California'. This is a Reuters story that was posted yesterday morning over at businessinsider.com. It bears the headline "CHINA TELLS AMERICA: Turn Around The USS George Washington". China's Foreign Ministry said in an online posting that naval exercises risks starting a war: "We oppose any military act by any party conducted in China's exclusive economic zone without approval." The link to this very short story ishere.
My first gold-related story is from yesterday's edition of The Wall Street Journal… and I thank reader Randall Reinwasser for sharing it with us. The headline reads "Behind Gold's New Glister: Miners' Big Bet on a Fund". It's a story about how the GLD ETF fund was founded. For you newbies reading this column, it's an interesting looking into how it all started. But as long as HSBC is the custodian, I still won't own it… and that's just my personal opinion… and I have lots of company in that regard. The link to the story is here.
The next gold-related story is courtesy of reader U.D… and is a posting bybullionvault.com's Adrian Ash over at safehaven.com. The headline of this article reads "Gold 'Hump' Shifting from Diwali to Xin Nian". Adrian states that "China isn't the world's No.1 gold buyer just yet. But its impact is already showing in how global gold prices move. Surging demand from China, the world's second-largest gold buyer, is changing seasonal patterns in gold price trends for investors everywhere." It's not overly long… and has some interesting graphs… and the link is here.
Here's another offering from 'David in California' that arrive in my in-box yesterday evening. It's a piece that's posted over at zerohedge.com that bears the longish headline "Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low". I ran this piece past Ted Butler, asking his opinion… which I posted earlier in this column. Here's his comment once again… ""they slammed the metals intentionally at a very thin time." The short article is worth the read… and the graph, which you have to click on to show the whole thing, is worth the trip all by itself. The link is here.
I haven't had a story from reader Craig McCarty for quite a while… but he showed up with this beauty last night that's posted over at the plata.com.mxwebsite. It's an essay from one of Mexico's richest men… Hugo Salinas Price… who, since 2001, has been proposing that Mexico re-monetize silver. Now he has the same advice for China. For many centuries, China was on the silver standard, until the American power elite blew their monetary system out of the water back in the 1920s. It's an idea whose time has certainly come. This is a fairly long read, but a must read in my humble opinion… and the link to the essay entitled "Silver money for China" is here.
In Friday's column I ran a couple of short King World News blogs featuring Rob McEwen and John Embry. Well, Eric King has now provided me with the links to the full interview with both men. The first of the two interviews is with Rob McEwen… who was the original founder of Goldcorp Inc. [NYSE:GG TSX:G]. Rob says that hyperinflation of the U.S. dollar is a growing threat and will cause an explosion in gold and silver… and then a rearrangement of the world financial system. I would suggest that what he has to say is worth listening to… and the link to the interview is here.
Eric King's other interview is with Sprott Asset Management's chief investment strategist John Embry. John predicts that despite that constant disparagement of gold and silver by respectable market analysts, the need of governments to prevent debt implosions will force them to keep printing money… and thereby keep gold going up in terms of that money. That, Embry says, will induce a mania in the precious metals mining shares. This interview is also worth your time… and the link is here.
¤ THE WRAP
You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings.– Professor Wilhelm Hankel, Frankfurt University, The Telegraph… November 25, 2010
I have three music selections for you today. The first one is a real hoot about the TSA… and comes from reader Dennis Miller. It's a spoof on a Kris Kristofferson piece from 1970 entitledHelp Me Make it Through the Night. This song is headlined Help You Make It To Your Flight. The photos that accompany the music are worth the trip all by themselves. It runs a bit over two minutes… and the link to the youtube.com video is here.
Having spent a lot of time around gifted children during my eleven-year tenure on the board of the Edmonton Symphony Orchestra, I'm always astonished when one shows up at such a tender age as this one. I've run videos of child prodigies before… and this one is worth watching/listening to as well. It's 8-year old Maya Tamir playing the first movement from Haydn's Piano Concerto in D-major with the Israeli Philharmonic Orchestra. It's wonderful from start to finish… and I thank reader G.G. for sharing it with us… and the link to theyoutube.com video is here.
If you live in Philadelphia and happened to be in Macy's Center City at precisely noon on Saturday, October 30, 2010… this is what you heard… and I thank reader Wistar Holt for sending it. Click here… and feel free to sing along, which is exactly what I did.
I mentioned earlier in this column about how low the real volume was in both gold and silver on Thursday and Friday… and how 'da boyz' had their way with the market. This is very typical of the way that JPMorgan et al do the dirty.
Talking about 'doing the dirty'… let me quote a sentence from yesterday's column… "Because of the way that the open interest numbers were reported in the [preliminary] CME volume report… I'm going to be particularly interested in the final open interest numbers when they become available later this [Friday] morning. It's too bad that none of this data will be in Monday's Commitment of Traders report."
And it was exactly what I expected. What the final open interest number showed was a big drop in open interest in both gold and silver for Wednesday's trading day. Gold o.i. declined by 15,048 contracts… and silver's o.i. was down a whopping 9,741 contracts.
There was little in the way of price action on Wednesday in either direction that would warrant such declines, so I'm speculating that this was carry-over from Tuesday's price drops that weren't reported in a timely manner by the bullion banks… which, as you know, is one of their favourite tricks when they're trying to hide their activities. I suppose it could have been spreads being lifted, which would have the same effect. But, regardless of that fact, these numbers won't be reported until next Friday's Commitment of Traders report… not the one that's due out on Monday.
Whatever it means, I'm getting the feeling it my bones that when this 'correction' is over… we could see a major move to the upside. Ted has been expecting it ever since CFTC Commissioner Bart Chilton made his big announcement about the silver market being rigged… followed immediately by a succession of lawsuits [now totaling 25] against both JPMorgan and HSBC.
There's still time to get fully invested in the next major up-leg of this bull market in both silver and gold… and I respectfully suggest that you take a trial subscription to either ourInternational Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers] today, as that will allow you the luxury of spending time this holiday weekend perusing the current issues, with all our best [and current] recommendations… as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
With the Germans buying both gold and silver with both hands, it's probably a good bet that you should be doing the same. There are only two types of paper currencies: those that are already worthless… and those that are about to become worthless. The German people know this all too well.
That's it for another week. I hope you enjoy what's left of it. I'm off to bed.