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GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS
The Euro System’s reserves of gold and gold receivables decreased again to by 25 million euros to 175.15 euros in the week ended 7/21. Foreign currency reserves decreased as well. Cash in circulation fell 400 million euros to 586.2 billion euros. Liabilities rose 14.7 billion euros to 79.6 billion euros.
Another upside down day on Tuesday with gold up $4.30. Silver was up $0.07 to $10.87. Gold was up $7.40 and went to minus $3.00 and back up to close firm. The access aftermarket was off $2.00. Gold open interest rose 1,451 contracts to 327,369.
Big funds are still holding long and that could propel the market if they hold. Silver open interest fell 1,081 contracts to 97,137, which is a new low.
The shorts are under pressure and covering when they can. This silver market could be very explosive.
For the second day in a row the shorts were big buyers, covering 6,768 contracts on Tocom. That is some 20,000 in two-days. The big shorts are now short 115,294 contracts. Silver net shorts rose 14 contracts to 4,145. Goldman only covered 45 gold contracts.
Gold shorts are still large, but silver shorts are beyond reason.
Platinum gained $23 to $1,222. Copper rose $0.08 to $346, oil fell $1.30 to $73.75. The dollar rose .41 to 86.33. The ten-year Treasury note was 5.07%, but the 2’s were 5.12%, still in inversion. The XAU gained 3.69 to 139.39 and the HUI went up 8.05 to 324.18.
The ECB said subordinate banks sold 25 million euros of gold last week, 1.65 tons versus 5.04 tons last week. They have ten weeks to sell 150 tons, which certainly won’t happen. Where are the pundits who told us the European Central Banks would bomb the market? They are speechless as usual.
They tried all day Wednesday to keep gold and silver down but to no avail. Gold closed up $4.60 at $621.60 and silver rose $0.13 to $11.00. The access aftermarket was up $1.40 after having been up as much as $2.80 early on. Gold open interest fell a large 11,734 contracts to 315,635, which was fund selling for those who didn’t want to roll their positions.
Gold option expiry took place today and gold did extraordinarily well in the face of that. As we said a few days ago we believe we’ve bottomed out in both metals. Silver open interest rose 402 contracts to 97,539. During Tocom’s Tuesday session the big shorts increased their short position, after having covered 20,000 odd contracts, increased shorts by 11,810 to 127,104 in an effort to drive gold down, which so far has proved unsuccessful. In silver their shorts increased by 236 contracts to 4,381.
Wednesday the Dow fell 1-point to 11,103, Nasdaq was off 18 Dow points and S&P was off 5 Dow points. The 2-year Treasury yielded 5.07, the 5’s 4.99% and the 10’s closed at 5.03% still in inversion. Oil rose $0.19 to $73.94. Natural gas now trades at $7.03. The dollar fell .75 to 85.66. The euro went up 1.21 to 126.99. The pound rose to 1.8541 and the Canadian dollar fell .11 to 88 plus. The rally in currencies came late in the day and was strong into the close. The XAU went up 2.02 to 141.42 and the HUI rose 3.49 to 327.71.
Well, finally good news for us on Barrick. We have been trying to get the management replaced for 16 years, but to no avail.
S&P has placed it’s A- long term corporate credit and senior unsecured debt ratings on Barrick Gold on credit watch with negative implications after the company announced an unsolicited bid of $1.53 billion in the takeover of Nova Gold.
The assets to be acquired are development properties that generate no appreciable cash flow, nor will they without substantial development capital expenditures. Yes, it will enhance Barrick’s operating profile in an area of low or no political risk. As we all know and S&P is dumb if they don’t know this takeover is to fulfill Barrick’s short hedge position. It is a terrible deal for Nova and Barrick doesn’t deserve to get bailed out for acting as a stooge for the elitists. Besides, Peter Monk is an aging crook.
The Royal Canadian Mint is proposing a gold and silver ETF. This is a class outfit. They’ll do what they are supposed to do and not screw the public.
They said, “our sale of silver coins have been hitting record levels in recent months as the price of the metal has soared.”
The Mint has the capacity to refine about 6 million ounces of gold annually and it recently began refining silver as well. Most of the refined metal is used to produce coins, regular currency and specialty products, as well as gold and silver bars and wafers.
We only have a month to go and mercifully one of the hottest summers on record will be over.
September cannot come soon enough for gold and silver-related assets after the carnage we’ve witnessed over the past two months.
September will bring investors and pros back into the markets.
We should see the end of interest rate increases in August as the Fed declares the end of rate increases at least until the election is over.
Republicans are in deep trouble and don’t need any more heat than they already have.
Real estate is slowly going down, they don’t want to accelerate the process. Oil continues to trade ever higher.
A move by Israel into Syria and the inclusion of Iran in the mix should send oil, gold and silver to new highs.
Liquidity increases are relentless and the Fed cannot let up.
If they do it will be a disaster. That means more inflation. The physical gold market will explode because the central banks have very little gold left that they want to part with. The production to usage shortfall grows with each passing day. The fall and winter will be good for precious metals.
UBS sees silver prices averaging $15 an ounce in 2007, and has begun coverage on Silver Standard (SSRI) as a Buy 2; Coeur d’Alene Mines (CDE) as a neutral 2, along with Silver Wheaton (SLW) and Pan American Silver (PAAS).
The price projection for SSRI is $24 and they said the company has one of the largest in-ground silver resources of any publicly traded silver company. The company has no debt, is unhedged and Bob Quartermain is the best in the business. That is why we recommended it at $2.50 a share.
A firm access market on Wednesday led to a higher Tocom market that held into Europe and into the pre-US opening. Gold was powerful all day and closed up $11.60, $3.00 off its highs at $633.40. Silver closed up $0.32 at $11.32. The cartel went after listed producers toward the end of the session. AEM fell $1.59 to $33.86; SSRI off $0.29 to $19.59 and GG fell $0.76 to $28.18 - hardly representative of such a strong day in gold. The access aftermarket rose to $635.20, up $2.00. Gold and silver have both broken up through trend lines. Unless there is a vicious attack on Friday gold should soon test $650 after testing $642 where the cartel attacked on the way up recently. The XAU fell 4.16 to 137.27 and the HUI ended the day at 319.78. There is no question the cartel is having a very hard time containing gold, especially with such large short positions. Their actions regarding the shorts are obvious and arrogant, never mind blatant. Gold open interest fell 1,564 contracts to 314.071. Silver open interest fell another 557 contracts to 96,982. Comex inventory of silver fell 518,242 to 101,867,219. Tocom traded firm into the end on 29,051 contracts. On Wednesday the large Tocom shorts in gold only added 189 contracts to 127,293. This was tame compared to Tuesday. Goldman went short an additional 543 contracts to 35,822 contracts. In spite of the previous day’s shorts, all these group and the commercials in NY are trying to cover. If they don’t attack tomorrow, Friday, then they’ll have to cover higher.
Anglo Gold Ashanti bought back 1.1 million ounces of gold sale contracts. It now has contracts remaining for the sale of 10.14 million ounces. They delivered into their hedges.
The Dow was up 60 points early on and then just wilted, ending up down 2 at 11,100. The Nasdaq was off 96 Dow points and S&P was off 47 Dow points. The early gains in the pound and euro were wiped out and the dollar index rose 0.2 on the day to 85.85. Oil gained $0.60 to $74.54 and rose another $0.13 in the access market. The Canadian dollar added $0.13 to 88.03. The 2-year Treasuries closed at 5.05% and the 10’s at 5.03%.
Before the year is out gold and silver will move higher. $730.00 on gold will be challenged and we will in all likelihood see a challenge of $850.00. The cartel is running out of gold and their ever-blatant attempts to control the price become more obvious daily. Silver is a fundamental dynamic. Some event will happen and the price will be long gone.
The Zhaoyuan Bank of the China Construction Bank has signed an agreement with Zhaoyuan Precious Metal Materials to lease one ton of gold for one year. This does not look to be a widespread practice at this time and in market terms one ton of gold for sale is not a market factor.
We were proud of gold and silver on Friday, particularly gold. The Fed loaded up their agents with $200 billion in buying power early in the day, so you knew gold, silver and commodities would get attacked all day – and, they were. Gold finished up $1.90 at $635.30 and the access aftermarket was off slightly. Silver was off $0.04 to $11.28. They attacked gold innumerable times, but it came back strongly each time.
Anything can happen in all the markets from here on out. You are all well aware of the economic and financial problem, but the fight for these next elections is going to be of epic proportions.
If the Republicans lose both Houses, and there is a good chance they will, all hell could break loose. In fact, the polls in September and October, if they show Republicans behind, could have a dramatic effect on all markets. All kinds of inquiries would be pushed if the Democrats took control and our wars could come to an abrupt end.
The Fed and the Treasury will do everything possible to keep bond and stock markets up and commodities up – if they can.
We believe the Fed will unleash a tremendous amount of money and credit from here through the end of October.
Why do you think these skunks eliminated M3 and the COT report is being allocated to the dustbin?
All we can say is that there is not a chance the Fed will stop inflation from becoming hyperinflation. While all this is going on the central banks keep selling into every major rally, knocking gold back, but it comes back - an out of control locomotive. This is when you buy – when nobody wants them...
-- Posted Sunday, 30 July 2006
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