Source: An Update On Copper

Silver gained about a dime in Far East trading, but got sold off hard the second that Hong Kong closed…but began to rise (along with gold) around 7:00 a.m. NY time. From there, it oscillated either side of $16.50 until New York closed for the weekend. It’s obvious (at least to me) that someone didn’t want any excitement in the precious metals today…at least not in gold and silver…although platinum and palladium seemed to do OK.

Open interest on Thursday was once again of the strange variety. Gold o.i. only dropped 891 contracts on a price fall of about eleven bucks…not a lot. And even though silver was down a bit on Thursday, the o.i. was up again…for the third day in a row! This time by 1,157 contracts. Is this shorting…new spreads??? It will, of course, be in next week’s COT. It seems like we’re always waiting for the next report, as the current one never provides us with what we really want to know…like what’s happening right now.

However, we do have the latest Commitment of Traders report. There weren’t a lot of changes in silver, but the bullion banks did improve their position by about 1,500 contracts as the tech funds pitched their longs. The tech funds (in the Non-Commercial category) only added 161 longs to their position, but went short 1,193 contracts. The bullion banks in the Commercial category added 3,643 contracts to their long position, but also added another 2,087 contracts to their short position…which nets out to the 1,500 contracts mentioned above.

But the big story is in gold. I guess I was wrong this time, as everything that should have been reported, obviously was. The COT showed about a 19,000 contract improvement in the bullion banks’ short position, as the tech funds in the Non-Commercial category not only pitched a pile of longs, but went short by a bunch too. To be precise, the tech funds tossed 11,369 longs and put on a whopping 7,594 short contracts! That’s a lot…and they’ve added more since the Tuesday cut-off. The bullion banks hiding in the Commercial category not only added 1,731 contracts to their long position, but covered a more than impressive 17,359 contracts in their short position. There’s your 19,000 contract improvement right there.

I feel that the Thursday/Friday time period was the absolute bottom…but I’ll wait to see what the G8 has up their respective sleeves this weekend before I break out the bubbly.

I note the following headlines in John Williams’ latest commentary over at shadowstats.com…and they are as follows: 1) Inflationary recession and banking crisis continue to intensify, 2) Market fantasies of contained crisis begin to fade, 3) Severe inflation surge in offing, 4) Evidence mounts for manipulation of key headline economic numbers.

The first story today is from The Telegraph out of London and is another offering from Ambrose Evans-Pritchard. Does this guy ever sleep? If you think that the $US has its problems, the Euro doesn’t seem to be much better off these days. The story is entitled “Support for euro in doubt as Germans reject Latin bloc notes”. It’s well worth the read and is linked here.

The second story is also from The Telegraph and is entitled “Russia plans Arctic military build-up”. This story is certainly no surprise to me, as the rush to claim whatever oil and gas reserves may be left on this planet is now on in earnest. The link is here.

I didn’t attend the funeral, but I sent a nice letter saying I approved of it. – Mark Twain

Despite the enormous influence that the Beatles had on music in Britain and around the world, this rock tune is still #1 in Britain, and will probably remain so until long after I’ve left this world. The youtube.com video in question is linked here.

I see in a Bloomberg story that foreclosures were up 48% in May and repossessions have doubled. “One in every 483 U.S. households either lost their home to foreclosure, received a default notice or were warned of a pending action.” But, hey…the Dow was up…so everything is fine.

Enjoy what’s left of your weekend and I’ll see you early on Tuesday morning.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And Then There’s This…Saturday, June 14th, 2008

A small rally ensued that continued into early New York trading on the Comex, but got capped…for the third day running…at 9:00 a.m. New York Time. From there, it got sold off gently for the rest of the day and into early trading in the Far East today.

Silver suffered the same fate, but managed to rally back into positive territory for the second day in a row…but was capped before it could get anywhere near its 20-day moving average, which is $17.14.

It’s still an open question whether the boys will try to take out the 200-day moving averages on this cycle, or have they already collected all the tech longs they can? I wouldn’t like to see it happen, because of the psychological damage it would do, but if the bullion banks want to do it…they can. Time will tell. Everyone talks about the ’summer doldrums’ in the precious metals. As you can see, there are forces out there that contribute to it.

Not surprisingly, gold open interest on Tuesday fell 5,490 contracts on the $17 swan dive in the gold price…and with silver squeezing out a few pennies of gain, o.i. rose 120 contracts. It would be wonderful if this gold o.i drop was in the COT tomorrow, as there has been huge liquidation since the Memorial Day long weekend…none of which was in last week’s report.

In the Bill King Report last night, there was the following comment…”At the end of 2007 the eight largest banks/brokers had over $500B of Level 3 assets, which represented over 90% of their capital. The amount of Level 3 (Mark to Myth) assets has increased in 2008.” This “Level 3″ debt isn’t worth much. Check out the ABX chart. For the first time, some of these “assets”…if you wish to dignify them with that name…are now worth less than a nickel on the dollar. The chart is here.

I have three stories today. The first is a short one about oil…and some comments that T. Boone Pickens had about the CFTC investigation into crude oil “manipulation” by “speculators”. The Bloomberg link is here.

The second story is about the Fed’s Treasury Auction Facility. As of May 1st, they are providing $150 billion/month in short-term loans to banks and brokerage firms to prevent a total melt-down. Their latest auction for a $75B tranch received 71 bids for $96.62B! From this, it’s easy to see how solid the US financial system really is…LOL! The link is here.

In another sure sign that all is not well, here is a story from The Telegraph in London entitled “Banks’ credit crisis solutions have echoes of 1929 Depression.” The link is here.

“I am enclosing two tickets to the first night of my new play; bring a friend…if you have one.” – George Bernard Shaw to Winston Churchill…followed by Churchill’s response: “Cannot possibly attend first night, will attend second…if there is one.”

Let’s see…Lehman was raising capital on Monday, and was rumored to be buying its own shares on Tuesday trying to support its stock price. Bernanke says that inflation is “significantly higher” than the Fed wants. And lastly, Moody’s has put Ambac’s Aaa credit rating up for review…after their stock has fallen from $95 to $2.50. Everything is fine.

See you on Friday.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And Then There’s This…Thursday, June 5th, 2008

They either weren’t trying very hard, or this was this best they could do…which wasn’t a lot. Gold was off about $15 from it’s 3:00 a.m. peak, but silver recovered a lot of its losses…such as they were. I wouldn’t read a lot into Thursday’s activity until we have a few more trading days under our belts and a short-term pattern develops.

Open interest numbers for Wednesday’s trading are unusual. Gold o.i. dropped a hefty 13,808 contracts. In a conversation with Ted Butler, he advised me that most of this was lifting of a bunch of butterfly spreads. When spreads are closed out, both a long and a short are extinguished, and o.i. naturally falls. And despite a 20-cent rise in the price of silver on Wednesday, o.i. actually dropped by 228 contracts. With first day notice a week from today, there will be lots of activity as traders either close out their positions or switch them to future months. One would hope that next week’s COT report should have all this current activity in it.

But despite all these changes in open interest and the rise and fall of the silver and gold prices, don’t forget that ‘8 or less’ traders are short 75+% of the entire Comex market in both these metals. As Ted Butler said in his latest commentary…”They are, quite literally, the biggest fish in the smallest pond in financial history. They are trapped. Their motive couldn’t be more simple, or compelling – they are postponing delivering actual silver because it doesn’t exist and delaying buying back their short positions because to do so will destroy them financially.” And that, dear readers, is the current situation in a nutshell. A clearer picture could not be painted. It boggles the mind that some people just can’t understand something this simple…but there are lots of them out there.

Here’s a look at the current silver chart…and the gold chart is identical. Are the boys trying to engineer a top here…paint the charts? If they are, it wouldn’t be the first time that a big rally to the upside ‘failed’ under mysterious circumstances right after the 50-day moving averages were breached to the upside…and long before the RSI flashed any kind of oversold signal. As I said yesterday, they can pull the lever any time them want, despite the number of mice (tech longs) they’ve got in the trap. The silver chart is linked here.

I see in a miningweekly.com article that “Gold Fields Ltd, the world’s No. 4 gold producer, has cut its gold output forecast for this year by 15 percent, because of power shortages in South Africa.”
The company now expects to produce about 3.6-million ounces of gold, down from a previous target of 4.25-million ounces.
“We’re probably going to miss (the target) by about half a million ounces,” Gold Fields CEO Nick Holland told Reuters at a gold conference in Peru. “I suspect we’re going to be 3.6 … something like that.” I’m sure that GF won’t be the only SA company ‘fessing up’ this year.
In the news department today, it was another embarrassment of riches. We’ve all heard the expression “How to win friends and influence people”…or the Einstein quote about the universe, hydrogen and human stupidity. This Reuters story is exactly like that, and is entitled “House Passes bill to sue OPEC over oil price.” I couldn’t believe it either…but the link is here, so fill yer boots!

The second story drags corporate debt default kicking and screaming into the naked light of day. This Bloomberg story points out that defaults so far this year have already surpassed all the corporate debt defaults from 2007…and we aren’t even half way through the year yet. I expect this trend to accelerate. The headline reads “Corporate Defaults Reach 28, Exceeding Total for 2007″…and the story is linked here.

And in closing, I see that Jefferson County in Alabama is having some serious problems in the credit market. This story surfaced earlier this year, but now it has turned really ugly. There are some unbelievable creepy-crawlies coming out of the woodwork down there, and I’ll have that story tomorrow.

Today is Friday. Expect anything…and all of us at Casey’s Daily Resource Plus will be here to discuss it Saturday morning.

And to all my American readers…I hope you have a happy and safe Memorial Day long weekend.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And Then There’s This…Friday, May 23rd, 2008

Platinum pushed as high as $2230 in Hong Kong, but sank through to New York, then traded sideways to end at $2164/oz., down $37. Overnight, platinum has been flat.

While silver was lower to the mid-point of the London session, it rallied from there, making its way nearly back to the break-even point, and closing at $17.96/oz., down just 2 cents. Overnight, silver has been trending higher.
(Click here for charts)

As might have been expected, there was profit-taking in the precious metals yesterday after their recent runup.

But the damage wasn’t large, especially considering that the usual market movers, oil and the dollar, both went against them, with the former backing off and the latter staging a modest rally.

In fact, some analysts were making the case that both the dollar’s rise and gold’s fall were technical in nature.

Technician Zachary Oxman, of Wisdom Financial, believes that, “Until we cross and close above the $940 level, we’ll remain range-bound between $900 and $940.”

Nick Ruggiero, a trader at Eagle Futures Inc. in New York, noted gold’s recent link to oil and said, “You’ve got to be cautious because when you do get a big sell-off in oil, all commodities are going to get hit hard.”

And how much does the paper gold market influence the metal’s price? Plenty, contends Jim Sinclair of jsmineset.com.

“It would be bullish to shut down the US market for gold,” Sinclair writes, “because then you would have a thin market with a positive Euro bent on gold and a more positive global market would be created.

“No access for major traders will be denied, that you can be sure of. I would love to see US trading stopped in paper gold. That would be good for $150 on the upside after less than 24 hours. The poor COT would not be able to create the influence on the global market they do with the aid of the US paper market cabal.”

Source: Gold Corrects, Following Oil

Then both metals began a gentle rise…and then a gentle decline into the London p.m. fix. From there, both metals were away to the races. Prices continue to rise quietly in Thursday morning trading in the Far East as I write this…which is late Wednesday evening here in North America.

Open interest for Tuesday was quite interesting. Gold o.i. only rose 1,384 contracts, which is not a lot considering gold rose almost $15. There must have been short covering in there as well. Silver o.i. rose a more than substantial 2,466 contracts…no short covering there at all. These would be technically motivated funds putting on long positions, as silver is now well above it’s 50-day m.a. I wonder what entities took the short side of that trade? Whoever they were will remain unknown until the COT comes out on May 30th…next Friday.

Well, what I predicted in my commentary on Tuesday did not come to pass on Wednesday…but there’s still time for it to happen…but not a lot. Only a couple of trading days to be exact. I must admit that seeing the counter-intuitive price action in the HUI…actually going negative on the day…did nothing to allay my fears about what might happen in the very near future. This is one of the events that we at GATA have sometimes seen just before a major sell-off attempt by the boys. I don’t believe for a second that it had anything to do with the drop in the Dow, as we had a big drop on Tuesday and the HUI had a terrific day. But as I’ve said before, maybe I’m looking for a black bear in a dark room that isn’t there. Let’s see what today brings.

In other gold news on Wednesday, I see that Mr. Gartman laid on another long position in gold and will add another once gold trades above $930 in New York. Will that be today? I’ll be ecstatic if it is.

Yesterday it was the Zimbabwe dollar…such as it is. Here’s a graphic illustration of what the US$ might look like a few years down the road. Andrew Jackson would not be amused…

click to enlarge

I’m totally overwhelmed by the number of stories that are worth mentioning, but I only have room for a couple. The first story is a GATA dispatch of a speech given by Benn Steil, senior fellow and director of International Economics for the Council on Foreign Relations. The headline reads “CFR official: Gold is the world currency of the future.” The link is here.The second story is from Reuters and is entitled “Goldman, UBS and Morgan Stanley agree on dark pools.” According to the article, about 10% of all equities trading is now done in these “dark pools”. If this doesn’t sound very transparent…it isn’t…and that’s the whole idea. The article is linked here.

I see that the derivatives market expanded 44% last year (according to the BIS) and now sits at $596 Trillion dollars…that’s spelled with a ‘T’. If this pace keeps up, by this time next year, total derivatives will exceed one Quadrillion dollars…that’s spelled with a ‘Q’!!! And Moody’s says that a ‘computer error’ accidentally gave triple-A ratings to billions of dollars worth of now worthless debt products. You believe them…right?

I don’t think we’re in Kansas anymore, Toto….

See you on Friday.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And Then There’s This…Thursday, May 22nd, 2008

We are still well below both the 20- and 50-day moving averages in both metals, so the tech funds aren’t a huge factor in this market at the moment. If they were, the volumes would be a lot higher and prices would be moving to the upside. However, while we’re waiting for that to happen, here are two questions that will need answers: 1) is the Cartel through with their down-side price management…or more succinctly…are the 200-day moving averages still in their sights, or are they just about finished? Secondly; if and when the tech funds do return to the market, will the Cartel be there to take the short side of their trades once again, which is what they’ve been doing for decades. Remember, if these ‘8 or less’ traders (the bullion banks) weren’t going short for every long…the prices of both metals would explode to the upside as there would be nobody (and I mean nobody) to take the short side of the tech fund longs until astronomically higher prices were attained. As I’ve said before, unless it’s an exogenous event, it’s the dance between the tech funds and the Cartel that always determines what the prices are doing.

Lots of stories to pick from today, and I’m not happy about having to limit it to two. Maybe I’ll have more space for them sometime later this week. The first story is from last Friday, but is worth mentioning here, as the guy doing the talking is no dummy. Nobel Laureate Joseph Stiglitz had a few things to say on CNBC about the recession that the U.S. is in…and how bad it could get. The story is linked here.

The second article is from my good friend James Turk over at goldmoney.com. This piece is entitled “Another Record Low in the Dollar”. It contains the usual wonderful graphs…and it’s all linked here.

I read in a story out of Britain…that the British bank bailouts now underway are to be kept secret…forever. Not only a permanent news blackout, but any requests for information under the Freedom of Information Act are to be denied…even after 30 years. It probably won’t be long before this type of secrecy is everywhere.

It now appears that everything my grandfather fought for in Belgium and France during WW1 was for naught.

See you tomorrow.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Normally they hit them both at exactly the same time, but there was a slight difference in yesterday’s pattern. It probably means nothing.

Doubtless there has been massive tech fund long liquidation, but you’d never know it by looking at the changes in open interest over the last couple of days. Wednesday’s numbers (like Tuesday’s) were no exception. Open interest for gold was up 3,643 contracts…and silver o.i. rose as well, but only 59 contracts. This is completely counter-intuitive. Is this shorting by the Cartel or the tech funds, more spread trades…or new buyers? Don’t know. Today’s COT, which will be released at 3:30 Eastern time, will only tell us part of the story. This sell-off started on the 17th and the cut-off for today’s COT was Tuesday the 22nd at the close of trading. Will everything that’s supposed to be reported actually be in this report? Using the past as prologue, the answer is no. We’ll have to wait until the following Friday…May 2nd…to hopefully get a more complete picture. I was interviewed on this subject by Al Korelin yesterday…and if you want to hear me talk about it, you can find it linked here.

The question still remains whether or not the Cartel/the boyz/bullion banks/’8 or less traders’…call them what you will…are trying to get every last possible long they can…like they did in August…when we got butchered last time. Don’t know that either, but this is their modus operandi after a huge run-up like we had in 2006…and now in 2008. Right now the 200 day m.a. in gold is $818…and silver’s is $15.23. Here is the three-year gold chart. Note that the price kissed the 200 day m.a. in June of 2006 before heading higher. Click here.

One thing is for sure, we’re closer to the bottom then we are the top. And as I said before, don’t expect the mining companies, the Silver Institute or the World Gold Council to help you out. We’re totally on our own (and defenseless) against the Cartel. However, the boyz can only win the odd battle here and there, as they are obviously losing the war in the long term.

Another thing of note…in a conversation with Ted Butler yesterday, he informed me that the gold ETF…GLD, has now liquidated about 50 tonnes of its holdings in the last three days and is now sitting about 5% lower in physical bullion than it was four months ago. On the other hand, the silver ETF…SLV, has increased its holding 25% since the beginning of the year, and hasn’t sold an ounce of it (as of this writing) despite the decline of $5 we’ve had in the price since the middle of March. You can read into that whatever you want.

A couple of stories today, the first is silver analyst Ted Butler’s latest commentary entitled “Then and Now”. How Ted can write about one subject year after year…and put a different spin on it each time…has always amazed me. This piece is no different and is linked here.

The second article is on real estate. Yesterday’s new home sales numbers were worse than awful…and well-known economist, Robert Schiller, says we’re a long, long way from the bottom. I couldn’t agree more. The story is entitled “Economist: Housing slump may exceed Depression” and is linked here.

Hank Paulson must have been a happy man again yesterday. Dollar up…check. Dow up…check. Oil down…check. Precious metals down again…check. I’m sure he turned in early last night in preparation for another hard day at the office. Let’s see how he makes out…and all of us at Casey’s Daily Resource Plus will be here on Saturday to talk about it, and we’ll see you then.