Pedal to the Metals

Ted Butler, who recently offered a tutorial on how Comex gold and silver trading works, wrote in a commentary last weekend to paid subscribers:  “One thing that I hope everyone realizes is that we have not declined in gold or silver prices for any reason other than to enable the commercial controllers on the Comex the opportunity to buy as many gold and silver contracts as possible.  The data indicate that these commercials are doing just that, in spades.

In watching the daily price action I have been muttering many things to myself, not the least of which has been the phrase, ‘slicing the salami.’  That’s the term that my good friend and mentor Izzy [Friedman] and I have used to each other over the years to describe one of the commercials’ favorite tricks against the technical funds.  It involves the deliberate setting of a series of new price lows to lure the technical speculators into selling (both long liquidation and new short selling).  Nothing encourages technical selling more than the establishment of a series of new price lows (or buying into new price highs).  It’s like waving a red flag in front of a bull.  Once this process is complete, you are invariably left with an important price bottom.  I haven’t talked with Izzy lately, but I’m sure he would agree that the commercials sliced the salami recently in silver and gold like never before.

The changes in this week’s COT report for gold and silver were spectacular, as they should have been given the price action.  If you have to endure the financial pain from the endless slicing of the salami, the reward should be a commensurate improvement in the market structure.”

Related Links:

MarketWatch:  Gold settles at 2012 low as dollar gains on Greece; silver down 1%

Jesse’s Café Américain:  Gold & silver charts:  More liquidation on Greece and Facebook

GoldSeek/P. Radomski:  What will happen to Greece and gold?; Political and economic factors bode well for gold

SilverSeek:  Is fear of deflation sapping gold and silver?

WSJ:  Price is right for Fed to come on down with stimulus

Bullion Bulls Canada/Jim Cook:  Gold losing battle vs. U.S. dollar in 2012; Doom of the dollar

Peter Grandich/Wealth Cycles:  Gold bears:  Put your money where your mouth is; Safeguarding your precious metals

KWN:  Paul Brodsky – The paralyzing fear among investors today; James Turk – Expect tremendous chaos, Europe deteriorating rapidly

Mineweb/GoldCore:  A shift in Indian gold buying patterns?; Bundesbank confirms German gold held by Fed, BOE and Banque De France

Frank Holmes:  Looking to China to fire up its economy

Perth Mint:  Bron Suchecki:  IMF to buy gold? Not

ChrisMartenson.com:  Acknowledging the arrival of Peak Government

Zero Hedge:  Jim Rogers: A must-see rebuttal to the ‘normal’ CNBC hopium

Reuters/Washington’s Blog: The core problems with JPMorgan’s failed trades

Jim Rickards/Forbes:  Why JPMorgan’s Jamie Dimon should resign; More bad news for JPMorgan as FBI gets involved

The Golden Truth:  It’s simple – Think like a criminal

With gold and silver both closing at multimonth lows on Monday, Dan Norcini points out that the “Gold’s move down towards $1550 has in the past attracted very substantial central bank gold buying. Hopefully this will remain the case as the market is now pushing towards the lower band of an eight month long trading range.”

And with the markets “moving so quickly away from risk and out of basically everything except Treasuries or cash,” he thinks that the Fed “is going to have a major problem on their hands if they do not soon give some sort of signal that they are preparing to act to stem the deflationary decline.”

Norcini also sees China’s lowering of its bank reserve ratio requirements as a sign that it’s “responding to slowing growth there as their export markets are impacted by the woes in the Eurozone and the anemic growth in the US. This is one of the signals that copper has been sending for a while now as it descends in price. Were copper to finally show some signs of a bottom, that would be constructive for silver which is testing chart support down near the $28 level once again.”

Related Links:

Wall St. Cheat Sheet:  Gold and silver decline, dollar higher for 11th consecutive day

Barron’s/Citywire:  Gold goes negative for 2012; Morgan Stanley stays bullish, believes gold may hit $2,175 in 2013

Kitco:  Deutsche Bank:  Commodities outlook mixed for rest of 2010; Precious metals, energy may rise

The Daily Gold/SilverSeek:  Major bottom in precious metals could occur this week; How euro money printing is going to drive up gold and silver prices

BBC/Reuters:  Could the euro survive a Greek exit?; Can Greece even exit the euro zone? Maybe not

The Daily Bell/Yahoo! Finance:  Drop the cash from helicopters!; Frank Holmes:  “When push comes to shove, they’re going to print money“

KWN:  Stephen Leeb:  This is why world markets are incredibly unstable

Zero Hedge:  Meet the latest converted gold bug: The IMF

Alasdair Macleod:  Gold bugs will be vindicated

Mineweb:  HSBC’s James Steel:  Chinese demand, the US election and the outlook for gold over summer

Bullion Vault/GoldSeek:  Gold investment demand in Asia; Frontrunning China’s insatiable demand for gold

Market Oracle:  The yuan, rupee and physical silver demand

The Victory Report:  Richard Russell:  Stay in cash and gold coins

Patrick Heller:  Is US government gold price suppression illegal?

AP:  Gold! Haiti hopes ore find will spur mining boom

In analyzing the current “Fickle gold and silver prices,” Mineweb‘s Lawrence Williams concludes “that gold and silver are not through their bull runs yet as the global financial turmoil is far from over.  The current gold (and silver) price hiatus is because many see the Eurozone crisis, which is the most newsworthy at the moment, as deteriorating further, but those fleeing it financially are putting their trust in the US dollar rather than gold.

Given the U.S.’s own economic problems, which are neatly being hidden from public perception in the run-up to this year’s Presidential election, this has to be a pretty shortsighted viewpoint and will surely come to an end before too long.  When it does both gold and silver will likely resume their overall upwards trend – but probably not as rapidly as the major gold and silver bulls would have you believe.”

Related Links:

Reuters:  Gold falls below $1,600 on euro zone uncertainty; silver off 0.8%

GoldMoney:  Market sell-off testing gold bulls

SafeHaven/Casey Research:  Can gold fall forever?; Gold fund manager John Hathaway calls a market bottom

Bloomberg:  Silver forecasters bullish as funds retreat from slump

SilverSeek:  Ted Butler:  Knowing the game

Silver Coins Today:  American Silver Eagle bullion coin sales retreat in April, but still 5th-best ever April

Avery Goodman:  The outlook for precious metals prices

Zero Hedge:  Eric Sprott on CNBC berates Berkshire’s buffoons and says “all markets are manipulated”; Jim Grant: “The Fed owns the stock market“

GATA/Gary North:  Gold has changed overnight, and likely will again; Why civilized people buy gold

Mineweb:  Buying gold on the ‘Roubini Dip‘

USA Gold:  Extraordinary popular delusions and the madness of machines:  Why gold might be setting up for a big move higher

Resource Investor:  The reasons for investing in physical gold

Seeking Alpha:  Gold mining stocks vs. physical gold bullion; Gold/Silver ratio in an uptrend

Jim Rickards/Azizonomics:  Romney doubles down on Obama’s toxic currency policies; Is China a currency manipulator?   

Daily Reckoning/Zero Hedge:  Bill Gross and others call for QE3; Citi’s Buiter on Plan Z: Unleash the helicopter money

Telegraph/Spiegel:  Why the euro is doomed to fall apart: it was an incredibly stupid idea in the first place; New documents shine light on euro birth defects

“It seems all the gold and silver roads are leading to China,” observes a commentary in The Australian about this week’s debut of a silver futures trade on the Shanghai Futures Exchange.

Addressing speculation that “the next few years could see the Chinese dominating the global silver market much as they appear to be doing with the global gold market,” Mineweb‘s Lawrence writes that “Indeed a big inflow of silver into China – a country which has a long association with the metal having had a silver-related currency standard up until the 1930s – is felt by some to be likely to end some of the metal’s price volatility and perhaps end what some see as excessive manipulation of the market through COMEX.”

And while warning that initially silver trading in China could lead to increased volatility, he cites commentators referred to by The Australian who “also say that there is indeed a particular penchant for silver investment in China because retail investors are attracted by the much lower price than that of gold and because of the relatively recent association of the country’s currency with the metal.”

Related Links:

Daily Reckoning:  China buys gold… No matter who’s selling

Reuters:  Gold eases 0.3% as investors digest Europe’s elections; silver off 1.1%

Safehaven/KWN:  Eurozone election hangover; James Turk – Gold & silver bottoming as euro troubles reemerge

GoldSeek/Telegraph:  European ‘austerity’ flames out with elections; Francois Hollande has ten weeks to avert a French bond crisis

CNBC/Resource Investor:  Citi:  Look for a ‘Grexit’ following elections;  Euro-zone breakup: How would this affect precious metals?

Tim Iacono:  Gold and silver prices look for direction, Friday’s rebound reassures

Commodity Online:  India govt rolls back gold duties, may boost domestic demand  

Silver Investing News:  Is silver’s industrial personality leading to changes?

Mineweb:  David Stockman’s investment model – ABCD (anything Bernanke can’t destroy)

Financial Sense:  Why civilized people buy gold and silver

GATA/New York Sun:  Gold is limited government, which is more ‘civilized’ than the alternative; The Munger Games

Alasdair Macleod/LewRockwell.com:  Keynesian vs. Austrian debate hotting up; Lessons from the Paul vs. Paul debate

Zero Hedge:  Reinharts and Rogoff on why the debt overhang matters

FOFOA:  Inflation or hyperinflation?

Washington Post:  The incredible shrinking labor force

Comex gold and silver rose 0.6% and 1.4% respectively following another disappointing payroll report showing that 115,000 jobs were created in March, the lowest number in six months.  And with Wall St. posting its worst week this year, Tim Iacono writes that in many ways, the jobs number “is probably about the worst case scenario for markets as it creates more uncertainty about how much economic growth will slow in the months ahead while giving the Fed all the reasons it needs to simply do nothing, waiting to see what happens as ‘Operation Twist’ winds down in the weeks ahead.”

Related Links:

KWN:  Louise Yamada – Gold and silver at critical points in this cycle

Rick Ackerman:  A wickedly bumpy ride for silver & gold bulls

Trader Dan:  Commodity sector continues to reel

SafeHaven/GoldSeek:  The silver bull market is over?; Precious metals: Don’t want to play anymore?

Zero Hedge:  Berkshire’s Charlie Munger:  Civilized people don’t buy gold

MarketWatch:  “A very robust wall of worry is being built. Eventually, gold will begin to climb it.

Seeking Alpha:  Time for gold bugs to pay attention to the Dow/gold ratio

The Atlantic:  Is gold today’s safest investment?

Hugo Salinas Price:  The gold price: the reds against the blues

Zero Hedge:  David Einhorn:  Only gold is an antidote to the Fed’s destructive “jelly donut policy“; Jim Grant: “The Federal Reserve is the vampire squid of vampire squids”

MarketWatch:  Ron Paul taking end-Fed bill before House subcommittee on Tuesday

Reuters:  Greeks to vent rage in election set to rock shaky eurozone

CSM/Financial Times:  French candidate Hollande’s projected win could change eurozone’s course; Sarkozy’s strange reluctance to play crisis card

Business Week:  Recession hit-Britons smelting the family silver

Bloomberg/Market Oracle:  The violent, scandalous origins of JPMorgan Chase; Keynes, the closet gold bug

As Mineweb‘s Lawrence Williams looks at the “puzzling” but “understandable” price patterns in gold, which he sees as increasingly resilient in the face of poor current fundamentals, Marc Faber, in a lengthy interview with Hard Assets Investor, says that he’s “telling every investor, in the long run, that central banks all over the world are going to print money because they know nothing else. The  purchasing power of currencies will continue to go down. In other words, the price of gold and silver will move up in the long run.”

And asked what kind of portfolio allocation he would recommend for investors, Faber’s formula is “25 percent in equities, 25 percent in physical precious metals, 25 percent in Asian properties and 25 percent in corporate bonds, mostly emerging economies.”

Related Links:

Forexpros:  Gold slumps 0.4% on strong greenback; silver off 0.9%

Trader Dan:  Dodd-Frank strikes the commodity markets; traders are literally on the edge

Kitco:  Friday’s U.S. jobs data may influence gold, financial markets, but longer-term trend more important

SafeHaven:  Gold breaks 3-month rule for 1st time in 11 years

The Daily Gold:  A weak economy remains gold’s best friend

GoldSeek:  Central bank demand to change gold, silver markets and prices

Beacon Equity:  Smart money banking on gold & silver prices to soar

Bloomberg:  Martin Feldstein:  Stock market is in a Fed-fueled bubble

Reuters/CNBC:  Positioning for more ECB easing, but not in May; In battle against crisis, ECB running out of weapons

Zero Hedge:  Hugh Hendry on Europe “You can’t make up how bad it is”

Financial Sense:  Ron Paul vs. Paul Krugman:  The invisible red line

Seeking Alpha/Mineweb:   A rare opportunity for SLV investors; India’s silver jewelry exports grow in the U.S.

Wall St. Cheat Sheet:  What do Americans think about gold?

Financial Chronicle:  Ten reasons for putting your money in gold

Santiago Capital:  Why did gold become money?

In an extensive look at the “Critical Factors that will Impact Silver,” Steve St. Angelo argues that “the fundamentals for silver today are even better than they were last year when its price and sentiment were higher.  Nevertheless, consumer affinity for precious metals has turned rather pessimistic presently.”

The five critical factors St. Angelo sees are 1) controlling silver market sentiment; 2) energy supply and diesel consumption; 3) declining average ore grades; 4) future silver mine supply, and 5) nationalization and monetization of precious metals.  And he closes by advising that “the best tactic for those who put their faith in the oldest forms of money in the world is to purchase and take delivery of the physical metal.”

Related Links:

MarketWatch:  Gold edges slightly lower for session, month; Silver suffers more than 4% monthly percentage drop

Dow Jones:  Gold shakes off $1.24 billion ‘fat finger’

Seeking Alpha:  Silver one year after the peak:  On the brink of the next big move; Is silver finally on its way to $40-$50?

SafeHaven:  Analysis of the latest COT reports for silver and gold

Commodity Online:  Huge upside potential in Gold as COMEX speculative net longs hit record lows

GoldSeek:  Investors dumped equities in April fastest in 17 years, will they now turn to gold and silver?

Tim Iacono:  Economy, central banks, and technical factors to drive gold price higher

Mineweb:  Indian gold prices testing new highs

Jesse’s Café Américain:  Gold bull’s long-term trendline – The indispensable chart

GATA:  The Moneychanger interviews GATA secretary about gold and silver suppression

Bullion Bulls Canada:  Paper money:  The barbarous relic

The Daily Bell:  Canada introduces plastic cash – say, how about trying a little gold and silver?

FT Alphaville:  The unwitting move towards a global gold standard

Arabian Money:  How JM Keynes was the Warren Buffett of his time

Zero Hedge:  iTax avoidance; U.S. elections:  Deflecting attention from the real question

Mike Shedlock/KWN:  GDP miss far bigger than announced; Shadowstats‘ John Williams – The “recovery” faked by phony government numbers

In analyzing the latest COT report, Got Gold Report‘s Gene Arensberg finds that the combined commercial traders are at “very near their lower limits of net short positioning relative to the past three years of previous trade.”  Combined commercial net-short positioning (LCNS) for silver futures was reduced by 15.6 percent in the week ending April 24, while the decrease in gold was 5 percent.

He sees this as suggesting that “the Big Hedgers are not, repeat not, positioning as though they expect gold and silver to move materially lower.  To the contrary, if the Big Hedgers thought that gold and silver were heading much lower we would expect them to be positioning for it with higher, not extremely low net short positions.”

“It seems to me that you opened up a very large can of worms last week when you sought to combat price manipulation in the energy markets,” begins an open letter to President Obama from Motley Fool contributor Christopher Barker.  “Within that now-opened can, I believe you will find one worm made of gold and another cast in silver.”

Barker, who writes regularly on gold and silver, goes on to remind Obama that  “you have repeatedly lamented the absence of a ‘silver bullet’ to address the elevated gas prices that threaten to choke off any green shoots of economic recovery that may be trying to sprout. I find your choice of phrasing a bit ironic, since last week you ignored the clearly manipulated markets for gold and silver while decrying manipulation in the energy markets.

I think I understand precisely why you might be inclined to fight for free and fair energy markets while turning a blind eye to gold and silver, but nonetheless I wanted to express to you my disappointment in the resulting double standard. In the meantime, if you really want to find something resembling a silver bullet for gas prices, you might wish to begin by looking inward at the out-of-control trends in U.S. fiscal and monetary policy.”

Related Links:

MarketWatch:  Gold ends 0.1% lower, recovers from sharp post-Fed drop; silver down 1.3%

Tim Iacono: FOMC statement:  Fed nothingburger leaves markets wanting

Reuters/Business Insider:  Press Conference:  Bernanke says Fed prepared to do more for economy

KWN:  Caesar Bryan – Asia to deploy stunning & massive QE

The Gold Report:  Is this the end of the consolidation in gold, silver and the miners?

MoneyWeek:  Good news for gold bulls – it could be time to start buying again

Mineweb:  Fact, opinion and fiction in the rising gold price scenario

Metallwoche:  James Turk:  Gold and silver are still undervalued

Global Times:  Shanghai Futures Exchange paves the way for silver futures

SafeHaven:  Gold and silver manipulation – Small silver speculators trounced

GATA:  ‘Real’ trading in U.S. markets is down to 16 percent; the rest is machines

GoldSeek:  Exchange trading out-sleazes carnival midway

St. Louis Post-Dispatch:  Missouri’s sound-money bill is really a protest

Telegraph:  Nightmare week for Angela Merkel as austerity bloc crumbles; Merkel defends austerity

Mineweb:  Investors buying sovereign debt rather than gold; Possible Eurozone collapse a game-changer for gold

Jesse’s Café Américain:  Janet Tavakoli: Another financial crisis looming, and you’re on your own

A charting exercise that contrasts the purchasing value of silver with that of the U.S. dollar, and puts the CPI-adjusted silver price at north of $100 an ounce, leads to the conclusion that silver currently trading around $32 per ounce offers what could be an historic buying opportunity.

And a Coin Week article asking “What’s the Best Way to Invest in Silver?,” points out that “90% silver is very popular because it sells for the lowest premium over melt of any form of physical silver…. If you hold those coins until silver rises by say $10 a ounce, you can sell them for a profit and not lose a chunk of your initial outlay to premiums which disappear at the time of sale.”

Related Links:

MarketWatch:  Gold inches higher, loses 1% on week; silver up 0.8% for week

Kitco:  Watch U.S. dollar, FOMC meetings for metals markets’ direction

Jesse’s Café Américain:  Comex silver inventory watch heading into May-July delivery period

Silver Doctors/Seeking Alpha:  HSBC transfers 329,000 ounces of silver into JPMorgan’s vaults; CME silver stocks at an all-time high, or are they?

Bullion Bulls Canada:  Two scenarios for next precious metals rally

KWN/SafeHaven:  John Hathaway – Fed to print more money & gold to hit new highs; Many signs point to gold’s higher prices

Jim Sinclair’s MineSet:  QE to infinity certain with European Stabilization Mechanism treaty

Wall St. Cheat Sheet:  Gold and silver miners put real money where their mouth is

Global Times:  Shanghai Futures Exchange paves the way for silver futures

Zero Hedge/Got Gold Report:  Eric Sprott & Charles Biderman discuss paper vs. physical gold; Biderman knocks government ‘statistics’

WSJ:  Gold is an ‘anti-government trade‘

Bloomberg:  BofAML’s Blanch says U.S. fiscal woes will push up gold

Tim Iacono/NYT:  Non-Fed leading economic indicators negative again; Fears rise that recovery may falter in the spring

Reuters:  Growth vs. inflation debate sharpens

Russia Today/Business Insider:  Ron Paul fights the Fed in new video game

That’s what Patrick Heller argues in an article headlined “Major gold and silver price suppression now a weekly occurrence. So what?“  He writes of having “previously warned my readers that markets will be more volatile as we get closer to the time when I expect gold and silver prices to soar.  When the US government needs to work with its trading partners and allies to engineer a major price suppression once a week, we are getting a lot closer to the day when such tactics will no longer work.”

Scroll down here to see an example from earlier this week of “what a bear raid looks like,” and read a recent interview with Ted Butler, in which he spoke of manipulation’s silver lining.

Related Links:

Forexpros/GoldSeek:  Gold eases higher on weak U.S. data, euro zone worries; Gold and silver end slightly higher

Jesse’s Café Américain:  Gold & silver winding up for a move

MilesFranklin.com:  David Schectman:  I’m a buyer at these prices

Got Gold Report:  Bob Moriarity:  Sprott will signal silver bottom

Silver Institute/Mineweb:  World Silver Survey 2012 released; Thomson Reuters GFMS forecasts ‘just above’ $40/oz high for silver

Kitco:  Silver Survey: Investment key to silver-price action in 2011

Bloomberg:  Top analysts see record gold in Q4 as hedge funds retreat

KWN:  Stephen Leeb: QE3 is now 80% – 90% & I’m going all-in gold if it dips

Tim Iacono: Economic data should spur more Fed money printing talk

SafeHaven:  Inflation and hidden gold taxation: 3 historical case studies

Gregor Macdonald:  Get ready for ‘hot’ inflation

Bullion Vault/Zero Hedge:  Derivatives: A disaster lurking just below the surface?; The mother of all infographics: Visualizing America’s derivatives universe

Reuters:  Sources:  Syria selling gold reserves as sanctions bite; Mongolia’s “ninja” miners help sate China lust for gold

BBC:  Silver: The harsh realities behind diminishing supplies

A commentary posted at Mineweb examines “registered” silver inventory held for delivery in COMEX vaults, and finds that “there is less than 4% of annual mine supply available for delivery.  In our view this is further evidence that we have reached the technical end of the runway.  Simply put, prices must rise in order to attract more physical silver into the delivery pool.”

Reuters reported earlier this week that the combination of “registered” and “eligible” inventory was at 28-month highs, but an article at Jesse’s Café Américain explained why “registered” is the more significant allocation, and noted that “The central banks may stand ready to lease increasing amounts of gold for sale into the markets if the price rises too fast … but they are fresh out of silver, and have been so for some time.”

Related Links:

MarketWatch:  Gold ends 0.7% lower as demand is seen lacking; silver off 0.6%

GoldMoney:  Mixed messages from silver sector

SilverSeek/321Gold:  Eric Sprott interview: Silver, gold, mining stocks and more; Sprott fund’s premium will signal silver bottom

Jesse’s Café Américain:  CFTC’s Bart Chilton discusses position limits

Silver For the People/CNN Money:  CFTC & SEC  bow to Wall Street on derivatives

SafeHaven/SGT Report:  Gold and silver manipulation and how they do it; Manipulation against the primary trend is destined to fail

Globe & Mail:  World Gold Council:  Gold is still a hedge

Pragmatic Capitalism:  Stock market:  10 more years of low returns

Wall St. Cheat Sheet:  Are taxi drivers buying gold or Apple?

Equities.com:  Gold and silver now accepted as currency in Utah

Peter Grandich:  Dennis Gartman – Love him or hate him?

Reuters/Bloomberg:  “Not if, but when” for Spanish bailout, experts believe; Italy follows Spain in delaying deficit goal amid slump

KWN:  Egon Von Greyerz – Bank failures, disorder, massive panic & gold; Nigel Farage: There are going to be serious banking collapses

Zero Hedge:  Bob Janjuah dismisses central bank independence amid monetary anarchy; Art Cashin on the clandestine war among central banks

Rep. Ron Paul:  Penny unwise, dollar insane

Dylan Ratigan:  The Federal Reserve’s revolving door