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Tuesday, April 3, 2012

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Why Gold ETFs Could Regain Their Mojo

Posted: 03 Apr 2012 04:39 AM PDT

By Tom Lydon:

Gold prices hit close to $2,000 per ounce last year, and related exchange traded funds followed. So far in 2012, prices have not been able to stabilize over $1,700 per ounce. Meanwhile, the best first quarter gain for the S&P 500 has sent U.S. equities over gold for the first time in over 10 years, possibly indicating a shift in the market.

"The problem with gold now is that people are starting to accept the economic recovery," Laszlo Birinyi, president of Birinyi Associates, told Bloomberg News. Even as confidence builds, "people are still too focused on the concerns and the fact that this looks similar to last year, where everyone said sell in May and go away," he said. "That's exactly the kind of thing we look for."

Holdings in bullion-backed exchange traded products such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU) and ETFS Physical Swiss Gold Shares


Complete Story »

Becoming 'Father Of The Year' With Stocks

Posted: 03 Apr 2012 04:12 AM PDT

By Rocco Pendola:

When I wrote an article about the custodial brokerage account I opened for my 8-year old, I figured it would set the groundwork for a series of articles that could touch on everything from the particular stocks in the portfolio to the power of starting early and dollar-cost averaging. I did not expect the number of kind comments I received from Seeking Alpha readers. Here's a sampling:


Talk about bringing a tear to your eye. But, as much as I appreciate the kind words and awesome sentiment, I would be remiss if I did not mention something. Every single day of the week, we all come across parents who cannot afford to invest a dime, or very much, for themselves or their children, yet they provide incredible experiences and upbringings for their kids. While it's nice to have the cash to invest for the future, I don't take it for


Complete Story »

SILVER: It's Down To Physical Only Now!

Posted: 03 Apr 2012 03:59 AM PDT

from roadtoroota.com:

As an avid gold and silver investor it's been a very long and winding Road. I've ridden the ups and downs of the industry for over 10 years and it has been an amazing adventure. Even though the prices of both gold and silver have risen dramatically I, like many other die hards, have made and lost substantial amounts of money in the precious metal markets. Yes, many of us have lost serious amounts of money even though the prices have risen. In the early years we were suckered into the Banksters game of fake breakouts and false crashes using leverage because we thought FOR SURE this was the END of the manipulation and the GATA Rockets would take off. Mining shares, futures, options, ETF's, pooled accounts – you name it. Each one held the promised riches we so deserved because we had done our homework and figured out that both metals are massively undervalued. But each time the Banking Cabal dashed our hopes sending prices tumbling back to earth never fully leaving the launching pad.

BUT THAT'S THE AMAZING THING!

Keep on reading @ roadtoroota.com

US Mint: “No Hysteria and No Bubble”

Posted: 03 Apr 2012 03:09 AM PDT

from goldcore.com:

Gold's London AM fix this morning was USD 1,674.75, EUR 1,254.03, and GBP 1,044.17 per ounce. Yesterday's AM fix was USD 1,664.00, EUR 1,246.16 and GBP 1,037.54 per ounce.

Silver is trading at $32.95/oz, €24.70/oz and £20.58/oz. Platinum is trading at $1,657.25/oz, palladium at $655/oz and rhodium at $1,350/oz.

Gold rose $8.80 or 0.53% in New York yesterday and closed at $1,677.00/oz. Gold traded sideways to slightly higher in Asia but has fallen in European trading to $1,674/oz.

Markets may get direction from clues regarding the outlook for the U.S. economy and hints regarding monetary policy from the minutes of the last U.S. Federal Reserve policy meeting.

Keep on reading @ goldcore.com

Forget Gold, Why Your Portfolio Needs Silver

Posted: 03 Apr 2012 03:07 AM PDT

from etfdailynews.com:

For the past few years, the investing world has turned gold into its darling commodity, as its meteoric rise was well-documented and thrust into the forefront of major media and news sites. All the while, its sister metal silver received very little attention by comparison. Now, many see gold as a great portfolio diversifying agent, a sound inflation hedge, as well as a great place to grow initial capital. While gold may be poised for a bright future, silver may present an even greater opportunity that investors would do well not to ignore

Keep on reading @ etfdailynews.com

William Lazonick: How High CEO Pay Hurts the 99 Percent

Posted: 03 Apr 2012 03:06 AM PDT

By William Lazonick, professor of economics and director of the UMass Center for Industrial Competitiveness. His book, "Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States" (Upjohn Institute, 2009) won the 2010 Schumpeter Prize. Cross posted from http://www.alternet.org/economy/154745/how_american_corporations_transformed_from_producers_to_predators/?page=entire">Alternet

Corporations are not working for the 99 percent. But this wasn’t always the case. In a special five-part series, William Lazonick, professor at UMass, president of the Academic-Industry Research Network, and a leading expert on the business corporation, along with journalist Ken Jacobson and AlterNet’s Lynn Parramore, will examine the foundations, history and purpose of the corporation to answer this vital question: How can the public take control of the business corporation and make it work for the real economy?

While most Americans struggle to make ends meet, the CEOs of major U.S. business corporations are pulling eight-figure, and sometimes even nine-figure, compensation packages. When they win, the 99 percent lose. We rely on these executives to allocate corporate resources to investments in new products and processes that, in a world of global competition, can provide us with good jobs. Yet the ways in which we permit top corporate executives to be paid actually gives them a strong disincentive to invest in innovation and training. The proper function of the executive is to figure out how to develop and use the corporation’s productive capabilities (business schools call it “competitive strategy”). But that's not happening.

In effect, U.S. top executives rake in obscene sums by not doing their jobs.

The Runaway Compensation Train

When all the data from corporate proxy statements are in within the next month or so, they will show that 2011 was another banner year for top executive pay.

Over the previous three years the average annual compensation of the top 500 executives named on corporate proxy statements was “only” $17.8 million, compared with an annual average of $27.3 million for 2005 through 2007. Yet even in these recent “down” years, the compensation of these named top executives was more than double in real terms their counterparts’ pay in the years 1992 through 1994.

It might surprise you to learn that in the early 1990s, executive pay was already widely viewed as out of line with what average workers got paid. In 1991 Graef Crystal, a prominent executive pay consultant, published a best-selling book, In Search of Excess: The Overcompensation of American Executives, in which he calculated that over the course of the 1970s and '80s, the real after-tax earnings of the average manufacturing worker had declined by about 13 percent. During the same period, that of the average CEO of a major US corporation had quadrupled! Bill Clinton took up the issue in his 1992 presidential campaign, and immediately upon taking office had Congress pass a law that forbade companies from recording as tax-deductible expenses executive salaries plus bonuses in excess of $1 million.

Unfortunately Clinton chose the wrong pay target. In 1992 salaries and bonuses represented only 23 percent of the total compensation of the top 500 executives named on proxy statements. The largest single component of executive compensation was gains from exercising stock options, representing 59 percent of the total. The Clinton administration left this so-called “performance pay” unregulated.

Perversely, one reaction of corporate boards to the Clinton legislation was to take $1 million in salary plus bonus as the “government-approved minimum wage” for top executives, and therefore to raise these components of executive pay if they fell short of that minimum. The number of named executives with salaries plus bonuses that totaled $1 million or more increased from 529 in 1992 to 703 in 1993 and 922 in 1994.

The other reaction of corporate boards was to lavish more stock options on their top executives. When the stock market boomed in the late 1990s, these executives cashed in. The average annual compensation of the top 500 named executives reached $21 million in 1999 with gains from exercising stock options representing 71 percent of the total, and $32 million in 2000 with option gains now 80 percent of the total.

From 1982 to 2000 the U.S. experienced the longest stock market boom in its history. Average annual stock-price yields of S&P 500 companies were 13 percent in the 1980s and 16 percent in the 1990s. So it didn't require any great genius to make money from stock options. In fact, it became a no-brainer. In 1991, the Securities and Exchange Commission waived the longstanding rule that, as corporate insiders, top executives had to hold stock acquired through exercising their options for six months to prevent “short-swing” profit-taking. As before, executives did not have to put any of their own money at risk in being granted stock options. But now they could also pick the opportune moment to exercise their options without any risk that the value of the company’s stock would subsequently decline before they could sell the stock and lock in the gains.

The New Normal of Corporate Greed

The speculation-fueled “irrational exuberance” of the late 1990s brought unprecedented pay bonanzas to top executives, thus establishing a “new normal” for corporate greed. When boom turned to bust in the early 2000s, money-hungry executives had to look for another way to get stock prices up and make their millions. Their favorite “weapon of value extraction” over the past decade has been the stock buyback (aka stock repurchase). Top executives allocate massive sums of corporate cash to repurchasing their company’s own stock with the purpose of boosting their company’s stock price. Stock buybacks and stock options have become the yin and yang of executive compensation.

Let’s take a look at how it works: The board of directors of Acme Corporation authorizes the CEO to repurchase the company’s own outstanding shares up to a specified value (say $5 billion) over a specified period of time (say three years). On any dates within this three-year period, the CEO then has the authority to instruct the company’s broker to use the company’s cash to buy back shares on the open market up to the $5 billion limit and subject to the SEC rule that the buybacks on any one day can be no more than 25 percent of the company’s average daily trading volume over the previous four weeks. That might permit Acme to do buybacks worth, say, $100 million per day. It may be the end of the quarter, and the CEO and CFO want to meet Wall Street’s expectations for earnings per share. Or they may want to offset a fall in the company’s stock price because of bad news. Or they may want to ensure that the increase in the company’s stock price keeps up with those of competitors, who may also be doing buybacks. Whatever the reason, by the laws of supply and demand, when the corporation spends cash on buybacks, it “manufactures” an increase in its stock price.

Then, with the stock price up, the CEO, CFO and other insiders may choose to cash in their stock options. Presto! They make tons of money for themselves.

Meanwhile, these executives will tend to ignore investments in innovation and training. Some companies actually fund their buybacks by laying off workers, offshoring jobs to low-wage countries, and taking on debt. The top executives’ weapon of value extraction becomes a weapon of value destruction. They are rewarded handsomely by not doing their jobs.

In 1981, 292 major corporations spent less than 3 percent of their combined net income on buybacks. In 1982, however, the SEC passed a rule (10b-18) that gave corporations that did very large-scale stock repurchases a “safe harbor” from charges of stock-price manipulation. Buyback activity then became larger and more widespread, increasing substantially over the course of the 1990s. From 2003 to 2007, buybacks really took off, and by 2007 the very same 292 corporations now spent over 82 percent of their net income repurchasing their own stock.

The financial crisis and the Great Recession forced a slowdown in buybacks. S&P 500 companies repurchased a record $609 billion in 2007 but pared it down to $360 billion in 2008 and $146 billion in 2009. They stepped it back up to about $289 billion in 2010 and an estimated $440 billion in 2011. It is quite possible that buybacks in 2012 will be even higher than in the previous record year of 2007. And look for executive pay to increase as well.

Concentration of Income at the Top

Make no mistake about it. Executive pay is a prime reason why in 2005-2008 the top 0.1 percent captured a record 11.4 percent of all household income (including capital gains) in the U.S., compared with 2.6 percent three decades earlier. In 2010 (the latest Internal Revenue Service data available), this number was 9.5 percent. The income threshold among taxpayers for being included in the 0.1 percent in 2010 was $1,492,175. Of the executives named in proxy statements in 2010, 4,743 had total compensation greater than this threshold amount, with a mean income of $5,034,000 and gains from exercising stock options representing 26 percent of their combined compensation.

Total corporate compensation of the named executives does not include other non-compensation income (from securities, property, fees for sitting on corporate boards, etc.) that would be included in their IRS tax returns. If we assume that named executives whose corporate compensation was below the $1.5 million threshold were able to augment that income by 25 percent from other sources, then the number of named executives in the top 0.1 percent in 2010 would have been 5,555.

Included in the top 0.1 percent of the US income distribution were a large, but unknown, number of US corporate executives whose pay was above the $1.5 million threshold but who were not named in proxy statements because they were neither the CEO nor the four other highest paid in their particular companies. To take just one example, of the five named IBM executives in 2010, the lowest paid had total compensation of $6,637,910. There were presumably large numbers of other IBM executives whose total compensation was between this amount and the $1.5 million top 0.1 percent threshold.

Let’s Put CEOs to Work for Us

Under the Obama administration, virtually nothing has been done to constrain top executive pay. President Obama signaled his unwillingness to take on the issue when, in an interview in February 2010, he was asked about the many millions paid in 2009 to Jamie Dimon, CEO of JPMorgan and Lloyd Blankfein, CEO of Goldman Sachs, in the wake of the financial meltdown and bank bailouts. "I know both those guys; they are very savvy businessmen,” the president said. “I, like most of the American people, don't begrudge people success or wealth. That is part of the free-market system."

The “Say-on-Pay” provision in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act sounds good, but it just reinforces a system of incentives the does not work. This provision gives public shareholders the right to express their non-binding opinion to corporate management on issues related to executive compensation. If Congress had understood what drives executive pay in the U.S., however, it would have recognized that the granting of Say-on-Pay rights to public shareholders is part of the problem, not the solution. Through a combination of stock options and stock buybacks, Say-on-Pay provisions reinforce an alignment between the incentives of top executives and the interests of public shareholders that has been undermining investment in America’s future.

It is about time that we took control of exploding executive pay. It is not just that the sums involved are unfair, and as history has shown, will only become more obscene. These executives control the allocation of resources that represent the well-being of the 99 percent, and the ways in which they bank their booty is doing severe damage to the U.S. economy. The investment strategies of business corporations are too important to be left under the control of those who gain when the 99 percent lose.

The Lost Swift Silver Mine

Posted: 03 Apr 2012 02:56 AM PDT

wvc

Tuesday's Market Video Game Plan for Metals, Oil & SP500

Posted: 03 Apr 2012 02:50 AM PDT

Hey Trader's!

The next few trading sessions should be interesting with precious metals on the verge of a rally which should get the attention of traders and investors once again. If we can get investors to start looking at gold and silver again instead of high dividend paying stocks we will see gold hit $1800 an silver $37.

The SP500 has been pulling back and looks about ready to bounce going into the afternoon.

I recorded my morning analysis explaining what to expect in the market this week and the key support and resistance levels.

Watch Video Analysis: http://www.thetechnicaltraders.com/ETF-trading-videos/

Chris Vermeulen

THE BEGINNING OF THE END

Posted: 03 Apr 2012 02:43 AM PDT

As convincing as this rally has been I am confident this is an ending phase and not the start a new secular bull market. Actually the bear market began last year in May but was temporarily aborted by massive central bank printing. Let me explain.

The last four year cycle that started in 2002 and bottomed in 2009 was the longest four year cycle in history. It was stretched to these extreme lengths by Bernanke's desperate strategy of debasing the currency to avoid the bear market that should have begun in 2006. Instead the stock market cycle stretched all the way into the spring of 2009. 

I have mentioned before that often a long cycle will be followed by a short cycle. This being the case the current four year cycle should have bottomed in the fall of 2012. That process had begun last summer.



However, central banks around the world, in the futile attempt to avoid a global depression again cranked up the printing presses. The bear market that had begun in May was temporarily aborted. Amazingly I think we are going to see another stretched four year cycle. And this one is going to end just like the last one when the price of oil spikes far enough to collapse the global economy and  another market crash. The next economic downturn won't be a Great Recession, it will be a Great Depression.


At the moment the stock market is in a runaway move very similar to what unfolded out of the summer 2006 yearly cycle low. These runaway moves are characterized by uniform mild corrections all of similar magnitude and duration. For this particular rally the corrective size has been roughly 25-35 points. This could continue for weeks or months, but all runaway moves end in the same fashion, with a crash or semi crash that wipes out months of gains in a matter of days or even minutes.

Generally speaking, once a corrective move has run 20% beyond the normal correction size that is the signal that the move is over. Unfortunately, at that point you are usually already into the 'crash day'. This is why at some point one has to say enough is enough, and stand aside, or you risk getting caught in the crash.

When this runaway move comes to an end I'm pretty sure it will signal the beginning of the end for this cyclical bull market. That doesn't mean that we won't see a test or even a marginal break to new highs but I think we are clearly in the final phase of this liquidity driven rally that began in March of 2009. 

We are now at the mercy of oil and the commodity markets. Bernanke's plan to print our way to prosperity is destined to failure. Ultimately he is just going to spike inflation and collapse the global economy, resulting in a worse downturn than what we saw in 2008/09.  

Whether that breaking point is at $120 oil or $160 oil is anyone's guess.

This posting includes an audio/video/photo media file: Download Now

Mike Victory: Silver Alone Won't Save You

Posted: 03 Apr 2012 02:23 AM PDT

Silver has the six aspects of money in a classical sense. It is divisible, durable, convenient, consistent, has utility value, and cannot be created by fiat. Silver has been used as a medium of exchange and as a store of value. My thoughts for the day on a video I watched last night. While I am a stacker, I believe things like faith, having minimal debt, living below one's means, and the ability to be productive are all of importance. VNote: Take heed, this audio was created on the fly and is the first in some time.

Megan Duffield: Silver Circle Movie

Posted: 03 Apr 2012 02:22 AM PDT

from silverdoctors:

~TVR

‘Little Business’ in Market to Buy Gold with China Absent

Posted: 03 Apr 2012 02:21 AM PDT

Prices to buy gold fell to $1,672 per ounce Tuesday lunchtime in London – 0.7% off Monday's high – as stocks and commodities ticked lower and US Treasury bonds gained ahead of the release of the latest Federal Reserve policy meeting minutes.

Australian Gold Offers Good Protection: Richard Karn

Posted: 03 Apr 2012 01:46 AM PDT

On Copper-Bottomed Fake Tungsten Gold

Posted: 03 Apr 2012 01:33 AM PDT

Gold Stocks Versus The Stock Market

Posted: 03 Apr 2012 01:31 AM PDT

Speculative Investor

Gold Coins In Q1 Show "No Hysteria & No Bubble"

Posted: 02 Apr 2012 11:28 PM PDT

Gold traded sideways to slightly higher in Asia but has fallen in European trading to $1,674/oz. Markets may get direction from clues regarding the outlook for the US economy and monetary policy in the minutes of the last US Federal Reserve policy meeting.

Mild Trading

Posted: 02 Apr 2012 09:18 PM PDT

I believe we will see some mild selling with a moderate rally through the month. Data as of the end of the day April 29.

Dow Jones Industrial Average: Closed at 13,145.52 +19.61 on normal volume and flat momentum. Resistance on the double top is 13,250. New support is 13,090 on the 20-day moving average. Price is above all moving averages, which is bullish. Price is getting squeezed between 13250 and 13900. The lower support is the 20-day and, a lower up-trending channel line. If the price gets a new boost and a 3rd try at 13250, it might break through for more buying. If it sinks under the lower channel line at 13,900, the next lower support is 12,850; a major number. Decision day for the trend is coming on Friday and Monday. Monday is normally an up-buy-day for shares. The other stock indexes are all holding tenuously to the lower support channel lines. The leading signal index, the Nasdaq, was off today about -8 points and that signals a break is coming. It's too close to call, but traders should be ready for a 5-7% drop in this index on a normal correction. This should be mild followed by a new rally to a spring top and peak at the end of April for the first half of 2012 trading.

S&P 500 Index: Closed at 1403.28 -2.26 on flat momentum and normal volume.  Price is above all moving averages and looks peaky but could continue higher on the chart patterns. Support is 1400 and resistance is 1410-1415. There is very hard resistance above those numbers at 1450. We are due for a mild correction, which lands the close near 1375 support. Traders want to keep buying but that is cooling-off as they hold what they have long and not selling. However, they are buying some downside limited protection with Put Options. We can see a supported close on Friday near 1400 with another try at higher numbers on Monday.

S&P 100 Index: Closed at 638.47 -1.51 on normal volume and flat momentum. Support is the 20-day moving average at 632.43 with resistance at 650. All the stock indexes including this one have been rising steadily in a 45 degree up trend, which is normal and desirable. Since tomorrow is month end and traders prefer to be flat, we would expect traders to hold the price or, sell-off mildly with new buying resuming on Monday. However, roughly between April 9 and 13, look for new selling on a normal correction in all the stock indexes.  Keep in mind, that after April 13 beginning on April 16 or so, a new spring stocks rally should be in play for all the stocks indexes, and commodities. On those further-out rally dates, the bonds and US Dollar should be soft and moving into mild selling periods.

Nasdaq 100 Index: Closed at 2762.05 -8.92 on flat momentum and normal volume. Price has continued a steady rise and is now supported by two rising channel lines and the 20-day moving average at 2706.53. While the close was negative today, there are more positive signals, particularly the channel support line and price versus all moving averages. Like the other indexes, we can see a mild selling correction coming in the second week of April followed by a new stocks' rally for the balance of April and perhaps even into a few days of May before our annual "Sell In May And Go Away" cycle hits the markets.

30-Year Bonds: Closed at 138.88 +1.25 on basing momentum and a rising price coming off major support at 135-136 to close above the 200-day average at 137.49 (now stronger support); and the 20-day moving average at 138.32. Only the 50 day average remains above the close at 139.82, which is now new resistance. Bonds have formed a huge, bearish, parabolic top from last August through the middle of March. The new rebound in bonds is a reaction to a cooling of nasty credit conditions in Europe and a peaky high being posted in stocks. We can see the bonds going back-up to 140.00 resistance in April as stocks mildly correct. However, we think that could be the new high for the first half of 2012 followed by more selling back to 133.50-135.50 in later June, 2012.

XAU: Closed at 173.83 +0.37 on skidding momentum and a basing metal-to-shares ratio showing a very tiny up-tick on today's trading. The price on Wednesday and Thursday fell under a channel support line just above 175. Then, it sold hard today but just as quickly came back up to close in the top of the trading range signaling a new base is in and new buying is just ahead.  Support is 170 and resistance is 178, and all the moving averages remain above today's close. The XAU price really hit the basement leaving almost no room without going off the bottom of the chart. I think selling is finally over and we have better days ahead next week.

Gold: Closed at 1662.50 +0.10 on newly basing momentum and a price supported above the 200-day moving average. Resistance is the 20-day average at 1677.99 and the higher 50-day average at 1689.35. Higher price resistance, which we forecast as a minimum spring high on new numbers is 1748.50. If gold can get some momentum, we have a chance at 1807 and 1848.50. Our next gold high should be posted at the end of April. After that we look for a flat and choppy summer. Last year gold began a new and stronger rally near the first of July, approximately one month earlier than normal.  In the seven week period from July, 2011, through August, gold jumped from $1500 to $1923; a very strong move for less than two months. Can this happen again? Yes, it can but we are unsure as the summer and fall cycles are very disturbed and convoluted with numerous Black Swans, including a messy national election.

Silver: Closed at 32.32 +0.29 on falling but newly supporting momentum and formation of a new continuation triangle.  The silver floor was hit in the last week of December after Christmas. From a low of $26.50 it bounced up to just under $37.00 before correcting back to $31.48.  New resistance is 32.82 on the 20-day moving average. Just above that is the 50-day at 32.94. Then, we see the hardest resistance of all, the 200-day moving average at 33.28. The silver price should be clear of resistance and price congestion once it lands above $34.48 and posts three closes above that number. We are expecting a price rise to major resistance this spring at $36.85 with a chance at $38.85. Today's pattern is an inverted head and shoulders, which is bullish for silver in April.

US Dollar: Closed at 79.13 -0.00 on flat to down-turning momentum. The Euro currency inverse trade has supported and begun to rise selling the dollar mildly. The US Dollar is firmly supported and resisting at 80.00 on the index. A lower support is the 200-day moving average at 78.30, the 20-day at 79.41, and 50-day at 79.38. All of these averages and the closing price are very near and influenced by the 80.00 price. Look for dollar trading to stay between 78.30 and 80.00 during next week.

Crude Oil: Closed at 102.78 -2.81 slipping under the 20-day average at 105.85 and the 50-day average at 104.05.  Oil is now supported by the 200-day moving average at 97.93.  It was reported today that the crude oil reserves are +8% above normal and this is driving the price lower. The depression is curtailing driving and gasoline demand. The airlines are slowing down on higher fuel costs and less travel. The close fell under two key supports at 104.50 and two channel lines converging near that price, as well. While this is a significant price break after oil touched 110.00 at the end of February, we think a new rally can begin within the next few days. I received a report today there are three USA aircraft carriers in the Gulf near Iran. I should think this is bullish for crude oil as pressure is building rapidly against Iran on several fronts.

CRB: Closed at 305.94 -5.53 on falling momentum and two long price bar drops, headed for 300 support next. We could receive new and lower support at 300, but more likely it will skid under to 290 before a new base is found. Grains and gold are bullish, but they are just now turning around as crude oil can still sell back to $100.50 support before the next rally. A stronger dollar and selling oil prices are smothering the CRB overall. However, this will change and we see new and higher price in April. –Trader Rog


This posting includes an audio/video/photo media file: Download Now

Endeavor Silver Explains Support for Sprott's Call to Treat Metal as Money

Posted: 02 Apr 2012 09:15 PM PDT

¤ Yesterday in Gold and Silver

The gold price jumped a bit the moment that trading began in New York at 6:00 p.m. on Sunday night, but from there got sold down to its low of the day [around $1,663 spot] which came shortly before 10:00 a.m. in London.

From that point it climbed back to almost unchanged from Friday's close by about 9:40 a.m. in New York.  Then a buyer of some substance showed up...and the high of the day [$1,684.90] was in around 11:55 a.m. Eastern.

Then the buyer vanished...and gold got sold off about seven bucks from its noon high...closing at $1,677.00 spot...up $8.30 on the day.  Volume was slightly elevated...around 120,000 contracts.

Silver also jumped a bit at the Sunday open...and stayed between 10 and 25 cents above its Friday closing price until the same 9:40 a.m. time in New York.

Most of silver's gains were in by 11:15 a.m. in New York, but the high price tick [$33.37 spot] came at precisely noon.  Then it, too, got sold down going into the close of electronic trading at 5:15 p.m. Eastern.

Silver closed the Monday trading session at a penny under the $33 mark.  Net volume wasn't overly heavy at around 32,000 contracts.

The dollar index traded within a 15 basis point price range of 79.95 through the entire Monday trading session...and is obviously just hanging onto the 80.00 level by its theoretical finger nails.

The gold stocks opened flat, but moved sharply higher once the gold buyer showed up around 9:40 a.m. Eastern time.  The gold stocks hit their zenith a couple of minutes before noon in New York...and just a couple of minutes after gold hit its high tick of the day.

From that high, the stocks gave back a bit of their gains, but the HUI still closed up 1.79% on the day which, for only an $8.30 gain in gold, was pretty chunky.  I was very encouraged by the price action in the stocks yesterday.

But even though the metal itself was up over 2 percent on the day, Nick Laird's Silver Sentiment Index only closed up 2.09%.  Some of the juniors did slightly better than that...but some didn't do that well, either.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 38 gold and 13 silver contracts were posted for delivery on the second delivery day of April.  That wasn't very many...and I was expecting a much large number in gold than this.  The link to the Issuers and Stoppers Report is here.

There were no reported changes in GLD on Monday...but over at SLV, a very large 2,039,324 troy ounces were withdrawn by an authorized participant.  Obviously this silver was needed elsewhere, as there was nothing in the price action of the last couple of days that would indicate the need for any fund liquidation.

The U.S. Mint had a sales report for the first business day of April.  They sold 4,000 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 195,000 silver eagles.

Friday was a very busy day over at the Comex-approved depositories, as they reported receiving 1,785,106 troy ounces of silver...and shipped only 260,500 ounces out the door.  All five depositories were active, which is the first time I can remember that happening.  The action is worth a quick look...and the link is here.

Silver analyst Ted Butler posted his weekend commentary for his paying subscribers on Saturday...and here are two free paragraphs.  Please note the one sentence that I've put in bold type.  I'll have more to say about it in 'The Wrap'.

"In silver, the entire 2,400 contract decrease in the total commercial net short position (now at 29,700 contracts) can be attributed to the big 4 (read JPMorgan). Accordingly, I would now calculate JPMorgan's concentrated silver short position as being roughly 19,000 contracts. This puts JPM's silver short position about midway between the 13,000 contract low point of late December and the recent 24,000 contract high-water mark of late February. Minus all spreads, this means that JPM is holding 23% of the entire COMEX futures open interest. It is not possible for that percentage of concentration not to be manipulative to the price of silver."

"The bottom line is that the COT structures in gold and silver are still favorable. Can the commercials still collusively rig prices lower? Of course, they can, but that will only make the set up better. In COT terms, there is much more price room to the upside versus the downside. An added takeaway is the hint of a possible very sharp rally given how quick and forceful some technical traders entered the long side of the gold market on Monday's [March 26th] rally. I would look at that as a harbinger of what may come, namely, strong technical-type buying once the moving averages are penetrated to the upside in gold and silver. At that point, it will become a question of how aggressively and manipulatively the commercials will be selling.  Just make no mistake - this paper trading on the COMEX is the sole determinant of short term price movement. This is price setting, pure and simple. This is also about as far removed from the price discovery function of futures markets intended under commodity law as can be imagined."

While on the subject of silver, reader Scott Pluschau has a few thing to say about both silver and copper in his two latest blogs from late yesterday.  I've see them both...and they're worth a look.  The silver blog is headline "Silver Breaks Out of Diamond Pattern"...and the copper blog is headlined "All Hands on Deck in Copper".

Here's the 3-year dollar chart.  A technical analyst may see a potential head and shoulder forming...and as I pointed out further up, the dollar index is hanging on to the 80 mark by its proverbial finger nails.

Since it's my Tuesday column...I have a fairly large number of stories.  And, as always, I'm more than happy to pass the final editing duties along to you.

I heard a saying on the Internet many years ago that one should never short a quiet market. That might turn out to be sage advice.
Silver breaks out of diamond pattern. What happened to gold? 'Upwards and eastwards'. Peter Brimelow: Indian gold buying seems likely to resume. The Critical Number for Gold.

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Clients Raise Questions About MF Global Checks/Cheques

MF Global customers who closed their accounts in the brokerage firm's final days have been fuming for months about how the firm mailed checks to them, instead of promptly transferring the money electronically as usual. Many of those checks arrived after the bankruptcy filing, and subsequently bounced.

Now customers are taking action, trying to show that MF Global delayed the return of their money to cover the firm's own bills and stay afloat. They are amassing client documents and submitting them to federal investigators in hopes of building a criminal case against MF Global executives.

While clients of MF Global say that it was unprecedented for the firm to abandon a longstanding business practice to wire money to customers who were closing accounts, the documents are not definite proof of wrongdoing. In recent weeks, federal authorities have come to suspect that MF Global's actions amount to sloppy record-keeping, rather than criminal fraud.

This story appeared in The New York Times on Sunday...and I thank Phil Barlett for sending it along.  The link is here.

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'Massive Wealth Destruction' Is About to Hit Investors: Faber

Runaway government debts have triggered uncontrolled money printing that in turn will lead to inflation that will decimate portfolios, according to the latest forecast from "Dr. Doom" Marc Faber.

Investors, particularly those in the "well-to-do" category, could lose about half their total wealth in the next few years as the consequences pile up from global government debt problems, Faber, the author of the Gloom Boom & Doom Report, said on CNBC.

The good doctor is never one to mince words.  This cnbc.com story was sent to me by West Virginia reader Elliot Simon yesterday...and the link is here.

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The Problem with the Fed's Zero Rate Policy: Jim Rickards

This is Jim Rickards' submitted testimony as a witness in the Senate Banking Committee's Subcommittee on Economic Policy hearing entitled: "Retirement (In)Security: Examining The Retirement Savings Gap".

It was posted over at the financialsense.com website yesterday...and I thank reader U.D. for bringing it to my attention.  It's a little on the long side, but for Rickards junkies/groupies...it's probably not long enough.  The link is here.

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CFTC accuses Royal Bank of Canada of sham trades

U.S. regulators are accusing one of Canada's largest banks of engaging in hundreds of millions of dollars in illegal futures trades to reap tax benefits on its holdings of company stocks.

The Commodity Futures Trading Commission filed civil charges Monday against Royal Bank of Canada, saying the bank made the sham trades with itself. The agency said it is the largest case it has brought against so-called wash trades, which cancel each other out. Royal Bank of Canada engaged in "a wash-trading scheme of massive proportion," the CFTC said.

In addition, the agency alleged that the bank concealed the true nature of the trades and made false statements to a futures trading exchange, OneChicago.

The first person through the door with this story was Florida reader Donna Badach, but I'm using this AP story that was picked up by finance.yahoo.com yesterday.  Casey Research's own Jeff Clark brought it to my attention...and the link to this must read article is here.

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In two interviews Biderman stresses bailouts, market rigging

Market analyst and financial letter writer Charles Biderman this week gave two good interviews concentrating on bailouts and market rigging, one with Dan Ameduri of Future Money Trends -- and the other with financial writer Chris Martenson.

The first interview runs 19 minutes...and the second for 36 minutes.  Both are posted in this GATA release...and the link is here.

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Market rigging gets too obvious even for Bill Buckler and Jim Grant

Nothing has been more disappointing and frustrating to GATA in its nearly 13 years of fighting gold and silver market manipulation than the refusal to acknowledge the issue by many of those who have affected to be devoted friends of the monetary metals and free markets.

GATA Chairman Bill Murphy long has called this the 'Not Invented Here Syndrome', a matter of the intellectual vanity of prima donnas who can't bring themselves to admit that mere upstarts might discover anything profound in the prima donnas' field. From 45 years in journalism the experience of your secretary/treasurer is that most endeavors are full of people whose success has made them so arrogant that they think that nothing could be happening if they don't know about it already. (While journalism inclines its practitioners to the exactly opposite position -- to realize every day how much more they don't know -- it doesn't necessarily give them the courage to report what they learn.)

This GATA dispatch is an absolute must read from one end to the other...and the link is here.

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Eric Sprott and Rick Rule Skewer the U.S. with James West

This 15-minute video was posted over at goldseek.com yesterday...and I thank Roy Stephens for sending it along.  The link is here.

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Three Stories from the Tehran Times

The first one bears the title of "Iran oil embargo raises threat of new global recession"...the second is headlined "Iran bids barewell to sanctions on oil industry: oil minister".  And lastly is this story headlined "Indian budget 2012 exempts Iranian oil payments from income tax".  All are courtesy of Roy Stephens, for which I thank him.  The last one is the most interesting.

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Having a Say: Bundestag's Rights Could Threaten Euro Rescue

German Finance Minister Wolfgang Schäuble ultimately had to concede defeat. Last Friday, Schäuble, a member of Chancellor Angela Merkel's conservative Christian Democratic Union (CDU), voted in favor of the massive euro-zone bailout packages whose sheer size makes most people's heads spin. "The euro area is mobilizing an overall firewall of approximately €800 billion, more than $1 trillion," the Euro Group, which consists of the euro-zone finance ministers, proudly announced.

But this breakthrough cou

Peter Brimelow: Indian gold buying seems likely to resume

Posted: 02 Apr 2012 09:15 PM PDT

Peter Brimelow: Indian gold buying seems likely to resume

This story was posted over at the marketwatch.com website yesterday...and I borrowed it from another GATA release.  It's certainly a must read...and the link is here.

GATA figures prominently in 'America's Book of Secrets' episode on Fort Knox

Posted: 02 Apr 2012 09:15 PM PDT

GATA figures prominently in 'America's Book of Secrets' episode on Fort Knox

The latest episode of the History Channel program "America's Book of Secrets" was broadcast on Saturday night...and GATA and our secretary/treasurer, Chris Powell, played a big part at its beginning and toward its end, separated by a lot of odd tangents that, while they do not involve GATA's work, may keep the lay viewer engaged until GATA's main points are pressed emphatically: market rigging and the likely encumbrances on the U.S. gold reserve.

read more

Endeavor Silver CEO explains support for Sprott's call to treat metal as money

Posted: 02 Apr 2012 09:15 PM PDT

Endeavor Silver CEO explains support for Sprott's call to treat metal as money

Interviewed by Dan Ameduri of Future Money Trends, Endeavor Silver and Canarc Resource Corp. CEO Bradford Cooke explains Endeavor's concurrence with Sprott Asset Management CEO Eric Sprott's call for gold and silver mining companies to start treating their metal inventories as money.  I lifted this from another GATA release yesterday.  The interview is in two parts and can be watched at the futuremoneytrends.com website.  The two interviews run about 14 minutes in total...and the link to both is here.

Why Corporations Should Get Out of Cash, and Into Gold

Posted: 02 Apr 2012 09:15 PM PDT

Why Corporations Should Get Out of Cash, and Into Gold

Reader Drew Mason had this op-ed piece posted over at the forbes.com website back on March 25th...and he sent it my way yesterday.  It's certainly worth reading...and the link is here.

What happened to gold? 'Upwards and eastwards'

Posted: 02 Apr 2012 09:15 PM PDT

What happened to gold? 'Upwards and eastwards'

It may be more desirable than ever, but gold is so expensive that more of us are selling jewellery rather than buying it. Emma John goes on the trail of the precious metal and discovers who's getting their fingers on it

This longish article about gold that showed up in The Guardian on Saturday bearing the headline "Gold Rush: what happened to bling?".  It's a very interesting read...and I borrowed the headline from a GATA release. The link is here.

South Carolina state treasurer's report notes gold and silver price suppression

Posted: 02 Apr 2012 09:15 PM PDT

South Carolina state treasurer's report notes gold and silver price suppression

The state treasurer's office seems to have discovered GATA's work and to have fully adopted our conclusions, as it tells the legislature: "Similar to other commodities, the value of gold and silver is determined by supply and demand, as well as speculation. The Federal Reserve, London Bullion Market Association, JP Morgan Chase, and HSBC Holdings have practiced fractional-reserve banking and engaged in naked short selling causing artificial price suppression."

The report was about the advisability of investing state funds in gold and silver.

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Five King World News Blog/Interviews

Posted: 02 Apr 2012 09:15 PM PDT

Five King World News Blog/Interviews

The first blog is from Ross Clark of CIBC [Canadian Imperial Bank of Commerce].  It's headlined "Gold Bull Market set up for a Spectacular Move".

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Gold bugs think Q2 will bring new rebound

Posted: 02 Apr 2012 08:54 PM PDT

from marketwatch.com:

Gold measured by the CME active contract floor-close was down 6.5% or $116.20, measured from Feb. 28. The NYSE Arca Gold Bugs Index XX:HUI +1.79% was down 13.8%. (Measuring from Feb. 28 represents March better. Leap Year Day, Feb. 29, saw a brutal sell off, smashing a promising rally and establishing the new month's character.)

The last month of a quarter seems to be a dangerous time to own gold instruments. Last December was gruesome too, giving gold bugs a notably unmerry Christmas.

But in January, gold rebounded. Could another new-quarter reversal be possible?

The latest of gold's two decent attempts to rally in March peaked last Monday. Although gold then fell back, over the whole week gold gained 0.6%, and further comfort to the bulls was offered by gold's starting to rise mid-morning in New York on Thursday and adding $17 on Friday — when the HUI closed up 1.09%.

Chinese demand driving commodities strategy
Minmetals Resources' majority stakeholder is the Chinese government, and the company is bullish that demand from China will continue to fuel the market for copper and zinc, according to its CEO Andrew Michelmore.

And there's possibly bullish news out of India, by far the largest importer of gold. (China is a rival to India in consumption, but it mines the bulk of the gold it needs: India mines almost none).

Keep on reading @ marketwatch.com

Societe Generale: Further Fed Easing to Boost Gold

Posted: 02 Apr 2012 08:48 PM PDT

from cnbc.com:

Fears that the U.S. economy may lose momentum this year could build the case for a third round of stimulus from the Federal Reserve and strengthen the price of gold, Societe Generale said in a research note on Tuesday.

Gold has rallied from its December 29th low of $1520 an ounce, but it has lagged the stock market in recent months. While the S&P 500 posted its best first quarter in more than a decade with a 12 percent gain, gold rose just 6.6 percent.

"We consider the drop in the gold price to be a buying opportunity as we expect the U.S. economy to surprise on the downside over coming months, which should result in the implementation of QE3," Robin Bhar, Director, Head of Metals Research at Societe Generale said, maintaining the bank's medium-term bullish stance on the precious metal.

"The markets remain concerned about the possibility of further QE/liquidity increases in Europe and the U.S., allied to negative real interest rates worldwide."

Keep on reading @ cnbc.com

The Critical Number for Gold

Posted: 02 Apr 2012 08:44 PM PDT

from CaseyResearch.com:

Sometimes people call us gold bugs. I can understand why, since gold and silver and related equities are our favorite investments at this time. But of course, the term suggests a semi-religious attitude about gold and an unwillingness to move on, even when it becomes obvious that it is time to move on.

Doug Casey likes to say that he'll know it's the top of the market when there's an image of a golden bull tearing up the NYSE on the cover of SLIME (TIME) magazine – and that he can't wait to blow out his portfolio at some high multiple of its current value… hardly the words of a fanatic who will never change course.

But now your Casey Metals Team has developed a more by-the-numbers way of thinking about when it's time to head for the exits. Any cutoff figure has to be considered in the context of what's going on in the real world at the time, not just the abstract world of numbers and ratios, but this is an excellent tool – a rule of thumb we intend to keep in mind to give us some early warning of when the real top has arrived.

Keep on reading @ CaseyResearch.com

Silver price gains on bullish US manufacturing data

Posted: 02 Apr 2012 08:30 PM PDT

Encouraging new US manufacturing data helped industrial commodities move higher yesterday, and pushed the Dow Jones and SandP 500 to their highest closes since May 2008. The silver price was ...

Should Investors Activate Gold & Silver Airbags?

Posted: 02 Apr 2012 08:10 PM PDT

The financial system serves as a global high-speed economic highway that is filled with many obstacles. Being the world's reserve currency, the US dollar is the truck that is one good bump away from losing control and crashing, causing a chaotic financial wreck.
at

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