Golden Minerals Company

The gold price, as per usual lately, didn't do much in Far East trading during their Monday...but did dip five bucks early in London trading...gaining it back again by 8:45 a.m. in New York.

At that precise moment, gold also broke above it's Friday closing price...and immediately ran into a not-for-profit seller. Then minutes after 1:00 p.m. Eastern...and less than half an hour before the Comex close...a short seller entered the market, or JPMorgan et al pulled their bids...and the price was down over ten dollars in five minutes.

The selling pressure disappeared at that point but, after gold had gained back about ten dollars of its previous loss, a willing seller was there to sell off the gold price in the thinly traded New York Access market. Volume was relatively light.

The whipping boy de jour was, once again, was silver. The price followed almost an identical path to the gold price...falling and rising at the same inflection points...which should be no surprise to any reader of this column. The high frequency traders showed up at the same 8:45 a.m. Eastern time...and that was it...as silver was down almost $1.50 when the low for the silver price came shortly before the close of Comex trading.

The subsequent rally attempt ran into the same not-for-profit seller as gold at exactly the same time. As I mentioned in the last paragraph, the price path for silver was identical to gold's...but the price was more 'volatile'....LOL! Volume was pretty decent for a Monday...but virtually all of that was the HFT boys from JPMorgan.

The dollar opened up just under the seventy-five cent mark...and began to roll over early in the Hong Kong afternoon trading session...and by 10:30 a.m. in New York it was down about 40 basis points. From that interim low, the dollar rallied until 12 o'clock noon right on the button, before falling off a 32 basis point cliff...and was down almost 50 basis points by the close of electronic trading in New York at 5:15 p.m.

If you can find anything on the gold and silver price charts that indicates that the precious metals were influenced the dollar's movements yesterday...I'd love to hear about it. As I've said many times before, the dollar only 'influences' the precious metals prices when 'da boyz' want a fig leaf to hide behind.

Despite the fact that the gold price never made it above Friday's close while the New York equity markets were open, the shares managed to make into the black for a short period of time yesterday morning. The low in the gold [and silver] price is easy to spot on this chart.

As the gold price came roaring back...so did the shares...but that rally got cut off at the knees when that not-for-profit seller showed up shortly after 2:00 p.m. Eastern. The shares sold off a bit from there in the close. Despite the fact that gold was down a percent on the day...the HUI was only down 1.35%.

A lot of the silver shares were down big but, much to my amazement, some of them were up big as well. Here's Nick Laird's Silver Sentiment Index. The seven stocks that comprise this chart obviously got smoked. On average, they were down 3.53% yesterday.

The CME's Daily Delivery Report yesterday showed that 116 gold, along with one lonely silver contract, were posted for delivery tomorrow. The big issuer was the Bank of Nova Scotia with 97 contracts...and JPMorgan with 17 contracts delivered out of its client account. The big stopper you ask?...JPMorgan, of course, with 106 contracts received in its house account. How would you like to be a gold bullion investor with JPMorgan, not knowing that the house is trading against you the whole time?

There were withdrawals from both GLD and SLV yesterday. GLD inventories declined by 28,231 troy ounces...and SLV's holdings had a monster decline of 6,630,571 ounces. I would guess that strong hands will own that silver for quite a while.

There was a sales report from the mint, as 5,500 ounces of gold eagles were sold, along with another 682,000 silver eagles. Month-to-date so far, the mint has sold 31,500 ounces of gold eagles, along with 1,617,000 silver eagles. No one-ounce 24K gold buffaloes have been reported sold this month as of yet.

The Comex-approved depositories showed that they received no silver on Friday...but 152,126 ounces of the stuff were shipped out the door. Here's the link to the action.

With the sensational news over at Kitco last week, I had quite a few readers worried about their gold in general...and Perth Mint Certificates in particular. So I fired off the following e-mail to Bron Suchecki...

Hi Bron,

How will Kitco's woes affect anyone who bought a Perth Mint unallocated/allocated precious metals certificate through them?

I've got readers already asking me that question, so I thought that I would go right to the horse's mouth.

Please give me an answer I can cut and paste for my Tuesday column...LOL!

With best wishes,

Ed

And here's the 'cut and paste' reply I got...

“When a client completes a purchase transaction and receives their Perth Mint Certificate, any risk they have to an Approved Dealer ceases. They now have a legal relationship with the Perth Mint for storage of their metal. Approved Dealers are involved only in facilitating transactions and do not have any ongoing involvement in the storage of, or a claim on, a client’s metal.

Clients should also be aware that they are not tied to the Approved Dealer they bought a Certificate from, and can sell their Certificate back through any Approved Dealer. In the case of a client sale, the Perth Mint will not send money to an Approved Dealer for forwarding to the client until it receives the exact same physical Certificate it originally issued. As long as clients have taken personal physical delivery of their Certificate they can be assured they are in control of their metal.”

Regards,

Bron Suchecki
MANAGER, ANALYSIS AND STRATEGY
THE PERTH MINT

While on the subject of 'cut and paste'...here are four paragraphs that I stole from silver analyst Ted Butler's weekly commentary to clients on Saturday. It's all about Comex warehouse stocks...something that Ted has been studying closely on a daily basis for more than a quarter of a century. I don't normally like to 'borrow' this much stuff from Ted, but it's all on one issue, so I hope he's still talking to me when I call him tomorrow.

"Many have asked me about daily reports which describe in great detail the changes in COMEX silver warehouse stocks, particularly changes between the two categories labeled registered and eligible. Recently, the registered category has slipped to lows not seen in the past decade. Conversely, the eligible category is near high levels of the past ten years. I prefer to look at total COMEX warehouse stocks (registered and eligible combined). Over the past decade, total silver stocks at the COMEX have range from 95 million ounces to 140 million ounces, with the last high water mark seen in mid-2008. It is noticeable that we have declined almost 40 million ounces since then.

"Since so many have given up on anything but a pronounced silver shortage breaking the back of the manipulation and freeing the price, more attention than ever is being placed on anything that might offer an advanced clue to the shortage. I think this explains the microscopic attention given lately to daily changes in the COMEX silver stocks. I have been closely studying these changes in COMEX silver inventories on a daily basis for more than 25 years. For much of that time (before the Internet), I got them by calling the COMEX daily and by subscribing to the exchange’s printed statistical sheets for a spell. I don’t think I ever missed a day’s statistics. An honest assessment of what I learned in all that time is not very much. Even though I still closely monitor the daily changes, I have grown skeptical that the daily COMEX silver inventory changes will ever give that special advanced clue that the silver shortage has arrived. Of course, that won’t stop me from continuing to look.

"I can’t even offer you a complete description of the difference between registered and eligible silver, other than registered used to have a paper bearer warrant attached for delivery purposes. But those paper warrants are being phased out as the warehouse process goes electronic. I don’t think anyone can know who actually owns the silver, for instance, or that registered is owned by investors and eligible by dealers. And even if you could discover who owned the COMEX silver, you would still be missing what you are really looking for. What we all want to know is how much of the COMEX silver inventory, no matter who owns it, is available for sale at then-current prices.. That, of course, is only known to the owners themselves. I think the intense study of the daily changes in COMEX silver stocks and categories is really an attempt to uncover how available this silver is to the market.

"In fact, trying to determine the true availability of the COMEX silver stocks is what I am trying to uncover by focusing on the turnover or the movement in and out of these inventories. I first noticed a big pick up in the turnover about a year or so ago. Before then, the COMEX silver stocks moved in and out very infrequently. Considering that it would be much cheaper and more efficient to deliver silver already in the COMEX warehouses to those who wanted delivery, rather than to bring in new silver to deliver instead, it occurred to me that one would only do so if the silver already in the warehouse wasn’t available. I’m still of that opinion. That’s why I write of this turnover weekly. My sense is that very little of the 101 million ounces in the COMEX is available for sale at current prices and, if true, this suggests a tightness in supply. At some point, of course, additional clues may be revealed in monitoring the daily changes in great detail. As I indicated, after 25 years, I’m not about to stop looking now.

Before I get into my stories for today...and I do have quite a few...here's a graph that Nick Laird over at sharelynx.com sent me yesterday. It's entitled Global Indices...and it looks like it's about to break down.

As I hinted in the previous paragraph, I do have a lot of stuff for you to wade through today, as this weekend produced a lot of news...and I hope you have the time to at least skim it all.

¤ Critical Reads

The SEC Just Refused To Hand Over Details Of SAC's Trades To Senator Grassley

Today's first story was posted at the businessinsider.com website on Saturday...and is courtesy of reader 'David in California'.

Originally it was thought that Grassley's requests for details on certain trades was because he was investigating Steve Cohen's mammoth hedge fund, but in fact, he was investigating the SEC.

SAC was being used a case study by the Senator's office, as he is concerned with how the SEC handles insider trading probes and referrals.

The link is here. Included in this item is the link to the original WSJ story.

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Budget deficit moves closer to $1 trillion mark

Here's an AP story that was picked up by finance.yahoo.com...and is courtesy of reader Scott Pluschau.

The federal budget deficit is on pace to break the $1 trillion mark for a third straight year. Record deficits are putting pressure on Congress and the Obama administration to come up with a plan to rein in government spending.

Already, the deficit through the first eight months of this budget year is $927.4 billion, according to the latest report from the Treasury Department released Friday.

The link is here.

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Bank of America ‘Significantly Hindered’ Review of Foreclosures, U.S. Says

“Our review was significantly hindered by Bank of America’s reluctance to allow us to interview employees or provide data and information in a timely manner,” William Nixon, an assistant regional inspector general for the agency, said in a sworn declaration.

The declaration, dated June 1 and obtained yesterday by Bloomberg News, was filed as an exhibit in a lawsuit by the state of Arizona against the Charlotte, North Carolina-based bank. Arizona, which is seeking to interview former Bank of America employees, accuses the bank of misleading homeowners who were seeking mortgage modifications.

The group is in settlement talks with the five largest mortgage servicers, including Bank of America, Wells Fargo & Co. and JPMorgan Chase & Co.

This is Scott's second offering in a row...and the link to this Bloomberg story is here.

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Too Big to Fail, or Too Trifling for Oversight?

It's not very often that business people head to Washington to explain how unimportant they are.

But over the last several months, executives from more than two dozen financial companies and their trade groups have paraded into the Treasury Department, the Federal Reserve and other government agencies to try to persuade top regulators that they are not large or risky enough to threaten the financial system if they should ever collapse.

This is a 2-page article...and it's certainly worth skimming. I thank reader Phil Barlett for this story from the Saturday edition of The New York Times...and the link is here.

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Jim Rogers: 2008 Was Bad ... Next Time Will Be Worse!

Reader Roy Stephens sent along this Jim Rogers interview from Russia Today that was posted over at thedailybell.com website on the weekend. The video runs 8:40...and the link is here.

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The King of Non-Productive Debt

Here's your big read of the day...and it's courtesy of reader U.D. For me, Friday night is Doug Noland night over at the prudentbear.com website...as Doug posts his weekly Credit Bubble Bulletin. His epistle is well worth the read this week.

"There are fascinating dynamics at work throughout our Credit market. Arguably, the U.S. is the King of Non-Productive Debt. In the wake of a historic expansion of non-productive household debt comes a Bubble in government (Treasury and related) Credit. The assets underpinning too much of the U.S. debt mountain are of suspect quality, although this hasn’t mattered recently. And, in true Bubble fashion, the marketplace has increasingly gravitated to Treasury debt as the “Greek” crisis escalates and contagion effects gather momentum. The corporate debt market has enjoyed extreme bullish sentiment – along with waves of investment and speculative inflows. While the corporate balance sheet appears sound, I would counter that corporate earnings and cash flows have been artificially inflated by unsustainable federal deficits. In particular, the bubbling junk bond market would appear vulnerable to the deteriorating liquidity backdrop."

You have to scroll about three quarters of the way down the page to find it...and I consider this a must read from beginning to end. The link is here.

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When the party is over..."Ask not for whom the bell tolls"

Here's another Max Keiser interview...and it's a different Max Keiser than you're used to seeing and hearing. He's much more serious here...not his usual raucous self. This video is an excellent piece of journalism...and it takes place in Ireland...and it's all about the banking crisis in that country. It runs a longish 20:25...and it's posted over at realecontv.com.

I thank Roy Stephens for sharing it with us...and the link is here.

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U.S. Is in Even Worse Shape Financially Than Greece: Bill Gross

When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC yesterday.

Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.

This story, courtesy of reader Roy Stephens, was posted over at cnbc.com on Monday...and the link is here.

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Greece's credit rating cut again on higher risk of default

Here's another offering from Roy...and this story was posted over at The Telegraph late last night.

Greece's recovery plans have suffered another hammer blow after Standard & Poor's cut the country's credit rating because of "a significantly higher likelihood of one or more defaults".

The rating agency reduced the long-term rating on Greek sovereign debt from B to CCC – only four notches above default. It added that in its view the country's credit outlook was "negative".

It's a very short read...and the link is here.

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Back from the dead: Astonishing pictures show how Japan is recovering just three months after the tsunami

Here's reader U.D.'s second contribution to today's column...and it's a series of pictures in London's The Daily Mail last Friday that's well worth looking at. The link is here.

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Is Silver a Buy Right Now?

West Virginia reader Elliot Simon provides our first precious metal-related story today...and it's a posting over at finance.yahoo.com.

This video runs for 5:14...and features Alix Steel, a reporter at TheStreet.com. Alix has been reporting on the precious metal markets for ages, but this is the first time I've seen her in an interview. I must admit that I was surprised, because I always assumed that Alix was a man. Well, how wrong I was!

She talks about the Registered and Eligible silver in the Comex warehouse...and keep in mind what Ted Butler said about it earlier in this column.

There's a lot of information in here that's not quite true...and some of it is patently false. This is what passes as serious main stream commentary on the silver market these days.

She's bullish, but for all the wrong reasons, as she's obviously never heard of the Commitment of Traders Report. Its current configuration is the real reason to be bullish. The link to the 5:04 video is here...and there's also commentary about silver further down...so just scroll down a bit as well.

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Belief in its scarcity sustains an imaginary currency

Well, if you haven't heard the word 'bitcoin' before, be prepared for an education. I consider it be right up there with the Tooth Fairy, the Easter Bunny, pet rocks...and Ponzi schemes. This finance.yahoo.com story is to be found in this GATA release...and the link is here.

Just as a matter of historical interest, this particular GATA release represents the 10,000th story that Chris Powell has dispatched under the GATA banner since 1999. Chris has never run out of things to do.

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GoldMoney posts video of GATA Chairman Murphy's presentation in Munich in April

Video of GATA Chairman Bill Murphy's presentation to the gold and silver conference at the Hofbräuhaus in Munich on April 29th has been posted at GoldMoney's Internet site. It's 22 minutes long...and the link is here.

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Newmont's O'Brien sees gold at $1600 this year and higher next

Here's a mineweb.com story that's courtesy of Washington state reader S.A.

Newmont Mining Corp, the world's No.2 gold producer, sees prices for the precious metal rising up to $1,600 this year and then above that next year, on growing demand from Asia's burgeoning middle class.

India and China, the world's top two gold consumers, together consumed about 1,543 tonnes of gold jewellery, coins and bars in 2010, the World Gold Council says.

The link to this short story is here.

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Debt repudiation by hyperinflation, Embry predicts to King World News

The link to this KWN blog is imbedded in the following GATA release. Chris Powell has already done the intro, so why should I try to improve on it. The link is here.

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The Value of Gold - Paul de Sousa, Bullion Management Group

Here's a fairly short speech given by Paul de Sousa, the vice-president of Business Development over at Bullion Management Group Inc. on June 7th in Nicosia, Cyprus. It's well worth the read...and the 15-page Powerpoint slide presentation that accompanied this speech is also linked...and worth running through as well. The link is here.

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Betting against gold is the same as betting on governments. He who bets on governments and government money bets against 6,000 years of recorded human history. -- Charles de Gaulle

Gold volume was around 110,000 contracts net of all roll-overs yesterday...and for the second day running, the CME had no preliminary report posted by the time I got to this point in my column...which is 4:15 a.m. Eastern. I wonder if they are no longer going to publish this data? We'll see if this trend continues.

Friday's final open interest number showed a decline of 8,312 contracts, which is pretty decent. And, since there was no preliminary report from the CME on Saturday, there's no preliminary o.i. number to compare it to.

Silver's net volume yesterday was around 72,000 contracts...and I have no preliminary o.i number for yesterday's trading day in silver, either.

Friday's final open interest numbers showed a chunky decline of 2,882 contracts.

I would expect that [unless there was shorting or huge spread positions being place in both metals] Monday's final open interest numbers in silver and gold will show declines after yesterday's big take-down in both metals...especially silver. We'll find out later this morning.

Whatever final open interest number for today's trading day [which will be reported on Wednesday morning] will be in this Friday's Commitment of Traders Report.

Here's the 3-year gold chart. This will be the focus of my attention for the next little while, because this is where I expect the battleground to be. As I've been mentioning ever since the 'drive by shooting' on May 1st, the 50-day moving average in gold has never been penetrated to the downside.

Well, as of the close of trading yesterday, we're less than $12 away from the magic number...and I'm sure that JPMorgan has that moving average firmly in its sights...as it is but a chip shot away from where the price sits as of this writing.

Once the 50-day is broken to the downside in gold, the question becomes...can they take out the 200-day moving average as well? The gold price hasn't been seriously below that moving average since early January 2009. That's more than two and a half years ago. Do 'da boyz' have the firepower to do it? The short answer is: I don't know...and it's too soon to say.

I don't want to sound like a broken record on this...but the U.S. bullion banks will use the gold smack-down to further hammer away at the the tech funds holding silver long positions in the Comex futures market.

Here's the 3-year silver chart. As you can see, it's a bit of a different animal than the 3-year gold chart. Silver has been below the 200-day moving average on more than one occasion...but just barely...and the 50-day moving average was shadowing the 200-day m.a. while a lot of that was going on, so it's not a fair comparison.

In actual fact, silver hasn't been seriously below its 200-day moving average for almost the same time period as gold...and the question remains: can JPMorgan get the price down to the 200-day moving average. The other question is: how much tech fund long liquidation are they going to get even if they do get the price down there? I don't know, but I expect that we'll find out the answer to that pretty quick.

As of 5:27 a.m. Eastern, both gold and silver are up a bit...but that means nothing when JPMorgan et al are on the hunt...as they were in the New York market yesterday. I would expect that they will show up again today once the Comex begins to trade at 8:20 a.m. Eastern.

That's quite enough for today. I'll see you tomorrow.