Doug Casey: “There’s Going to be a Bubble in Gold and Silver…and a Super-Bubble in the Miners…So Buy Them Now”

The gold price was flat during early trading in Hong Kong, but the moment the dollar index started to roll over, the gold price began to develop a positive bias during the late afternoon in the Far East…and into the London open.

Gold got sold down a bit once the London noon silver fix was in…and was only up a couple of bucks when Comex trading began at 8:20 a.m. Eastern time.

Then the dollar index took a tumble…and the gold price headed north. Almost all of the day’s gains were in by 10:30 a.m. Eastern, even though the dollar index continued to decline at a pretty good clip after that. From there, gold traded flat…and then faded a bit in late electronic trading.

Gold’s low price tick of around $1,654 came early in Far East trading…and the high tick in New York was $1,680.10 spot.

Gold finished the Thursday session at $1,674.80 spot…up $16.80. Net volume was fairly light at around 130,000 contracts.

Up until the Comex open, silver followed a similar path to gold‘s…and also giving away all its overnight gains once the London silver fix was in at noon GMT…and was virtually unchanged by 8:20 a.m. in New York.

After surging in price during the first thirty minutes of trading, the silver price worked its way slowly higher up until 2:00 p.m. in the electronic market, before getting sold off a bit into the 5:15 p.m. close.

Silver’s low tick in early Far East trading was around 30.25 spot…and the New York high checked in at $31.05 spot.

Silver closed at $30.86 spot…up 50 cents from Wednesday. Volume was decent at around 48,500 contracts.

The dollar index opened at 80.61…virtually on its high of the day…and stayed slightly above that mark until around 2:00 p.m. in Hong Kong before a slow selloff began. This slow decline in the index lasted until 8:30 a.m. in New York…and then headed south with a vengeance from there. The low tick [79.69] came minutes after 2:00 p.m. Eastern…and then recovered a handful of basis points, closing the Thursday session at 79.79…down 82 basis points from Wednesday.

Considering the magnitude of the decline in the dollar index, one should have expected bigger gains in the precious metals…because they would have certainly ‘fallen’ more than that if the index had risen that amount.

The gold stocks gapped up at the open and then climbed steadily until around 10:15 a.m. in New York…and then crept higher for the rest of the day, selling off a hair during the last thirty minutes that the equity markets were open. The HUI finished up 2.31%.

The silver stocks did pretty well on the day, but Nick Laird’s Intraday Silver Sentiment Index was dragged down by the news out of Silver Standard Resources, so it only finished up 0.87%.

(Click on image to enlarge)

The CME‘s Daily Delivery Report showed that 9 gold and 11 silver contracts were posted for delivery on Monday from within the Comex-approved depositories.

For the third day in a row, an authorized participant withdrew gold from GLD. This time it was 67,780 troy ounces. But SLV had its second deposit in a row, as an authorized participant added 677,141 ounces of silver yesterday.

Well, the new updated short positions for both GLD and SLV for the end of December were posted on the Internet site late last night. Both Ted and I were expecting/hoping to see big declines, especially in silver, since 6.0 million ounces were deposited in SLV during the reporting period.

But, alas, it was not to be.

The short position in SLV increased by another 2,892,600 shares/ounces…which works out to an increase of 13.15%. The short position now sits at 24,897,800 shares/ounces…and that translates into a short position 7.64% of all outstanding shares of SLV.

The short position in GLD increased by ‘only’ 802,100 shares, or 80,210 troy ounces…which works out to an increase of 5.43% from the previous report. The short position in GLD now sits at 15,575,200 shares, or about 1.56 million ounces of gold…3.62% of the outstanding shares of GLD.

In tonnage, it would require a bit of 774 tonnes of silver to cover the entire SLV short position…more than twelve days of world silver production. In gold, the amount required to cover all short positions is 49.0 tonnes…about seven days of world gold production.

One can only imagine what the prices of gold and silver would be if JPMorgan Chase et al had to go into the open market a buy all this metal to cover their short positions. I’m speculating here, but I’d guess that 90% of the short positions in both GLD and SLV are held by these bullion banks.

The U.S. Mint had another big sales report. They sold 12,500 ounces of gold eagles…9,500 one-ounce 24K gold buffaloes…and 345,000 silver eagles.

The Comex-approved depositories reported that 614,226 ounces of silver were received on Wednesday…and 150,114 troy ounces were shipped out the door. The link to that activity is here.

I don’t have too many stories for you today, so I hope you have the time to at least skim everything that I’ve posted below…and can find the time for must watch/reads.

Article Via: Caseyresearch

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