Casey Research Publication
Gold & Silver Daily
"These guys sure are in a hurry. They might as well have hired a brass band and marched it down Wall Street"
 

¤ Yesterday In Gold & Silver

All was calm in the gold market through Far East and early London trading yesterday...and the gold price was up about five bucks going into the Comex open.  But then "the seas boiled and the skies fell"...and by shortly before noon in New York, JPMorgan Chase et al had engineered a price decline of almost thirty-five bucks.  Gold's low price tick checked in at $1,634.30 spot.

The subsequent rally lasted until about 4:00 p.m. Eastern time...and from there the gold price traded fairly flat into the electronic close.

Gold finished the Thursday trading session at $1,647.20 spot...down $18.70 on the day.  Net volume was a hair under 200,000 contracts.

But, like every other day of this engineered price decline, it was really silver that "da boyz" were after...and they got it real good on Thursday.

Silver was up nearly twenty cents going into the Comex open, but it didn't take long for the high-frequency traders to do a number on silver as well.  The low price tick...$29.51 spot...came about the same time as gold's low price...and then silver traded sideways until a smallish rally began that started just before the Comex close.  This lasted until 4:00 p.m...just like gold...and then traded sideways into the electronic close.

Silver finished the Thursday session at $29.92 spot...down $1.06 on the day...but had an intraday move of more than $1.65.  Net volume was monstrous...around 92,000 contracts.

Of course neither platinum nor palladium were spared, either.

On the day, gold closed down 1.12%...palladium down 2.03%...platinum was down 2.52%...but silver closed down a monstrous 3.42%...and at its low tick was down 5.3% from its pre-Comex open price.

The dollar index opened around the 79.41 level on Thursday morning...but by 9:00 a.m. in New York, the index had fallen all the way down to 79.06.  Then the index rallied back to 79.38 by around 11:20 a.m. Eastern.  From there the dollar index backed off a bit...and closed at 79.25...up about 15 basis points from Wednesday's close.

It nearly goes without saying that there was zero co-relation between the dollar index and the precious metal prices yesterday.

Not surprisingly the gold stocks gapped down at the open...with the low of the day coming at the low price tick for gold...around 11:45 a.m. Eastern time.  But by the close of the day, the gold stocks had gained back virtually all their losses...and the HUI closed down only 0.49%.  The insiders with deep pockets were buying every share that the weak hands were selling yesterday.  I hope you were one of them, dear reader.  Remember that "blood in the streets" quote I've mentioned on several occasions this month?

Even more amazing was the fact that the silver stocks closed mixed on the day!  Nick Laird's Intraday Silver Sentiment Index closed flat...down only 0.01%...and was actually in positive territory briefly.

(Click on image to enlarge)

The CME's Daily Delivery Report showed a fair amount of activity, as 134 gold and a chunky 382 silver contracts were posted for delivery on the day before Christmas.  In gold, Credit Suisse First Boston was the surprise short/issuer with 128 contracts...and our two favourites...JPMorgan Chase and the Bank of Nova Scotia were the biggest long/stoppers.  UBS was a distant third.

In silver it was also Credit Suisse First Boston as the short/issuer on 259 contracts...and Jefferies was in second place with 99 contracts.  Not surprisingly, our two old friends were there as long/stoppers...JPM and the Bank of N.S....with 172 and 179 contracts respectively.  As you are already aware, I consider these two banks to be the #1 and #2 short holders in the silver price management scheme on the Comex.

The Issuers and Stoppers Report is definitely worth a minute of your time...and the link is here.

There were no reported changes in GLD yesterday but, surprisingly enough, an authorized participant added 774,096 troy ounces of silver to SLV.

The U.S. Mint had a surprise sales report yesterday...and I triple checked the first sales figure, as it showed they sold 18,000 ounces of gold eagles...zero silver eagles...and 500 one-ounce 24K gold buffaloes.  My guess is that most, if not all, of that sale went to just one buyer.

The data from the Comex-approved depositories didn't disappoint on Wednesday either.  It showed that no silver was brought in...but 1,542,167 troy ounces was reported shipped out the door.  The link to that activity is here.

Since yesterday was the 20th of the month, The Central Bank of the Russian Federation updated their website with their November data.  It showed that they added another 100,000 ounces to their gold reserves, which now sits at 30.2 million troy ounces.  I'm beginning to wonder if, like the Chinese, the Russians aren't reporting all the gold they're squirreling away.  I guess we'll find out in the fullness of time.  Nick Laird's most excellent chart below tells all.

(Click on image to enlarge)

I don't have a lot of stories today, so I hope you can at least find the time to skim the ones that I do have.

 

¤ Critical Reads

White House Said to Tell Business Groups Talks Stall

Obama administration officials told leaders of business and financial services groups that negotiations with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said.

The officials told eight industry representatives at the White House that plans to vote on Boehner’s alternative proposal on taxes risk pushing the government past the deadline for spending cuts and tax increases to start, said the person, who asked for anonymity to discuss the private talks.

Treasury Secretary Timothy F. Geithner and White House Chief of Staff Jack Lew were among the administration officials who briefed the group, which included Business Roundtable President John Engler and U.S. Chamber of Commerce Chief Executive Officer Tom Donohue.

Engler said President Barack Obama and Boehner still must bridge differences on spending even as they’ve made progress on raising revenue.

This Bloomberg story was posted on their Internet site on Wednesday evening Eastern time...and I found it in yesterday's edition of the King Report.  The link is here.

Read more...

Guess Who Is NOT "Rotating" Out Of Treasuries

If one reads sell side research (especially that of Bank of America or Goldman), if one listens to comedy-finance fusion TV channels, if one reads newspapers, one can't help but be left with the impression that everyone and their grandmother is now dumping Treasuries and buying stocks.

So just to test whether or not this was indeed the case, we decided to go to the source data for what the smartest money of all is doing: the 20 or so (RIP 21st PD MF Global) primary dealers. After all, if everyone is dumping Treasuries over fears of an imminent surge in yields, and rotating into stocks, it would be them right? Well, the result is charted below: we present it without commentary.

Of course the primary dealers have to buy this stuff.  But maybe they're just having trouble finding suckers to buy it from them...and they may be forced to eat it.  The chart, along with the rest of the short commentary, was posted on the Zero Hedge Internet site yesterday...and I thank Marshall Angeles for sending it.  The link is here.

Read more...

Bank of America blocks employees from reading Zero Hedge blog

Bank of America Corp. is reportedly preventing employees from reading a popular financial news blog known for its activist investor posture.

Founded in 2009, Zero Hedge publishes financial news and opinion, aggregated and original, from a host of editors, all writing under the pseudonym Tyler Durden. Its editors purportedly hail from within the financial industry

"We couldn't have said it better: 'Bank of America blocks users from accessing websites that present certain risks to the bank,'" wrote one Zero Hedge editor, Tuesday, quoting a "This Web site is blocked" page that shows up when employees try to access zerohedge.com via BofA servers.

Zero Hedge has at times taken a critical stance on BofA.

How childish can you get?  There are obviously big troubles over at BofA...and the sociopaths that run the place are not taking their medications as prescribed.  This story showed up on the bizjournals.com Internet site on Wednesday morning...and I thank Australian reader Wesley Legrand for bringing it to our attention.  The link is here.

Read more...

Watchdog: Fannie, Freddie May Have Lost $3 Billion in Libor Fiasco

U.S. mortgage finance giants Fannie Mae and Freddie Mac may have suffered more than $3 billion in losses due to manipulation of the benchmark interest rate known as Libor, according to an internal memo by a federal watchdog.

The estimate was provided in a memo that was sent to Freddie and Fannie's regulator, the Federal Housing Finance Agency, by its inspector general. Reuters obtained a copy of the memo. The watchdog urged the regulator to consider whether the losses warranted a lawsuit against the banks that set Libor.

"We conducted a preliminary analysis of potential Libor-related losses at Fannie and Freddie and shared that with FHFA, recommending that they conduct a thorough review of the issue," a spokeswoman for the inspector general's office said when asked about the memo. "FHFA agreed to study the matter further."

A FHFA spokeswoman said the regulator "has not substantiated any particular Libor-related losses for Fannie Mae and Freddie Mac," and the regulator "has not made any determination regarding legal action."

This story showed up on the moneynews.com Internet site early yesterday morning...and it's courtesy of West Virginia reader Elliot Simon.  The link is here.

Read more...

Hong Kong joins UBS Libor rigging probe as US charges two ex-traders at bank with conspiracy to manipulate rate

The Hong Kong Monetary Authority, the city's de facto central bank, said it has received information from overseas regulators about "possible misconduct" by UBS involving submissions for the city's interbank rate, known as Hibor, and other reference rates in Asia.

UBS was fined by Swiss, British and US regulators on Wednesday after an investigation revealed evidence of massive misconduct in the setting of the London interbank offered rate (Libor), a global reference that affects trillions of dollars of loans and mortgages.

The Hong Kong Monetary Authority said it had "commenced an investigation to assess whether the potential misconduct had any material impact on Hibor, which is considered a key benchmark interest rate for economies in the region.

It will work with overseas regulators to gather information and "consider further actions that need to be taken" pending the findings of the investigation.

This article appeared on The Telegraph's website early yesterday morning GMT...and I thank Roy Stephens for sending it. The link is here.

Read more...

Fitch expects 'Bond Bubble' carnage when rate cycle turns

Yields on 10-year US corporate bonds have fallen to the lowest levels in history as a result of central bank liquidity, halving from 4pc to well under 2pc since early 2011.

Fitch said investors could cope with a gentle reversion to higher rates, but a “sudden rise” would devastate the portfolios of life insurers, pension funds, and other fixed-income institutions.

Fitch said the authorities face an ugly dilemma. If they persist with ultra-loose policies, they will push investors deeper into “low-coupon securities” that are most vulnerable to rising yields. “As rates fall further, the risks and severity of a potential correction mount,” it said.

This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk Internet site early yesterday morning...and I thank Manitoba reader Ulrike Marx for sending it.  The link is here.

Read more...

Central bankers rethink their devotion to slaying inflation

A subtle shift in monetary policymaking is afoot with a new generation of central bankers, striving to secure global economic recovery, prepared to challenge the old doctrine of inflation-fighting at all costs.

Mark Carney, the governor of the Bank of Canada and soon-to-be head of the Bank of England, may or may not have intended to spark a high-level debate last week over how diligently central banks should fend off inflation.

But he did just that with his speech in Toronto on the BoC's flexible approach to prices, and his musings on alternative approaches to policy that the Canadian central bank had considered but dismissed.

Within two days, Britain's finance minister, two BoE policymakers, and numerous economists had weighed in on what Carney's comments meant for the country and for the future of central banking.

This Reuters story from yesterday morning Eastern time shows you just what kind of La La Land these bankers live in. There is nothing they can do...and they know it.  It's just a matter of how long their money printing policies will stave off the inevitable world-wide economic, financial and monetary collapse that is an absolute certainty somewhere down the road.  This is another item that Elliot Simon sent me...and it's worth running through if you have the time.  The link is here.

Read more...

Doubts remain over Spain's austerity miracle

Fresh data from the OECD show that Spain has narrowed the gap in “unit labour costs” with Germany by 5.5pc over the past year alone. It has clawed back 4.6pc against France and 6.6pc against Austria since late 2011, as it slashes pay and pursues a scorched-earth policy of “internal devaluation”.

Luis Maria Linde, the Bank of Spain’s governor, says that within two years the country will have recovered “almost all” the ground lost during the first disastrous years of euro membership. The total gain in competitiveness against the EMU bloc since 2008 has been 10pc.

Yet economists say it is far from clear whether Spain is chasing the right target or even whether it can recover within EMU. Deflation has pushed the numbers out of work to 26.2pc, with 55.9pc youth unemployment.

This article by Ambrose Evans-Pritchard appeared on The Telegraph's website yesterday evening GMT...and I thank Ulrike Marx for her second offering in today's column.  The link is here.

Read more...

'Much Worse than Greece': IMF Demands Partial Default for Cyprus

Euro-zone member state Cyprus badly needs a bailout, but the International Monetary Fund is demanding a debt haircut first, according to media reports. The resulting standoff with Europe has delayed the country's badly needed aid package. To ward off insolvency, Nicosia has raided the pension funds of state-owned companies.

Cyprus did its part on Wednesday night. The country's parliament approved a 2013 budget which included far-reaching austerity measures so as to satisfy the conditions for the impending bailout of the debt-stricken country. While aimed at significantly reducing the country's budget deficit, the spending cuts and tax hikes are likely to result in a 3.5 percent shrinkage of the economy in 2013 along with an uptick in unemployment.

Citing anonymous sources familiar with the negotiations, the Süddeutsche writes that the IMF is concerned that, despite the austerity measures the country has now adopted, it still wouldn't be able to shoulder the interest payments due on its debt. Several European countries agree with the IMF. Others, however, believe that such a default could be dangerous. After all, when private creditors were pressured to write down a portion of their Greek debt holdings, the euro zone went to great lengths to present the move as one that would not be repeated. Should such a default now be applied to Cyprus, it could severely undermine investor trust in the euro zone.

"The situation in Cyprus is much worse than it is in Greece," one high-ranking EU official told the paper.

This story appeared on the German website spiegel.de yesterday...and it's no surprise that it's courtesy of Roy Stephens.  The link is here.

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Drifting Apart: Summit Underscores EU Tensions with Russia

Kremlin boss Vladimir Putin and European Commission President José Manuel Barroso have little affection for one another. Despite flourishing economic ties, Russia and the EU are drifting apart politically -- and neither side knows what to do about it. 

In St. Petersburg, Vladimir Putin's hometown, José Manuel Barroso gushed over the magnificent Constantine Palace, where the Russian president, who had just been voted back into the Kremlin, received the European Commission president at a summit meeting. Back in June when it happened, Russian newspapers described it as a reception worthy of a czar. The truth, however, is that there is little love lost between Putin and Barroso. Putin considers the Portuguese politician to be a lightweight, and it is not uncommon for the Kremlin boss to take days before returning calls from the European leader -- despite Barroso's efforts at two summits to endear himself by citing Russian national poet Alexander Pushkin.

The difficult relationship between the two leaders is symptomatic of something even greater. In the run-up to the Russia-EU summit this Friday in Brussels, disputes are simmering over Russia's desire for a visa-waiver for its citizens traveling to Europe, Putin's push to expand Moscow energy giant Gazprom deeper into the EU and a new tariff imposed by the Russians on imported cars. EU officials believe Russia is violating the rules of the World Trade Organization (WTO), a body that Moscow only recently joined.

This spiegel.de article from yesterday is a must read for all students of the "New Great Game".  I thank Roy Stephens for his final story in today's column..and the link is here.

Read more...

Three King World News Blogs

Here is the second KWN blog with Andrew Maguire in as many days.  It's headlined "Physical Silver Market Has Now Diverged to Extremes".   Here's Andrew Maguire yet again...and this blog is entitled "CBs Buying, Who's Supplying & is Paulson Selling?".  And lastly is this blog with Roberto Giorgi, president of VShips.  It's bears the headline "The New Terrifying World of Modern Day Pirates".

Read more...

Silver Vaults Stuffed Means Price Rising 30% in 2013: Commodities

Silver Bullion Pte, one of Singapore’s largest suppliers of coins and bars to retail investors, says sales tripled since October, part of a global surge in demand that drove holdings to a record.

“Our clients are worried that a major currency crisis or mass bankruptcies would occur,” said Gregor Gregersen, the 36- year-old founder of Silver Bullion, whose sales now average about S$6 million ($4.9 million) a month. “It all has to do with falling confidence in the heavily indebted Western governments and financial institutions.”

Global investment through silver-backed exchange-traded products reached a record 18,854 metric tons in November, or more than nine months of mine output, data compiled by Bloomberg show. Holdings are now valued at about $19.2 billion. Prices will rise as much as 29 percent to $40.25 an ounce next year, based on the median of 49 analyst, trader and investor estimates compiled by Bloomberg.

This Bloomberg News story, filed from Singapore, was posted on the businessweek.com Internet site yesterday...and it's certainly worth reading.  I thank Phil Barlett for sharing it with us...and the link is here.

Read more...

Going for gold? Don't forget the vault

Investors in Asia are increasingly dealing with a seemingly anachronistic problem: finding a place to stash their bars of gold.

Gold is a popular choice for those seeking to diversify their holdings and spread risk but it isn't the most mobile of assets. Still, gold has been moving east, and that has created opportunities for security companies in Singapore, Hong Kong, and Shanghai -- financial hubs where the metal's popularity is soaring.

Security companies are busy ordering two-ton steel doors and sophisticated monitoring systems, and hiring more armed guards as they expand their high-security vault capacity in Asia.

This must read story was posted on The Wall Street Journal website yesterday...and it's posted in the clear in this GATA release.  The link is here.

Read more...

Jim Sinclair: A move of desperation by the Fed

Mr. Sinclair was not a happy camper yesterday...and had something to say about it.  It's a short, but very worthwhile read...and it was posted on his website jsmineset.com.  The link is here.

Read more...

Sprott starts up platinum and palladium physical trusts

Eric has gone the full monty with these two precious metal funds...and is now a world-class player in all four of the major precious metals.  Every bar that goes in these, and other physical-backed funds, is just another brick in the wall for JPMorgan Chase et al. Nick Laird says that they've only been operating for two days.  If you want any further information...you can find it posted on the sprottphysicalbullion.com Internet site here.

Read more...

2012 gold price performance really disappoints readers and experts alike

The gold price moves on economic-based sentiment as much as, or more than, fundamentals. All the factors that have fuelled gold’s rise over the past 12 years remain with us – indeed are perhaps even more apparent today than they were at the beginning of the bull run. However it has to be said that the machinations in the market noted above, with every upwards move seemingly countered by massive gold futures selling at market dominating levels with huge numbers of contracts sold all at once, has indeed had the effect the sellers have been trying to achieve. That is to drive weak holders out of the gold market. Indeed the volatility so generated has probably opened the doors to the sellers being able to buy back at lower prices, see gold move up, and then repeat the cycle. Hardly an efficient market mechanism and one which is thus obviously open to significant manipulation by those with incredibly deep pockets. Perhaps not much different from bear raids on stocks seen in the markets – but moves that can only be initiated by institutions (a term used generally rather than specifically) with enormous capital backing.

What the motives are for the heavy COMEX selling are obviously open to interpretation which largely follows pre-conceived notions on market trading theory and practice. But whatever these are they have definitely been effective in subduing the gold bull market, which many analysts believe remains in place nonetheless. Indeed it appears that sales of physical gold and of gold ETFs have been relatively little affected so far suggesting this is moving into stronger hands who look mainly at the long term picture rather than in short term trading for profit. The big question is will these raids on the gold market come to an end – and if so, when?

Well, Laurie Williams over at the mineweb.com comes as close as you can get to saying that JPMorgan et al are rigging the precious metal markets without actually saying the exact words.  There is definitely a tinfoil hat in Laurie's future if he keeps on talking dirty like this.

But let's face it, dear reader...this now far beyond the childish game of 'conspiracy theory'.  It's 'conspiracy fact'.  This must read commentary was posted over on the mineweb's Internet site yesterday morning...and I'm sure Lawrie wrote it long before "da boyz" showed up at the Comex open on Thursday morning.  I wonder what he'd say now?  The link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

One of the saddest lessons of history is this:  If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle.  We’re no longer interested in finding out the truth. The bamboozle has captured us.  It’s simply too painful to acknowledge, even to ourselves, that we have been taken. - Carl Sagan

These guys sure are in a hurry.  They might as well have hired a brass band and marched it down Wall Street...combined with a front page ad in yesterday's edition of The Wall Street Journal.  Talk about in your face!

But, having said all that, it's obvious that a major bottom is being put in at this point.  Whether we saw it yesterday...or it's still to come...once this is done, I'd guess that somewhere in the not-too-distant future, a major rally will unfold in the precious metals...and for the first time in decades, JPMorgan et al may put their hands in their pockets and let her rip...at least for a little while.

Ted Butler has been saying this for years...but that time might now be at hand.

The share price action yesterday should be all the evidence you need that the insiders were buying everything in sight.  For silver to get nailed to the proverbial cross like it was...and have their associated equities finish flat on the day is one of the most astounding sights I've seen in the twelve years I've been watching the precious metal markets.  The same can be said about the gold equities.  And if they're doing it, dear reader, I sure hope you're following their lead.

Today we get the Commitment of Traders Report for positions held at the close of Comex trading on Tuesday...so yesterday's and Wednesday's price/volume action won't be included.  Too bad, as I'm sure that there was major technical fund long liquidation yesterday in all four precious metals...put particularly in gold and silver, as both metals had their 200-day moving averages taken out with real authority.

Here are the 6-month charts for all four precious metals so you can see the lay of the land after yesterday's price carnage.

(Click on image to enlarge)

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(Click on image to enlarge)

But is the carnage over?  I don't know.  As Ted Butler has said over the years, when the final downside move comes, you can be sure that JPMorgan Chase et al will leave no stone unturned to get every speculative long they can to sell out to them...and to do that requires ever-lower prices.

Of course that's precisely what happened during early morning trading in the Far East on their Friday.  "Da Boyz" sent out their high-frequency traders to engineer the prices to new lows in both gold and silver...and that caused more technical funds to puke up their long positions, which allowed the bullion banks to cover more of their short positions, or go long themselves.  This has been their modus operandi for more than twenty-five years...and nothing has changed up to this point.  But it soon may.

Not surprisingly, volumes in both metals are huge.  In gold, it's 41,000+ contracts...and in silver it's just over 11,000.  The dollar index moves are irrelevant...even though the index is up about 20 basis points at the moment.  In the past, the currencies have always been a convenient fig leaf for "da boyz" to hide behind when they were doing the dirty.  They could engineer the appropriate price moves in the dollar index just as easily as they could in the precious metals.  Now they don't even bother. They just do what they want...and to hell with dollar index.  Like now, for instance.

As I hit the 'send' button at 5:20 a.m. Eastern time, I note that all of gold and silver's Far East losses are now history...and both metals are in positive territory in mid-morning trading in London.  How long this happy state of affairs lasts, or is allowed to last, is only know by the bullion banks...and Blythe Masters is not returning my calls.

For the moment, all we can do is put on a pot of coffee and watch this unfold on our computer screens...which is basically what the CFTC and CME Group are doing as well...unless they're orchestrating all this, which wouldn't surprise me in the slightest.

If you are in a position to take advantage of these deep discount prices in both the metal itself...and their associated shares, I would think that it's in your best interests to do so.

Today's trading session in New York could be an education...as it's Friday...and the last real trading day before Christmas.

Enjoy your weekend...or what's left of it, if you live west of the International Date Line.