Casey Research Publication
Gold & Silver Daily
"At these prices there are very few legitimate short sellers to be found in the precious metal markets"
 

¤ Yesterday In Gold & Silver

Not a lot happened in the gold market yesterday.  It was quiet throughout all of the Far East trading day...and a smallish rally began just before 9:00 a.m. in London.  That lasted until the London a.m. gold fix at 10:30 a.m. GMT...and then the gold price went into a quiet decline right up until a few minutes before 11:00 a.m. in New York.

Then, in the space of about fifteen minutes, the gold price popped about ten bucks...and proceeded to trade sideways for the rest of the Comex trading session and the electronic session that followed.

Gold closed at $1,684.30 spot...up $9.70 on the day.  Gross volume was 187,610 contracts, but once all the roll-overs and spreads were netted out, net volume came in around 127,000 contracts...give or take.

It was virtually an identical chart pattern in silver...and at first glance the gold and silver charts look the same.  Silver closed at $33.43 spot...up 48 cents on the day.  Net volume was reasonably high at 38,000 contracts...but most would be of the useless HFT variety.

The dollar index didn't do much either...trading within a 15 basis point range of 79.75.

The standout feature on the HUI was that ten dollar price move in gold that began shortly before 11:00 a.m. Eastern time...as it certainly put a bid under the shares.  But after that, nothing much happened...and the HUI finished virtually flat...up 0.09% on the day.

Despite the fact that silver had a decent day yesterday, the associated equities only outperformed their gold cousins by a small amount.  Nick Laird's Silver Sentiment Index closed up 0.33% on the day.

(Click on image to enlarge)

The CME's Daily Delivery Report was even less exciting on Wednesday than it was on Tuesday, as only 8 gold and zero silver contracts were posted for delivery on Friday.  According to the CME's Daily Volume Report, there are only about 40 gold contracts left to deliver in March...along with about 475 silver contracts.  There's no guarantee that all these contracts holder will take delivery, as they still have a way to get out of taking physical delivery, even though they stood for delivery on February 29th.  So the rest of March could be pretty quiet on the delivery front.

As I've said in the space several times over the years, no physical metal ever leaves the Comex-approved depositories on these CME deliveries...it just changes racks [and owners] in the warehouse.  Sometimes they don't even change racks, as both Kyle Bass and Eric Sprott have said that quite a few of the bars they saw had little "Post-It" notes on them saying who the new owners are.  How's that for high tech?

There were no reported changes in either GLD or SLV yesterday, putting icing on the cake that the 5-day smack-down in the precious metals that started on February 29th, was all a Comex paper affair.

The U.S. Mint had another tiny sales report.  They sold 6,500 ounces of gold eagles...and that was the extent of it.

Over at the Comex-approved depositories they did not report receiving a single ounce of silver on Tuesday.  But they shipped out an eye-watering 3,172,266 troy ounces of the stuff...and 99% of that came out of Brink's, Inc.  Here's the link to the action.

It's this silver that comes and goes from the Comex-approved depositories that you should be watching...as this is the physical metal itself that's on the move.  One has to wonder where this 3.17 million ounces of silver is going to end up...but it's obvious that its new [or existing] owner had a more urgent need for it elsewhere, or why go to the trouble [and expense] of moving it?  Those ounces add up to just under five semi tractor-trailers full...and, depending on how those trucks have to be loaded, there could have been more than five.

Silver analyst Ted Butler had his mid-week comments for his paying subscribers yesterday...and here are two free paragraphs...

"Here’s a head’s up and preview of tomorrow's COT report. It promises to be significant because all of the high volume and vicious sell-off at this point occurred precisely within the reporting week. This is somewhat rare, as there is usually an overlap in big price moves over several reporting weeks. I don’t remember such a sharp move in the past being so clearly confined in one reporting week. The collusive commercial crooks smacked the price of gold and silver starting last Wednesday (the first day of the reporting week) and kept the pressure on through yesterday’s cut-off. I can’t say that the deliberate price smash is over for sure, but it might be."

"What I can say is that we should get big reductions in the speculative net long and commercial net short position in both gold (by tens of thousands of contracts) and silver (by many thousands of contracts). At least, that is my expectation. The real question will be how much the raptors bought in each market versus the big 4 and 8. I would think that JPMorgan should have been able to reduce its concentrated short position in silver down from 24,000 contracts, but by how much depends upon how much buying competition came from the raptors. At the very least, it should be an interesting COT report."

Here's a zerohedge.com chart that Washington state reader S.A. sent my way yesterday.  It shows the total OTC derivatives as of the end of June 2011.  As you can see, they total a bit over $700 TRILLION.  Soon the word 'quadrillion' will be dusted off for the first time...and it wasn't that very long ago that the trillion number first came on the scene...and as far as OTC derivatives are concerned, that number will soon pass into the history books.

(Click on image to enlarge)

It was a reasonably quiet news day yesterday...and I've managed to edit the list down to what I believe is a manageable number.

 

¤ Critical Reads

Jim Grant: "Capitalism Is An Alternative For What We Have Now"

This absolute must watch CNBC interview between Mr. Grant and Ms. Bartiromo is imbedded in this zerohedge.com story from yesterday.  I thank reader Phil Barlett for sending it along...and the link to this 8:52 interview is here.

Read more...

Jim Sinclair: Monetary doubletalk beyond MOPE

Market analyst and mining entrepreneur Jim Sinclair talked back to a news story apparently planted by the Federal Reserve to suggest that it can do and undo "quantitative easing" at the same time to cancel any inflationary implications of bond monetization.

The Fed's story, Sinclair writes, "is total gobbledygook to deflect the fact that QE is going to infinity." Sinclair's commentary prefaces a MarketWatch.com account of the Fed-planted story, is headlined "Monetary Doubletalk Beyond MOPE" -- that's "Management Of Perspective Economics" -- and it's posted at JSMineSet.com website...and the link is here. I thank Chris Powell for providing the introduction.

Read more...

Doug Casey on Cashless Societies

This week's edition of Conversations With Casey is well worth your time...and it starts out with the following question from Louis James: "Doug, we've had a lot of questions from readers about the apparent push governments are making to go to paperless currency - all electronic, no cash. Do you think that's likely, and what would be the implications?"

Doug: I think it's probably inevitable. It's not just cash, but the whole world is becoming increasingly digital. Credit cards already work very well all around the world, and everyone in the world, it seems, will soon have a Smartphone - or at least everyone who might have any cash.

But it's not just a question of evolving technology. Governments hate cash for lots of reasons, starting with the fact it costs a couple of cents to print a piece of paper currency, and they have to be replaced quite often. As the US has destroyed the value of the dollar, they've had to take the copper out of pennies, and soon they'll take the nickel out of nickels. Furthermore, with modern technology, counterfeiters - including unfriendly foreign governments - can turn out US currency that's almost indistinguishable from the real thing. And the stuff takes up a lot of space if it's enough to be of value. So sure, governments would like to get rid of tangible currency. They'd like to see all money kept in banks, which are today no more than arms of the state. But it's not so simple: increasing numbers of people trust neither banks - most of which are insolvent - or currencies - most of which are on their way to their intrinsic values.

It's a long interview, but a must read in my opinion...and the link is here.

Read more...

China boosts domestic security budget to face growing unrest

China will spend 111.4 billion dollars on public security, which includes police and state security forces, in the coming year — an amount that exceeds even the defense budget. This is according to a report presented by the Ministry of Finance on Monday, at the start of the annual session of the National People's Congress (NPC), the top legislative body. Military spending for 2012 was announced a day earlier at 106.4 billion, marking the second consecutive year in which the internal security budget has surpassed the outlay on national defense.

The boost to internal security comes amid recent unrest in Tibet and Xinjiang. On Monday, a Tibetan teenager and a widowed mother of four were reported by overseas groups to have set themselves on fire to protest religious policies in Gansu and Sichuan provinces.

At least 25 self-immolations by monks and nuns have been reported in the past year while Tibetans have clashed with police forces in Sichuan, resulting in the deployment of additional security across many Tibetan areas in western China. Xinjiang has also seen intermittent ethnic unrest, with at least 20 people killed in violence near Kashgar last month.

Nothing terrifies the ruling elite in the Chinese communist party more than civil unrest, as everything starts to come unglued when the economy finally does implode.  I thank Casey Research's own Louis James for sharing this article with us.  It was posted over on the mercopress.com website on Tuesday...and the link is here.

Read more...

China Moves To Further Marginalize Dollar: Offers CNY-Denominated BRIC Loans

In a further step confirming that China is rapidly encroaching on the "reserve" status of the sacrosanct USD, the FT writes that China intends to extend renminbi loans to other BRIC nations in "another step toward the internationalisation of its currency."

To those following the stealthy Chinese incursion into currency markets as a dollar alternative, this is not news: already we know that China and Japan have bypassed the dollar entirely and now engage in direct bilateral trade using JPY and CNY (even as most other nations in Asia have developed bilateral agreements to transact in a non dollar basis). This is merely the latest incremental step which will see China become the dominant player in the currency arena, and further puts to doubt the fate of the US Dollar as the default currency.

This zerohedge.com posting is another offering from Phil Barlett...and the link is here.

Read more...

The World from Berlin: New Talks with Iran 'Only a Faint Glimmer of Hope'

The EU and UN have announced new talks with Iran over the country's controversial nuclear program. But is Tehran just stalling for time, or is there a real chance of progress? German commentators aren't optimistic.

This rather short article showed up on the German website spiegel.de yesterday...and I thank Roy Stephens for bringing it to my attention.  It's worth skimming...and the link is here.

Read more...

Hedge Funds Oppose Greek Bond Swap

Some hedge funds are refusing to join Greece's bond swap, threatening legal action if the government does not come up with a better offer and complicating efforts to restructure the country's debt.

Greece's private creditors have until Thursday night to decide whether to take part in a bond swap, aimed at avoiding a disorderly default that would drag other countries further into the euro zone crisis.

Hedge funds alone are unlikely to derail the swap but if their strategy works and they agree a better deal it would infuriate other creditors and use up Greek resources. If not, it could drag the Greek government into a lengthy and expensive legal battle just as it needs to focus on bringing back economic growth.

I thank West Virginia reader Elliot Simon for sending me this cnbc.com story from yesterday...and the link is here.

Read more...

Greece on brink of default as bond deal falters

Less than half of Greece’s international creditors had agreed to a vital €206bn (£172bn) bond swap on Wednesday night, leaving Athens dangerously exposed to default. 

The Royal Bank of Scotland, Barclays and HSBC joined 30 European banks and institutions in declaring their acceptance of the deal - but the tally was still far short of the 95pc needed to avoid being officially declared in default.

The International Institute of Finance (IIF), the body that has negotiated with the Greek government on behalf of bondholders, put out several announcements on Wednesday, counting the proportion of the vote as it inched up. The latest statement said bondholders “amounting in aggregate to €84bn, or 40.8pc of the €206bn total eligible debt” would support the deal.

This story was posted over at The Telegraph late last night...and I thank Roy Stephens for sharing it with us.  It's certainly worth a look...and the link is here.

Read more...

‘Dr. Doom’ Sees Iran-Israel Clash, Says Buy Precious Metals

Political risk in the Middle East has increased significantly with war between Iran and Israel almost inevitable, and precious metals and equities investments offer some safety, Swiss money manager and long-term bear Marc Faber said on Tuesday.

"Political risk was high six months ago and is higher now. I think sooner or later, the U.S. or Israel will strike Iran—it's almost inevitable," Faber, who publishes the widely read Gloom Boom and Doom Report, told Reuters on the sidelines of an investment conference.

"You have to be in precious metals and equities... most wars and most social unrest haven't destroyed corporations—they usually survive," he said.

This is the third day in a row that I've had something that featured Dr. Marc Faber.  I thank Florida reader Donna Badach for sharing it with us...and the link to this cnbc.com story is here.

Read more...

Agitation in Switzerland and Germany to bring their gold home from U.S.

Looks like suspicions about central bank gold policies are spreading, as Zero Hedge reported last night about agitation in Switzerland and Germany to repatriate their national gold reserves from the United States.

I thank Chris Powell for wordsmithing the headline and the preamble...but the first reader through the door with this zerohedge.com story was Bob Fitzwilson, for which I thank him.  It's a must read for sure...and the link is here.

Read more...

Gold 'fundamentally cheap' as measure of money supply, Brodsky tells KWN

Fund manager Paul Brodsky tonight told King World News last night that gold remains "fundamentally cheap" as a measure of the world money supply. Of course to GATA the questions are whether central banks ever again will let gold be perceived as such a measure and whether gold investors will ever figure out that gold is "fundamentally cheap" because most of what they think is their gold is just paper.

As you can tell, I borrowed the title and introduction from another GATA release.  An excerpt from the interview with Brodsky is posted at the KWN Internet site...and the link is here.

Read more...

Gold smash-down only spurred buying of real metal, London trader says

The London gold trader source of King World News reported massive buying of real metal as the commercial traders cover their short positions and even central banks buy the dip. "During this entire takedown in the gold market," the London trader says, "there has been absolutely no selling of physical gold, only accumulation. You see people saying gold is headed to $1,620, $1,600, $1,500. I guarantee you these individuals do not know what's going on in the physical market."

This is another GATA release that I pillaged.  An excerpt from the interview is posted at the KWN website...and the link is here.

Read more...

Silver smash-down costing shorts a lot of metal, KWN's London trader says

Eric King had a second interview with his secret London source.

This "deep throat" of the gold world reported last night that, as with gold, silver -- the metal, not the paper -- has been massively accumulated on the latest smash down in the paper market. He says: "The Chinese are doing the exact same thing in the silver market that they are doing in the gold market -- massive accumulation on dips. ... The local traders in silver are short and nervous. Everyone is short silver and so that market can move violently higher when it turns."

We'll see if there's any truth behind all these words from this unknown source as time progresses.  The link to this King World News blog is here.

Read more...

Pat Heller: Liberty Dollar's von Not Haus did nothing wrong or unusual

Patrick A. Heller, proprietor of Liberty Coin Service in Lansing, Michigan, has written a brilliant letter, full of specific details of U.S. monetary history, to U.S. District Judge Richard L. Voorhees of the Western District of North Carolina in support of leniency in sentencing of Liberty Dollar founder Bernard von Not Haus, whose conviction a year ago on a charge resembling counterfeiting seems to many of us to be a gross injustice.

Heller notes that private currency using the word "dollar" long has circulated and continues to circulate without penalty in the United States, and that von Not Haus never represented his currency as issue of the U.S. government.

This GATA release contains an extensive preamble by Chris Powell, which includes the two paragraphs above.  The rest of the GATA release is an absolute must read as well...as is Heller's letter...and the link to all that is here.

Read more...

 

¤ The Funnies


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¤ The Wrap

Democracy, as practiced by the US and other developed countries, is a fraud. It is just a way for the insiders to scam money and power from the outsiders, by pretending that the voters are in charge...American democracy, circa 2012, has no more in common with real democracy than American capitalism has in common with real capitalism. Both are degenerate...corrupt...and geriatric. - Bill Bonner

I wouldn't read a whole lot into yesterday's price action...as there are only two things that matter from this point going forward...the first being, are JPMorgan et al done to the downside and...number two, on the next rally, will JPMorgan et al be the short sellers of last resort again...as they've always been.

One thing you must understand, dear reader, is that at these prices there are very few legitimate short sellers to be found in the precious metal markets...and in the Comex futures market there has to be a short for every long placed...and vice versa.  So, as the tech funds and small traders start to lay on their long positions, causing prices to rise...if 'da boyz' weren't there ready, willing and able to take the short side of every one of their long trades...the legitimate buyers would have to bid the price to nose-bleed levels in order to attract any sort of legitimate short seller...and there just aren't many at this price level.

And what price level that might end up being, is precisely what the U.S. banking system and the U.S. government don't want tested.  That's why the bullion banks and their allies are doing what they're doing...and is precisely the reason that the CME and CFTC will do nothing, as they know exactly what's going on.  They are complicit.

This is a controlled price retreat...and we'll soon find out how controlled it is when the next serious rally commences.

Gold didn't do a lot in Far East trading during their Thursday...and was up about six bucks going into the London open.  Not much happened in silver either until precisely 3:00 p.m. Hong Kong time, an hour before the 8:00 a.m. London open, when the price popped about 20 cents...and minutes before the London open, silver is up about two bits. Volume numbers aren't available because of problems on the CME's website.

It's been a while since I wrote the above paragraph...and London has now been open for more than two hours.  Gold broke through the $1,700 spot price...and silver, which sailed through $34 without even breaking a sweat, has been beaten back below that number as of 5:15 p.m. Eastern time.  At the moment, gold is now up $17...and silver is up about 55 cents.

I'm sure that part of this rally has to do with the fact that the dollar index did a face plant about 8:45 a.m. in London...and is down 31 basis points as I hit the 'send' button.  How much of this rally is new buyers...and how much is short covering...is impossible to tell. 

I haven't the foggiest idea of how the precious metals will trade in New York today...but after the above start to the London trading day, nothing will surprise me.

That's allI have for today...and I'll see you here tomorrow.