Gold & Silver Daily
"The Commitment of Traders Report won't make for happy reading"

¤ Yesterday In Gold & Silver

The gold price didn't do much when Far East trading began on their Thursday---and shortly after trading began, the price started drifting quietly lower.  The low tick came shortly after 8:30 a.m. GMT in London---and it began to rally quietly from there.  The rally continued for the rest of the day---never getting out of hand to the upside.  Gold closed virtually on the high of the day---and above the $1,300 spot price mark.

The low and high ticks were recorded by the CME Group as $1,286.20 and $1,303.00 in the April contract.

Gold closed the Thursday session in New York at $1,302.80 spot, up $11.00 from Wednesday's close.  Volume, net of February and March, wasn't exactly light at 134,000 contracts.

Silver's price pattern was virtually the same, with only real difference being the high tick of the day, which came at precisely 4 p.m. EST in electronic trading.  After that, the price got sold down a bit into the close.

The low and high ticks were $20.125 and $20.52 in the March contract.

Silver finished the trading day on Thursday at $20.485 spot, up 24.5 cents from Wednesday.  Net volume was 30,000 contracts.

Platinum and palladium sagged a bit in Far East and London trading, but rallied rather sharply in New York until 1 p.m. EST.  Here are the charts.

The dollar index closed at 80.70 late on Wednesday afternoon in New York, then fell down 20 basis points around 8:30 a.m. Hong Kong time on their Thursday morning---and it continued its losing ways until 8:30 a.m. in New York.  From there it chopped sideways in a 10 basis point range until it closed at 80.30---which was down 40 basis points on the day.

The gold stocks opened in the red, but didn't stay there long, powering their way higher for the remainder of the day.  The HUI closed up a very decent 3.73% ---and virtually on its high tick of the day.

The silver equities followed a very similar path---and Nick Laird's Intraday Silver Sentiment Index closed up a healthy 4.25%.

The precious metal equities gained back everything they lost on Wednesday, plus a bunch more.

The CME Daily Delivery Report was a real yawner, as only 8 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Monday.

There was a big addition to GLD yesterday, as authorized participants added a chunky 240,991 troy ounces of the stuff---and as of 9:53 p.m. EST yesterday evening, there were no reported changes in SLV.  It's a good bet that SLV is owed many days worth of world silver production---and the question still unanswered is whether or not the authorized participants add physical silver, or short the shares in lieu of.

Over at Switzerland's Zürcher Kantonalbank for the week ending February 7, they reported that their gold ETF had a tiny increase.  It was only 4,416 troy ounces, but it's the first up week they've had since that latter part of October last year.  Their silver ETF showed a decline of 164,129 troy ounces.

The U.S. Mint had a small sales report yesterday.  They sold 33,500 silver eagles---and that was it.

Over at the Comex-approved depositories on Wednesday, they reported receiving 20,125 troy ounces of gold---and didn't ship any out.  The link to that activity is here.

It was a strange report on silver from within the Comex-approved depositories on Wednesday.  The report showed that nothing was shipped in, but a chunky 1,384,755 troy ounces were shipped out---all from the HSBC USA depository.  The strange thing about the report [which Ted Butler pointed out to me early yesterday afternoon] was that the line items that contain the Delaware depository information were completely missing, as was their silver from the total number of ounces---both registered and eligible.  I'm sure that the reasons are technical---and I'm also sure that they'll have it corrected today sometime.  They may even have it corrected before you check the Wednesday silver warehouse stocks in this report---and the link to that is here.

Once again I don't have that many stories for you today and, like yesterday, I'm very happy about that.


¤ Critical Reads

Simon Johnson: An Open Letter to JPMorgan Chase Shareholders

Dear Shareholders:

It is a great honor to have been suggested as a potential board member of JPMorgan Chase – by Sheila Bair in an interview in DealBook in The New York Times last week.

Given the daunting problems that continue to face your corporation, I have thought long and hard about whether to allow my nomination to go forward. Upon reflection, I have decided that further change at the top of JPMorgan Chase would be helpful to you, to the financial system and to the broader economy. That is not to say I am seriously proposing myself for the board; rather, I am making serious proposals regarding what the board should do, and I hope powerful shareholders will think harder about whom to support on the board.

Simon Johnson, former chief economist of the International Monetary Fund, is the Ronald A. Kurtz professor of entrepreneurship at the M.I.T. Sloan School of Management.  He owns shares in broadly diversified mutual funds whose holdings include JPMorgan Chase stock.

This interesting commentary was posted on The New York Times website just after midnight on Thursday morning---and today's first news item is courtesy of Phil Barlett.


New York Sun: Yellen and de Gaulle

Thursday's editorial in The New York Sun remembers French President Charles de Gaulle's opposition to the imperialism of the U.S. dollar, expressed at a press conference in 1965. "The virtue of the gold standard, in the eyes of de Gaulle," the Sun writes, "was that the system was not particular to any one country but imposed the same measure of value and thus of discipline on all of them. ... Janet Yellen doesn't want to talk about de Gaulle's point."

This very short editorial is a must read---and I found it embedded in a GATA release yesterday.


Europe Considers Wholesale Savings Confiscation, Enforced Redistribution

At first we thought Reuters had been punk'd in its article titled "E.U. executive sees personal savings used to plug long-term financing gap" which disclosed the latest leaked proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in "There May Be Only Painful Ways Out Of The Crisis" back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental.

In a nutshell, and in Reuters' own words, "the savings of the European Union's 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says." What is left unsaid is that the "usage" will be on a purely involuntary basis, at the discretion of the "union", and can thus best be described as confiscation.

Well, it hasn't happened yet---and it's a long way down the road.  We'll see how far it gets before the Europeans see the writing on the wall.  This story shows up on the Zero Hedge website on Wednesday evening EST---and I thank reader Harry Grant for sending it our way.


Italian Stocks & Bonds Fall As Government Collapse Looms

Having rallied yesterday and totally ignored the fact that Letta's 10-month-old government was about to collapse, Italian equity and sovereign bond markets are falling this morning by their most in two weeks. The main bone of contention for Renzi-Letta fight is jobs and growth - there is none of either - and while Prime Minister Letta assures that the Italian economy grew in Q4 (GDP data to be released tomorrow) for the first time in 10 quarters, as Bloomberg's Niraj Shah notes, real GDP is still smaller than it was in 2000. Letta has just canceled his UK visit (planned for 2/24) and did not take part in the Democratic Party meeting with a Renzi friend saying "[Letta] will resign."

Via AnsaPremier Enrico Letta said Thursday that he would not attend a meeting of his centre-left Democratic Party (PD) that has been called to decide whether it should continue backing his coalition government. New PD leader Matteo Renzi may call on the party to pull its support for Letta so he can take over as premier. Letta said he would not go to the meeting so that his party could "decide with serenity".

I think that's 50+ governments that the Italians have had since the end of WW2.  This news item was posted on the Zero Hedge website yesterday morning EST---and I thank Ulrike Marx for her first offering in today's column.  Roy Stephens sent me a Reuters story late yesterday afternoon on the same issue.  It's headlined "Italian PM Letta to resign after party withdraws support".  The link to that is here.


The Tanks Are Rolling In Post-Devaluation Kazakhstan

Following the 20% devaluation of Kazakhstan's currency on Tuesday, the nation has quietly drifted into a very un-safe scenario. As the following clip shows, tanks and Humvees are lining the streets around Almaty as stores are closed and food is running desperately short. Local accounts note that the people are growing increasingly indignant. At a mere 192bps, the cost of protecting Kazakhstan sovereign debt from default (or further devaluation) seems cheap in light of this.

This short Zero Hedge piece from yesterday contains a video clip---and an excellent chart.  It's courtesy of  U.A.E. reader Laurent-Patrick Gally.


World asleep as China tightens deflationary vice

China's Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs.

"China is getting serious about de-leveraging," says Patrick Legland and Wei Yao from Société Générale. "It is difficult to gently deflate a bubble. There is a very real possibility that this slow deflation may get out of control and lead to a hard landing."

This commentary by Ambrose Evans-Pritchard was posted on the Internet site on Wednesday evening GMT---and my thanks go out to Roy Stephens for sending it our way.  It's definitely worth reading.


Five King World News Blogs/Audio Interviews

1. Art Cashin: "Is This 1929 or 2007 All Over Again?".  2. James Turk: "This is How Quickly We Will Smash Through $1,925".  3. Tom Fitzpatrick: "Gold, Silver and Oil to Crush the Bears With Historic Advances".  4. Richard Russell: "Why the Collapse in the U.S. Will Be Terrifying".  5. The audio interview is with David Stockman.

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]


Gold will spike when 'tapering' is stopped, Celente tells Sprott Money News

Trends Journal editor Gerald Celente talks about gold price suppression in an interview with Sprott Money News and predicts that gold's big spike will come when the Federal Reserve backs away from "tapering" its bond buying.

This 19:15 minute audio interview from February 4 was posted on the Internet site yesterday.


Barrick posts big loss, slashes gold reserves

Barrick Gold Corp, the world's largest gold miner, reported a big fourth-quarter loss on Thursday as it took a hefty impairment charge, cut its gold reserve estimate by 26 percent and said costs per ounce would likely rise this year.

The results fell short of analysts' expectations but that didn't stop Barrick's shares from rising as the spot gold price hit a three-month high on Thursday.

Dundee Capital Markets analyst Josh Wolfson said Barrick's shares have underperformed so far this year. "It would appear the under performance had factored in some of this disappointment," he wrote in an email. Still, he called the market reaction to the results "unusual".

This Reuters story, filed from Toronto, was posted on their website very early yesterday morning EST---and I thank Roy Stephens for his final contribution to today's column.


‘Gold bars’ ground Indian airliner in Malaysia

An Indian airliner made an emergency landing in Malaysia on Thursday over a bomb scare, but fear turned to puzzlement once authorities discovered the contents of a suspicious package: three golden bars.

The pilot of the IndiGo budget airline flight from Singapore to Chennai in India diverted to Malaysia early Thursday after a crew member found the package in the toilet.

A Malaysian fire and rescue team that inspected the package at Kuala Lumpur International Airport (KLIA) found it contained three bars weighing less than 1 kilogramme (2.2 pounds) combined.

They were believed to be gold but authorities did not confirm that.

This AFP story, filed from Kuala Lumpur, was posted on the Internet site late yesterday afternoon in Dubai---and I thank Ulrike Marx for her final offering in today's column.


Is India going back to bullion?

India is a huge importer of gold. At a retail level, Indians love gold," Rajiv Biswas, senior director and Asia-Pacific chief economist at IHS Global, told CNBC in a TV interview.

"I think there are signs of progress with reducing the trade and current account deficits in India and knowing that it's very hard to restrict this demand indefinitely, they probably feel it's time to start easing back on the controls."

Biswas said however that the RBI would not completely axe the restrictions, but ease them slowly.

This 2:31 minute CNBC video clip, with an extensive transcript, was posted on their website very early Tuesday morning EST---and I thank West Virginia reader Elliot Simon for today's last story.



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¤ The Wrap

Let me stop here for a moment to state the unspoken obvious. Had not the U.S. Treasury Secretary, the Fed chairman, the CFTC, the CME and the head of JPMorgan agreed to bail out Bear Stearns and extend the gold and silver manipulation by preventing a free market resolution for covering Bear Stearns’ short positions, the price of gold and silver would have soared to the heavens. Quite frankly, if the Feds hadn’t bailed out, effectively, all the shorts by having JPMorgan backstop Bear Stearns I can’t see how the price of gold wouldn’t have exceeded $2,000 and silver $100 or more on short covering (of which there was none into the price highs). - Silver Analyst Ted Butler: 12 February 2014

I was happy to see the rallies in both gold and silver yesterday, but as Ted pointed out on the phone, they are ever so quiet and orderly, as there is no rush for the exits by the technical fund shorts, even though we're well above the 50-day moving averages in both gold and silver---and knocking on the door of the 200-day moving average in gold.

Here are the six-month charts for both metals so you can see the current lay of the land after Thursday's close.

Certainly the reason the gold price is rising is that the technical funds are covering short positions---and the current long holders, of which JPM is the biggest, are selling out their long positions at a profit.  In silver, JPMorgan may be adding to its short-side corner in the Comex futures market as the silver rally progresses---and it's a near certainty that the raptors [the Commercial traders other than the Big 8] are happily selling their longs for a profit.

But Ted was rather surprised that the Commercial traders were letting the technical funds off the hook so easily.  All the Commercial traders would have to do to is stop selling longs to, or buying shorts from, the technical funds [a 'no ask' market]---and we would see prices within a few minutes[ or few hours] that would make your eyes glaze over---and the long holders even more wealthy than they already are.

This obviously isn't happening---and it's a pretty good bet that the Commitment of Traders Report won't make for happy reading when it's posted on the CFTC's website at 3:30 p.m. EST this afternoon---and it's only gotten worse since the Tuesday cut-off.  I'd like to proven wrong, of course.

As I said a few times earlier this week, this rally in the precious metals feels like it's going to end up the same old way as every other rally in the precious metals has ended.  It appears that the precious metal prices are being controlled not only on price declines, but on the rallies as well.  Today's COT Report will tell us a lot---and I'll have all the [gory?] details for you tomorrow.

But, having said that, any sell-off should be used to add to your positions in either the physical metal or the shares themselves---as this rally, despite any setbacks, should have a long way to run.

Here's a chart that Nick Laird sent our way in the wee hours of this morning.  It's a graph of the Australian gold miners index [ASX] going back five years.  I'm sure the equivalent Canadian gold stock chart would look very similar---as would the five-year charts of the HUI and XAU.

By the way, Nick has a complete complement of charts posted in the clear [FREE] that covers virtually the entire gold sector in the Australian mining industry---and the URL for that is here.

In Far East trading on their Friday morning, three of the four precious metals didn't do much price-wise.  But at 9 a.m. Hong Kong time, the silver price took off like the proverbial scalded cat---and was up 40 cents in no time at all---and would have gone materially higher if a seller of last resort hadn't put in an appearance within thirty minutes.  Then, with less than an hour to go before the London open, the price of all four precious metals spiked up a bit---and as I write this paragraph, there are 25 minutes to go before the London open.  Volumes in both silver and gold are pretty high already---and about double what they were this time yesterday.  The dollar index is down 13 basis points.

And as I put the finishing touches on today's column at 5:10 a.m. EST, I note that the precious metal prices aren't doing a lot after their little price pop going into the London open.  All are up from Thursday's close---silver substantially so.  But that comes with a price, as gold volume is north of 40,000 contracts already---and silver's net volume is a bit north of 15,000 contracts, so it's more than obvious that these rally attempts are being met almost contract for contract by the sellers of last resort.  The dollar index isn't doing much.

Today is Friday and, like yesterday, I wouldn't want to hazard a guess as to how the trading day will unfold---especially in New York---because, despite how bullish things really are for the precious metals, JPMorgan et al are still running the price show in all of them, at least for the moment.

Enjoy your weekend, or what's left of it if you live west of the International Date Line---and I'll see you here tomorrow.