Gold & Silver Daily
"As you also already know, supply/demand fundamentals mean nothing"
 

¤ Yesterday In Gold & Silver

It was a volatile trading session for gold yesterday, but it all happened within a very tight price range---and appeared to center around the $1,200 price mark.  The high tick came at exactly 9 a.m. Hong Kong time on their Tuesday morning---and the low tick came at the London afternoon gold fix---and the subsequent rally got hammered flat during the next two hours of trading.  Then, starting a minute or so after 12 o'clock noon in New York, the gold price rallied back towards the $1,200 spot price mark---and made it shortly after the COMEX trading session ended.  From there, the price traded basically flat into the close.

The CME Group recorded the high and low ticks as $1,204.40 and $1,190.00 in the April contracts.

Gold finished the Tuesday session in New York at $1,201.30 spot, down 50 cents from Monday's close.  Net volume checked in around 105,000 contracts---about the same daily volume it has been for last five trading days or so.

Here's the 5-minute gold chart courtesy of Brad Robertson---and as you can tell, almost all yesterday's volume occurred between the London afternoon gold fix---and 11:45 a.m. EST.  Before and after, there was there was virtually no volume worth mentioning.  Don't forget to add two hours for EST---and the 'click to enlarge' feature really helps with this chart.

The silver chart looked very similar, with the high tick coming in morning trading in Hong Kong.  But the low tick of the day came a few moments after 12 o'clock noon in New York.  From there it chopped quietly higher and, like gold, closed almost unchanged.

The high and lows were reported as $16.04 and $16.455 in the March contract.

Silver closed yesterday at $16.31 spot, down a penny.  Net volume was only 16,000 contracts, but gross volume was, not surprisingly, very high as traders continue to roll out of the March contract and into future months.

Platinum's chart was a mini version of both the gold and silver charts.  Platinum closed at $1,163 spot, up two bucks on the day.

Palladium, as usual, was trading in a world all its own, closing at $792 spot, up another 7 dollars from Monday's close---and heading back to the $800 spot mark.  Will it be allowed to get there?

The dollar index closed late on Monday afternoon in New York at 94.55---and continued on with the rally that it was currently in.  That rally developed even more momentum starting about 3 p.m. Hong Kong time, which was an hour before the London open.  The 94.86 high tick came at the 10:30 a.m. GMT London a.m. gold fix---and then the index chopped lower in a very wide range, closing at 94.47---which was down 8 basis points from Monday's close.

Not surprisingly, the gold stocks hit their high at the same time as the metal itself, which was shortly before 11 a.m. EST.  From there they chopped lower---and never got a sniff of positive territory after that, even though the gold price recovered to virtually unchanged.  The HUI closed down 0.56 percent---and as you can tell, there was a problem with the main data feed---and the chart is not "all there" so to speak.  Nick Laird's HUI chart looked the same, or I would have posted that in lieu of.

The silver equities spiked well into positive territory, but fell back to unchanged as the not-for-profit sellers took the price to its noon low tick.  From there they traded in a tight range either side of unchanged, closing down 0.06 percent.

The CME Daily Delivery Report showed that 266 gold and 9 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  The big short/issuer sitting in the bushes until the last day turned out to be none other than HSBC USA with 255 contracts.  JPMorgan stopped 261 contracts in its client account.  The nine contracts in silver were issued by Jefferies and stopped by Canada's Scotiabank.  The link to yesterday's Issuers and Stoppers Report is here.

The CME's Preliminary Report for the Tuesday trading session showed that February open interest was unchanged from Monday at 362 contracts minus, of course, the 266 contracts posted for delivery tomorrow.  The remaining gold contracts for February delivery will be posted in tomorrow's column.  In silver, there are still 12 contracts outstanding, minus the 9 posted above.  The remaining 3 will be in tomorrow's Preliminary report.

There were no reported changes in GLD---and as of 9:46 p.m. EST yesterday evening, there were no changes in SLV, either.

The U.S. Mint had another sales report.  They sold 1,500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and another 253,500 silver eagles.

There was very little gold activity over at the COMEX-approved depositories on Monday, as only 643.000 troy ounces were reported received---and 128.600 were shipped out.  That's 20 kilobars and 4 kilobars respectively.  As always, it was a pretty big day in silver, as 886,249 troy ounces were shipped in, but only 20,180 were shipped out the door.  The link to the silver activity is here.

Once again I have a very decent number of stories for you today---and I hope you find some in here that are of interest to you.

 

¤ Critical Reads

Stocks and Bonds Soar as Dollar Dives

Despite being told by The Fed that stocks are over-valued, investors decided today was the day to take that money off the sidelines and BTFATH. Everything is surging in equity land as bad data, worse earnings, and Ukraine were trumped by a little old lady in Washington and a self-referential list of growth-destroying reforms for Greece. However, as investors sell sell sell their dollars (USD Index down hard) they are buying US Treasuries with both hands and feet...

This short Zero Hedge piece, with three excellent charts, appeared on their Internet site at 11:25 a.m. EST on Tuesday morning---and I thank Dan Lazicki for today's first story.

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U.S. Macro Crashes Near 1-Year Lows, February Running At 90% Data Miss Rate

Despite this morning's U.S. Services PMI rise, U.S. macro data is running at a 90% miss rate in February and Richmond Fed's tumble from 6 to 0 (11mo lows) along with The Conference Board's Consumer Confidence dropping the most since Oct 2013 merely confirm this trend. This is the biggest 4-month slump in Richmond Fed since 2010 as practically every sub index deteriorated. California, Florida and New York saw over consumer confidence collapse and Texas saw 'present situation' plunge. US Macro data is now nearing its lowest in a year...

This is another brief Zero Hedge offering from Dan Lazicki.  It was posted on their Internet site at 10:45 a.m. EST yesterday morning.

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U.S. Economic Confidence Tumbles Back Into Negative Territory as "Hope" Fades

With economic data serially disappointing in 2015, it is probably not entirely surprising that Gallup's U.S. Economic Confidence Index fell to an average of -2 last week (with the biggest drop since July). This is the first time the index has had a negative weekly average since late December. Both the current conditions and outlook sub-indices tumbled but it was the future 'hope' index that fell the most with more people now saying the future will be 'poor' than believe it will be 'good'.

As Gallup reports, the U.S. Economic Confidence Index fell to an average of -2 for the week ending February 22.

This is the first time the index has had a negative weekly average since late December. Prior to that, the index had consistently been in negative territory since Gallup began tracking it daily in 2008.

This is another rather short Zero Hedge article from yesterday.  It showed up on their website at 2:51 p.m. EST---and it's the third contribution in a row from Dan Lazicki.

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This is Why Hewlett-Packard is Firing 58,000 employees

The biggest scandal in today's release of Hewlett Packard Q1 earnings was not that, just as the NASDAQ is knocking on 5000's door, it reported revenues of $26.8 billion missing consensus expectations of $27.3 billion, while beating non-GAAP EPS by 1 cent to $0.92 (up from $0.90 a year ago) entirely due to a massive reduction in outstanding stock and some truly gargantuan non-GAAP add backs (GAAP EPS declined from $0.74 a year ago to $0.73) pushing the stock down 7% after hours.

The biggest scandal was the company announced that having cut 44,000 workers so far, it will cut 58,000 jobs by the end of 2015.

Incidentally, just 10 years ago Hewlett Packard employed a total of 58,000 people in the entire US.

So why is the company axing 58 thousand workers? Simple: so it can cut enough costs on top and continue to fund its now exponential surge in stock buybacks, which in the just concluded quarter was a record $1.6 billion, an increase of 178% from a year ago, and 66% more than the company spent on CapEx, in the process making its shareholders even richer while its management team get massive equity-linked bonuses.

This tiny article, with an embedded chart that's worth the trip, appeared on the Zero Hedge Internet site at 6:58 p.m. EST on Tuesday evening---and it's another story from Dan Lazicki.

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"This Shorting Opportunity is as Great as 2007-2009", Billionaire Crispin Odey Warns

We have seen though some strange things, with Economics 101 turned on its head. We’ve seen that falling prices produce more supply, as the biggest producers see that they can take market share and use the opportunity by reducing average costs through excess production. We’ve seen that in the oil, minerals and iron ore industries. We have also seen in the last couple of years that as bond yields fall, governments are able to issue more debt.

But this time round the problem we have as well is that politics will start to rear its head and we are left to deal with politicians who are increasingly critical of the capitalist system’s ability to allocate capital and provide for society.

For me the shorting opportunity looks as great as it was in 07/09, if only because people are still looking at what is happening and believe that each event is an individual, isolated event. Whether it’s the oil price fall or the Swiss franc move, they’re seen as exceptions....

This down cycle is likely to be remembered in a hundred years, when we hope it won’t be rated for “How good it looks for its age!”. Sadly this down cycle will cause a great deal of damage, precisely because it will happen despite the efforts of the central banks to thwart it.

This commentary was embedded in another Zero Hedge article from yesterday afternoon.  This one showed up there at 3:12 p.m. EST---and it's now five in a row from Dan.  It certainly worth reading.

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J.P. Morgan to start charging big clients fees on some deposits

J.P. Morgan Chase & Co. is preparing to charge large institutional customers for some deposits, citing new rules that make holding money for the clients too costly, according to a memo reviewed by The Wall Street Journal and people familiar with the plan.

The largest U.S. bank by assets is aiming to reduce the affected deposits by billions of dollars, with a focus on bringing the number down this year, these people said. The move is the latest in a series of steps large global banks have been discussing in recent months to discourage certain deposits due to new regulations and low interest rates.

J.P. Morgan’s steps are among the most detailed and widespread. Specifics are likely to be unveiled Tuesday by J.P. Morgan executives at the bank’s annual strategy outlook with investors, these people said. Among other points, the bank is expected to stress alternatives customers affected by the deposit moves can use for their excess cash.

This WSJ article was picked up by the marketwatch.com Internet site at 8:36 a.m. EST on Tuesday morning---and the first reader through the door with it was Norman Willis.

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Bank of New York Mellon in settlement talks over forex fraud, sources tell Reuters

Bank of New York Mellon Corp. is in settlement talks with the U.S. Justice Department and New York attorney general over claims the bank defrauded clients in foreign exchange transactions, according to sources familiar with the matter.

BNY Mellon last week revealed that it would take a $598 million charge as it sought to resolve matters including "substantially all" foreign exchange litigation it faced, though it did not specify which cases.

The bank faces several lawsuits, including class actions, stemming from allegations that it misled clients about how it determined currency exchange rates for certain transactions.

The Justice Department, which has a lawsuit against BNY Mellon pending in Manhattan federal court, is engaging in settlement talks, a person familiar with the matter said.

This story appeared on the Reuters website at 4:40 p.m. EST yesterday afternoon---and I found it embedded in a GATA release.

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Janet Yellen's Advice to Rand Paul

Federal Reserve Chair Janet Yellen mostly succeeded in her attempt to be vague about Fed policy in her semiannual appearance before Congress on Tuesday. On one issue, however, she was unequivocal -- and correct: A congressional audit of the Fed's interest-rate decisions is a very bad idea. 

The Fed is already "extensively audited," she said, and Senator Rand Paul's bill to audit it even more "would politicize monetary policy." Were such congressional micromanagement possible in the 1970s, she pointed out, former Fed Chairman Paul Volcker would probably not have been able to defeat inflation by pushing up interest rates to double digits and forcing the economy into a recession. 

Undermining the central bank's political independence would ultimately harm the economy. Studies show that independent central bankers are better stewards of their economies than are politically appointed finance chiefs. The reason is simple: Politicians often favor easy-money policies that promote short-term growth and boost their re-election chances, even if they bring on inflation later.

Well, no shades of gray here.  Bloomberg is no friend of Rand Paul.  This short editorial appeared on the Bloomberg website at 3:35 p.m. EST yesterday afternoon---and I thank Dan Lazicki for sending it.

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The New York Sun: Janet Yellen's audit

It strikes us that it was passing strange for Chairman Janet Yellen to wave a copy of the central bank’s audited financial statement as a prop in answering Congress on Senator Rand Paul’s “Federal Reserve Transparency Act.” She did this earlier today at the hearing of the Senate Banking Committee. Her suggestion that a standard financial audit is what the Transparency Act is all about was almost contemptuous. So was her suggestion that the bill that has already twice passed the House — September’s bipartisan vote was 333 to 92 — is somehow designed to politicize monetary policy.

Just to underline the point, what Mrs. Yellen held up was an audited report of the kind that is done by accountants using green eye shades. What the Congress wants is a look not only at the books but also at the Fed’s holdings and minutes and transactions overseas. It is not an attempt to interfere with Fed policy. It is an attempt to find out what the Federal Reserve is doing. It’s just shocking that the Federal Reserve would want to deny to its creator this kind of inspection once every, oh, say, century.

There's no question where The N.Y. Sun lies on this issue, either.  This editorial put in an appearance on The New York Sun's website yesterday---and I found it on the gata.org Internet site.  It's worth reading.

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Ex-Plunge Protection Team Whistleblower: "Governments Control Markets; There Is No Price Discovery Anymore"

One year after the great stock market crash in 1987, US President Ronald Reagan launched the "Working Group on Financial Markets." Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the "Plunge Protection Team."

One glimpse at a few days during 2007/8 and it is clear that 'someone' with infinitely deep pockets was able to support markets on several critical days - though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. However, as Dr. Pippa Malmgren - a former member of the U.S. President’s Working Group on Financial Markets - it is not conspiracy theory, it is conspiracy fact: "there's no price discovery anymore by the market... governments impose prices on the market."

In this 38-minute interview Lars Schall, for Matterhorn Asset Management, speaks with Dr Pippa Malmgren, a US financial advisor and policy expert based in London. Dr Malmgren has been a member of the U.S. President’s Working Group on Financial Markets (a.k.a. the “Plunge Protection Team”). They address, inter alia...

I've had several readers send me this interview over the last few days---and have put off posting it until now.  The interview runs for 38 minutes---and you can read all about it, as Zero Hedge has put their spin on it which, along with the interview, is worth your while.  This is also courtesy of Dan Lazicki.

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Bill Bonner: The Day the ATMs Run Out…

Please remember this warning when you go to the ATM to get cash… and there is none!

While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us.  Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.

Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage?  Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.

This very interesting article by Bill showed up on the dailyreckoning.com Internet site on Tuesday sometime---and once again I thank Dan Lazicki for sharing it with us.  It's certainly worth reading.

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Washington Has Resurrected the Threat of Nuclear War — Paul Craig Roberts

Foreign Affairs is the publication of the elitist Council on Foreign Relations, a collection of former and current government officials, academics, and corporate and financial executives who regard themselves as the custodian and formulator of US foreign policy. The publication of the council carries the heavy weight of authority. One doesn’t expect to find humor in it, but I found myself roaring with laughter while reading an article in the February 5 online issue by Alexander J. Motyl, “Goodbye, Putin: Why the President’s Days Are Numbered.”

I assumed I was reading a clever parody of Washington’s anti-Putin propaganda. Absurd statement followed absurd statement. It was better than Colbert. I couldn’t stop laughing.

To my dismay I discovered that the absolute gibberish wasn’t a parody of Washington’s propaganda. Motyl, an ardent Ukrainian nationalist, is a professor at Rugers University and was not joking when he wrote that Putin had stolen $45 billion, that Putin was resurrecting the Soviet Empire, that Putin had troops and tanks in Ukraine and had started the war in Ukraine, that Putin is an authoritarian whose regime is “exceedingly brittle” and subject to being overthrown at any time by the people Putin has bought off with revenues from the former high oil price, or by “an Orange Revolution in Moscow” in which Putin is overthrown by Washington orchestrated demonstrations by US financed NGOs as in Ukraine, or by a coup d’etat by Putin’s Praetorial guards. And if none of this sends Putin goodbye, the North Caucasus, Chechnya, Ingushetia, Dagestan, and the Crimean Tarters are spinning out of control and will do Washington’s will by unseating Putin. Only the West’s friendly relationship with Ukraine, Belarus and Kazakstan can shield “the rest of the world from Putin’s disastrous legacy of ruin.”

What we see here with Motyl is the purest expression of the blatant propagandistic lies that flow continually from the likes of Fox “News,” Sean Hannity, the neocon warmongers, the White House, and executive branch and congressional personnel beholden to the military/security complex.

This very interesting and disturbing commentary by Paul was posted on his Internet site on Tuesday sometime---and the stories from Dan just keep on coming.

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Making Me Pay For My Crimes Would Send “Message of Uncertainty to the Markets”: Bank President to Spanish Judge

A Spanish judge by the name of Fernando Andreu recently violated one of the most important unwritten rules of global finance: namely, that banks and bankers are effectively immune to all laws of all lands (barring, of course, Iceland). As I reported roughly 10 days ago, Andreu had ordered Bankia, its parent company state-owned BFA, the bank’s former chairman, Rodrigo Rato, and three other former directors to pay an €800 million civil liability bond for signing off on fraudulent financial statements in the run up to the bank’s 2011 IPO.

If the defendants fail to cough up the full amount before March 13th, the authorities will embargo assets belonging to them with the equivalent market value. With the clock ticking down and the days flying by, it was just a matter of time before the defendants hit back – and hard!

The first to hit back was Rodrigo Rato, the bank’s former chairman and one-time IMF president. In a 75-page notice of appeal that was leaked to the Spanish press, Rato cautioned that Judge Andreu’s “premature” decision to force the six defendants to compensate the thousands of shareholders they are accused of defrauding could end up provoking a “much greater evil” than that it is supposed to address.

In the worst case scenario, the document warns, it could send a “message of uncertainty to the markets,” which could in turn exert downward pressure (otherwise known as gravity) on the already semi-defunct bank’s share price. This is not the first time that a panicked banker has used this argument; indeed, it is the preferred alibi of all 21st-century banking racketeers.

This very interesting news item/commentary was posted on the wolfstreet.com Internet site on Monday---and it's courtesy of Brad Robertson.

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The Reason Why the Eurogroup Rushed to Approve the Greek Reform Package?

As we noted earlier today, there was some confusion over the plight of the Greek reform proposal document, which initially was said to have been delayed until today, only for the Troika, pardon, Institutions, to flip around and say they had actually received it before midnight on Monday. How could the two be possible? Courtesy of Yannis Koutsomitis, who had the simple but profound idea of looking at the properties tab in the leaked Varoufakis draft of the agreed to proposals, we now know.

As it turns out, the reason why not only the Troika received an agreed to version of the Greek reform proposals "before midnight on Monday", but rushed these through with a favorable agreement today, is that, drum-roll, the European Commission drafted the entire letter!

All Yanis Varoufakis had to do was agree to the letter that the Troika had previously written and agreed in advance was agreeable to it, and send it back. The skeptics are encouraged to play around the original pdf "leak" found here.

As for the actual author of the "Greek" reform package, a document which was created at 10:09 pm on Monday, February 23, 2015 (so technically, yes, before midnight on Monday) was one Declan Costello of the European Commission.

This interesting news item showed up on the Zero Hedge website at 11:51 p.m. EST on Tuesday morning---and it's another contribution from Dan Lazicki.

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Tensions high as Greece scrambles to keep rescue deal alive

Greece has vowed to shake up labour markets and push through far-reaching reforms to avert a fresh showdown with eurozone creditors this week, hoping to stave off bankruptcy within days as cash runs dry.

The radical Syriza government submitted a five-page list of measures to EMU officials in Brussels in time for a deadline on Monday, including an assault on trade union powers that risks setting off a revolt by the movement's Communist and hard-left factions.

Failure to reach an agreement would lead to yet another round of crisis talks, backed by the threat that the European Central Bank could at any time cut off emergency liquidity support for Greek lenders and effectively force the country out of the euro.

This Ambrose Evans-Pritchard commentary appeared on the telegraph.co.uk Internet site at 8:23 p.m. GMT on Monday evening local time---and I thank Roy Stephens for sending it along very early on Tuesday morning.  It's worth reading.

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Eurozone clears path for Greek bailout extension

Eurozone finance ministers on Tuesday (24 February) approved a list of reforms submitted by Athens and cleared the path for national parliaments to endorse a four-month extension of the Greek bailout, which otherwise would have run out on 28 February.

"We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions," the Eurogroup of finance ministers said in a press statement.

National parliaments, notably Germany's Bundestag, will still have to approve the move this week.

The three international creditors - the European Central Bank, the European Commission and the International Monetary Fund - earlier that day gave an assessment of the reforms plan and said they were "sufficiently comprehensive to be a valid starting point" for the bailout loans to be extended and paid out.

This news item was posted on the euobserver.com Internet site at 7:17 p.m. Europe time yesterday evening---and it's courtesy of Roy Stephens.  There was also a story about this in The Telegraph yesterday evening GMT---and it's headlined "Troika raises fresh concerns over Greece's last-ditch debt deal"---and I found it today's edition of the King Report.

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David Stockman: Kick-The-Can Has Morphed Into a Blatant Farce

The whole Kabuki dance in the Eccles Building is about hand signals to Wall Street carry traders; its a reflection of the desperate fear of our monetary politburo that having inflated for the third time this century the mother of all financial bubbles, they must now keep it going literally one meeting at a time—lest it splatter again and destroy the illusion that an egregious spree of money printing has saved the main street economy.

Likewise, it now transpires that the bruising political war of words between the Germans and the “radical” Greek government has been suspended for another few weeks. And the reason is a pathetic fear that unites the parties despite their irreconcilable substantive policy differences. Namely, that the markets will crater upon even a hint that a real solution is on the table, and that the way to keep the beast at bay is to cover their eyes, kick-the-can and hope something turns up to avert the next crisis a few weeks down the road.

Still, this is getting beyond juvenile. If there were any adults in the room they would focus on quickly shaping a workable Greek default and exist—-not on perpetuating the lie that Greece can ever recover from its debt servitude to the EU superstate and IMF.

Ironically, the fire breathing leftists who have taken over in Athens have compliantly strapped on the poodle collar left behind by the Samaras government. It seems that their game-theory spouting Keynesian financial spokesman, Yanis Varoufakis, also fears a thundering upset in the casino. So the Syriza government stumbles forward——now visibly toting the massive debt imposed on them by the Eurozone and IMF in order to bailout the German, French and Italian banks.

This longish, but worthwhile commentary by David put in an appearance on his Internet site yesterday sometime---and it's another contribution from Roy Stephens.

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East Ukraine artillery withdrawal focus of FMs meeting – as Poroshenko buys UAE weapons

While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE.

The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment.

It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting. He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back.

This story was posted on the Russia Today website at 11:44 a.m. Moscow time on their Tuesday morning, which was 3:44 a.m. in Washington.  I thank Roy Stephens for sending it along.

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OPEC will hold extraordinary meeting if oil plunge continues – cartel president

The OPEC member states are discussing the possibility of an emergency meeting should oil prices continue to fall, said Nigerian Oil Minister, and OPEC President Diezani Alison-Madueke. Prices have dropped by than half since their peak last summer.

If the price “slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” said Alison-Madueke, as quoted by the Financial Times, adding that discussions are already underway.

“Almost all OPEC countries, except perhaps the Arab bloc, are very uncomfortable,” she said. As the cartel’s president, she is responsible for maintaining communication with member countries and Secretary-General El-Badri in case of an emergency meeting.

This Russia Today news story showed up on their Internet site at 3:05 p.m. Moscow time on their Tuesday afternoon---and it's another contribution from Roy Stephens, for which I thank him.

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Big Banks Face Scrutiny Over Pricing of Precious Metals

U.S. officials are investigating at least 10 major banks for possible rigging of precious-metals markets, even though European regulators dropped a similar probe after finding no evidence of wrongdoing, according to people close to the inquiries.

Prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.

HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.

Also under scrutiny are Bank of Nova Scotia , Barclays PLC, Credit Suisse Group AG , Deutsche Bank AG , Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.

I had a lot of readers send me this Wall Street Journal story yesterday---and the first person through the door with a link that I could use was Ken Hurt.  But reader Michael McKay sent it to me as well, along with the following comments, which I thought worth sharing:  "This article was on the Front Page of the print edition.  Because this edition (central) serves Chicago, the seat of the Commodity markets, you can be very sure this was noticed by ALL the top folks. Trust me Ed, I was 23 years in those circles. This is the revealing of an open open secret that is the next big thing. But it it also true that the C[ommodity?] Markets are so very specialized that only those closest to the Metals know how significant this is.  I recommend keep pushing your index finger into the open wound that this story is.  Leverage is there."  From your lips, to God's ears, Michael!

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Bank of England denies secret futures trading on CME Group exchanges in U.S.

Bank of England Governor Mark Carney today told the Treasury Committee of the House of Commons that the bank is not participating in CME Group's program by which central banks receive discounts for their secret trading in all major U.S. futures markets.

Carney's denial came in response to a question from committee member Steve Baker, Conservative for Wycombe in England.

While no mainstream financial news organizations will question central banks about their secret trading in the markets, at least the issue seems to have come to the attention of some elected officials in Britain.

I found this worthwhile commentary, plus a video link, posted on the gata.org Internet site yesterday.

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Gold and silver prices: The next bank rigging scandal?

The world's biggest banks are still reeling from the consequences of the Libor and foreign exchange scandals, but U.S. authorities are now investigating the possibility of more rigging.

Several banks are being scrutinised over how they set influential benchmarks in the markets for gold, silver, platinum and palladium in London, with at least 10 under investigation from the Department of Justice (DoJ) and Commodities and Futures Trading Commission (CFTC), according to reports.

The benchmarks, which influence the prices of financial products as well as valuable jewellery, were set by a telephone conference call by a group of banks until last year, when they were overhauled amid mounting scrutiny of market rigging.

This gold-related news item showed up on the telegraph.co.uk Internet site at 12:36 p.m. GMT yesterday---and in many respects its similar to the WSJ story further up.  It's another item I found in this morning's edition of the King Report.

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Jim Armitage: For HSBC bashers, this latest misfortune is pure gold

If you thought HSBC-bashing would quickly drop off the list of national sports, think again.

As if all the chicanery and wrongdoing around its Swiss tax evasion foundry weren’t enough, now it admits it’s also under investigation for possible rigging of the gold price.

This time, the U.S. regulators are probing, but the possible collusion happened here in London.

It’s tempting now to tally up a list of the charges and suspicions against HSBC, from sanctions busting to aiding Mexican drug cartels, through Libor and currency fixing to, now, potentially manipulating the price of gold, silver, platinum and palladium.

Probably guilty as charged, especially in gold.  This article appeared on the London Evening Standard Internet site at yesterday GMT---and it's courtesy of Nick Laird

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Swiss Watchdog Says It's Looking at Possible Gold Market Manipulation

Switzerland's competition commission WEKO is looking into possible manipulation of price fixing in the precious metals market, its spokesman said today.

"We have a preliminary investigation into the manipulation of gold and precious metal price fixing," the spokesman said. He declined to say which banks were involved.

The spokesman said this preliminary investigation began in 2014, without elaborating.

This Reuters story appeared on their Internet site at 12:48 p.m. EST yesterday---and it's another gold-related news item I found in a GATA release.

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Gold Holdings of Eurozone Rise to 10,792 Tonnes – ECB’s “Reserve of Safety” Accumulated

The Euro zone raised its gold holdings by 7.437 tonnes to 10,791.885 tonnes in January, International Monetary Fund data released overnight showed.

The rise in gold holdings was small in tonnage terms and in percentage terms  – especially when viewed in the light of the recently launched ECB’s €1 trillion Q.E. monetary experiment.

Nevertheless, the rise in Euro-area gold holdings shows how the ECB continue to view gold as an important monetary asset. Mario Draghi said of gold in October 2013 that gold is a “reserve of safety” that “gives you a value-protection against fluctuations against the dollar.”

Draghi told an open forum at Harvard’s Kennedy School of Government, why central banks want gold and what value it offers. He said that there were “several reasons” to own gold including “risk diversification”.

This commentary by Mark O'Byrne was posted on the goldcore.com Internet site yesterday---and it's definitely worth reading.  There was another story about this over at the mineweb.com---and it's headlined "Kazakhstan adds gold for 28th straight month".

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Investment Forecasts For 2015: Interview with Nick Barisheff

G-E:  What is your overall Investment Outlook for 2015?

Nick:  I am seeing 2015 as a year of great volatility and uncertainty and there are many problem areas that could get dramatically worse. Unless something goes drastically wrong, like a Swiss currency issue out of the blue or something along those lines, I don’t think the gold price will do much until September, and will likely stay in the $1,100 to $1,300 range. If nothing dramatic happens, we will have volatility and uncertainty. The U.S. equity markets are experiencing increasingly greater volatility.

G-E:  What asset classes are considered today very inexpensive relative to historical standards and current global economic conditions?

Nick:  For the precious metals sector, gold, silver and platinum are very inexpensive today. Right now there is a rare anomaly where platinum is below the price of gold and silver is grossly undervalued with respect to gold. The silver/gold ratio is around 73:1. Based on the US geological survey of how much gold to silver is in the ground, there is sixteen times more silver than gold in the earth’s crust. Under the U.S. Coinage Act when you had the bimetallism standard, it was 16:1. In 1980 the ratio was 16:1. If the ratio reverted to the mean it would be around 56:1. The prices are way out of line for silver and there is a depressed gold price. Platinum is grossly undervalued, silver is grossly undervalued relative to gold and gold is dramatically undervalued.

Undervaluation brings us to the $10,000 per ounce gold figure. Until 2012, the U.S. debt and the gold price had a positive correlation of 97%. Then the figures diverge through manipulation, the gold price goes down and the US debt keeps rising. To get back to the correlated relationship that has been there for at least 20 years, the gold price would have to return to around $1,800. Gold is undervalued, silver is more undervalued and platinum is undervalued, so there is a lot of catching up to do. Instead of getting distracted by the manipulation, consider it a gift from the central banks. Right now gold, silver and platinum are all at a discount, so it is an ideal time to buy as much as you can.

Nick has never been able to develop the courage to say that precious metal prices are managed, even though he knows they are. This interview with Toronto-based Bullion Management Group CEO Nick Barisheff appeared on the gold-eagle.com Internet site on Sunday---and I thank reader M.A. for pointing it out.  It's certainly worth reading as well.

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Lawrence Williams: Platinum price puzzles

If anything demonstrates the illogicality of the precious metals markets, it appears to be platinum. But is this really the case? Currently the metal is languishing at around a five-year low, yet most analysts put global platinum supply as being in a substantial deficit situation ever since last year’s South African platinum mine strikes, which took a substantial hunk of the metal out of the markets. Platinum is also selling at a lower price than gold – around $40 an ounce lower at the moment – which is a relatively rare, but not unknown, occurrence.

Indeed the world’s most respected platinum analysts at Johnson Matthey suggested that the platinum deficit last year was upwards of 1.1 million ounces – and in a total global market of around 8.5 million ounces, that is a big percentage deficit of getting on for 13%. Not only was platinum in deficit in 2014, but it had also been in deficit for the previous two years too, although not as large.

Indeed most analysts have been falling over each other to predict better things for platinum prices this year. In the recent LBMA metals forecasting competition both platinum and its sister metal palladium were seen as the precious metals price winners over the year, and while it is early days yet, recent market prices suggest that this may not actually happen.

As you already know, dear reader, platinum prices are managed just as much as the other three precious metals.  It's price won't rise until JPMorgan et al decide---because as you also already know, supply/demand fundamentals mean nothing.  Prices are set in the COMEX futures market by "da boyz"---and until that changes, nothing changes.  This isn't rocket science.   As Chris Powell said: "There are no markets anymore---only interventions." This commentary by Lawrie showed up on the mineweb.com Internet site at 2:17 p.m. GMT yesterday afternoon---and it's the final contribution of the day from Dan Lazicki, for which I thank him.

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¤ The Funnies

These photos were taken on Day 2 at Grand Canyon---January 11.  It's not raining or snowing---and cloud base has lifted by a couple of hundred feet and is more well defined.  You can't see the North Rim, which is about 10 miles/16 kilometers away, because it's about 1,000 feet/330 meters higher than than the South Rim, so it's buried in cloud/fog.  These are just general canyon shots along the trail.   You'll need to use the 'click to enlarge' feature to see the people in photo #2---and that gives you some idea of scale.  I cropped the last photo in order to enhance the sense of danger, which is all too real.  There's nothing below her but air for many thousands of feet.

By the way, if you're not up on your Grand Canyon statistics, I found this excellent Reader's Digest version of the whole place linked here.

Freegold Ventures Limited is a North American gold exploration company with three gold projects in Alaska. Current projects include Golden Summit, Vinasale and Rob. Both Vinasale and Golden Summit host NI 43-101 Compliant Resource Calculations.

An updated NI 43-101 resource was calculated on Golden Summit in October 2012 and using 0.3 g/t cutoff  the current resource is 73,580,000 tonnes grading 0.67 g/t Au for total of 1,576,000 contained ounces in the indicated category, and 223,300,000 tonnes grading 0.62 g/t Au for a total of 4,437,000 contained ounces in the inferred category. In addition to the Golden Summit Project the Vinasale also hosts a NI 43-101 resource calculation which was updated in March 2013. Indicated resources are 3.41 million tonnes averaging 1.48 g/t Au for 162,000 ounces, and Inferred resources are 53.25 million tonnes averaging 1.05 g/t Au for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 grams/tonne (g/t) as a possible open pit cutoff. Please send us an email for more information, ir@freegoldventures.com

 

¤ The Wrap

Even though the headline number of the total commercial net short position [in silver in last Friday's COT Report] has declined by nearly 14,000 contracts since January 27, the concentrated net short position of the eight largest shorts has hardly budged---and remains over 65,000 contracts. This is still a manipulative position on its face since it represents more than 325 million ounces and 40% of world annual production, an amount unequalled among all commodities. Reviewing the dismal earnings reports by those companies that mine silver, I have uncovered not a one holding any of the 325 million oz held short by the 8 crooked COMEX shorts. Excepting JPMorgan, I doubt any of the other seven big shorts own much real silver, even though the concentrated short position represents more than 30% of all the silver bullion in the world. This is simply preposterous and illegal. - Silver analyst Ted Butler: 21 February 2015

I'm not sure what, if anything should be read into yesterday's gold price action because, once again, there wasn't a lot of volume---and there was little net volume in silver, although roll-over activity was very high, of course.

But, whatever action there was will be in Friday's Commitment of Traders Report, as yesterday at the close of COMEX trading was the cut-off.

Here are the 6-month charts for all four precious metals updated with Tuesday's price/volume action.

And as I write this paragraph, the London open is about forty-five minutes away---and there certainly has been some rather interesting price activity in Far East trading on their Wednesday.  I'm guessing that the Chinese New Year holiday has come to an end---and that traders are back at their desks over there.

Right out of the chute at 6 p.m. EST yesterday evening, all four precious metals powered higher, particularly silver, which I thought very unusual.  Depending on which metal you're looking at, the fun ended by 9 or 10 a.m. Hong Kong time---but started again with somewhat less enthusiasm in early afternoon trading.

Gold volume is very chunky at 25,000 contracts net, so this rally obviously ran into ferocious opposition by JPMorgan et al---but silver's net volume is only 2,870 contracts.  Gross volume is north of 10,500 contracts, so roll-over activity is already way up there, as the large traders have to be out by the end of COMEX trading today---and the rest of the traders tomorrow.

Thinking about that silver rally last night I'm wondering if it involved a decent amount of short covering, as the net volume is very light.  But there's no way of knowing for sure, because all the price/volume activity occurred after the cut-off for the COT Report on Friday---and by the time the next report is available, this trading action will be buried.

And as I send this off to Stowe, Vermont at 4:50 a.m. EST, I note that the tiny rallies in all four precious metals in early afternoon trading in the Far East, ended at 3 p.m. Hong Kong time, which was an hour before the London open.  And, with the exception of palladium, which is knocking on the $800 price door once again, the other three precious metals are heading quietly lower, but on such light volume, the price trend hardly matters.

Net gold volume is up to a bit over 31,000 contracts, an increase of only 6,000 contracts from two and a half hours ago---and silver's net volume is only 3,340 contracts, up only 500 contracts in the same time period.  There's nothing going on---and nothing to see at the moment.  The dollar index is now down 32 basis points---and coming awfully close to the 94.00 level once more.  It will be interesting to see if "gentle hands" put in an appearance once again.

That's all I have for today which, once again, is more than enough---and I look forward to the rest of Wednesday's trading activity with more than the usual amount of interest.

See you tomorrow.

Ed Steer