The gold price spent the entire trading day on Friday in the black, with the high of the day coming shortly before lunch in New York. From there it got sold off about a percent by the close of Comex trading at 1:30 p.m. Eastern time...and then did nothing into the close of electronic trading at 5:15 p.m. Eastern time.
The spot gold price closed at $1,566.40...up $20.90 on the day. Not surprisingly, volume was down quite a bit from the prior couple of days, as only 94,000 contracts were traded.
Silver got sold off about 50 cents by mid-day Hong Kong time, but began to recover around 2:00 p.m. local time. Like gold, the high price tick came just before noon on the east coast...and then it got sold off.
From its Hong Kong low, to its New York high, silver gained about $1.30...and once the pre-noon sell-off began, silver got sold off about 90 cents by 2:20 p.m. Eastern...and from there, the silver price recovered to finish off the day up only a few pennies from Thursday's close.
The silver price closed at $27.86 spot...up a whole 9 cents from Thursday. Volume was pretty decent at 24,500 contracts.
With the world shutting down for the New Year celebration, I wouldn't read too much into yesterday's price action...although I was somewhat surprised that silver got sold off so hard [more than 3% in the New York afternoon] with only hours left in the 2011 trading year. I'm tempted to say that someone was painting the year-end tape in both metals, but I'll bite my tongue on that one.
The reason I'm tempted to say that, is because the price action in platinum and palladium barely followed the silver and gold price action at all...platinum did a little, but palladium not at all.
The dollar opened quietly at 80.40 cents...and spiked up 20 basis points between 3 and 4 a.m. Eastern time. From there, the dollar declined to the 80 cent mark by 11:30 a.m. Eastern time...the exact low price for gold and silver. The dollar recovered about 25 basis points of its loss going into the close of trading.
Like Wednesday and Thursday, Friday's dollar price action pretty much matched the price action in gold and silver...but was, once again, way out of proportion to the price action in either metal.
The gold shares didn't follow the gold price at all...and even the Dow price action didn't match the HUI's price pattern. The gold stocks peaked at precisely 10:00 a.m...but the gold price peaked at 11:30 a.m. sharp. One has to wonder who was selling into every rally attempt. I also note that the HUI got sold off at the close, just as it was about break above the 500 point mark. Like the gold and silver price action yesterday, I suspect that someone was painting the year-end tape.
It was a mixed bag for the silver equities yesterday. Some did spectacularly well...and others did next to nothing. The seven large cap silver stocks that make up Nick Laird's Silver Sentiment Index fit that description as well. The SSI finished up 1.94%.
(Click on image to enlarge)
The CME's Daily Delivery Report for Friday showed a sharp drop-off in deliveries for the January contract, as only 86 gold and 82 silver contracts were posted for delivery next Wednesday. The link to this action is here.
Once again there were no reported changes in either GLD or SLV on Friday...and the U.S Mint ended the year with no sales report, either.
It was another busy day over at the Comex-approved depositories on Thursday, as they reported receiving 1,211,071 ounces of silver...and shipped 603,781 troy ounces out the door. Here's the link to that action.
Yesterday's Commitment of Traders Report, for positions held at the close of trading on Tuesday, December 27th didn't show a lot of change...but what changes there were, were all positive. In silver, the Commercial traders decreased their net short position by a smallish 693 contracts...and the technical funds [Non-Commercial traders] pitched another 276 long contracts, plus they went short an additional 297 contracts.
The Commercial net short position in silver is now down to 14,132 contracts...or 70.66 million ounces. The tiny net long position in the Non-Commercial category is now down to 6,855 contracts...and the small traders [the Nonreportables] are long the difference, which is 7,277 contracts. Every one of the numbers in this paragraph are at record lows. As you can tell, this has been a clean-out to the downside of absolute biblical proportions.
The changes in gold are barely worth mentioning, as the Commercial traders decreased their net short position by a very small 622 contracts. The current net short position in gold [as of last Tuesday's report] stood at 16.4 million ounces, just a hair below last week's number.
But don't forget the fact that parts of Wednesday and Thursday trading were big down days in gold and silver as well. The engineered sell-off from the Wednesday morning highs in London, to the absolute lows at the London silver fix at noon local time on Thursday...about twenty-four hours later...resulted in a $70 decline in gold and another $2.70 decline in silver. These changes are not in yesterday's COT report. That's why I'm hoping that we'll get through next Tuesday without a major price jump in either metal, as I want to see what changes this 24-hour period made in the COT report. The rallies off those London lows in both metals appeared to be short covering...and that will improve next Friday's COT report as well.
Reader E.F. has, once again, provided his analysis of the COT report, along with all his most excellent graphs. His introduction begins as follows..."The other commercials (Ted Butler’s Raptors) haven’t held this many contracts net long since 10/28/2008 when silver closed at $9.09. Furthermore, top 4 commercial concentration hit an important new multiyear low this week. Top 4 commercial concentration fell to 43.5%, the lowest reading since September 2005." The link to his must read commentary is posted over a the ewfresearch.com website...and the link is here.
I have the usual number of stories for you today, which is quite a few, so I hope you have time to at least skim the paragraphs of each that I've posted.
As the Fed's critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury's TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April.
This zerohedge.com posting is courtesy of West Virginia reader Elliot Simon...and the link is here.
To date, and with just one week left in, investors have withdrawn a whopping $135 billion from equity mutual funds, which we are 100% certain is an all-time record for any year in which the S&P closed even nominally positive for the year, proving that nobody believes this farce known as a market any longer.
This is another zerohege.com posting...this one from Phil Barlett. The link is here...and the chart is worth the trip.
Highland Park, Michigan — When the sun sets in this small city, its neighborhoods seem to vanish.
In a deal to save money, two-thirds of the streetlights were yanked from the ground and hauled away this year, and the resulting darkness is a look that is familiar in the wide open cornfields of Iowa but not here, in a struggling community surrounded on nearly all sides by Detroit.
Cities around the nation, grappling with what is expected to be a fifth consecutive year of declining revenues and having exhausted the predictable budget trims, are increasingly considering something that would once have been untouchable: the lights.
This story was posted in The New York Times on Thursday and, once again, I thank reader Phil Barlett for sharing it with us. The link is here.
Since its inception, the euro zone has been built on lies, the most grievous of which is the idea that the common currency could work without political union. But Europe's politicians are currently suffering under a different but equally fatal delusion -- that they have all the time in the world to fix the crisis.
This 2-page article showed up over at the German website spiegel.de yesterday...and is Roy Stephens first offering of the day, for which I thank him. It's worth the read...and the link is here.
Hungary’s parliament has adopted a set of controversial laws increasing political influence over the judiciary and the nation’s central bank, prompting critics to warn that the country is drifting towards a “more authoritarian political system”.
Critics say the measure -- which prompted the European Union and International Monetary Fund to walk out of talks this month on a possible bailout for Hungary worth 15-20 billion euros ($20-25 billion) -- will increase government influence over monetary policy...and could see the central bank disappear as a separate institution altogether.
Roy Stephens sent me this, plus two the other stories below, in the wee hours of the morning. This AFP story is posted over at the france24.com website...and the link is here.
Spain’s new government warned Friday that the country’s budget deficit will be higher than anticipated this year as it unveiled a first batch of austerity measures that include surprise income and property tax hikes.
Following the new conservative government’s second Cabinet meeting, the budget deficit for this year was revised up to 8 percent of national income from the previous government’s forecast of 6 percent.
Alongside the upward revision, which comes amid predictions that the Spanish economy will soon be back in recession, the government, which is headed by Prime Minister Mariano Rajoy, announced further measures to get a handle on its debts, including €8.9 billion ($11.5 billion) in spending cuts.
This AP story is Roy's second offering from the france24.com website...and the link is here.
Japan's headline Nikkei-225 index finished 2011 at its lowest year-end level since 1982, despite rising on Friday thanks to upbeat US data.
The Nikkei index of the Tokyo Stock Exchange finished at 8,455.35, down 17.34 percent, or 1,773.57 points, from the 2010 close of 10,228.92, with the March 11 earthquake and tsunami taking its toll on share prices.
It was the worst year-end figure since 1982, when the index saw out December at 8,016.67.
This AFP story, also posted at the france24.com website, is also courtesy of Roy Stephens...and the link is here.
Market analyst and mining company consultant Peter Grandich doubled his challenge to Kitco.com's gold market analyst, Jon Nadler -- $2 million, to be donated to charity, betting that gold will reach $2,100 (the price in Grandich's previous challenge was only $2,000) before it ever sinks to $1,000. Grandich is incensed by Nadler's misrepresentation this week of the previous challenge, which Nadler incorrectly said involved a downside target price for gold of $1,500. Grandich's commentary is headlined "I Now Have 2 Million Reasons to Be Bullish on Gold".
Jon is strong with the dark side of The Force. Peter's commentary is posted at his grandich.com Internet site...and the link is here. I thank Chris Powell for providing the above introductory paragraph from the GATA release.
Ron Paul said Thursday that he's eager to find out how much gold the United States really owns.
A supporter at a town hall meeting asked about Fort Knox: "Would you reveal as president whether there's actually gold there?"
Here is Paul's full response:
"Yes, and if I couldn't accomplish that then there's big trouble in this country. I may need to get some help for you. I tried for years to do this. ... I never went to Fort Knox. I made a request when the gold commission came up in the early 1980s. We had a study of the role of gold in the monetary system. There were 17 members, and I couldn't get one other person to endorse the principle that we ought to go to Fort Knox and find out if there's gold.
This story is posted over at the politico.com website...and I plucked it from a GATA release yesterday...complete with the above introduction courtesy of Chris Powell. The link is here.
A new taxation law in Japan has triggered a bullion sales spree among gold investors at the end of the year despite sharp falls in gold prices, dealers said.
From Jan. 1, bullion retailers are required to report to tax authorities physical gold and platinum transactions of over 2 million yen ($25,700) with members of the general public, said a senior official with a large bullion house in Tokyo.
Bullion houses stayed open on Thursday, even though it was a public holiday in Japan, to receive investors who wanted to sell their physical gold holdings or swap big chunks of gold for smaller lots, such as coins.
This Reuters piece was posted on the news.yahoo.com website on Thursday...and I lifted it from yesterday's King Report. It's a must read...and the link is here.
China's decision this week to channel all gold trading through Shanghai shouldn't dampen mainland investors' appetite for bullion, even as unauthorized trading platforms are forced to close, according to analysts.
Tightened oversight of the gold market, including a ban on bullion trading apart from that directed through the official exchanges in Shanghai, comes after a year of volatile price moves for gold and silver. Unauthorized trading platforms have proliferated along with the boom in precious metals
Analysts in Hong Kong said the move is likely an attempt to bolster investor safeguards rather than to discourage investment. “This clampdown is to try and avoid situations where the retail investors get burned because a particular exchange doesn’t play by conventional rules,” said Scotia Capital managing director Sunil Kashyap in Hong Kong.
This marketwatch.com story was filed from Hong Kong yesterday...and I stole it from a GATA release. The link to this must read news item is here.
As competition for oil, water and other resources intensify, global power relationships are shifting, providing backdrops for a string of conflicts from Iraq to Libya. Brazilian-born journalist Pepe Escobar, one of the most perceptive analysts of these trends, was interviewed by German Lars Schall.
Here's a journalist who knows it all. I've followed Pepe's work for years now...and consider him to be extremely credible. This is the American Empire with the cover fully ripped off and the internal workings visible for all to see. I particularly enjoyed the part where they talked about gold...and I couldn't agree more with what he had to say. This is a very long read...but an absolute must read from one end to the other.
Australian reader Wesley Legrand sent me this interview earlier this week and, for obvious reasons, I had to leave it until today. I haven't read the whole thing myself as of yet, but it will be right at the top of my 'must read' list this weekend. If you only read one article out of today's column...this should it.
It's posted over at the consortiumnews.com website...and the link is here.
Yesterday I posted Jim's blog about the U.S. going to war with Iran...and what that would do to gold and oil prices. This interview dovetails nicely with the Pepe Escobar interview above.
Eric slid this interview into my in-box just as I was about to hit the send button. It's a must listen...and the link is here.
Cornerstone has started drilling its flagship Shyri gold property in Ecuador
Ecuador, one of the world’s most under-explored and resource rich countries, has a brand new mining law that supports international investment. Cornerstone is one of the first companies invited back and has begun drilling the Gama Prospect at our flagship Shyri Gold-Copper Property in southern Ecuador. Together with our joint venture partner Intrepid Mines, we will spend $6.0 million on the property during the next five years. We’re very excited about this project that lies just a few kilometers away from a previously discovered multi-million ounce deposit and has the potential to host a significant gold-copper system. Read more about Shryi and Cornerstone’s entire portfolio of properties.
Today's 'blast from the past' was released in 1954 and, unfortunately, I remember it. This is a cover version of a hit by The Chords, a group out of the Bronx in New York. This one was done by The Crew Cuts...a Canadian group. You'll certainly know it as soon as it starts to play...as it's a classic. The link is here.
As I said before, I wouldn't read a lot into yesterday's price action in both gold and silver...but it's hard not to. My bet is that yesterday's rally was short covering by the large commercial traders, as the price for both metals is well below the moving averages. The technical funds in the Noncommercial category of the COT won't begin laying on new long positions until these moving averages are broken to the upside...driving prices even higher.
I never had the chance to talk to Ted Butler yesterday, so I'm looking forward to what he has to say in his Weekly Review today...and I'll steal what I think I can get away with for Tuesday's column.
It's hard for me to believe that the big commercial shorts [read JPMorgan et al] will be coming back on the short side of either silver or gold during the next major rally. They look real serious about getting out of Dodge this time around. But, we'll find out soon enough, I would think.
And it's no stretch for me to believe that what the U.S. bullion banks are up to, is not in some way associated with what Jim Rickards and Pepe Escobar discuss in their respective interviews above. What's going on in the real world...and what the main stream media wants you to believe...are two entirely different things. But most people, like Winston Churchill said, when knocked over by the truth, have a tendency to pick themselves up, brush themselves off...and then hurry away like nothing had ever happened. What I'm talking about here, is a case in point.
In closing, I'd like to take the opportunity to thank the two people at Casey Research that take care of me on a daily and weekly basis. That would be Dody Day...and Juli Placek, the nice lady that gets up at 5:20 a.m. Eastern time four days a week to post this column.
And where would I be without the input from some of my 40,000 daily readers? Four of the most prolific contributors are now 'household' names around here...Wesley Legrand, Phil Barlett, Eliot Simon...and where would I be without the incomparable Roy Stephens? I thank them, plus everyone else that has enriched this column over the past year...and what a year it was.
Of course, not to be forgotten is you, dear reader. It has reached the point where this daily missive has just about consumed my entire life...and I thank you for taking the time to run through all or part of my daily rant. It's a very daunting, but infinitely rewarding, daily routine.
I wish you a Happy New Year...and it's a certainty that 2012 will be one for the record books.