Gold & Silver Daily
"Another engineered price decline during the Comex trading session in both gold and silver"

¤ Yesterday In Gold & Silver

The two smallish rallies in Far East trading on their Tuesday was the only time that gold was in positive territory yesterday.  The high was in about 2:30 p.m. Hong Kong time---and 90 minutes before the London open.

By the time trading began on the Comex at 8:20 a.m. EST, the gold price was back down to its Monday close.  Then the engineered price decline began, with most of the loss in by the open of the equity markets in New York.  The low tick was around 10:35 a.m.---and the rally that began around noon ran out of gas about 3:30 p.m. in electronic trading.

The CME recorded the high and low ticks at $1,244.70 and $1,224.20 in the February contract.

Gold closed on Tuesday at $1,231.80 spot, down an even six bucks from Monday.  Volume, net of roll-overs out of the February contract, was around 108,000 contracts, which wasn't particularly heavy.

The silver price action followed mostly the same path as gold, except the high tick came around 10:30 a.m. Hong Kong time.

The light and low ticks were reported as $20.28 and $19.625 in the March contract, which was more than a 3% intraday move.

Silver closed at $19.845 spot, down 32.5 cents from Monday.  Volume was pretty decent at around 43,000 contracts, which was about 5% more volume than on Monday.

Platinum didn't do much yesterday, but the smallish rally in palladium appeared to get capped just before 1 p.m. EST in Comex trading, as it appeared that the price was really about to take off.  Here are the charts.

The dollar index closed late on Monday afternoon in New York at 80.67.  From there it rose to 80.79 by about 2:30 p.m. in Hong Kong on their Tuesday---and hit its low of 80.61 shortly after 12 o'clock noon in London.  Then away it went to the upside, but that rally ran out of gas at 80.92---very close to the London p.m. gold fix---and that turned out to be the high of the day as well.  By 12:15 p.m. EST, the index was down to 80.72---but rallied into the close from there.  The dollar index finished the day at 80.87---which was up 20 basis points from Monday's close.

Once again, it's more than a stretch to match the price moves in the precious metals to anything that was going on in the currency market.

Not surprisingly, the stocks gapped down at the open, but the damage wasn't as bad as one would expect.  The stocks spent the rest of the day inching higher, but at 3:15 p.m. EST, a serious buyer put in an appearance---and the gold equities popped into positive territory right at the close.  The HUI finished up 0.18%.  The HUI finished up 0.19% on Monday.

The silver equities did OK as well, at least considering the pounding that the metal itself got, but the chart only bears a passing resemblance to the HUI---and Nick Laird's Intraday Silver 7 Index closed up the tiniest possible amount---and that was 0.01%.  It could have been far worse.

The CME's Daily Delivery Report showed that zero gold and 7 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.

There were no reported changes in GLD yesterday---and as of 9:57 p.m. EST yesterday evening, there were no reported changes in SLV, either.

Once again, the U.S. Mint did not update its website with 2014 sales.  If they have sold anything in 2014 so far, it's not possible to read that data the way the applicable web page is set up.

There was almost no in/out movement in gold at the Comex-approved depositories on Monday.  They reported receiving only 707 troy ounces of gold---and didn't ship any out.

Of course it was far more active in silver, as 717,017 troy ounces were received---all in the CNT depository---and 180,514 troy ounces were reported shipped out.  The link to that activity is here.

I don't have all that many stories for you today---and the final edit is yours.


¤ Critical Reads

J.P. Morgan banker joked that Madoff’s accounting firm might be a car wash

The government paints a damning picture of J.P. Morgan Chase & Co. in its dealings with Bernie Madoff. The $1.7 billion settlement revealed Tuesday portrays bank employees who were alternately too incompetent to notice, or too calculating to bother reporting, that Madoff was running a gigantic Ponzi scheme.

The J.P. Morgan banker assigned to helping Madoff Securities for years had no clue how much money was in the Madoff account, and signed off on compliance reports because he couldn’t see a reason not to, according to the government’s charges.

Others within J.P. Morgan and the predecessor banks later subsumed by J.P. Morgan started raising questions about Madoff beginning in the mid-1990s, and one senior executive joked via email that they should visit Madoff’s accountant’s office to make sure it wasn’t a car wash. Employees then yanked out most of the bank’s own money invested with Madoff-related funds and congratulated themselves after his arrest on the money they’d saved the bank.

I knew it would be bad...but even I was aghast at how widespread the knowledge was inside the firm that Madoff was running a Ponzi scheme.  One can easily extrapolate this into the precious metals arena.  This story was posted on their Internet site during the New York lunch hour yesterday...and I thank Roy Stephens for today's first news item.  It's definitely worth your time.


JPMorgan is Penalized $2 Billion Over Madoff

Two men who occupy coveted roles in Manhattan’s power elite, one the city’s top federal prosecutor and the other its top banker, sat down in early November to discuss a case that was weighing on them both.

Preet Bharara, the United States attorney in Manhattan, and Jamie Dimon, the chief executive of JPMorgan Chase, gathered in Lower Manhattan as Mr. Bharara’s prosecutors were considering criminal charges against Mr. Dimon’s bank for turning a blind eye to the Ponzi scheme run by Bernard L. Madoff. Mr. Dimon and his lawyers outlined the bank’s defense in the hopes of securing a lesser civil case, according to people briefed on the meeting.

But at the cordial meeting in Mr. Bharara’s windowless conference room lined with law books, the prosecutors would not budge. Mr. Bharara — flanked by his own lieutenants, including Richard B. Zabel and Lorin L. Reisner — made it clear that he thought the wrongdoing was significant enough to warrant a criminal case.

On Tuesday, Mr. Bharara announced the culmination of that case, imposing a $1.7 billion penalty stemming from two felony violations of the Bank Secrecy Act, a federal law that requires banks to alert authorities to suspicious activity. The prosecutors, calling the amount a record for violating that 1970 federal law, will direct the money to Mr. Madoff’s victims.

But nobody is going to jail.  This longish article on the Madoff decision was posted on The New York Times website yesterday morning...and will appear in their print edition today.  My thanks go out to Phil Barlett for sending it our way.


Royal Bank of Scotland Japan Unit Sentenced in Libor Probe

Royal Bank of Scotland Group Plc was ordered to pay $50 million by a federal judge in Connecticut over claims that it rigged the London interbank offered rate.

RBS Securities Japan Ltd. in April pleaded guilty to wire fraud as part of a settlement of more than $600 million with U.S and U.K. regulators over Libor manipulation, according to court filings. U.S. District Judge Michael P. Shea in New Haven today sentenced the Tokyo-based unit of RBS, Britain’s biggest publicly owned lender, to pay the agreed-upon fine, according to a Justice Department statement.

RBS was among six companies fined a record 1.7 billion euros ($2.3 billion) by the European Union last month for rigging interest rates linked to Libor. The combined fines for manipulating yen Libor and Euribor, the benchmark money-market rate for the euro, are the largest-ever EU cartel penalties.

This short Bloomberg story was posted on their website early on Monday evening MST...and my thanks go out to reader M.A. for finding it for us.


Eurozone losing 'safety margin' against deflation trap as core gauge falls to record low

Eurozone inflation has fallen to the lowest recorded under two key measures, raising the risk of a textbook deflation trap if recovery falters or there is an unexpected shock.

Core inflation – stripping out food and energy – fell to 0.7pc, lower than at any time following the Lehman crisis.

“It's lower than when the European Central Bank was forced to cut rates in November,” said David Owen from Jefferies Fixed Income.

“A large number of countries across the periphery are either in deflation already or very close, and this is spreading to France. The ECB will have to do quantitative easing in the end,” he said.

I had a story on this issue in yesterday's column---and it was posted on the Internet site.  This one is from Ambrose Evans-Pritchard...and he has a way of cutting to the chase that that leaves his European counterparts in the dust.  This must read article was posted on the Internet site late yesterday afternoon GMT...and it's another contribution from Roy Stephens.


Goodyear executives released after being held hostage by French workers

Workers at a doomed Goodyear tyre factory in northern France released the two executives they were holding hostage on Tuesday afternoon.

The men had been detained by up to 200 employees who blocked their escape with a tractor tyre as they arrived at a meeting with union leaders on Monday.

Immediately after the men left, officials from the factory's CGT union announced they would occupy the site.

Goodyear announced it was closing the plant, throwing 1,173 employees out of work, after several years of turbulent relations between management and unions.

This news item appeared on The Guardian website late yesterday afternoon GMT...and is a follow-up to the one I posted in this space yesterday.  It's also another offering from Roy.


Malta's sale of E.U. passports causes controversy

A British consultancy firm, Henley & Partners, stands to make tens of millions of euros for helping Malta create up to 20,000 new EU citizens-on-paper.

The scheme will provide money for a €1 billion investment fund in the tiny Mediterranean country, whose national budget is just €3 billion a year.

It will see Malta sell 1,800 passports for €650,000 each, before closing down the programme.

But every main applicant can also buy additional passports for children up to 26 years old, for their spouse, and his or her spouse's parents and grandparents, for between €25,000 and €50,000 per head.

This interesting news item, filed from Brussels, was posted on the Internet site yesterday morning Europe time...and once again I thank Roy Stephens for bringing it to our attention.


More Israel disclosures in Snowden’s trove of 'significant stories' – Greenwald

Glenn Greenwald, the investigative journalist who first published Edward Snowden leaks, said that the NSA whistleblower still has "a huge number of very significant stories to reveal," including those relating to Israel.

"There definitely are stories left that involve the Middle East, that involve Israel. The reporting is going to continue at roughly the same pace that has been happening," the former Guardian journalist said in an interview with Channel 10 television station that aired Monday night.

"I don’t want to preview any stories that aren’t yet published, but it’s definitely the case that there are a huge number of very significant stories that are left to report," the Brazil-based Greenwald said, adding that the journalists will continue releasing stories "at roughly the same pace that has been happening.

One can only imagine what these stories will reveal.  If I were the Israeli leadership, military, or Mossad...I'd be worried.  This Russia Today story was posted on their website late yesterday morning Moscow time...and I thank South African reader B.V. for sharing it with us.  It's worth reading.


Syria ships out first batch of chemical weapons materials

Syria has started moving chemical weapons materials out of the country in a crucial phase of an internationally backed disarmament program that has been delayed by war and technical problems.

The Organisation for the Prohibition of Chemical Weapons said on Tuesday that "priority chemical materials" were transported to the port of Latakia and onto a Danish vessel which was now sailing towards international waters.

The OPCW did not disclose what percentage of Syria's toxic arsenal -- which totals 1,300 tons in all -- had been removed but said nine containers of the most dangerous chemical materials were on the Danish cargo vessel.

This Reuters story, filed from Beiruit, was posted on their Internet site late yesterday afternoon EST...and once again it's courtesy of Roy Stephens.


New police sackings over Turkey fraud probe

The Turkish government has dismissed 350 police officers in Ankara, local media reports say, in the latest twist in a corruption scandal embroiling powerful politicians.

The officers were sacked on Tuesday by a government decree published at midnight and included chiefs of the financial crimes, anti-smuggling, cyber crime and organised crime units, the private Dogan News Agency reported.

Erdogan responded by sacking hundreds of police officials across the country, including the powerful Istanbul police chief.

Erdogan's critics accuse him of desperately trying to protect his cronies, and the appointment of Selami Altinok, a little-known governor with no background in police work, as Istanbul's new police chief was further seen as an attempt to shut down the investigation.

This must read news item was posted on the Internet site yesterday...and it's another contribution from Roy Stephens.


U.S. and Iran find common enemy in jihadist group

It’s rare that Washington and Tehran are on the same wavelength.

But the U.S. and Iran are in agreement when it comes to Iraq: on Sunday, the two countries both said they would support Iraqi authorities faced with an insurrection led in large part by the Islamic State of Iraq and the Levant (ISIL), a group of al Qaeda-affiliated jihadists.

The group, which is also active in Syria, has become increasingly active in recent months – as illustrated when it took control of parts of the key Iraqi cities of Fallujah and Ramadi last week.

I posted a story about the fighting in Iraq in yesterday's column, but this story includes the Iran angle.  It was posted on the Internet site yesterday...and it's the final offering of the day from Roy Stephens, for which I thank him.  It's a must read, especially for students of the New Great Game.


Race to Debase: Fiat Currency vs. Gold -- Fiat Currency vs Silver :: 2000 - 2014

How has your Paper Currency performed versus Silver and Gold in the 21st Century?

You may be surprised by the answers below.

Below you will find 120 fiat currency's nominal values versus silver and gold prices thus far in the 21st Century.

Not one paper currency has outperformed bullion thus far, see for yourself...

This interesting table of numbers was posted on Mike Maloney's website yesterday...and it's worth skimming.


Hedge Funds Raise Gold Wagers as Yamada Sees $1,000

Hedge funds raised their bullish gold bets to a six-week high, splitting with analysts at Technical Research Advisors LLC and Goldman Sachs Group Inc. who are predicting more declines after last year’s rout.

Gold tumbled 28 percent in 2013, the first decline in 13 years and the biggest since 1981, after some investors lost faith in the metal as a store of value. The Federal Reserve on Dec. 18 cut the pace of its monthly bond purchases. Bullion is poised to fall another 19 percent in the coming months to $1,000 an ounce, said Technical Research’s Louise Yamada, who’s the former head of technical research at Citigroup Inc.

“With gold, in the short-term, we’re being pulled in multiple directions,” said Michael Cuggino, who manages about $10 billion of assets at Permanent Portfolio Family of Funds Inc. in San Francisco. “There were sellers trying to get out in front of the tapering. Physical demand is OK, but not strong. You also have increasing economic activity, which could begin to accelerate inflation.”

This is another typical garbage story about gold.  This one turned up on the Bloomberg website during the Denver lunch hour yesterday...and I thank reader Ken Hurt for sending it our way.



Iran tries to reverse a slumping birth rate: offers gold coins

In Iran, free condoms and government-backed vasectomies are out, replaced by sermons praising larger families and discussions of even offering gold coins to the families of newborns.

Having successfully curbed birth rates for two decades, Iran now is promoting a baby boom to help make up for its graying population. But experts say it is difficult to encourage Iranians to have more children in a mismanaged economy hit by Western sanctions and 36 percent inflation.

"A gold coin won't change couples' calculations," said Mohammad Jalal Abbasi, head of Demographics Department at Tehran University. "Many young Iranians prefer to continue their studies, not marry. Lack of financial ability to buy a house and meet expenses are among other reasons why the youth postpone marriage or have no interest in raising many children."

Low birth rates are a product of an increase in living standards and a well-educated population.  China is also promoting a baby boom for the same reason, but it's already far too late for Japan, as their population is going to implode no matter what they do.  This very interesting AP story was posted on their website early Monday afternoon EST...and my thanks go out to Nick Giambruno, the Senior Editor over at the Internet site for sending it around yesterday.


India May Keep Gold-Import Curbs Past March to Contain Deficit

India should retain curbs on gold imports at least until March to stabilize the current-account deficit that weakened the rupee to a record low last year, Economic Affairs Secretary Arvind Mayaram said.

The government needs to keep the deficit low and should not tamper with the restrictions on gold shipments until at least the end of the fiscal year on March 31, Mayaram told the Press Trust of India. D.S. Malik, a finance ministry spokesman in New Delhi, confirmed the comments to Bloomberg News today.

“Gold imports have been identified by policy makers as a problem area because this is not some kind of productive imports,” said Siddhartha Sanyal, an economist at Barclays Plc in Mumbai. “Just because the numbers are favorable for the last few months, I don’t think they will change it dramatically. They are not in any big hurry to change it.”

This gold-related news item, co-filed from Mumbai and New Delhi, was posted on the Bloomberg website very early yesterday morning MST...and I thank Manitoba reader Ulrike Marx for finding it for us.  It's not overly long...and it's worth reading.


Chinese Gold Demand Strong at Start of 2014

Chinese gold buying has noticeably picked up at the start of 2014, helped by softer prices and the approach of Chinese New Year holidays, traders and analysts said.

The premium in China has risen to $20 an ounce, perhaps $10 higher than a week ago, said Bernard Sin, global head of precious metals trading with MKS (Switzerland) SA.

“That is an indication that demand is relatively healthy,” he said. He also cited good demand in Hong Kong and Thailand.

Joni Teves, analyst with UBS, said volume on the Shanghai Gold Exchange picked up significantly lately, with combined turnover for the two gold contracts around six-month highs. They reached 34 metric tons Monday and averaged 24 tons over the first few business days of 2014, compared to an 18-ton average in December, she said.

This gold commentary was posted on Kitco website yesterday morning...and it's also courtesy of Ulrike Marx.


Chinese FX expert says gold is a currency that China must dominate

Yesterday, gold researcher and GATA consultant Koos Jansen disclosed a speech given to a gold conference in Beijing last year by Tan Ya Ling, president of the China Foreign Exchange Investment Research Institute, arguing that gold is a currency and and potentially the world reserve currency and that China needs to dominate the world gold market. An English translation of the speech is posted at Jansen's Internet site  It's definitely worth reading.



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¤ The Wrap

More than the actual timing of the coming price penetration of the moving averages in gold and silver, there is another possibility that looms large – how easily (or not) will the commercials let the technical funds buy back their short positions and establish long positions? This is the question I ponder more than any other. Simply stated – unless the commercials sell fairly aggressively as the moving averages are penetrated to the upside, there is a real possibility of disorderly pricing to the upside. I’m back to the thought that a market that can fall $200 (gold) or $5 or $15 (silver) in days can also rise by such amounts. It comes down to how easily the commercials will let the tech funds off the short hook. Time will tell, but let me remind you that the commercials (and particularly JPMorgan) will rip out the financial lungs of anyone on the wrong side of a trade if it suits them. - Silver analyst Ted Butler: 04 January 2014

Another day---and another engineered price decline during the Comex trading session in both gold and silver.  When will it end, you ask?  Beats me, although I was happy to see that the precious metal equities managed to recover all their loses as the trading day wore on in New York yesterday.

Since yesterday [at the close of Comex trading] was also the cut-off for this Friday's Commitment of Traders Report---and monthly Bank Participation Report---I'm hoping that all of yesterday's price and volume activity will be reported in a timely manner by JPMorgan et al, because as Ted Butler pointed out on Monday, it appears that large chunks of data were not reported in a timely manner in last week's COT Report.

Yesterday I posted a couple of Nick Laird's charts showing the intraday price moves in both gold and silver for December---and also for the entire 2013 calendar year in both metals. 

Here are two more charts from Nick, both of which have graced this column in the past and, I though worth posting again now.  I would have put them in yesterday's column, but I didn't get them from Nick in time.

Both charts are for gold---and both are fairly self-explanatory.  The two buy and sell scenarios presented---and you can't do this in real life---show the results of a theoretical $100 investment if you bought gold at the London a.m. fix, and then sold at the London p.m. fix---vs. buying at the London p.m. fix and then selling the next morning at the London a.m. fix.

Under buy/sell scenario #1 in the chart below---starting on January 1, 1970---your original $100 investment would be worth $13.05 as of the close of trading yesterday.  Note the peak on January 1, 1975.  That's when it all started.  Except for the big price-spike in January of 1980 when gold hit $850 the ounce, every year [without exception] has been a down/losing year if you'd bought the London a.m. fix and sold the London p.m. fix, and then invested the proceeds the following morning at the a.m. fix.

The chart below shows the opposite scenario.  Buying the London p.m. gold fix and selling the next morning at the London a.m. gold fix, beginning with the same theoretical $100 investment and reinvesting the proceeds every trading day for the last 43 years.  As of the close of trading yesterday, you're hundred bucks would theoretically be worth $26,810.  Any questions?

This isn't rocket science, dear reader.  These are the actual numbers from the LBMA website that Nick Laird used to compute these charts.  Everything you need to know about the Anglo/American price management scheme in gold is right here in front of you.

All four precious metals came under selling pressure during the Wednesday trading session in the Far East earlier today---and that pattern has continued now that London has been open a bit over an hour.  Volumes in gold were pretty light going into the London open, and mostly of the HFT variety, as there were virtually no roll-overs out of the February contract.  Silver's volume was pretty light at that time as well.

But since the open, gold volume has increased by about 5,000 contracts during the the first hour of trading---and now sit at 23,000 contracts in February---which still isn't a lot.  However, gross silver volume is up 40% during the same time period, and now sits at a bit over 10,000 contracts.  That's pretty big number for this time of day.  The dollar index is up about 10 basis points---and a hair under the 81.00 mark as of 4:14 a.m. EST.

And as I hit the send button on today's efforts at 5:20 a.m. EST, I see that new lows were set in both gold and silver in early trading in London---but both metals are well off their lows, at least for the moment.  Gold volume has picked up quite a bit---and is over 30,000 contracts, but silver's volume is only up a thousand contracts or so since I wrote the last paragraph over an hour ago.  The dollar index is still hovering just below the 81 mark.

That's all I have for today.  I'm not overly impressed with the price action so far on Wednesday---and I'm not really looking forward to what I'll find when I power up my computer later this morning, as it's obvious that JPMorgan et al are still at it.

See you tomorrow.