[Note to Readers: The chances are better than 50/50 that I won't have a column on Saturday, but I haven't completely ruled it out at the moment. Ed]
The high of the day was the brief spike up at precisely 9:00 a.m. in London yesterday morning...and it was all down hill from there, with the low of the day coming about two minutes before 3:00 p.m. Eastern time in electronic trading in New York.
From that low, the gold price recovered a bit into the 5:15 p.m. close. The final price was $1,656.60 spot, down $2.20 on the day. Net volume was a very light 95,000 contracts.
Silver didn't do much during Far East trading on Thursday...and hit its high of the day at 9:00 a.m. in London as well. The price made a few attempts to make it through the $31 dollar level after that, but finally got turned back for good when it got sold down 40 cents at 8:40 a.m. Eastern time.
After that, the silver price didn't do a lot...and closed the day at $30.64 spot...up 12 whole cents. Volume was only 29,000 contracts.
The dollar index continued its relentless decline...and lost about 40 basis points yesterday. Since the dollar opened on Sunday night in New York, it has lost 150 basis points...a cent and a half. Any attempts by gold or silver to rally in the face of this almost 2% decline in the dollar have been turned back.
The gold stocks opened in the black, but that didn't last long...although they managed to hold their own up until about 11:00 a.m. in New York. Then a relentless sell-off began that continued until precisely 3:00 p.m. Eastern...gold's low price tick of the day. The sell-off was out of all proportion to the smallish decline in the gold price that occurred during that four hour time interval. One has to wonder what the real motive for the sell-off was, as the Dow wasn't doing much of anything.
From that low, a smallish rally began that took the HUI back above the 500 mark. It closed down 2.12% on the day.
Nick spent so much time talking to me on the phone [again] this morning that he forgot to update his Silver Sentiment Index. [And this just in from Nick at 6:09 a.m. Eastern: The SSI closed down 0.47% on Thursday. Nick's excuse was that he has the flu...which he does...but I know the real reason was the four beers he drank.]
(Click on image to enlarge)
The CME Daily Delivery Report was a surprise, as 11 gold and a rather large 114 silver contracts were posted for delivery on Monday. As has been the case all month, Jefferies was the only short/issuer in silver...and the Bank of Nova Scotia was the big long/stopper with JPMorgan coming in second by default. Come to think of it, it was exactly the same for gold...Jefferies, Bank of Nova Scotia and JPMorgan. I sure don't know what to make of all this. The link to the Issuers and Stoppers Report is here.
There were no reported changes in either GLD or SLV yesterday...and no sales report from the U.S Mint, either.
But the big surprise of the day, courtesy of Nick Laird over at sharelynx.com, was the news that Zürcher Kantonalbank in Switzerland added a whopping 8,160,120 troy ounces to their silver ETF last week. Their silver ETF now holds 89,905,909 ounces. Between Sprott and ZKB, almost 18 million ounces of silver have been taken off the market within the last week. That's more than nine days of world silver production.
The Comex-approved depositories showed that 300,366 ounces of silver were received on Wednesday...and a tiny 2,994 ounces were shipped out the door. The link to that action is here.
Here's the Total Precious Metals Pool chart courtesy of Nick Laird...and the big additions by SLV and Sprott are more than obvious.
Reader Scott Pluschau has provided another T.A. commentary on his website...this one regarding gold equities. It's headlined "Are the Gold Miners showing a threatening price pattern?" The link to that is here.
I've kept the stories down to the bare minimum...at least for me.
MF Global Inc. commodity customers must be paid before all other claimants, including the bankrupt parent company, according to the Commodity Futures Trading Commission.
Court papers by the trustee for MF Global Holdings Ltd., Louis Freeh, contain “errors and misstatements of law” in arguing that commodity laws, which require that customers be “made whole” first, don’t apply to brokerage liquidations, the regulator said in a court filing today. Freeh, representing the parent company creditors, has said money due to them shouldn’t be “diverted” to customers.
If Freeh was right, “the senseless result would be to render inapplicable the key regulations of the Commodity Futures Trading Commission in the largest commodity broker bankruptcy in U.S. history,” the CFTC said. The result would “strip” customers of a remedy, after they entrusted their assets to the brokerage relying on rules for segregating customer money, it said.
This businessweek.com story from Wednesday was sent to me by West Virginia reader Elliot Simon...and it's more than worth your time. The link is here.
Investors bought inflation-protected Treasury securities at a negative interest rate for the first time on Thursday, demonstrating the depth of concerns that Federal Reserve efforts to stimulate the economy could lead to higher inflation in the future.
The $15 billion in Treasury inflation protected securities, or Tips, were sold at a negative yield of about 0.046 per cent. Investors could still make money on their holdings because the principal of such securities increases if inflation rises.
Bill O'Donnell, strategist at RBS Securities, said that investors were accepting "a short-term cost for a potential long-term gain." Treasury securities of all kinds are finding favour as a haven as investors flee the market turmoil in the eurozone.
This subscriber-protected story appeared in yesterday's edition of the Financial Times...and it's posted in the clear in this GATA release.
Federal prosecutors have charged a computer programmer with stealing software code valued at nearly $10 million from the Federal Reserve Bank of New York, according to a criminal complaint filed in United States District Court on Wednesday.
A contract programmer who worked at the Fed, Bo Zhang, was charged with illegally copying software to an external hard drive, according to the complaint.
Both the New York Fed and the Federal Reserve board in Washington declined requests for comment.
The authorities said the software, owned by the Treasury Department, cost about $9.5 million to develop.
This story was posted in The New York Times on Wednesday...and I thank Washington state reader S.A. for sending it along. The link is here.
You can't make this stuff up...redux.
A bakery in Providence, R.I. has take the recent TSA scandal, dubbed Cupcakegate, and turned it into a clever marketing scheme.
The saga began last December when airport security confiscated a cupcake in a 8-ounce jar at McCarran International Airport in Las Vegas.
Although regular frosted baked goods aren't seen as a national security threat, the packaged cake had a thick layer of icing that violated that administration's 3-ounce carry-on limit for liquids, gels and aerosols, according to a post on the official TSA blog.
Casey Research's own Doug Hornig sent this around to the CR crowd yesterday...and I thought it worth sharing. It was posted on the businessinsider.com website on Tuesday...and the link is here.
Regulators haven't been able to keep up with price manipulation in the commodities markets or any other market. Why do games persist? The short answer is because they can, and because they can be very profitable in the short run.
If you've Googled gold or silver, you've probably come across sites that are breathless about the possibility of manipulation of metals prices. The problem with the internet is that it's new, too new to capture the rich history of the financial markets. Manipulation of metals prices--and the prices of many other commodities--is an old tradition. Here's one example adapted from An Alchemists Road: My transition from medicine to business, by Dr. Henry Jarecki (Dr. Jarecki is currently Chairman of Gresham Investment Management LLC.), October, 1989. This publication is not available on the internet.
This Huffington Post column from yesterday is a must read in my opinion...and I thank reader Scott Pluschau for sharing it with us...and the link is here.
Eric King sent me this Stephen Leeb blog yesterday morning. I haven't read it yet, but I'm sure it's worth your time. It's posted over at the King World News website...and the link is here.
Prominent Canadian fund manager Eric Sprott said on Wednesday he was bearish on cyclical commodities such as industrial metals because of the economic slowdown, though he remained positive on gold and crude oil.
Sprott, a long-time gold bull who last week filed to launch a platinum and palladium product allowing investors to redeem the physical metals, said he expects that business to grow in the wake of MF Global's collapse.
"I am not bullish on cyclical commodities such as iron ore, coal, steel, lead, and zinc because I am worried about this economic contraction that everybody is talking about," Sprott told Reuters in a phone interview from his Toronto office.
This Reuters story was posted on their website yesterday...and I borrowed it from a GATA release...and the link is here.
Mining entrepreneur and market analyst Jim Sinclair told King World News yesterday that there likely will be much repatriation of European gold reserves held in custody at the Federal Reserve Bank of New York. Sinclair expects that there will be attempts to discourage repatriation but he doesn't expect the Fed to refuse.
I thank Chris Powell for providing the introduction to this KWN blog...and the link is here.
Below we present Nomura's just released Gold Sector Initiation, which is a must read for new entrants to the field of physical and paper representations of gold, as well as a timely reminder for everyone else that in the past three years, nothing has changed with the fundamental thesis and, in fact, recent actions have merely reinforced it (and if we indeed have a €1 or €10 trillion LTRO, then watch all resistance levels in the metal get blown off).
This rather longish read includes a copy of the 105 page Nomura forecasts on future gold prices, supply and demand trends, and what this means for gold equities.
I thank Australian reader Wesley Legrand for sending me this zerohedge.com posting from yesterday...and the link is here.
For Chinese shipping executive Ping Bo buying gold is the best way to protect his family's wealth and give his 10-year-old son a head start into adulthood.
"For my son, the idea is that he will get a nice stash of gold that he can cash out when he turns 21 or when he gets married," said Ping, one of over 2 million people that have opened accounts in the past two years to accumulate gold at the Industrial and Commercial Bank of China (ICBC).
The ICBC launched the accounts in April 2010. The gold that it has bought to back them is only a fraction of total Chinese demand, but the explosive growth in the number of investors that have signed up is a symptom of the wider demand for the precious metal in the world's most populous country.
This Reuters story was posted over at the mineweb.com yesterday...and I thank reader 'David in California' for sharing it with us. It's certainly worth the read...and the link is here.
Pelangio Exploration Inc. (PX:TSX-V; PGXPF:OTC) announced the results of seven diamond drill holes totaling 1,574 metres from its ongoing drilling program at the Pokukrom East zone on the Manfo Property in Ghana. Highlights of the results included:
· 1.19 g/t gold over 113 metres, including 9.05 g/t gold over 7 metres;
The results continued to confirm a higher grade, shallow north plunging core of Pokukrom East zone with an open plunge of 600 metres from near surface in previously reported hole SPDD-088 (7.01 g/t gold over 19 metres) to 210 metres depth in the holes reported this week. Warren Bates, Senior Vice President Exploration, commented: “These are our best holes on the Manfo Property to date. These holes represent the north-plunging core of higher grade mineralization at Pokukrom East, now demonstrating an open plunge length of 600 metres.” Please visit our website to learn more about the project and request additional information.
With volume very low yesterday, it wasn't hard for any interested party to shove the price of both gold and silver in any direction they wished, which is probably what they did.
The CME's volume page is not loading properly, so it's obvious that they're having problems with the website. Because of that, I don't have any preliminary open interest data for Thursday...nor do I have the final numbers for Wednesday.
Here's one more chart from Nick Laird. I posted this one a couple of days ago, but he made an error in coding the data...and the corrected version below will take your breath away. Nick and I had our second long-distance chat in as many days about this chart. It covers a 42-year span...from 1970 until the end of 2011.
As the box in the chart says..."This chart shows what the price of gold would be [blue line] if it never traded between the London a.m. and London p.m. gold fixes. Both these traces start on the actual London a.m. gold fix at 10:30 GMT on 01/01/970."
(Click on image to enlarge)
One thing of note on this chart is the discontinuity point that began at the beginning of the fourth quarter of 1999...which was the beginning of the bull market in gold. I'll have more to say about this in my Casey Research presentation in Vancouver on Sunday afternoon.
We get two reports today. The first one out the door will be from The Central Bank of the Russian Federation. They will update their website with December's data...and I'll find out exactly how much gold they purchased for the month...and for the 2011 year as a whole. [This just in after I filed today's column: The Russian Central Bank has now updated their website as of 5:40 a.m. Eastern time...and they reported buying 300,000 ounces of gold in December, bringing their total reported reserves up to 28.4 million ounces. For 2011 they added 3.0 million ounces of gold to their reserves.]
(Click on image to enlarge)
The second is the Commitment of Traders Report [for positions held at the close of trading on Tuesday, January 17th] which will be posted on the CFTC website at 3:30 p.m. sharp.
IF...and it's still a pretty big IF at the moment...I have a column on Saturday, the above mentioned information will be posted in it.
Not much happened to the gold price during the Far East trading day on Friday...and it was basically flat right up until the London open. Then a willing seller showed up and leaned on the price...and as of 5:18 a.m. Eastern time, the gold price is down an even eight bucks.
Silver hit its high just before the London open...and has been under pressure ever since. As of 5:20 a.m. Eastern time, the price was down about 35 cents from it's pre-London open high...and down 20 cents from the Thursday afternoon close in New York.
With the CME website pretty much down across the board, I don't have any volume figures for you at this time. The dollar index bottomed around 7:30 a.m. in London...and is now up about 30 basis points off that low as of 5:08 a.m. Eastern.
As much as I hate to keep beating this story to death, there's still time to either re-adjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
That's all I have for today. I hope you have a great weekend...and I may, or may not, be here on Saturday. I have a very busy schedule in Vancouver starting later today...and I'm not sure if I'll be able to fit it in.