Gold & Silver Daily
"The sell offs in gold and silver [about 2% apiece] were specific only to those two precious metals, as platinum barely moved...and palladium was unchanged."

¤ Yesterday In Gold & Silver

Well, the little rally that began shortly after London opened yesterday morning topped out about 9:30 a.m. GMT...and that was the high for the day.

From there, the price declined until just before 1:00 p.m. in London..and then rallied a bit into the Comex open at 8:20 a.m. Eastern time, about half an hour later.

That tiny rally lasted until the jobs numbers came out at 8:30 a.m. Eastern...and by the time the selling was over at the London p.m. fix shortly after 10:00 a.m. in New York, about $27 had been pealed of the price since the London high earlier in the day.

The gold price then more or less traded sideways around the $1,740 mark until an hour into the thinly-traded New York Access Market, when a not-for-profit seller sliced another $15 off the price in a thirty minute time frame.

The gold price closed at $1,725.90 spot...down $32.50 on the day.  Net volume was pretty impressive at 179,000 contracts.

Silver got sold off about 20 cents or so in overnight trading...and, like gold, the top of the smallish rally that began shortly after the London open proved to be the high in silver as well.

The sell-off in silver after that was far more pronounced that in gold...and by 1:00 p.m. in London, 7:00 a.m. in New York, silver was down almost two percent from its London high price.

Then a rip-roaring [short covering?] rally began at that point..and within half an hour, the silver price had tacked on 40 cents.  At 8:30 a.m. Eastern, the selling began, and within a couple of hours silver was down about 70 cents...and every subsequent rally attempt after that got sold off in short order.

Silver finished the Friday trading day at $33.67 spot...down 69 cents.  Net volume was pretty chunky at about 41,000 contracts.

The dollar index didn't do much on Friday, spending most of the Far East and London trading session just under the 79.00 cent mark.  If you look at the chart closely, you'll note that the dollar was actually heading lower on the jobs announcement at 8:30 a.m. Eastern, but someone stepped in to catch a falling knife moments later...and in about thirty minutes, the dollar index had jumped 45 basis points.

But it is was all for naught, as the all that gain vanished by the 5:15 p.m. New York close...and the dollar index finished basically unchanged on the day.

Not surprisingly, the gold stocks gapped down at the open of the equity markets at 9:30 a.m...and the low of the day was at the London p.m. gold fix just minutes after 10:00 a.m. Eastern time, which was minutes after 3:00 p.m. in London.

After that, the gold stocks pretty much followed the gold price, but it was nice to see the tiny rally into the close that cut the HUI's loss to only 1.78% on the day.  It could have been worse.

The silver stocks did not fare well, either...but Nick Laird's Silver Sentiment Index only closed down 0.76%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that only 3 gold, along with 67 silver contracts, were posted for delivery on Tuesday.  In silver, it was the Jefferies, Bank of Nova Scotia, JPMorgan ménage à trois once again, as Jefferies was the short/issuer on 66 of those contracts...and the major long/stoppers were the Bank of Nova Scotia and JPMorgan, as they gobbled up 60 of those contracts.  The Issuers and Stoppers Report is worth a look...and the link is here.

Four hundred silver contracts have already been delivered so far in the first three days of February...along with the approximately 1,300 that were delivered in January.  These are big numbers for what are, traditionally, non-delivery months in silver.

There were no reported changes in GLD yesterday, but that was not the case in SLV, as authorized participants deposited another 874,678 troy ounces.  Here's the link to that action.

There was a tiny sales report from the U.S. Mint yesterday.  They sold another 50,000 silver eagles...and that was it.  Month-to-date the Mint has reported selling 1,000 ounces of gold one-ounce 24K gold buffaloes...and only 95,000 silver eagles, which is a very slow start to the month.

Ted Butler has mentioned a couple of times this week that February sales numbers may be a disappointment when compared to what happened in January.  He may be right, as the month has started out pretty ugly.

The Comex-approved depositories had a much quieter time of it on Thursday compared the record day they had on Wednesday.  They reported receiving only 867,826 troy ounces of silver...and shipped 181,735 ounce out the door.  As of the close of the Thursday business day, the five Comex silver depositories held a combined total of 130,862,159 troy ounces.

As expected, yesterday's Commitment of Traders Report did not make for happy reading.  In silver, the Commercial net short position increased by 3,708 contracts, or 18.54 million ounces...and the total Commercial net short position is now up to 143.6 million ounces.  This is a 100% increase from its absolute low of late December of 2011.

As bad as it was in silver, gold was much worse.  The Commercial traders increased their net short position by an eye-watering 30,094 contracts...or 3.01 million ounces.  They sold 16,493 long positions and added 13,601 contracts to their short positions.  The total Commercial net short position in gold is now 21.0 million ounces.

Ted Butler said that the small commercial traders [the raptors] are now short the gold market as of this week's report...and that's never a good sign.  Ted also said that the COT in gold is now neutral at best.

Here's a chart that Nick Laird sent me shortly after midnight.  It's the "Global Indices" chart...a compilation of seventeen global indices with a 41% weighting to the USA.

(Click on image to enlarge)

I have the usual number of stories, some of which I've been saving all week, so I hope you can find the time to read them all.


¤ Critical Reads

Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30 Year Low

A month ago, we at Zero Hedge joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million.

Australian reader Wesley Legrand sent me this must read story from yesterday...and the three charts are worth the trip.  The link is here.


The Real Economic Picture: Paul Craig Roberts/John Williams

This Paul Craig Roberts column came out on his website on Thursday, the day before the 'jobs' report.

Paul was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following.

Sometime Paul can be a little over the top in his ideas and comments...but this is not one of those times.  Armed with John Williams' charts from over at the website, he really tears the cover off the ball in this scathing indictment of government statistics.

I thank reader Rob Bentley for bringing this article to my attention...and now to yours.  It's well worth the read...and it's posted over at the website. The link is here.


U.S. indicts Wegelin bank for helping Americans avoid tax

The United States indicted Wegelin, the oldest Swiss private bank, on charges that it enabled wealthy Americans to evade taxes on at least $1.2 billion hidden in offshore bank accounts, the U.S. Justice Department said on Thursday.

The announcement, by federal prosecutors in Manhattan, represents the first time an overseas bank has been indicted by the United States for enabling tax fraud by U.S. taxpayers.

The indictment said the U.S. government had seized more than $16 million from Wegelin's correspondent bank, the Swiss giant UBS AG, in Stamford, Connecticut, via a separate civil forfeiture complaint. Because Wegelin has no branches outside Switzerland, it used correspondent banking services, a standard industry practice, to handle money for U.S.-based clients.

This Reuters piece that was posted over at the website yesterday was sent to me by reader Jerome Cherry...and the link is here.


Italian Bonds Tumble As Greece Talks Drag On; Bunds Decline on U.S. Jobs

Italian and Spanish government bonds fell as Greece struggled to reach accords with European officials and its creditors to avoid a default next month, sapping demand for the region’s higher-yielding assets.

German bonds fell, posting a weekly decline, as U.S. employment climbed more than economists forecast in January and the jobless rate slipped to the lowest in three years. Italian 10-year yields rose from the least since October after a report showed the country’s services sector contracted more than estimated. The French-German 10-year yield difference dropped below 100 basis points for the first time in almost two months.

“There’s an element of caution out here with regards to Greece,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “The Italian data was very poor and the underlying picture is that the non-core economies are in a pretty dire state.”

This Bloomberg story was filed from London yesterday...and is Roy Stephens first offering of the day.  The link is here.


For Greek Tax Reformers, Good Ideas Aren’t Enough

For nearly two years, as the debt crisis worsened, Diomidis Spinellis led a team that devised innovative software to help Greece crack down on tax cheats. He sent daily reports to his superiors showing which regional tax offices lagged in closing cases and collecting tax revenue. 

But last September, Mr. Spinellis, who interrupted a brilliant career as a computer science professor in 2009 to work for the Greek Finance Ministry, resigned, frustrated that officials did little or nothing with the data he generated.

“I cannot remember getting an enthusiastic response,” Mr. Spinellis, 45, said with characteristic understatement in an interview in his tiny, book-filled office at Athens University of Economics and Business, where he has returned to teaching.

I knew that things were bad in Greece, but I had no idea how much the rot had become institutionalized in its culture and it's government.  This very interesting article in the Thursday edition of The New York Times was originally titled "The Powerful Resist Change to Greek Tax System"...and is Roy Stephen's second offering of the day.  The link is here.


Hungary's National Airline, Malev, grounded over cash flow woes

Malev has ceased operations in the latest development to shake the country’s ailing economy and pile pressure on prime minister Viktor Orban.

Malev abruptly announced yesterday morning that it was grounding all flights, amid fears that its aircraft could be impounded abroad after they were not allowed to take off from Dublin and Tel Aviv airports.

Officials at Malev, which was founded in 1946, said it had run into extreme cash flow difficulties in recent days, as partners became nervous following a demand from the EU that it repay some €130 million in state aid that it received between 2007 and 2010.

Malev was effectively placed under bankruptcy protection at the start of this week, when the government shielded it from creditors by declaring it a “strategically important company”.

This story was posted at the website just after midnight local time...and I thank Roy Stephens once again.  The link is here.


Young, Wired and Angry: A Revised Portrait of Hungary's Right-Wing Extremists

Though largely ignored by the national media, Hungary's right-wing extremist Jobbik party operates within a surprisingly well-developed and self-sustained online universe. What's more, recent studies have found that the party's supporters aren't the "losers" that many experts thought they were.

The leader of Hungary's right-wing extremists rarely expresses himself so clearly. Speaking before a crowd of a few thousand supporters in Budapest's Sportmax complex on Saturday, Jan. 21, Gábor Vona announced the end of liberal democracy in the world. In the speech traditionally delivered before party members in January, the 33-year-old politician demanded "no compromising" either with or as part of the ruling political system, calling instead for "fighting, fighting and still more fighting." "We are not communists, fascists or National Socialists," Vona said. "But -- and this is important for everyone to understand very clearly -- we are also not democrats!"

This short article showed up over at the German website yesterday.  It is, of course, another Roy Stephens offering...and worth the read if you have the time.  The link is here.


Echoes of war across the South Caucasus

As the standoff over Iran's nuclear program intensifies, South Caucasus leaders are pondering contingencies since the consequences of open conflict or prolonged tensions are potentially serious for all three nations.

Over the past several years, Iran has become an increasingly influential player in the South Caucasus as Armenia, Azerbaijan and Georgia have each sought to diversify their economic and political ties away from their traditional alliances - none more so than Armenia, which now relies on Iran as a major trading partner and investor.

However, with tensions on the rise in the Persian Gulf, and with threats by Iran to disrupt oil supplies passing through the Strait of Hormuz in retaliation for the sanctions that have been slapped on it by various countries over its uranium-enrichment activities, South Caucasus capitals are pondering what role they would play should the standoff get hot.

This Asia Times story was sent to my by Roy Stephens a couple of days ago...and the link is here.


A dragon dance in the Negev

There is no record of dragons in the nomadic life of the Negev desert, which dates back at least 4,000 years (some say 7,000). That may be about to change in the Year of the Dragon.

The Bedouins of the Negev will soon witness the sight of a Chinese-built railway line snaking its way through the mélange of brown, rocky, dusty mountains and the wadis and deep craters, leading north from the resort city of Eilat in the Gulf of Aqaba toward the eastern Mediterranean.

Having developed strong interests on the two sides of the Persian Gulf divide - Gulf Cooperation Council (GCC) states and Iran - China is taking an awesome leap as a big-time player in the geopolitics of the Middle East by elevating its ties with Israel to a strategic partnership.

This is another very interesting read that was posted over at the Asia Times website earlier this week...and I thank Roy Stephens for digging it up on our behalf.  The link is here.


India team to seek boost in Iran imports for oil

India will send a delegation to Iran this month to explore boosting exports to smooth use of the restricted rupee currency, which the two sides have agreed to use for 45 percent of New Delhi's $11 billion (6 billion pound) a year oil bill, sources told Reuters.

India is currently paying Iran for the oil through Turkey's Halkbank after a previous mechanism was closed 13 months ago, but fears that route may also succumb to international pressure.

The United States slapped fresh sanctions on Tehran from the start of this year, targeting financial institutions that deal with the central bank, hoping to stem oil revenues.

The European Union followed with a ban on Iranian oil this week that is expected to take full effect within six months.

India is Iran's second-biggest oil client after China but its own exports to the Islamic nation are worth only about $2.7 billion according to latest figures from the commerce ministry.

This Reuters story was posted in the Tehran Times yesterday...and I thank Roy once again for sharing it with us.  The link is here.


Japan may win waiver from Iran sanctions: report

Japan may be granted some waivers from the U.S.-led sanctions against Iran, Kyodo News reported Friday, citing Foreign Minister Koichiro Gemba.

"Steady progress was made in a good atmosphere" in respect to both Japan's cooperation with the U.S. to address the Iranian nuclear issue and request a waiver from the sanctions, Gemba told reporters in Tokyo when asked about the outcome of the second round of talks on the matter between the two countries.

He also said the Japanese government wants to "conclude the consultations as soon as possible", although he refused to go into detail as negotiations are still ongoing with the United States.

This is another story that Roy found posted in the Tehran Times yesterday...and the link is here.


Fear and loathing in the American Gulf: Pepe Escobar

Persian Gulf? Khaleej-e-Fars? Forget it; time to call it the American Gulf - to the delight of the vultures, jackals and hyenas of war, Israeli and Anglo-American. The House of Saud wouldn't be too displeased either.

So much for the Pentagon's "pivoting" strategy from the Middle East to East Asia - recently announced by United States President Barack Obama. The confrontation against China starts in Southwest Asia - in the American Gulf; and goes way beyond Washington cheerleading the hardcore Sunni sectarian killers of Jundallah in Iran's Sistan-Balochistan province, Israeli Mossad agents posing as US Central Intelligence Agency operatives, serial assassinations of Iranian nuclear scientists, computer viruses, and ludicrous accusations of Tehran helping al-Qaeda and vice-versa.

This is Pepe at the top of his game...and calling it the way it really is in the Persian [American] Gulf.  It's a must read...and it's Roy Stephens final offering of the day.  The link is here.


How to Start a War: The American Use of War Pretext Incidents

With regard to the confrontation in the Persian Gulf, is the Obama administration prepared to sacrifice the Fifth Fleet based in Bahrain with a view to triggering public support for a war on Iran on the grounds of self-defense?

Throughout history, war planners have used various forms of deception to trick their enemies. Because public support is so crucial to the process of initiating and waging war, the home population is also subject to deceitful stratagems. The creation of false excuses to justify going to war is a major first step in constructing public support for such deadly ventures. Perhaps the most common pretext for war is an apparently unprovoked enemy attack. Such attacks, however, are often fabricated, incited or deliberately allowed to occur. They are then exploited to arouse widespread public sympathy for the victims, demonize the attackers and build mass support for military “retaliation.”

Like schoolyard bullies who shout ‘He hit me first!’, war planners know that it is irrelevant whether the opponent really did ‘throw the first punch.’ As long as it can be made to appear that the attack was unprovoked, the bully receives license to ‘respond’ with force. Bullies and war planners are experts at taunting, teasing and threatening their opponents. If the enemy cannot be goaded into ‘firing the first shot,’ it is easy enough to lie about what happened. Sometimes, that is sufficient to rationalize a schoolyard beating...or a genocidal war.

Such trickery has probably been employed by every military power throughout history. During the Roman empire, the causes of war -- cassus belli -- were often invented to conceal the real reasons for war. Over the millennia, although weapons and battle strategies have changed greatly, the deceitful strategem of using pretext incidents to ignite war has remained remarkably consistent.

It's rare to find such a thoroughly researched article as this one appears to be.  There are 101 references at the end of the article.  I consider this a must read...and it was posted over at the website back in early January.  I thank reader 'Jan in Denmark' for sending me this essay last Sunday...and the link is here.


States seek currencies made of silver and gold

A growing number of states are seeking shiny new currencies made of silver and gold.

Worried that the Federal Reserve and the U.S. dollar are on the brink of collapse, lawmakers from 13 states, including Minnesota, Tennessee, Iowa, South Carolina and Georgia, are seeking approval from their state governments to either issue their own alternative currency or explore it as an option. Just three years ago, only three states had similar proposals in place.

"In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System ... the State's governmental finances and private economy will be thrown into chaos," said North Carolina Republican Representative Glen Bradley in a currency bill he introduced last year.

I lifted this CNNMoney story out of a GATA release yesterday.  It's definitely worth reading...and the link is here.


Paul Brodsky and Lee Quaintance: A reply to the NYTimes' patronizing of gold

Chris Powell posted this rebuttal that was sent to Floyd Norris at The New York Times yesterday in reply to his February 2nd piece "In a Focus on Gold, History Repeats Itself".  It's contained in this GATA release...and it's certainly worth the read.  The link is here.


GoldMoney's Turk likes how precious metals are trading

GoldMoney founder and GATA consultant James Turk today told King World News yesterday that despite Friday's setback in the precious metals, he likes the way they're trading -- without enthusiasm even as Europe is about to blow up financially.

I borrowed the above introduction from a GATA release yesterday afternoon.  The blog, headlined "Corrective Action in Gold is Prelude to Bullish Explosion", is posted over at the KWN website...and the link is here.


Bank of England's glittering stash of £156 BILLION in gold bars

Cash-strapped British people will breathe a sigh of relief when they see these impressive treasure troves.

Despite the financial crisis, it seems the country still has some money left in the Bank of England's vault beneath London.

In fact, there are stacks of gold bars worth a whopping £156 billion stored in an old canteen deep below the streets of the capital.

But sadly, not all of it belongs to England. A lot of it is deposited by foreign governments. Different shapes and marks distinguish the varying sources of the wealth.

I saved this until last...and as soon as you click on the link, you'll understand why.  I fired this story off to James Turk and the rest of the GATA brain trust to see what they could make of the numbers quoted in this article...and I'll let you know what I hear back.

This story was posted in the Daily Mail yesterday morning...and I thank Nick Laird for digging up this absolute must read article...and the link is here.



¤ The Funnies

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¤ The Wrap

The two enemies of the people are criminals and government, so let us tie the second down with the chains of the constitution so the second will not become the legalized version of the first.  - Thomas Jefferson

Today's 'blast from the past' is one that I stumbled across on this morning when I was looking for something else.  Well, that 'something else' will just have to wait for another week.  This ballad was released as a single in 1978...and is a classic.  Everybody knows it...and everybody just loves the instantly recognizable saxophone riff, including this turn up your speakers and click here.  The history behind this composition is amazing in its own right...and you can learn all about it here.

Well, I must admit that I'd forgotten all about yesterday's jobs report when I wrote my Friday column, but once I checked the day's stories at Bloomberg yesterday morning after I turned my computer on, all became the precise 8:30 a.m. price smack is a trademark of 'da boyz' on the first Friday of every month for the last decade or so.

But, having said that, it wasn't nearly as ferocious as job number take-downs of the past...and at the moment, I'm of the opinion that the Commercial traders may have used the take-downs in gold and silver at the release of the jobs report, as a pretense to begin the process of flushing out all the newly-minted long positions that have been placed during this $200+ rise in the gold price...and the corresponding rise in silver.

That's pure speculation on my part...and we'll have a better idea when the markets open on Sunday night in New York.  But they certainly set the tone yesterday during Comex trading...and then the fifteen dollar take-down in the thinly-traded electronic market that followed.

I mentioned this possibility in my Friday column, so we'll find out quick enough if my speculation is anywhere near the mark.  Yesterday's frightful Commitment of Traders Report may have set the stage as well.

By the way, the sell offs in gold and silver [about 2% apiece] were specific only to those two precious metals, as platinum barely moved...and palladium was unchanged.  "Dr. Copper", as Ted Butler pointed out to me yesterday, was actually up 2.82%.

Yesterday's engineered price declines in both gold and silver certainly made inroads into the overbought condition in both metals, so if we get a big sell-off in both metals in the early part of next week, the Commercial traders may clean out the weak-hand technical longs rather quickly.

James Turk's King World News headline "Corrective Action in Gold is Prelude to Bullish Explosion" in a story posted further up, may turn out to be prophetic.  Let's hope so.

But, as long-term readers already know, I was born in Missouri in another life...and I'll believe it when I see it.

Enjoy what's left of your weekend...and I await the Sunday night open in both gold and silver with great interest.

See you on Tuesday.