Gold & Silver Daily
"It seems likely that the only way that the 'big 8' Commercial traders in silver are going to doing any more serious short covering is to the upside."
 

¤ Yesterday In Gold & Silver

The gold price got sold down the moment that trading began in New York on Sunday evening.  The low of the day [about $1,605 spot] was in shortly after 9:00 a.m. Hong Kong time...and from there the price rallied pretty sharply going into the London open.

Then about 8:15 a.m. GMT, the high of the day was in...and the gold price came under pressure for the balance of the Monday trading session.  Gold attempted a rally at the Comex open...but a willing seller was waiting...and every subsequent rally attempt after that, ran into more selling.

Gold's high of the day was around $1,623 spot at 8:15 a.m. in London...but closed at $1,611.00 spot...down $5.60 on the day.  Volume, net of all roll-overs, was not overly heavy at 105,000 contracts.

Silver's price path on Monday was the just about the same.  Silver's low price tick came just before 1:00 p.m. Hong Kong time and, like gold, the price rallied strongly into the London open...but ran into a willing seller shortly after 8:30 a.m.

Then it followed gold price pattern almost exactly...rally beginning just before the Comex opened...capped shortly after 9:30 a.m. in New York...and every subsequent rally attempt got sold off.

The only real difference was the silver managed to close in the plus column at $29.05 spot...up 30 cents on the day.  Net volume was pretty light at around 27,000 contracts.

The dollar index spiked up about 25 basis points right at the open at 6:00 p.m. on Sunday night...and that would certainly account for the gap down in the gold price at the open as well.

But the sell-off in gold around 8:30 a.m. in London preceded the 5:40 a.m. Eastern time low in the dollar by a good two hours...and after that, the dollar chopped higher until about 11:10 a.m. in New York, before heading lower.

The dollar finished down about 25 basis point from its Sunday night New York open...and although the gold price followed the dollar move closely, it certainly didn't follow it exactly...as gold was the only precious metal that posted a loss on Monday.

Here's the 3-year dollar chart.  Reader Scott Pluschau pointed out that the dollar fizzled out again at the current high price point.  If I had to bet ten bucks at this juncture, I'd say the dollar may get sold down from here...but the exact timing of this event is uncertain.

The gold stocks pretty much followed the price pattern of the underlying metal...but managed to close in the black, as the HUI finished up 0.41%.

Even though silver closed up 30 cents on the day, the silver stocks as a group didn't do much...and Nick Laird's Silver Sentiment Index was up only 0.31%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that only 1 gold, along with 42 silver contracts, were posted for delivery tomorrow.  The only short/issuer once again was Jefferies...and the only two long/stoppers were the Bank of Nova Scotia and JPMorgan.  The link to what little activity there was, is here.

There were no reported changes in either GLD or SLV yesterday.

The U.S. Mint had another sales report.  They sold another 4,500 ounces of gold eagles...and 410,000 silver eagles.  Month-to-date the mint has sold 79,000 ounces of gold eagles...3,500 one-ounce 24K gold buffaloes...and 3,957,000 silver eagles.

Friday was another busy day over at the Comex-approved depositories.  They reported receiving 595,036 troy ounces of silver...and shipped a chunky 1,010,029 ounces out the door.  The link to all that action is here.

Here are a couple of free paragraphs from silver analyst Ted Butler's weekend commentary to his paying clients...

"Changes in the visible stocks of silver have garnered attention this week...and over the past month or so. COMEX silver warehouse stocks have surged higher while there have been some notable withdrawals from the big silver ETF, SLV. Whether there is a direct connection for silver moving from the SLV to the COMEX warehouses is hard to say, but I suppose it’s possible. As I indicated recently, there are always many possibilities for why silver would come into or out from the COMEX warehouses and it is usually near impossible to know for sure. I also wrote recently that it would not surprise me to see COMEX silver inventories rise by 10 or 20 million ounces and we are now more than half way to the upper level of that range. Even if the COMEX silver inflow is not directly related to the decline in SLV holdings, my main point is that any increase in COMEX totals should not automatically be interpreted as representing a surplus and being bearish on price. That’s because there are so many possible explanations."

"Sales of Silver Eagles appear to have caught investors’ favor again, based upon strong sales from the US Mint for the New Year. Obviously, it’s too soon to reach definite conclusions about the state of silver retail demand, so the situation must be monitored. A new report confirmed a recent observation of mine that sales of Silver Eagles for 2011 accounted for the entire US mine production for the year. This is quite shocking when you think about it, as the US is the world’s seventh largest silver producing country. (The report also confirmed that Canada’s entire silver mine production was consumed by the sale of Silver Maple Leafs last year.) The US is considered to be the largest silver consumer in the world (although I think China may now be larger). Since all the silver produced by US mines was consumed by the sale of Silver Eagles that means the US import reliance on foreign supplies of silver has never been greater, even greater than for petroleum. That might be something to keep in mind when thoughts of silver oversupply crop up on increasing COMEX warehouse totals."

I also received a full commentary about last Friday's Commitment of Traders Report from ewfresearch.com.  Along with his excellent graphs and analysis in that report, he has also included commentary headlined "Extreme Silver Probabilities".  The link to that...and the gold and silver COT reports...is here.

Here's another nifty chart that's courtesy of Washington state reader S.A...and it needs no further embellishment from me, as it's self-explanatory.

It was a busy weekend for stories...and I have quite a few for your reading pleasure today.

 

¤ Critical Reads

The Never Ending MF Global Story: Regulators Block The Truth

Instead of looking out for MF investors – and customers who are still waiting for their money – it looks like regulators and the bankruptcy trustees are busy suppressing information. Instead of full transparency, regulators and the trustees are holding onto crucial details that might tell us all who was asleep at the wheel when the broker/dealer and futures commission merchant (FCM) headed over the cliff.

Bob English, an independent trader and contributing editor to the blog, Economic Policy Journal, published a post Monday morning that raises serious questions about the Securities and Exchange Commission’s program of regulation for broker/dealers and, in particular, the agency’s role in keeping the truth from the public about what went wrong at MF Global. We’re also being kept from the truth about other broker/dealers who may be putting risky trades on their books or whose controls over segregation of customer assets may be weak or non-existent.

Like I told Dr. Dave Janda in my radio interview on Sunday...all of Wall Street is a criminal organization, including the 'regulators'.

Reader 'David in California' sent me this story that was posted over at the forbes.com website yesterday...and the link is here.

Read more...

From East and West, Foreclosure Horror Stories

The authorities have fallen silent lately about a possible settlement over foreclosure abuses at big mortgages servicing companies.

The talks began in earnest last March, and people keep whispering that a deal is nigh. But last week, a spokesman for Shaun Donovan, the secretary of Housing and Urban Development and a lead negotiator, said that there was nothing new to report.

That’s probably not a terrible thing. After all, no deal is better than a bad deal. State and federal authorities jumped into these talks without conducting serious investigations into foreclosure shenanigans. Why strike a deal — one that would, say, shield banks from new litigation over toxic loans, flawed securitizations and the mess at MERS, the registry that has made such a jumble of land records — without knowing what happened?

If you're caught up in the mortgage fraud web in the U.S...this Gretchen Morgenson story in the Sunday edition of The New York Times is a must read...and the link is here.

Read more...

Alasdair Macleod: Financial repression

Economist and former banker Alasdair Macleod, who spoke at GATA's London conference last August, examines "financial repression" today in his new essay at GoldMoney. "Financial repression" involves various forms of market rigging by government, and while it appears to have worked for a while just after World War II, Macleod is doubtful about its prospects today. His commentary is headlined "Financial Repression" and it's posted at the goldmoney.com website.

I borrowed this commentary from a GATA release on Sunday...and I thank Chris for writing the preamble.  The story is must read...and the link is here.

Read more...

The buzz builds: Reuters columnist rationalizes 'financial repression'

No sooner had Alasdair posted his comments regarding the BIS paper on 'financial repression' when an article showed up in a Reuters column on Sunday saying that this was, all in all, a wonderful idea.

As Chris Powell added in the GATA dispatch where the story was imbedded..."Gold price suppression [and silver - Ed] can't quite yet be mentioned in this propaganda, but it fits perfectly. Indeed, it's the keystone of the operation."

That is indeed the case...and I suppose that a little strychnine in your drinking water wouldn't do you any harm, either.  The link to this must read Reuters story is here.

Read more...

Dr. Dave Janda interviews your humble scribe

The good doctor was kind enough to interview me on his Operation Freedom radio program over at WAAM 1600 All-Talk radio out of Ann Arbor, Michigan on Sunday afternoon.  It lasts about twenty-five minutes...and the link to the mp3 file is here.

Read more...

Iran and Russia drop dollar for their own currencies in bilateral trade

Iran and Russia have replaced the U.S. dollar with their own currencies in their trade ties, a senior Iranian diplomat announced on Saturday.

Speaking to FNA, Tehran's ambassador to Moscow, Seyed Reza Sajjadi said that the proposal for replacing the dollar with the ruble and rial was raised by Russian President Dmitry Medvedev in a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana on the sidelines of the Shanghai Cooperation Organization meeting.

"Since then we have acted on this basis and a part of our interactions is done in ruble now," Sajjadi stated, adding that many Iranian traders are using the ruble for their trade deals.

This story was posted by the FARS News Agency on Saturday...which I plucked from Chris Powell's GATA release.  The link is here.

Read more...

Who's in charge the next time banks fail?

The year was 1984 and Lord Lawson received a telephone call at 6am on October 1 informing him that the Governor of the Bank of England wanted to see him "before the markets opened".

At the duly arranged meeting some 90 minutes later, Lord Lawson was informed that Johnson Matthey Bankers (JMB) was on the brink of collapse. The Bank would need to take JMB over or face a possible run on the bank's parent company, Johnson Matthey, a key player in the London bullion market. Sir Robin Leigh-Pemberton, the Governor, explained that there was no alternative as all other options – a private sector rescue – had been exhausted. JMB, he explained, had a very bad loan book. Losses could total £100m and the Treasury (and hence the taxpayer) was in line to make up any shortfall in funding that could not be provided by the Bank.

Lord Lawson had a few minutes to make a decision. "If the news itself was unpalatable, the very late stage at which I was informed made it even worse," Lord Lawson wrote. "As a result I was being given only a few minutes to decide whether or not to give an open-ended guarantee of taxpayers' money in support of a rescue about whose wisdom I was far from convinced."

Anyone who owns a decent amount of silver and/or gold probably has a few J&M bars in their stash.  This is how JMB vanished off the face of the earth...although what's left of the company still pours 100 oz. silver bars out of their refining facility in Salt Lake City.

This story appeared in the Saturday edition of The Telegraph...and is Roy Stephens first offering of the day.  It's well worth the read...and the link is here.

Read more...

Swiss central bank chairman quits over wife's currency trade

Swiss National Bank Chairman Philipp Hildebrand resigned with immediate effect today, saying he could not prove he had been unaware of a controversial currency trade made by his wife and wanted to protect the integrity of the central bank.

Hildebrand's decision to relinquish one of the top 10 central banking jobs in the world came as Swiss parliamentarians met to discuss the scandal, which erupted last week after Sarasin bank sacked an employee who leaked details of the trade to a political opponent of the central banker.

Until now, Hildebrand had resisted calls to step down, saying he learned of his wife's trade the day only after she made it and rejecting claims by Swiss magazine Weltwoche that he had personally authorised the currency deal.

I stole this Reuters story from another GATA release on Monday...and the link is here.

Read more...

Germany and the ECB: 'Either Way, We're Trapped'

Berlin appears to be losing influence at the European Central Bank. Leading economist Hans-Werner Sinn, 63, believes that Germany has been 'pushed to the margins' at the institution and that its hard-line positions on monetary policy are a thing of the past.

This very short interview was posted on the German website spiegel.de yesterday...and is Roy Stephens second offering in this column.  It's worth a minute of your time...as that's how long it will take to read it.  The link is here.

Read more...

European Banks Now Get Loans From Cash-Rich Firms

Blue-chip names like Johnson & Johnson, Pfizer, and Peugeot are among firms bailing out Europe's ailing banks in a reversal of the established roles of clients and lenders.

One source with knowledge of the so-called repo deals, or short-term secured lending, said the two U.S. pharmaceutical groups and French car maker were the latest to sign up for them.

Europe's banks are struggling to secure the cash to fund their day-to-day business and have largely stopped lending to each other for fear Europe's sovereign debt could land any of their peers in trouble.

You have to wonder how stupid these companies are, because if the banks don't trust each other, why should these companies?  Just asking.

This Reuters story from yesterday is courtesy of West Virginia reader Elliot Simon...and the link is here.

Read more...

Resistance from Private Creditors: Doubts Grow over Greek Debt Restructuring

The outlook for cash-strapped Greece is looking increasingly bleak. Government reforms are behind target, and negotiations with private creditors over voluntary debt relief are stalled. A disorderly default could be just weeks away.

At least the backdrop to the heated exchange was glamorous. The venue for the mid-December conference, which was hosted by the US Chamber of Commerce, was the Hotel InterContinental in Athens. Poul Thomsen, wearing a purple tie, was standing on the floor of the ballroom. Thomsen, the International Monetary Fund's envoy for Greece, summarized the country's reform efforts to date in harsh terms. "Reforms are running behind schedule in most areas," he said. There was no longer even a pretense of hope. When Thomsen predicted that the economy would shrink in 2012, someone in the room shouted angrily: "Your troika is destroying us!"

Two years after the crisis began, the Greek tragedy is reaching a new climax. The economic data are distressing, the reforms are progressing very slowly...and now negotiations with private lenders on a voluntary write-down of Greek government bonds appear to be on the rocks.

But the Greek government and the so-called troika, consisting of the European Union, the IMF and the ECB, are determined to stick to their current strategy. IMF envoy Thomsen plans to return to Athens next week, and he is already starting to ramp up the pressure. In light of the country's gloomy economic outlook, the troika wants to revise the benchmark figures for the restructuring program approved in October.

This is another story posted over at spiegel.de yesterday...for which I thank Roy Stephens once again.  It's well worth your time...and the link is here.

Read more...

With Work Scarce in Athens, Greeks Go Back to the Land

Unemployment in Greece is now 18 percent, rising to 35 percent for young people between the ages of 15 and 29 — up from 12 percent and 24 percent, respectively, in late 2010. But the agricultural sector has been one of the few to show gains since the crisis hit, adding 32,000 jobs between 2008 and 2010 — most of them taken by Greeks, not migrant workers from abroad, according to a study released this fall by the Pan-Hellenic Confederation of Agricultural Associations.

Nikos Gavalas and Alexandra Tricha, both 31 and trained as agriculturalists, were frustrated working on poorly paying, short-term contracts in Athens, where jobs are scarce and the cost of living is high. So last year, they decided to start a new project: growing edible snails for export.

As Greece’s blighted economy plunges further into the abyss, the couple are joining with an exodus of Greeks who are fleeing to the countryside and looking to the nation’s rich rural past as a guide to the future. They acknowledge that it is a peculiar undertaking, with more manual labor than they, as college graduates, ever imagined doing. But in a country starved by austerity even as it teeters on the brink of default, it seemed as good a gamble as any.

This story was posted in The New York Times on Sunday...and is another Roy Stephens offering.  It's an interesting read...and the link is here.

Read more...

Beware the anti-gold propaganda explosion, Turk tells King World News

GoldMoney founder and GATA consultant James Turk, interviewed by King World News yesterday, warns against the explosion of anti-gold propaganda now coming from central planners, market manipulators, and government agents. Currency debasement remains inevitable, Turk says, and that means higher precious metals prices.

The introductory paragraph is courtesy of Chris Powell...and the link to the KWN blog is here.

Read more...

Dutch central bank admits 90% of its gold is abroad

Here's a GATA release from yesterday...and I'll let Chris Powell do the honours, as his preamble to the story is extensive.  Both the preamble and imbedded story are must reads.  It was posted over at the gata.org website on Saturday...and the link is here.

Read more...

Netherlands Urged to Repatriate Gold Reserves

Notwithstanding how good current relations may be between the Netherlands and the U.S., once global investor confidence waned on the American dollar, the Dutch could still lose the gold reserves it placed in full trust in various strategic vaults in the US. Call it perhaps survivor's instinct.

Gold experts in the Netherlands advised the federal government it should start facilitating the repatriation of its gold reserves from the U.S. , as well as from Great Britain and Canada, after the Dutch central bank (DNB) confirmed a Dutch newspaper report by the de Volkskrant that revealed much of the country's reserves of the yellow metal are not within the country.

Dutch gold experts all the more got restless when American commentator Jim Richards, according to the Radio Netherlands Worldwide, said the US government has the power to confiscate whatever foreign gold reserves it holds in the event global interest on the dollar decelerated, still owing to the global fiscal crisis that had shaken the fiscal stability of the much developed economies.

This 3-paragraph story was posted on the ibtimes.com website yesterday...so you've already read the entire thing...and the link to the hard copy is here.

Read more...

Gold Will Make a New High on This Date

Well, if you don't subscribe to CR's free publication Casey's Daily Dispatch then you have to put yesterday's commentary on your must read list.  Both Louis James and Jeff Clark have more than a few things to say about the gold market.

"Some investors are frustrated and a few are worried that gold seems stuck in a rut. This stall in price has happened before, of course, but since 2001 it's always eventually powered to a new high. Unless one thinks the gold bull market is over, it's natural to wonder how long might we have to wait before seeing another new high."

"Absent some sort of global shock that sparks another rush into gold (easily possible in today's climate), I think the answer may lie in examining the size and length of past corrections and how long it took gold to reach new highs afterward."

As I said, it's a must read...and the link is here.

Read more...

Reasons For Gold’s Weakness

Bron Suchecki over at The Perth Mint has a comment about Jeff Clark's article posted above.  In it he states..."I agree with Jeff Clark from Casey Research, who says investors should not “confuse short-term volatility with long-term forces” and stay the course. In this article I discuss the short-term factors Jeff identifies, and also analyse the recent decline in Indian consumer demand, another significant issue in the gold market."

This blog, posted over a the perthmintbullion.com website, is a must read as well...and the link is here.

Read more...

Gold Could Hit $1,940 an Ounce in ’12: Goldman Sachs

Goldman Sachs Group Inc. is staying “overweight” on commodities as a rebound in demand revives speculation of shortages, with gold a favorite for 2012 as investors seek a hedge against Europe's debt crisis.

Gold futures traded on the Comex in New York may climb to $1,940 an ounce in 12 months as U.S. interest rates and inflation are expected to remain low, Jeffrey Currie, head of commodities research, said at the company’s Strategy Conference 2012 in London today, repeating the bank’s December forecast.

Morgan Stanley also named gold among its top picks in a report e-mailed today, saying bullion may average a record $2,200 an ounce. Gold prices are unlikely to move higher than $1,940 unless there is a “much weaker real rate environment” driven by inflation, which is not embedded in Goldman’s forecast, Currie said.

This Bloomberg story was sent to me by Washington state reader S.A. yesterday...and the link is here.

Read more...

U.S. Gold's McEwen expects investment mania in precious metals

Mining entrepreneur Rob McEwen sure didn't sound discouraged in his interview with King World News yesterday. McEwen, founder of gold monster Goldcorp and now CEO of U.S. Gold, says money printing will carry the precious metals into an investment mania. An excerpt from the interview is posted at the King World News website...and the link is here.

Read more...

Ted Butler: Three elements of silver manipulation

Silver market analyst Ted Butler explains why silver market manipulation would be easier to prove than Bart Chilton of the U.S. Commodity Futures Trading Commission may think, and he wonders why the commission's latest investigation of the silver market has gone on for 3 1/2 years without result.

The contents of this GATA release...along with the Bart Chilton interview over at the financialsense.com website, imbedded in Ted's commentary...are all absolute must reads and must listens...and I urge you to give these commentaries the time that they richly deserve.

The link to the GATA release is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

The fatal investment anomaly in today’s world is that nobody knows what anything is worth anymore, because nobody is allowed to meet in an unfettered market to determine it. Valuations on every class of asset or investment have been systematically falsified in a doomed attempt to prop up a system in which the only “collateral” is a promise to pay. When the means of payment can be...and is...created out of thin air in ever increasing quantities, the promise is worthless. - Bill Buckler, The Privateer...January 8, 2012

The above quote is the Bill Buckler treatment of Chris Powell's classic line..."There are no markets anymore, only interventions."

Even though it was reasonably obvious that gold and silver price were held in check yesterday, I wouldn't read a whole heck of a lot into it.  Volume was pretty light in both metals...and a determined seller...or buyer...can shove prices around pretty easily under those circumstances.

The preliminary open interest numbers for Monday showed small declines in o.i. in both gold and silver.  For Friday's trading day, gold o.i. was down a bit...and silver was unchanged.  What it all means won't be known until Friday...and today is the cut-off for that report.

With both silver and gold pretty much sold out to the down side, it seems likely that the only way that the 'big 8' Commercial traders in silver are going to doing any more serious short covering is to the upside.  Their last attempt at that began in late August of 2010...and that rally lasted until May 1st 2011...and we all know what happened then.  Here's silver's 2-year chart to put that rally into perspective.

(Click on image to enlarge)

Whether that will happen again still remains to be seen...but for the moment we seem to be treading water in both metals.

If we do go lower from here in silver, it will be done on very little real volume, as there are almost no speculative longs left...and as Ted pointed out in his weekend commentary..."can the raptors trick the tech funds into going short on lower prices?"  That remains to be seen.

Neither gold nor silver did much in Far East trading earlier today...but shortly after London opened both metals caught a bid...and have really started to show some real legs to the upside...and as I hit the 'send' button at 6:15 a.m. Eastern time, gold is up about twenty-two bucks...and silver is up about 75 cents.  How long this state of affairs is allowed to last is anyone's guess...but we'll probably find out soon enough.  Volume, which had been very light in both metals up until the rallies began, has jumped substantially since, so it appears that these rallies are not going unopposed.  Here's the silver chart...

It could be an interesting Comex trading session when it begins at 8:20 a.m. Eastern time in New York.

That's all I have for today...and I'll see you here on Wednesday.