Gold & Silver Daily
"This was the HFT boyz and their algorithms putting the boots to the price"
 

¤ Yesterday In Gold & Silver

The gold price chopped quietly lower in fits and starts until the London p.m. gold fix was in.  At that point, the gold price was down about thirteen dollars.  Then a not-for-profit seller, algorithms at the ready, ground the gold price down by another twenty bucks, with the low tick coming minutes before the 1:30 p.m. COMEX close.  From that point the gold price crawled higher into the close of electronic trading at 5:15 p.m.

The high and low ticks were reported by the CME Group as $1,285.40 and $1,251.00 in the February contract.

Gold finished the Thursday trading session at $1,258.10 spot, down $25.20 from Wednesday's close.  Net volume was way up there at 255,000 contracts.

Silver traded more or less flat in Far East trading on their Thursday morning---and briefly penetrated the $18 spot price mark in early morning trading.  Then, starting at 1 p.m. Hong Kong time, "da boyz" showed up---and by 10:40 a.m. EST, they had the price down about 60 cents.  Then the HFT algorithms kicked in---and the low tick was printed about 12:20 a.m. EST.  Then, like gold, it rallied a bit into the close.

The high and low ticks were reported as $18.05 and $16.74 in the March contract an intraday move of over 7 percent.

Silver closed yesterday in New York at $16.915 spot, down $1.045.  Volume, net of February, was enormous at 85,000 contracts.

The palladium and platinum charts looked very similar to the silver and gold charts.  Platinum finished the Thursday session at $1,218 spot, down 31 bucks from Wednesday.  Palladium closed at $771 spot, down 21 dollars.  Here are the charts.

The dollar index closed late on Wednesday afternoon in New York at 94.63---and made it up to 94.80 by 1:00 p.m. Hong Kong time.  From there it chopped lower, hitting its 94.37 low tick the moment that the HFT boyz and their algos showed up around 10:30 a.m. EST in New York.  By 12:30 p.m. the dollar index had blasted up to its 95.00 high---and got sold down from there, closing the Thursday session at 94.68---up only 5 basis points on the day.

All of the the precious metal declines occurred while the dollar index was declining from 94.80 to its 94.37 low tick---and their subsequent rallies were in the face of a sizzling dollar rally.  As I've said on many occasions---and will repeat again here---what the dollar index is doing is almost totally irrelevant---with yesterday's price/dollar action an excellent case in point.  Movements in precious metal prices have everything to do with what's happening with the paper traders in the COMEX futures market.

So the next time you hear the brain-dead pundits saying the the precious metal rose or fell on what was happening in the currency markets, it's an excellent bet that you can reject those comments for the bulls hit that they are.

The gold stocks gapped down at the open, of course, but rallied into the London p.m. fix before turning lower when the assault on the gold price began shortly after.  Their low tick came when gold hit its low, which was shortly before the COMEX close.  They rallied sharply from there---and were in danger of breaking into positive territory before getting sold down a bit going into the close.  The HUI finished the Thursday session down only 1.48 percent.

The silver equities follows a similar price pattern but, not surprisingly, they didn't do as well as their golden brethren---and Nick Laird's Intraday Silver Sentiment Index closed down 3.43 percent.

Considering the carnage in both gold and silver yesterday, I consider the share price action to be a positive.  Let's hope it lasts through today.

The first of two CME Daily Delivery Reports showed that  12 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories today.  As I said in this space yesterday, the balance of January's open interest would have to go off the books by the close of business today---and here it is.

The January delivery month closed out as follows---95 gold contracts were delivered, but a chunky 453 silver contracts were posted for delivery, which is an impressive outcome to what is traditionally a non-delivery month.

Late yesterday evening the CME Group updated the Daily Delivery Report with the First Day Notice numbers for delivery into the February gold contract starting on Monday.  It showed that only 55 gold, along with an astonishing 288 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  Jefferies was the only short/issuer of note in both gold and silver---and the list of long/stoppers totalled about ten, with no standouts.  But that wasn't the case in silver, as Jefferies was the only short/issuer---and Canada's Scotiabank stopped 282 of them.  The link to yesterday's Issuers and Stoppers Report is here.

The Preliminary Report for the Thursday trading session showed zeros across the board for outstanding deliveries into the January contract, as per my previous comments.  The gold open interest for February shows a very high 8,494 contracts, but I expect that to drop precipitously in the days ahead, so don't use that number as guide.  The number in tomorrow's Preliminary Report will be a better guide.  In silver, the February o.i. shows 316 contracts, a goodly portion of which [288] were posted for delivery on Monday

There was another surprise deposit in GLD yesterday, as 182,454 troy ounces were shipped in by an authorized participant.  I would guess that this was being deposited to cover an existing short position.  As of 9:53 p.m. EST yesterday evening, there were no reported changes in SLV.

Joshua Gibbons, the "Guru of the SLV Bar List", updated his website with the weekly report from the iShares.com Internet site---and here's what he had to say:  "Analysis of the 28 January 2015 bar list, and comparison to the previous week's list -- 5,696,474.9 troy ounces were removed (all from Brinks London), no bars were added or had serial number changes."

"The bars removed were produced by the following refineries: Handy Harman (1.8M oz), Britannia (0.9M oz), Hoboken (0.5M oz), Noranda (0.7M oz), Asarco (0.6M oz), and 23 others."

"As of the time that the bar list was produced, it was overallocated 390.7 oz.  All daily changes are reflected on the bar list."

"As has been common, over 99% of the bars removed recently had been in SLV for many years. I do not know if they are being 'hand picked' (e.g. COMEX-approved brands), or if this is just a coincidence (e.g. entering the vault from the back entrance to remove bars, for those vaults with multiple entrances!)."

The U.S. Mint had a tiny sales report yesterday.  They sold 1,000 troy ounces of gold eagles---and another 111,500 silver eagles.

Once again there was no in/out activity in gold at the COMEX-approved depositories on Wednesday---and there was very little activity in silver, as nothing was reported received---and only 36,027 troy ounces were shipped out.

I have another whole raft of stories for you again today---and I'm happily leaving the final edit up to you once again.

 

¤ Critical Reads

Janet Yellen Saves the Day: Stocks Soar After Fed Chairwoman Tells Democrats to BTFD

Because everyone knows you BTFD when Janet Yellen speaks (and Sell The F**king Shit, aka STFS, out of precious metals in the middle of surging currency volatility and monetary policy chaos...)

Thank The Market Gods for Janet Yellen... Stocks were rescued back above their 100DMAs to prove everything is fine...which dragged all stock indices back into the green post-QE3

The big news was Gold & Silver crushed... Crude new cycle lows... and Swiss Franc slapped hard and put away wet... (oh and stocks bounced)

This rant, with some excellent charts, showed up on the Zero Hedge Internet site at 4:06 p.m. EST yesterday afternoon---and the first person through the door with this story was Dan Lazicki.

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David Stockman: Fed Statement: Not Dovish, Not Hawkish—Just Gibberish

Call it 529 words of gibberish and be done!

All of the FOMC’s platitudes about the economy “expanding at a solid pace”, labor market conditions which have “improved further”, household spending which is “rising moderately” and business fixed investment which is “expanding” are not simply untruthful nonsense; they are a smokescreen for the Fed’s actual intention. Namely, to keep the Wall Street gamblers in free money in the delusional hope that ever rising stock prices will generate a trickle down of “wealth effects” in the main street economy.

But in equivocating still another time about when they intend to get the Fed’s big fat ZIRP thumb off the money  market, the denizens of the Eccles Building have shown their true colors. The FOMC is not really comprised of economists or central bankers. It is simply a groupthink posse of spineless cowards who are petrified of a Wall Street hissy fit—–and are therefore willing to dispense whatever spurious word clouds they judge may be necessary to keep the gamblers hitting the “bid” until the next meeting.

David sounds miffed!  This rant appeared on his website yesterday sometime---and it's the second offering of the day from Dan Lazicki.

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Caterpillar CEO: 'Rising Dollar Won't Be Good for U.S. Economy'

The surging dollar, which has reached multi-year highs against a range of currencies in recent weeks, is taking a hefty chunk out of many U.S. companies' earnings.

And that means pain for the economy as a whole, say Doug Oberhelman, CEO of Caterpillar, one of the companies affected.

"The rising dollar will not be good for U.S. manufacturing or the U.S. economy," he said in a conference call with analysts and investors Tuesday, The Wall Street Journal reports.

A strong dollar reduces the revenue earned by U.S. companies overseas, because that revenue is now worth less when converted from foreign currencies into dollars. An ascendant greenback also depresses U.S. companies' exports by making them more expensive in foreign currency terms.

This news story appeared on the moneynews.com Internet site at 7:20 a.m. EST on Thursday morning---and I thank West Virginia reader Elliot Simon for sending it along.

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Almost half of U.S. households exhaust their salaries

The Federal Reserve has declared economic growth "solid." But several new reports show most Americans are treading along a dangerous financial tightrope, where one slip could be devastating.

Nearly half of U.S. households — 47 percent — say they spend all of their income, go into debt or dip into savings to meet their annual expenses, according to an analysis of Fed survey data released Thursday by the Pew Charitable Trusts.

"They could not withstand a serious financial emergency," said Diana Elliott, a Pew research manager who co-wrote the analysis. "That really is the contrast to the macroeconomic story" of a recovering economy.

"Macro indicators tell us a lot, but they don't tell us what is specifically happening within families," she said.

No surprises here.  This AP story showed up on the denverpost.com Internet site at 9:59 a.m. MST yesterday morning---and it's the first offering of the day from Manitoba reader U.M.

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Baltic Dry Index: 666

Forget The Hindenburg Omen and The Hilsenrath Omen, today we have the real deal as The Baltic Dry Index hits the ominous 666 level - the lowest print for this time of year on record.

Of course, just like with oil - this is brushed off as over-supply (not under-demand) and we are sure someone will opine how positive this drastic deflation of shipping rates is for global business... but still - this is the lowest print since September 2012 (and practically the lowest since the recession).

This tiny article, with two excellent charts, put in an appearance on the Zero Hedge website at 9:33 a.m. on Wednesday morning EST.  It's courtesy of reader Brad Robertson.

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Raul Castro: U.S. must return Guantanamo for normal relations

Cuban President Raul Castro demanded on Wednesday that the United States return the U.S. base at Guantanamo Bay, lift the half-century trade embargo on Cuba and compensate his country for damages before the two nations re-establish normal relations.

Castro told a summit of the Community of Latin American and Caribbean States that Cuba and the U.S. are working toward full diplomatic relations but "if these problems aren't resolved, this diplomatic rapprochement wouldn't make any sense."

Castro and U.S. President Barack Obama announced on Dec. 17 that they would move toward renewing full diplomatic relations by reopening embassies in each other's countries. The two governments held negotiations in Havana last week to discuss both the reopening of embassies and the broader agenda of re-establishing normal relations.

Obama has loosened the trade embargo with a range of measures designed to increase economic ties with Cuba and increase the number of Cubans who don't depend on the communist state for their livelihoods.

This AP story, filed from San Jose, Costa Rica, found a home on the Thailand Internet site thaivisa.com on Wednesday sometime---and I thank South African reader B.V. for finding it for us.  It's certainly worth skimming.

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Bank of England chief 'delusional' to claim U.K. escaped debt trap - economist

U.K. economist and anti-austerity campaigner Michael Burke rejected Carney’s claim that Britain had escaped its debt trap. The former Citibank economist said Britons remain deep in debt, and that people are borrowing more than ever.

“Mark Carney is delusional if he thinks Britain and the U.S. have found a way out of the debt trap,” Burke told Russia Today.

“They have transferred debt, from companies to households. Household debt in both countries is among the highest in the world.”

Speaking in Dublin, Carney sharply criticized austerity policies common to the Eurozone states, warning the single-currency area was constrained by strangulating levels of debt that could plunge it into years of stagnation.

This article was posted on the Russia Today website at 2:44 p.m. Moscow time on their Thursday afternoon, which was 6:44 a.m. in New York---and it's the second story in a row from reader B.V.

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U.K. banks rigging markets are like 'careless fighter pilots'

A senior Bank of England official has compared banks' failures to prevent Libor and foreign exchange rigging to a fighter pilot ignoring safety checks, saying it should be in the banks' own interests to stamp out bad behaviour.

Andrew Hauser, the BoE's director of markets strategy, said ensuring good conduct had become misaligned with profitability at banks, causing systematic failures that led to traders ripping off customers in an attempt to make money.

He said that despite an "enormous" focus on improving standards at many banks, promises to reform could become like a quickly-forgotten new year's resolution if rules are not put in place to make sure it is in a bank's best interests to do so.

This story was posted on the telegraph.co.uk Internet site at 1:42 p.m. GMT on their Thursday afternoon---and I found it embedded in a GATA release.

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U.K. summons Russian ambassador after 'dangerous' bombers disrupt civil aircraft

Britain has summoned the Russian ambassador to explain why two Russian long-range bombers flew over the English Channel on Wednesday, dangerously close to passenger planes.

The Typhoon fighters were scrambled to escort the long-range Russian Bear planes – which are capable of carrying nuclear weapons – out of the U.K.'s “area of interest”.

Sources said the Russian planes were flying without their transponders turned on, making them invisible to civilian aircraft. A number of flights arriving in Britain had to be diverted to avoid potential disaster.

The unwelcome visit was part of an "increasing pattern of out-of-area operations by Russian aircraft", according to the Foreign Office.

This news item appeared on The Telegraph's website at 6:36 p.m. GMT yesterday---and I thank Casey Research's own Louis James for passing it around yesterday.

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It Will Now Cost You 0.5% to Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time in Two Weeks

When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!

Ironically, all this will achieve is delay the Peg breach by a few weeks. If anything, the Danish central bank is merely confirming that while it hasn't sounded an all out retreat from currency wars, like the Swiss and Singapore banks did recently, it is in furious retreat and it is only a matter of time at this point.

Yep, another euro peg about to bite the dust.  I'm taking bets as to what day in February it will be.
This story showed up on the Zero Hedge website at 10:13 a.m. EST on Thursday morning---and it's the second contribution of the day from reader U.M.

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Germany succumbs to Europe’s deflationary crisis

Germany has succumbed to deflation for the first time in more than five years, and may not see inflation again before the year is out.

Inflation fell below zero for the first time since October 2009, according to preliminary estimates from statistics agency Destatis, as prices dropped by 0.3pc in the year to January.

Analysts had expected deflation - but not at this pace. A poll suggested that prices would fall by just 0.2pc in the period. Final results for January will be published on February 12.

There are fears that prices may continue to fall for some time. Michala Marcussen, of Societe Generale, said: "German inflation should not turn positive before the final quarter of 2015."

This article showed up on the telegraph.co.uk Internet site at 1:05 p.m. GMT on their Thursday afternoon---and my thanks go out to Roy Stephens for sending it.

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Lessons from 1953: The debt write-off behind Germany's 'economic miracle'

Six decades ago, an agreement to cancel half of postwar Germany's debt helped foster a prolonged period of prosperity in the war-torn continent. The new government in Athens says Greece – and Europe – now need a similar deal.

When discussing Greece’s whopping $310 billion debt, the country's new Prime Minister Alexis Tsipras likes to recall a time when Europe's great debt offender was not Greece, but Germany, today's paragon of fiscal responsibility. The leader of the radical-left Syriza party refers in particular to an international conference held in London in 1953, during which West Germany secured a write-off of more than 50% of debt, accumulated after two world wars. Back then, with memories of Nazi atrocities still fresh, many countries were reluctant to offer such generous debt relief. But the US persuaded its European allies, including Greece, to relinquish debt repayments and reparations in order to build a stable and prosperous Western Europe that could contain the threat from Soviet Russia.

“Tsipras is right to remind Germans how well they were treated, with both debt relief and money from the Marshall Plan,” says Professor Stephany Griffith-Jones, an economist at Columbia University, referring to the US programme to help rebuild European economies after World War II. She believes Greece is justified in demanding a more generous approach from its creditors, despite obvious differences between its current plight and that of war-ravaged Germany. “In fact, Greece’s situation is perhaps more urgent because the pressure from markets and the financial sector is so much stronger than in the 1950s,” she says.

This very interesting article appeared on the france24.com Internet site yesterday Europe time---and it's worth reading.  I thank reader B.V. for digging it up on our behalf.

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Alexis Tsipras' Open Letter to Germany: What You Were Never Told About Greece

Most of you, dear [German] readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.

In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.

In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.

This absolute must read commentary appeared on the Zero Hedge website at 10:27 a.m. EST on Thursday morning---and the first reader through the door with it was our man in Greece, Harry Grant.

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Investors have woken up to Greece's nuclear risk

Markets have woken up to Greek nuclear risk. Bank stocks on the Athens exchange have crashed 44pc since Alexis Tsipras swept into power this week with a mandate to defy the European power structure.

Greek bonds bought with such zest by investors last April - entranced by the mirage of recovery, and deaf to simmering revolution below - are signalling a rapid slide towards bankruptcy. Five year yields spiked to 13.5pc today.

Contrary to expectations, Mr Tsipras has not resiled from a long list of campaign pledges that breach the terms of Greece's EU-IMF Troika Memorandum, and therefore put the country on a collision course with the Brussels, Berlin, and Frankfurt.

He told his cabinet today that the government is willing to negotiate on its demands for debt relief but will not abandon its core promises to the Greek people. “We will not seek a catastrophic solution, but neither will we consent to a policy of submission. The country is holding up its head,” he said.

Ambrose Evans-Pritchard picks up the Greece story---and runs with it in this article that appeared in The Telegraph at 8:25 a.m. GMT yesterday morning.  It's definitely worth reading---and I thank Roy Stephens for sharing it with us.

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Alexis Tsipras Most Outrageous Outburst Yet?

Speaking in May 2014 (ahead of Ukraine's elections) new Greek Prime Minister Alexis Tsipras made very clear why he is now against Germany's push for further sanctions against Russia.

[The SYRIZA] party believes that the new government in Ukraine came to power as a result of a coup, and call it a junta.

"We should not accept or recognize the government of neo-Nazis in Ukraine," the Athens News Agency quotes Tsipras who believes that the Ukrainian people should decide their future themselves.

Speaking about different peoples' movements for self-determination, Tsipras said that the European left respected the right to self-determination, but nationalism and clashes could not lead to positive results.

"We in the E.U. should not give preference to changing borders, but must respect the position of the peoples, who have decided to create a Federation within the state," said the SYRIZA leader.

This short, but interesting commentary appeared on the Zero Hedge website at 6:51 p.m. EST yesterday evening---and it's definitely worth reading as well, as is the embedded link to the original story from 2014.  It's another offering from reader B.V.

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Greece agrees E.U.-Russia sanctions, defends its rights

The new Greek government has agreed to impose more EU sanctions on Russia, while defending its right to shape European foreign policy.

Foreign ministers in Brussels on Thursday (29 January) extended the Russia blacklist for six months, promised to add extra names, and began preparations for a fresh round of economic sanctions.

The new names - individuals and entities - are to be added by 9 February at the latest.

Leaders will decide whether to move ahead on economic sanctions most likely at a summit in mid-March.

This was a surprise!  I wonder what Moscow thinks now?  This article appeared on the euobserver.com Internet site just after midnight Europe time this morning---and I thank Roy Stephens for sliding it into my in-box just after midnight Denver time.

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Putin Pivots Back: Russia Confirms Willingness to Provide Financial Aid to Greece

We suggested the Greek pivot from Europe to Russia was building previously, and now, we get confirmation from Russia's finance minister Anton Siluanov that the pivot could be mutual, who told CNBC in the interview below:

  • RUSSIA WOULD WEIGH FINANCE FOR GREECE IF ASKED, SILUANOV: CNBC

With fire and brimstone spewing from Germany over the potential for Greece to veto any and everything, it seems Russia may just have stymied Europe's leverage over the newly democratic nation.

It appears, in Russia, Greece has found another possible friend...

Siluanov: "if such a petition [for financial aid] is submitted to The Russian Government, we will definitely consider it."

You need a program to keep up to the changes---and I get the feeling that we ain't seen nothing yet.   He reminds of JFK back in the 60s---and we should hope and pray that they don't have a "grassy knoll" incident in Athens. This Zero Hedge piece appeared on their website at 1:43 p.m. on Thursday---and it's another contribution from reader U.M.

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One Wrong Word From Lukashenko Sends Belarus Bonds Into Tailspin

In less than three hours, Belarus President Aleksandr Lukashenko learned a painful lesson in the language of bond markets.

After sparking a record sell-off in the former Soviet republic’s bonds by raising the prospect of “restrukturizatsiya” -- Russian for restructuring -- of debt, Lukashenko attempted to restore investor calm by saying the word he really meant to use was “refinansirovanie,” or refinancing. While the clarification helped pare the size of the rout, the nation’s $1 billion of bonds due this August still lost 12.4 cents on the dollar, leaving the yield at 47.53 percent, three times higher than it ended Wednesday.

“The mounting uncertainty about the fallout from Russia’s financial crisis across the entire CIS region naturally increases investors’ sensitivity to negative news flow,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by e-mail. “Volatility has returned with a vengeance.”

This Bloomberg news story showed up on their website at 3:09 a.m. Denver time yesterday morning---and it's courtesy of Elliot Simon.

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Russia In the Cross Hairs — Paul Craig Roberts

Washington’s attack on Russia has moved beyond the boundary of the absurd into the realm of insanity.

The New Chief of the U.S. Broadcasting Board of Governors, Andrew Lack, has declared the Russian news service, Russia Today, which broadcasts in multiple languages, to be a terrorist organization equivalent to Boko Haram and the Islamic State, and Standard and Poor’s just downgraded Russia’s credit rating to junk status.

Today Russia Today International interviewed me about these insane developments.

In prior days when America was still a sane country, Lack’s charge would have led to him being laughed out of office. He would have had to resign and disappear from public life. Today in the make-believe world that Western propaganda has created, Lack’s statement is taken seriously.

This longish, but absolute must read commentary by Paul showed up on his website on Monday---and I thank reader M.A. for sending it along.

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Russia, Turkey announce new gas route with hub in Greece borders

Six hundred and sixty kilometers of the new Turkish Stream pipeline will go through the old South Stream corridor and a further 250 kilometers will head in the direction of the European part of Turkey.

The four threads which make up the pipeline will have a capacity of 63 billion cubic meters, Gazprom said in a statement following Tuesday’s meeting between CEO Aleksey Miller and the Turkish Minister of Energy and Natural Resources Taner Yildiz.

The company will apply to carry out design and exploration work in Turkish territorial waters on Wednesday, January 28.

This article was posted on thetoc.gr website on Tuesday---and it's courtesy of Brad Robertson.

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Turkey's Vanishing $8 Billion

Something bizarre is happening on Turkey’s accounting books, and nobody’s quite sure why.

Turkey attracted $7.9 billion of income from unexplained sources during the first eight months of 2014, compared to an outflow of $90 million during the same period a year ago, according to the central bank data. In the three months that followed, $5.6 billion of that left the country.

Unexplained flows of foreign funds into and out of the economy -- marked as “net errors and omissions” in Turkey’s Balance of Payments report -- showed violent swings during the first 11 months of 2014. Outflows in November were estimated to be $3.46 billion, the biggest monthly exodus in more than 16 years, according to central bank data.

This interesting article put in an appearance on the Bloomberg Internet site at 10:18 p.m. MST on Wednesday evening---and it's the final offering of the day from Elliot Simon.

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Pilots Disabled Critical Computers Moments Before AirAsia Crash

The pilots of AirAsia Bhd. Flight 8501 cut power to a critical computer system that normally prevents planes from going out of control shortly before it plunged into the Java Sea, two people with knowledge of the investigation said.

The action appears to have helped trigger the events of Dec. 28, when the Airbus Group NV A320 climbed so abruptly that it lost lift and it began falling with warnings blaring in the cockpit, the people said. All 162 aboard were killed.

The pilots had been attempting to deal with alerts about the flight augmentation computers, which control the A320’s rudder and also automatically prevent it from going too slow. After initial attempts to address the alerts, the flight crew cut power to the entire system, which is comprised of two separate computers that back up each other, the people said.

While the information helps show how a normally functioning A320’s flight-protection system could have been bypassed, it doesn’t explain why the pilots pulled the plane into a steep climb, the people said. Even with the computers shut off, the pilots should have been able to fly the plane manually, they said.

This news item was posted on the Bloomberg website at 11:20 p.m. MST on Wednesday evening---and I thank Dan Lazicki for finding it for us.  The original headline read "Indonesia won't publish preliminary report on Airasia jet probe".

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Lawrence Williams: U.S. 10-month gold mine output falls 7% y/y

Latest USGS figures show that production of gold by U.S. mines was 540,000 ounces (16.8 tonnes) in October, a 6% decrease compared with September output and an 11% decrease compared with that of October 2013 (See table below). Year on year U.S. gold output is down by 7.4%, continuing the decline seen a year earlier. The U.S. is the world’s fourth largest gold producer, after China, Australia and Russia, but is not in danger of losing its place as South Africa, the world’s fifth largest producer in 2013, is some way behind, and production there will also probably be down on a year earlier. However the gap is widening between the U.S. and the three countries above it which are all likely to show increases in gold output in 2014 compared with 2013 when the final 2014 figures are all collated. On the basis of the USGS figures to date, U.S. total gold production for the year is likely to be in the order of 211 tonnes as compared with 230 tonnes a year earlier.

The USGS also produces some interesting data on the destinations of U.S. gold exports. The top four recipients of U.S.-produced gold in October were: Switzerland with 17.6 tonnes, Hong Kong with 12.9 tonnes, mainland China with 7.4 tonnes and India which took in 6.1 tonnes. Other significant recipients were Thailand (2 tonnes), the U.K. (2 tonnes), the UAE (1.36 tonnes) and Singapore with 1 tonne.

This latest USGS data are thus also particularly interesting for China watchers as they would seem to confirm that a significant amount of gold is being imported directly via the Chinese mainland ports of entry rather than just by the old primary route through Hong Kong, although the latter still remains the larger destination. For comparison, in October 2013 only 0.36 tonnes were shipped direct to China and 17.8 tonnes to Hong Kong. This year’s figures thus represent a substantial change which we have commented on in other articles on Chinese total gold demand and the lower Hong Kong export figures seen last year. The gold exported to Switzerland will have mostly been destined to be remelted into kilo bars and shipped onwards – primarily again to China both via Hong Kong and directly.

This very interesting commentary by Lawrie appeared on the mineweb.com Internet site yesterday---and is certainly worth reading.  I thank reader U.M. for bringing it to our attention.

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At the New York Fed, gold can leave discreetly by the back door

With his meticulously documented report yesterday about the close connection between the auxiliary gold vault of the Federal Reserve Bank of New York and the vault area of the adjacent JPMorgan Chase & Co. building, GATA consultant Ronan Manly was pretty cautious:

Manly noted the claim made by the CME Group, operator of the New York Commodity Exchange, that documents about the vault in possession of the U.S. Commodity Futures Trading Commission should be exempt from federal disclosure law, and he speculated that the only statutory provisions for such exemption might be for national defense and foreign policy issues.

Manly was probably understating the situation. That is, it seems fair to conclude that the New York Fed has set up its gold vaults this way so that gold leaving its custody for sensitive market intervention or embarrassing repatriation can depart by the back door rather than by the front door, can depart disguised as the business of a commercial bank rather than be exposed as official business.

I found this brief gold-related story on the gata.org Internet site yesterday.

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CME Hikes Silver Margins By 11%

In a day in which silver was pounded the most since September 2013 without any fundamental reason to explain this weakness (aside for the extensively discussed Precious Metals-USDJPY funding pair trade, so favored by the central banks to punish gold/silver while pushing risk higher), many are wondering: what was the reason for this crash?

Well, in a day in which Yellen now openly advised Democrats in a non-public setting about Fed policy, is it that ludicrous to assume that someone leaked the following announcement made after the close by the CME, namely that silver margins were just hiked by 11%?

I would guess that this margin increase was further pressure on the leveraged longs to cover their positions and get out of the market so that JPMorgan et al could buy them.  This brief Zero Hedge article appeared on their website at 4:48 p.m. EST yesterday afternoon---and it's the last offering of the day from Dan Lazicki.

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Gold: The Early Warning Signs

If, as Kyle Bass so eloquently noted previously, "buying gold is just buying a put against the idiocy of the political cycle. It's That Simple," then recent (post-QE3) activity suggests the narrative is changing fast...

Perhaps Larry Summers was right last week in Davos, "we have to recognize that the era when central bank improvisation can be the world’s growth strategy is coming to an end."

That's all there is to this tiny Zero Hedge piece that appeared on their website at 9:27 a.m. EST yesterday---and the embedded chart is worth a look.  It's another offering from Manitoba reader U.M.

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Physical gold demand likely positive for price in 2015: GFMS

Underlying physical demand is starting to pick up in 2015 and will "give the market longer-term ballast" although more headwinds remain before a return to a bull market, analytical company GFMS said Thursday.

In conjunction with Thomson Reuters, GFMS said in its Gold Update 2 report that professional investors are absent as the dollar "remains king. Fresh professional investment is unlikely much before there is clarity on the Fed's timing over rate hikes."

Continued monetary easing in Europe, Japan and China will support the dollar in the medium term, pointing away from gold investment, "especially as US equities, on an historical multiple at least, are not over-extended."

I'm no fan of anything that GFMS says, but in the interest of fairness I thought I should post it.  This article, filed from London, showed up on the platts.com Internet site at 2:43 p.m. GMT yesterday---and I thank reader U.M. once again for sending it along.

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Global gold output rises, but demand remains muted

Despite the lower gold price, global mine production continued to grow last year, increasing 2% to an all-time high of 3,109 t, the latest survey by GFMS showed.

However, total physical demand fell 19% in 2014 as all areas, with the exception of official sector purchases, registered declines.

GFMS attributed the growth in output to production strategies aimed at reducing unit costs and production growth from large projects – the “legacy of investments” made during high-price periods – brought online or ramped up.

Global scrap supply declined almost 11% last year to an estimated 1,122 t – in line with the 10.3% fall in the dollar gold price – with East Asia bucking the trend with growth of 4%.

One has to wonder if this story is referring to the same GFMS story in the previous posting above, as at no point do they even sound similar or mention the same things.  I'll leave it to you to sort out, dear reader.  This article, filed from Johannesburg, put in an appearance on the miningweekly.com Internet site yesterday---and I thank South African reader B.V. for his final offering in today's column.

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Dubai's shopping festival adds sparkle to gold sales

Whether it is investing, taking advantage of the biggest gold and jewellery promotion, or getting one’s hands on designed products imported from over 30 countries, gold and jewellery has proven to be one of Dubai Shopping Festival’s (DSF) major attractions.

After an overwhelming response received by gold and jewellery shoppers this DSF, Dubai Gold and Jewellery Group (DGJG) said the 20th edition of DSF has greatly contributed to the drastic push in the gold sector raising average gold sales 25-30 per cent at all the participating outlets.

The enormity of prizes, giving people a chance to win up to 100kg of gold and 40 carats of diamonds, including the chance to buy a link in a world breaking longest chain could be one of the main reasons why many shoppers have been flocking to gold shops and to the Gold Souq to purchase gold and jewellery.

Overall demand for jewellery in Dubai has been steadily increasing, but since it is home to the largest Indian expat population, who values gold and considers it as the best way to invest their savings, this has also played a significant role in boosting gold jewellery sales on a larger scale during festive seasons like DSF.

This very interesting story, filed from Dubai, appeared on the gulfnews.com Internet site at 7 p.m. Gulf Standard Time yesterday evening, which was 10 a.m. EST.  Once again it's courtesy of reader U.M.

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Kazakhstan’s Central Bank buying out all gold produced

For the recent two years Kazakhstan’s Central Bank has been buying all the fine gold produced in the country, Tengrinews.kz reported, citing Albert Rau, Minister for Investments.

“Given the turbulent global economy condition, the National Bank has been buying out all the fine gold produced (…) annual production output stands at 22 tons a year”, Mr. Rau said, when presenting a draft law on precious metals and gems in the country’s Majilis (lower chamber).

“As a rule, prices for gold grow amidst growing demand (…) the latter is normally driven by volatility of major currencies. Currently, the keen interest to gold is assigned to the weakening Euro. Gold is seen as a stable harbor”, he elaborated.

This very interesting gold-related article appeared on the linkis.com Internet site on Wednesday sometime---and it's worth reading, as we don't get too much gold news from this area of the world.  Once again I thank reader U.M. for finding this story for us.

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India Customs seizes 365 kg gold worth Rs 1 billion at Chennai airport in 2014

India customs seized 365kg gold worth Rs 1 billion at Chennai airport till December 2014 as against 113kg worth Rs 350 million in 2013.

The increase in seizure is due to high surveillance. We seized gold from passengers, from planes and airport building. More personnel will be inducted into customs at airport and cargo soon. Additional manpower has been sanctioned,” said S Ramesh, chief commissioner of customs, Chennai, after inaugurating a sensitization programme for customs personnel and staff of other agencies organized to mark International Customs Day on Tuesday.

The airport is popular among gold smugglers because of the good connectivity to Singapore, Kuala Lumpur, Colombo and Dubai from where majority of the smuggled gold is sourced.

This short item was posted on the customstoday.com.pk Internet site yesterday---and it's the final story of the day from Manitoba reader U.M.---and I thank her on your behalf.

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India overtakes China as world's top gold consumer

India overtook China as the world's biggest gold consumer in 2014 as global physical demand fell, an industry report showed on Thursday, forecasting that prices that have declined for the last two years would bottom out this year. 

Chinese gold demand slid by more than a third last year to a four-year low of 866 tonnes, while the country's scrap gold supply rose 21 percent to an unprecedented 182 tonnes, the report by GFMS analysts at Thomson Reuters showed. 

Slower economic growth and a crackdown on corruption helped knock Chinese jewellery demand to 608 tonnes, 33 percent below the previous year's "extraordinary" levels, it said. Physical bar demand fell 53 percent to 171 tonnes, a five-year low. 

"We do expect an increase in Chinese demand this year. However, without a dramatic course of events we would not expect it to come close to matching the level in 2013," GFMS analyst Ross Strachan said.

Another story---and another reference to that GFMS report.  This one, a Reuters piece filed from New Delhi, appeared on the rediff.com Internet site at 8:05 p.m. IST---and it's courtesy of reader M.A.

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Lawrence Williams: 36% of October U.S. gold exports to China went direct rather than via Hong Kong

Latest statistics from the USGS make for interesting reading – not because they show U.S. gold output has been continuing to fall – it’s down 7.4% year on year to date – but for the country by country export data.  We have been commenting on Mineweb.com for much of this year that imports to mainland China via Hong Kong remain significant, but by no means as significant as in the past.  We have come up with this viewpoint through extrapolation of Chinese Shanghai Gold Exchange data  which has been high – particularly in the  final quarter of the year – even while net gold imports from Hong Kong have slipped sharply.  That's an anomaly that is hard to explain unless substantial gold imports are coming in by other routes.

But I’ve just received some interesting statistical data from the USGS which shows that a substantial proportion of U.S. gold exports to Hong Kong and China in October went directly to the mainland.  The figures were 12.9 tonnes to Hong Kong and 7.4 tonnes directly to the mainland – or 36%.  This ties in remarkably well with our opinions on the breakdown of Chinese gold imports and that while Hong Kong remains a significant import route it is not nearly so important in the overall picture as it used to be.  By contrast, in October 2013, only 0.36 tonnes were shipped direct to the mainland and 17.8 tonnes to Hong Kong.  A very substantial change indeed.

This short article by Lawrie dovetails nicely with the first gold-related story of the day---and he posted it on his own website lawrieongold.com yesterday.

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¤ The Funnies

Avrupa and Antofagasta intersect copper-rich VMS in Pyrite Belt, Portugal

•             First Greenfields discovery of massive sulfide mineralization in 20 years in the Iberian Pyrite Belt

•             10.85 meters of massive and semi-massive/stockwork sulfide mineralization grading 1.81% Cu, 2.57% Pb, 4.38% Zn, 0.13% Sn, and 75.27 ppm Ag

•             Including 7.95 meters @ 2.21% Cu, 3.05% Pb, 4.82% Zn, 0.15% Sn, 89.8 ppm Ag

•             Followed by 2.90 meters @ 0.71% Cu, 1.27% Pb, 3.17% Zn, 0.092% Sn, 35.4 ppm Ag

•             Avrupa and Antofagasta sign an amended Joint Venture Agreement

Please visit our website to learn more about the company and current exploration program.

 

¤ The Wrap

You certainly don't need me to read you chapter and verse on what happened yesterday, as we've been down this particular road together many times before.  Once again the price action had ZERO to do with supply/demand issues---and ZERO to do with what the currencies were doing.  This was the HFT boyz and their algorithms putting the boots to the price in the COMEX futures market, a paper market, allowing them to cover part of their grotesque short positions.

They weren't just content with the four precious metals, they kicked the crap out of copper, natural gas and crude oil as well.  You can't have investors running to hard assets when paper assets of all descriptions require constant support---like the Dow and the bond market for instance.

Here are the 6-month charts for the Big 6 commodities---and I've included natural gas as well.

Looking at the gold chart above, you'll note that the price broke below its 200-day moving average by a small amount, but did not close there.  Silver was only allowed to touch its 200-day moving average on the latest rally---and came within a few pennies of its 50-day moving average on the way down yesterday.

Platinum and palladium were closed below their respective 50-day moving averages, but with the chart patterns they have, I wouldn't read a thing into that.

So, are we done to the downside?  Perhaps---for the moment.  But if forced to bet ten bucks, I'd bet that JPMorgan et al are far from through.  Even though there was big down-side price/volume action yesterday, the Big 8 short holders still hold an historically large short position in both silver and gold---and only the timing of the next engineered price decline remains in doubt.  It could be today, next week, or next month---but it's coming.

Could they get over run?  Sure, but these guys have hijacked the price mechanism so thoroughly that it matters little as to what might happen in the real world.

The one thing that should be pointed out, is that the big price smashes yesterday should have come as no surprise to anyone who reads this column on a daily basis, as both Ted Butler and I have just been sitting and waiting for "da boyz" to pull the trigger---because as I said in Wednesday's missive "the danger flags are snapping in the wind".

And as Ted pointed out on the phone yesterday, you have to wonder how long the precious metal miners are prepared to put up with this price management scheme, as it's even more obvious now than it was a year ago.  But the World Gold Council and The Silver Institute will certainly put an end to any attempt by the mining industry from asking the CFTC and the CME Group any embarrassing or incriminating questions.

And as I write this paragraph, the London open is about twenty minutes away.  All four precious metals are up a bit from their respective closes in New York late Thursday afternoon.  Net volume is gold is around 19,000 contracts, which is mostly in the new front month, which is April---and in silver net volume is around 5,500 contracts.  The dollar index, which kept creeping lower all through Far East trading on their Friday, is currently down 4 basis points.  All is quiet at the moment.

Today we get the new Commitment of Trader Report for positions held at the close of COMEX trading on Tuesday---and without even seeing the report, it can already be classified as "yesterday's news," because what happened after the cut-off on Wednesday and Thursday has already rendered it irrelevant---and we'll have to wait until next Friday's report to get an idea of what happened yesterday and the day before.  We also have three more trading days in the reporting week to add to next week's COT Report---and anything can [and probably will] happen between now and then.

So we wait some more.

The one positive note yesterday was the muted reaction of the precious metals shares.  Considering the pounding that both gold and silver took, I was much relieved to see share prices rebound quickly.  Will that continue?  Beats me, but I don't expect we'll have to wait long to find out.

One thing I will be watching closely over the next week, is just how much gold is withdrawn from GLD because of the price action over the last couple of days.  As far as SLV is concerned, this price smash would certainly allow JPMorgan to cover some or all of their short position in that ETF, because there has only been one deposit in SLV since December 1---and that was 1.1 million troy ounces that was added on January 22.

Since December 1, just over 30 million ounces of silver has been withdrawn from SLV---and not a soul, except for Ted Butler, is saying a word about it.  The SLV ETF was obviously owed a lot of silver, but since nothing was deposited during the previous rally, the authorized participants , with JPMorgan being the chief culprit, was shorting the shares in lieu of depositing real metal.  Now they're covering.

And as I hit the send button on today's column at 5:25 a.m. EST, I see that the gold price is still inching higher---and is currently up 8 bucks.  Net volume is around 29,000 contracts, which isn't a lot. 

Silver is back over the $17 mark.  Just twenty-four hours ago it was just above $18 spot.  Net volume is 7,800 contracts. Platinum and palladium are up as well, but their respective "rallies" got sold down a hair---and the dollar index hasn't changed much from about three hours ago, and is currently down 6 basis points.

Today is the last day of the week---and the month---and absolutely nothing will surprise me from a price perspective when I check the charts later this morning.  It shouldn't surprise you, either.

Enjoy your weekend---and I'll see you here tomorrow.

Ed Steer