Gold & Silver Daily
"I wasn't amused that the precious metals shares got sold off as heavily as they did..."

¤ Yesterday In Gold & Silver

Just eye-balling the Kitco gold chart below, it's obvious to me that the gold price, despite several serious attempts to do so, wasn't going to be allowed to break above the $1,720 spot mark anywhere on Planet Earth yesterday and, with the exception of the high tick of the day [$1,724.10 spot] at the London p.m. gold fix, it didn't.

The gold price finished the day at $1,716.00 spot...up a whole 80 cents from Friday's New York close.  Net volume was very light at only around 108,000 contracts.

Here's the New York Spot Gold [Bid] chart on its own...and three of four of gold's attempts to climb above the above mentioned price got turned back...and the glaring one is at the 3:00 p.m. GMT London gold fix...10:00 a.m. Eastern.

Silver rallied right from the New York open on Sunday night...and its Far East high came around 10:00 a.m. Hong Kong time.  It was all down hill from there until the noon silver fix in London.

That proved to be the low of the day.  The subsequent rally ran into the usual not-for-profit seller at the afternoon London gold fix...and that was it.

Silver closed at $33.66 spot...up 22 cents on the day.  Net volume was a rather unexciting 30,500 contracts...give or take.

The dollar index, which closed on Friday at 80.24, was under pressure right from the get-go in Far East trading on their Monday morning...which most likely explains the initial rally in gold and silver.

The index sank under the 80.00 mark around 3:00 p.m. in Hong Kong...about an hour before London opened.  From there it kept declining in fits and starts...closing around the 79.89 mark...down about 35 basis points on the day.

It was obvious that both gold and silver wanted to rally at midday in London...and at the Comex open...but it's equally obvious that there were forces standing by to make sure that it didn't happen.

The US dollar index packed up on the Internet site around 9:00 a.m. yesterday morning...and as you can see, I stole the chart below from one of Peter Spina's I'm sure he won't mind.

As you are more than aware, the shares did very poorly yesterday...and the HUI finished down 2.33%.  The HUI from that website has been M.I.A. for many days now...and here's one that Scott Pluschau offered up in its stead.

(Click on image to enlarge)

The silver shares fared little better...and despite the metal itself finishing well in the black, the shares got sold down pretty hard as well.  Nick Laird's Silver Sentiment Index closed down 1.68%.

(Click on image to enlarge)

The CME's Daily Delivery Report for 'Day 3' in the December delivery month showed that 1,906 gold and 712 silver contracts were posted for delivery on Wednesday within the Comex-approved depositories.

In gold, the big short/issuer was Deutsche Bank with 1,741 contracts posted for delivery...and in very distant second place came the Bank of Nova Scotia with 162 contracts.  The big long/stopper in gold was JPMorgan Chase with 1,565 contracts...275 in its client account and 1,290 in its proprietary [in house] trading account.  There were about a dozen other small stoppers accounting for the rest.

In silver, the big short/issuer was Deutsche Bank as well with 579 contracts...and JPMorgan, in its proprietary account, was in second with 106 contracts.  The biggest long/stopper was JPMorgan in its client account with 341 contracts.  Second was Barclays with 225 contracts...and third was Credit Suisse First Boston with 98.

The Issuers and Stoppers Report is well worth a few minutes of your time...and the link is here.  Note the delivery info in palladium as well...Deutsche Bank, JPMorgan and Barclays.

If you haven't figured it out already, it should be patently obvious that JPMorgan is at the center of the precious metals universe.

There were no reported changes in either GLD or SLV yesterday...and no sales report from the U.S. Mint, either.

Over at the Comex-approved depositories on Friday, they reported receiving no silver at all...but shipped 458,050 troy ounces out the door.  The link to that activity is here.

Washington reader S.A. had no charts for me today...but he more than made up for it by sending me a photo of the latest addition to the Oregon Zoo.

Being a Tuesday column, I have a few more stories than usual for you today...and I'll leave the final edit up to you.


¤ Critical Reads

ISM: US Manufacturing Sector Contracts, Plunges to Three-Year Low

Manufacturing unexpectedly contracted in November to its lowest level in more than three years, as companies worried about whether lawmakers in Washington could reach a budget deal in time avert a crisis that many fear could lead to a recession.

The Institute for Supply Management (ISM) said on Monday that its index of national factory activity fell to 49.5 in November from 51.7 the month before. The reading was shy of expectations of 51.3, according to a Reuters poll of economists.

The figure was the softest since July 2009 when the U.S. economy was struggling in the aftermath of the financial crisis. Economists said the November slide may have been aggravated by Super storm Sandy, which devastated the U.S. east coast in late October, as well as uncertainty over budget negotiations in Washington.

This story was posted on the Internet site yesterday morning...and I thank West Virginia reader Elliot Simon for providing the first story of the day.  The link is here.


Strikers Shut Down the ports of Los Angeles and Long Beach

Strikes in the ports of Los Angeles and Long Beach that began last Tuesday are delivering a blow to the U.S. economy.

Clerical workers from the International Longshore and Warehouse Union (ILWU) Local 63 have been without a contract for 2.5 years, and negotiations between them and the ports broke down last Monday.

The ILWU has accused management of trying to outsource clerical jobs to overseas workers that are paid far less and receive fewer benefits.

This story from the was posted on their Internet site early yesterday afternoon Eastern time...and I thank Roy Stephens for this first offering of the day.  The link is here.


Treasury Scarcity to Grow as Fed Buys 90% of New Bonds

Even as U.S. government debt swells to more than $16 trillion, Treasuries and other dollar fixed- income securities will be in short supply next year as the Federal Reserve soaks up almost all the net new bonds.

The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 ended Sept. 30, a survey of 18 primary dealers found. At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.

“The shrinking amount of bonds in the market is lowering rates and not just benefiting the Treasury, but providing lower rates for private-sector decision-makers as well,” Zach Pandl, a senior interest-rate strategist in Minneapolis at Columbia Management Investment Advisers LLC, which oversees $340 billion, said in a Nov. 30 telephone interview. “The Fed is not creating this scarcity to help out the Treasury, it’s primarily to get the economy going.”

More paper games.  This Bloomberg story showed up on their website yesterday morning Mountain Standard Time...and it's Elliot Simon's second offering of the day.  It's certainly worth skimming...and the link is here.


Fair Game: In an F.H.A. Checkup, a Startling Number

DO we have another Fannie or Freddie on our hands — another mortgage giant headed for a rescue?

Like Fannie Mae and Freddie Mac before it, the Federal Housing Administration is suffering in a mortgage hell of its own making. F.H.A. officials say they won’t need taxpayers’ help, but we’ve heard that kind of line before.

The F.H.A. backs $1.1 trillion of American mortgages and, by the look of things, it’s in deep trouble. Last year, its mortgage insurance fund was valued at $1.2 billion. Today that fund is valued at negative $13.48 billion.

Gretchen Morgenson tees up the F.H.A. in her Saturday column in The New York Times.  I thank Phil Barlett for bringing this story to our attention...and the link is here.


Washington Proposes $1 Trillion Bailout for Delinquent Student Loans

America’s now-nationalized student loan industry just reached a value of $1 trillion, according to Citigroup, growing at a 20 percent-per-year pace. Since President Obama nationalized the industry (a tacked-on provision of the Obamacare bill), tuition has gone up 25 percent and the three-year default rate is at a record 13.4 percent.

With many young people unable to pay their loans (average graduating debt is about $29,000), Citigroup and others are speculating that this industry might be ripe for a bailout.

To pay off all the current defaults, Citigroup says it would cost taxpayers $74 billion. However, this number doesn’t include those who will default in the coming years, and, when the government rewards the defaulters, it will encourage more borrowers not to pay their debts.

And liberals in Congress have proposed forgiving all student loans via “The Student Loan Forgiveness Act 2012,” costing taxpayers $1 trillion.

This story was posted on the Internet site last Thursday...and I thank 'David in California' for bringing this story to our attention.  The link is here.


American Households Hit 43-Year Low In Net Worth: Study

The median net worth of American households has dropped to a 43-year low as the lower and middle classes appear poorer and less stable than they have been since 1969.

According to a recent study by New York University economics professor Edward N. Wolff, median net worth is at the decades-low figure of $57,000 (in 2010 dollars). And as the numbers in his study reflect, the situation only appears worse when all the statistics are taken as a whole.

According to Wolff, between 1983 and 2010, the percentage of households with less than $10,000 in assets (using constant 1995 dollars) rose from 29.7 percent to 37.1 percent. The “less than $10,000″ figure includes the numerous households that have no assets at all, or “negative assets,” which is otherwise known as “debt.”

This CBS article from Washington, D.C. was posted on their Internet site early Friday afternoon...and it's a story that I found buried in yesterday's edition of the King Report.  The link is here.


SEC Says Big Four Audit China-Affiliates Blocked Probe

U.S. regulators probing potential fraud by China-based companies increased pressure on their auditors by formally accusing affiliates of Big Four firms of withholding documents from investigators.

Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Limited have refused to cooperate with accounting fraud investigations into nine companies whose securities are publicly traded in the U.S., the Securities and Exchange Commission said in an administrative order yesterday. BDO China Dahua Co. Ltd. was also named by the SEC in the action.

China-based companies listed on U.S. exchanges have faced increased scrutiny over the past two years after regulators became concerned that some firms may not be providing accurate financial statements to investors. Investigators have struggled to obtain documents central to the probes because auditors, citing China’s laws, have declined to cooperate.

This Bloomberg story was posted on their website early yesterday evening...and I thank Elliot Simon once again for sending it our way.  The link is here.


China surpasses U.S. as top global trader

Shin Cheol-soo no longer sees his future in the United States.

The South Korean businessman supplied components to American automakers for a decade. But this year, he uprooted his family from Detroit and moved home to focus on selling to the new economic superpower: China.

In just five years, China has surpassed the United States as a trading partner for much of the world, including U.S. allies such as South Korea and Australia, according to an Associated Press analysis of trade data. As recently as 2006, the U.S. was the larger trading partner for 127 countries, versus just 70 for China. By last year the two had clearly traded places: 124 countries for China, 76 for the U.S.

This AP article, filed from Seoul, was posted on the Internet site Sunday evening Eastern...and I thank Matthew Nel for sending it.  The link is here.


India's Retail inflation for industrial workers inches up to 9.6% in October

Retail inflation for industrial workers climbed to 9.6 per cent in October on account higher prices of wheat and rice, from 9.39 per cent in the same month last year.

The retail inflation, measured by the Consumer Price Index for Industrial Workers, stood at 9.14 per cent in September, as per the official data released on Friday.

The largest upward pressure on inflation came from items such as rice, wheat, wheat atta, milk, tea (readymade) and onion.

This story was filed from New Delhi just after midnight on Saturday morning India Standard Time...and this is the second news item I found in yesterday's edition of the King Report.  It's posted on the Internet site...and the link is here.


Egypt’s judges refuse to oversee referendum

A key judicial body has refused to oversee a December 15 referendum on the new draft constitution as judges effectively went on strike Sunday, suspending work indefinitely, amid mounting tension in the country. 

Protests by Islamists allied to President Mohamed Mursi forced Egypt’s highest court to adjourn its work indefinitely on Sunday, intensifying a conflict between some of the country’s top judges and the head of state.

The Supreme Constitutional Court said it would not convene until its judges could operate without “psychological and material pressure”, saying protesters had stopped the judges from reaching the building.

This New Wires story showed up on the Internet site yesterday...and it's courtesy of Roy Stephens.  The link is here.


Walker's World: French dis-connection

The downgrading of its debt by Moody's led to a further downgrade of the eurozone's two bailout funds. France is becoming part of the euro's problem, rather than part of a solution.

It has been a bad week for France. The downgrading of its debt by Moody's ratings agency led to a further downgrade Friday of the eurozone's two bailout funds. As the second-largest contributor to the rescue funds, this means France is becoming part of the euro's problem, rather than part of a solution.

Then the government of President Francois Hollande found itself in an unwinnable spat with ArcelorMittal, the giant steelmaker which is losing money at the rate of $200 million a year.

Over-capacity in Europe is the main cause of the losses but the French government last week made some blustering threats of nationalization rather than permit ArcelorMittal to lay off French workers. An attempt to calm the row led French labor unions to accuse their government of betrayal, which French business leaders interpreted the threats of nationalization as yet further proof that the governments doesn't understand the realities of the global economy.

This UPI story was filed from Paris just minutes after midnight on Monday...and I thank Roy Stephens for his second offering in a row.  The link is here.


Young, Educated and Jobless in France

Justine Forriez wakes up early to go onto the computer to look for a job. She calls university friends and contacts; she goes to the unemployment office every week, though mostly for the companionship, and has taken a course in job hunting. She has met with 10 different recruiters since May and sent out 200 résumés.

Ms. Forriez is not poor or disadvantaged, and she holds a master’s degree in health administration. But after a two-year apprenticeship, she is living on state aid and working at off-the-books jobs like baby-sitting and tending bar. She cares for a dog for $6.50 a day. She paints watercolors in her spare time to keep herself from going crazy.

Ms. Forriez, 23, is part of a growing problem in France and other low-growth countries of Europe — the young and educated unemployed, who go from one internship to another, one short-term contract to another, but who cannot find a permanent job that gets them on the path to the taxpaying, property-owning French ideal that seemed the norm for decades.

This is a disease of the entire Western the jobs disappear and new ones never materialize to replace them.  I can't see anything on the horizon that will cause this situation to change in my lifetime.  This story showed up on The New York Times website on Sunday...and I thank Phil Barlett for sharing it with us.  The link is here.


Mother Of Former Greek PM Papandreou Linked To $714 Million Swiss Bank Account

The so-called "Lagarde List" is causing trouble in Greece again, with new reports linking it to the very top levels of political society.

On Sunday two Greek weekly magazines, To Vima and Proto Thema, reported that Margarita Papandreou, mother of former Greek Prime Minister George Papandreou, had been linked to a mysterious Swiss bank account by members of the Financial Crimes Squad (SDOE).

The largest figure on the Lagarde List was a 550 million euro deposit ($714 million) under the name Maria Panteli, but according to reports in To Vima, Nikolaos Lekkas, the Manager-Comptroller of SDOE, said that, “behind the biggest deposit on the list is Mrs. Margarita Papandreou.”

This news item showed up on the Internet site yesterday afternoon...and it's another contribution from Roy Stephens.  The link is here.


Net Neutrality? Google Prods Users to Fight Copyright Law

Google is increasingly throwing around its power to improve its bottom line. The latest incident is a draft law in Germany that would force the company to share some revenues with newspaper publishers. Meddling in politics is certainly not illegal, but it could be risky.

The timing of the debate in the Reichstag was curious, but it fits perfectly with the story of this contentious draft legislation. On Thursday night last week, at around 11 p.m., the German parliament, the Bundestag, debated the Leistungsschutzrecht für Presseverleger, or ancillary copyright law for newspaper and magazine publishers. Only around 40 primarily younger members of parliament sat in the front rows, but the Twitter community was wide awake. At C-base, a prominent Berlin meeting place for computer buffs, activists even organized a public viewing.

At its core, the proposal concerns the headlines and short teaser texts indexed by search engines -- the so-called snippets.

The bill aims to protect copyrights that belong to newspapers and their publishers. When search engines display those snippets "for commercial purposes," the proposed law would allow the publishing houses to charge a fee. Bloggers, clubs, associations and even company press reviews would not be affected by the current draft version of the law.

This interesting read showed up on the German website yesterday...and it's another offering from Roy Stephens.  The link is here.


Five King World News Blogs/Audio Interviews

1.  Robert Fitzwilson: "Confiscation, Price Suppression & the True Gold & Silver Price".  2.  John Embry: "Here is What Will Break the Massive Silver Short Positions".  3.  Michael Pento: "Lucky Horseshoes & Empty Promises Won't Halt This Decline".  The first audio interview is with Gerald Celente...and the second audio interview is with Eric Sprott.  The Sprott interview is a must listen.


Ambrose Evans-Pritchard: The world's commodity supercycle is far from dead

Great resource booms usually end abruptly, catching almost everybody by surprise.

The rhythm is as old as mankind. It is poignantly described Nobel laureate Halldór Laxness through the life of an Icelandic sheep farmer a hundred years ago in Independent People, harrowing because his ruin is so utterly human.

Studies by the World Bank covering two centuries of data sketch a pattern of 10-year supercycles, followed by a slide for the next 20 years or so as excess investment leads to a flood of supply. The long bear market can be cruel for those hanging onto to resource stocks, convinced that the rebound must be nigh.

Mark Ryder, Australian investment chief for UBS, says we are reaching just such an inflexion point as China’s manic construction phase gives way to more sedate growth, and Europe, America, and Japan take their fiscal medicine. "The commodity super cycle’s end is at hand. The scene is set for a momentum shift," he said.

This longish AE-S commentary is a must read...and it was posted on the Internet site on Sunday evening.  It's also Roy Stephens' final offering in today's column...and the link is here.


Banks consider quitting food speculation due to role in global hunger

Financial giant Barclays is considering an end to food speculation, a controversial practice linked to sudden, dangerous spikes in global food prices.

Rich Ricci, head of Barclays' corporate and investment banking arm, told British lawmakers on 28 November that public disapproval of food speculation may push his bank, the world's third-largest, to stop altogether.

"Market speculation is playing a role in global hunger. Now that science has made this clear, speculation should be unacceptable," said Yaneer Bar-Yam, president of the New England Complex Systems Institute.

Speculation -- investors betting on food prices -- has existed for decades, but until the late 1990s was restricted to farmers and food producers, who have direct market interests and used bets to offset their risks.

And that's precisely the situation that should exist in all commodities...the precious metals included.  This story showed up on the Internet site yesterday...and is a must read as well. I thank Elliot Simon for his last story in today's column...and the link is here.


Growing clamor about monetary metal that may not be where it's supposed to be: Two Stories

GATA figures heavily in the new edition of "The Keiser Report" on the Russia Today television network, which deals with the latest country to start worrying about the security of its gold reserves vaulted abroad, Austria. The pertinent part of the video is contained in the first six minutes...and the link is here.  I consider it an absolute must watch...although I should point out that Max goes on a bit of a rant in a few spots... wink

Story Number Two:

The theme of official gold that is likely missing is elaborated upon by GoldMoney's James Turk in an audio interview with GoldMoney's Andy Duncan.  It was posted over at the Internet site on Friday...and it runs for 19 minutes.  It's certainly worth the listen if you have the time...and the link is here.


Multi-million gold heist from boat in Caribbean

Armed men dressed as police boarded a fishing boat Friday in Curaçao and stole about 70 gold bars worth an estimated $11.5 million (£7.2 million), police in the southern Caribbean island said.

The boat's captain was struck in the head in the early-morning assault before the thieves made off with the gold in three cars, police spokesman Reggie Huggins said. Authorities believe there were six men involved in the heist. No suspects are in custody.

The captain and three crew members were from the South American country of Guyana, he said.

Huggins declined to say who owned the boat or to provide any details about the possible source of the gold.

A very interesting story...and I wonder if we've heard the last of this?  It was posted on The Telegraph's website just after midnight GMT on Saturday morning...and I thank Scott Pluschau for digging it up on our behalf.  The link is here.


Casey Research: Gold Supply Crunch Coming?

A number of market analysts and gold-industry insiders are warning about a possible shortage of gold supply. Barrick CEO Jamie Sokalsky recently stated that since gold production is inelastic (i.e., insensitive to price changes) there will be a very limited increase in supply from gold producers, even during sharp increases in the gold price. Rick Rule, a billionaire and avid gold investor, pointed out that while we're seeing spectacular demand, a number of issues will make supply very tight in the future, especially among retailers.

The issues facing gold miners are well known: depletion of existing mines, lower grades, and fewer new discoveries - especially big and rich ones. Further, miners face increased calls for nationalization, demands from workers for higher pay or from local communities for better infrastructure, and - of course - environmental concerns. Many mining company representatives say it's getting harder to not only find large deposits but to get those deposits into production. Some estimate it now takes twice as long as to go from discovery to production vs. a decade ago.

These warnings aren't always taken seriously, especially by those who see that mine production has been growing. At first glance, they're correct - but only if you look at the short-term picture. The following chart shows that global mine production has indeed been rising since 2008. From 2009 through 2011, output rose an average of 3.9% per year. However, we know that a good chunk of this increase is due to China, and upon excluding its output, you can see how it alters the global picture.

This essay was written by Casey Metals Team Researcher Alena Mikhan...and it was embedded in yesterday's edition of the Casey Daily Dispatch.  The link is here.


The Chart That Keeps Ben Bernanke Up at Night

What changed in the last 30 days? Did the world just wake up to the idea that the only way out of this quagmire is a twisted currency war that appears to have re-ignited thanks to Abe's efforts? Something appears to have snapped in the American psyche as the last 30 days have seen the largest physical gold sales on record. Between the search volume for 'bulk ammo' and this, we fear something is afoot and while Congress fiddles as our economy burns, Bernanke going 'back to work' is perhaps what the physical ''hoarders' are thinking... or maybe they understand, as we noted here, that just as Kyle Bass has confirmed previously, Paper Gold is just like allocated, unambiguously owned physical bullion... until it’s not.

You've just read the one and only paragraph in this very short Zero Hedge story from Saturday.  The chart is definitely worth the trip...and I thank 'David in California' for sharing it with us.  The link is here.


Getting tough on gold imports won't work, two former Indian central bankers say

Two former governors of the Reserve Bank of India warned Saturday against taking tough measures to rein in gold imports -- a major reason for the persistently high current account deficit.

The chairman of the Prime Minister's Economic Advisory Council, C. Rangarajan, said steps like banning gold imports would only push up its smuggling.

Rangarajan, who served as RBI governor, said there are already indications that illegal shipments of the precious metal have gone up in the last three months after the hike in the excise duty.

This story, which I plucked from a GATA release, was filed from Mumbai just after midnight India Standard Time on Sunday morning...and was posted on the Internet site.  It's a must read...and the link is here.


Gold coins pop up in Salvation Army kettles

The holiday season means those ever-present Salvation Army red kettles are out in force. That also means the tradition of anonymously slipping gold coins into the kettle has started up again.

At a Sam's Club in southwest Houston, a 1-ounce gold coin that was dropped into a kettle is worth about $2,000. Talk about a pot of gold. A note attached to the coin read, "A child is born, Jesus! Merry Christmas!"

The secret Santas have a tradition that goes back five years in Houston. In Bettendorf, Iowa, where a quarter-ounce gold coin worth $500 was left in a kettle, the annual Yuletide donation has been going strong for 15 years.

This story from The Lookout was picked up by the Internet site on Friday sometime...and it's a heart-warming read.  I thank Washington state reader S.A. for today's last story...and the link is here.



¤ The Funnies

Sponsor Advertisement

Tosca Mining Corporation's goal is to acquire advanced stage projects that can be placed into production quickly. The company's primary asset is the Red Hills Molybdenum/Copper project located in Presidio County, Texas. A program to confirm, and expand the considerable size and potential of the project and evaluate various economic scenarios was completed in 2011. 

Tosca recently received results from the 13 remaining holes from its phase two, 16,000 M (4,873 m) diamond drill program. Per Tosca’s Chairman, Dr. Sadek El-Alfy, “the drill program has successfully verified historic drill results of the shallow Copper-Molybdenum cap and confirmed the presence of a deeper, well mineralized Molybdenum Porphyry deposit.” The results of 21 holes drilled through the copper/moly cap in Tosca's 2011 drill program give a weighted average grade of 0.39 % Cu over a core length of 113 feet (34.5 m). Since the copper cap is subhorizontal, the average core length can be interpreted as being approximately equivalent to true width. The copper/moly cap is crescent shaped, approximately 4,000 feet (1220 metres) long and 400 feet (122 m) to 1000 feet (305 m) wide.

The 2011 program encountered numerous thick  Molybdenum mineralized intervals including Hole TMC-25 wich  intersected 1,189 feet (362.4 m) averaging 0.089 per cent Mo including 830 feet (253 m) of 0.1 per cent Mo from 359 feet (109.8 m) to the bottom of the hole. Hole TMC-29 cut 989 feet (301.4 m) averaging 0.09 per cent Mo including 139 feet (42.4 m) of 0.16 per cent Mo. The molybdenum grades are similar and in some cases higher than those of projects currently considered of potential economic interest."

Aggressive plans are in place for 2012 to conduct metallurgical tests, produce an updated resource estimate and  Pre Economic Assesment. Tosca is operated by an experienced mine development team, operates in Texas, a  mine-friendly jurisdiction and its property iseasily accessible with infrastructure in place to advance operations. Please visit our website to learn more about the company ad request information.


¤ The Wrap

I have no doubt that the CFTC is publishing accurate data on COMEX silver. Without that data, I couldn’t begin to make a case for manipulation. The problem is that all the agency does is to publish accurate data that prove that silver is manipulated in price...and then refuses to react to the clear proof of manipulation. Due to a decrease in reported spread positions in this week’s disaggregated COT report, JPMorgan’s 38,000 contract silver short position “only” increased to 34.7% of the entire net COMEX short position from the previous week’s 34%. But the 190 million ounces that the 38,000 contracts represent is equal to 25% of the world’s total annual silver mine production of 760 million oz. If one trading entity was short 25% of the annual world production of any other commodity that entity would be in jail the day it became known. For that entity in silver to be a systemically important US bank is shocking in its own regard. In many ways, I admit that this is so extreme as to not be fully comprehendible. Believe me when I tell you that I can hardly comprehend that I label JPMorgan as crooked and get away with it. - Silver analyst Ted Butler... 01 December 2012

Even though volume was pretty light in both silver and gold yesterday, it was obvious [at least to me] that the prices of both metals weren't allowed to get far, even though the dollar index dropped below the psychologically important 80.00 mark.

I wasn't amused that the precious metals shares got sold off as heavily as they did...and I'll quote a paragraph on this from my Saturday column...

"I'd like to think that it's strong hands buying all the shares that are falling off the table as weak-kneed day traders hit the 'sell' button...but I'm always concerned that "da boyz" are buying up all these shares in order to dump them later when they need to suppress the share prices as well.  I know that John Embry would be in total agreement with this scenario.  But maybe I'm looking for a black bear in a dark room that's not there."

I leave it up to you, dear reader, to ponder the notion of whether or not there is any truth in that paragraph...for, or against.

As you may remember, I've had correspondence with Scotiabank here in Canada about whether or not they were the bank that was fingered by the CFTC as the "non-U.S. bank" in their November Bank Participation Report.  All enquires sent by myself...and other readers...ended up with the same "non-denial denial" type of answer.

So, on Sunday, I sent an e-mail off to the ombudsman at Scotiabank...and here is what I had to say...

02 December 2012

Mr. Charles Dougall



Hi Charles,

I've been trying to get an answer to a question that I asked of your firm a month or so ago.

I started off with Andy Montano at Scotia Mocatta...and have since graduated to Rick Waugh...and got immediately passed off to Dave Shearim.  I have not received a direct answer, except for the usual 'non-denial denial'...the normal runaround corporations give when they really don't want to answer and are just trying to blow someone off.

I'm not asking for trading secrets, or the trading positions of any client [in-house or otherwise] that may exist over at Scotia I fully understand that this client privileged information.

Here is the sequence e-mails as posted in 'The Wrap' section of my daily column over at Casey Research on November 6th...

[There was a bit more to this e-mail than that at the end, but what you see above is the essence of what I sent]

The reply I got back on Monday was as follows...

Dear Mr. Steer,

We acknowledge receipt of your email dated December 2nd.

After a preliminary review of your email, we wish to inform you that there are certain issues that are deemed to be outside the mandate of the Office of the Ombudsman, which may include the issue(s) you have raised.  Having said that, we will make inquiries into your concerns and will respond to you further in due course.

Yours truly,

Marlaine Radke
Assistant Ombudsman
Scotiabank - Executive Offices
44 King Street West
Toronto, ON  M5H 1H1
Telephone: (416) 933-3299
Fax:  (416) 933-3276

And that's where it sits at this point...and I'll let you know the contents of any further correspondence that I receive, or send.  I get the impression from the tone of the reply, that I'm not going to get very far, but you never know.

Both gold and silver came under selling pressure the moment that Far East trading began on their Tuesday.  Then, as you've already noted, the bid disappeared shortly before 2:00 p.m. Hong Kong time...or the high-frequency traders showed up...and the gold price dropped ten dollars in just a few minutes.  This decline occurred in all four precious metals.

Since those lows, they have recovered somewhat...and their respective rallies have continued [in fits and starts] into the first hour or so of trading in London.  Whether these rallies will be allowed to continue is impossible to tell...but as I also said in my Saturday column, it's a mug's trying to predict what the precious metals will do price-wise when the heavy hands of JPMorgan Chase et al are in the market.

The dollar index has been in a slow but steady decline all through Far East and the early London trading session as well...and is down about 23 basis points as I hit the 'send' button at 5:15 a.m. Eastern time.  Volumes are monstrous...over 45,000 contracts in gold...and 9,000+ in silver.  Fortunately, all of this...along with New York's price/volume activity...will be in Friday's Commitment of Traders Report, as the cut-off is at the 1:30 p.m. Eastern time Comex close today.

And I suggest you re-read Ted Butler's quote under the cartoons above to give you some idea of the meaning of "obscene and grotesque" when it come to a short position in the precious metals...especially silver.  Between JPM and Scotiabank...if they are the second big silver short...they hold a short position of over 45% of the entire Comex futures market in silver.  That was as of the Tuesday cut-off for last week's COT Report...and it may have declined since.  But by how much, won't be known until Friday.

What the precious metals do price-wise is entirely up to them...and has nothing to do with legitimate supply and demand fundamentals.

That's more than enough for today...and I'll be very interested in the price action in New York when I switch my computer on later this morning.

See you tomorrow.