Gold & Silver Daily
"JPMorgan et al can keep this up as long as they think they can get more leveraged longs to sell."

¤ Yesterday In Gold & Silver

As I mentioned in 'The Wrap' in yesterday's column, the gold price didn't do much of anything in Far East trading on Wednesday...and the London high came very shortly after the 8:00 a.m. GMT open.  Then at precisely 9:00 a.m. the selling started, sell stops were tripped, and down went the price.

That decline came to an end at the London a.m. gold fix at 10:30 local time...and from there it didn't do much until around 8:40 a.m. in New York.  Then, in the space of about fifty minutes, another twelve bucks was peeled off the price, with the low of the day [$1,627.00 spot] coming minutes before the open of the equity markets at 9:30 a.m. Eastern.

Gold rallied in fits and starts from there...but the price action really quieted down once the Comex trading session ended at 1:30 p.m.  From there it moved a few dollars higher going into the close of electronic trading at 5:15 p.m. in New York.

Gold closed at $1,644.90 spot...down $5.20 on the day.  Volume, net of all roll-overs, was in the 148,000 contract range...about 30% higher than Wednesday's volume.

Silver's high of the day was in London at the same moment as gold's...and from there, the selling pressure was relentless all day long, as the high-frequency traders did their thing.

Silver's low price tick [$31.01 spot] came about twenty minutes before the Comex close at 1:30 p.m. Eastern time...and then silver rallied a bit going into the Comex close, and a little more in the electronic trading session that followed.

Silver's intraday price move was $1.16...or 3.6%...about the same intraday price move as Tuesday.  Silver closed at $31.59 spot...down 58 cents on the day.  Net volume was very heavy...around 47,000 contracts.

The dollar index, which had been down all through early Far East trading, caught a bid moments after the London open...and by the London a.m. gold fix was up 45 basis points.  From there it traded sideways...with the high tick of the day coming around 9:45 a.m. Eastern.

From there it traded lower until precisely noon in New York...and moved sideways into the close.  It was another day where the dollar index closed virtually unchanged.

It was also another day where the gold price and dollar index activity were chained together but, as always, the metal sold off far more than the dollar index decline warranted

The gold stocks gapped down almost three percent at the open and, despite the fact that gold recovered almost all its losses on the day, the shares barely moved off the floor.  The HUI closed down 1.96%.

Most of the silver stocks in Nick Laird's Silver Sentiment Index closed down on the day as well...and that index closed lower by 2.25%.

(Click on image to enlarge)

The CME Daily Delivery Report showed that 87 gold and 1 lonely silver contract were posted for delivery on Monday.  The link to this action is here.

The GLD ETF showed that an authorized participant withdrew 242,851 troy ounces of gold...and there were no reported changes in SLV.

There was no sales report from the U.S. Mint.

Over at the Comex-approved depositories on Wednesday, they reported receiving a chunky 1,315,174 troy ounces of silver...and shipped a very small 18,523 ounces out the door.  The link to that activity is here.

Here's a chart about Turkish gold demand that Washington state reader S.A. sent my way yesterday.  There's a must read story about Turkish gold demand further down.

Here's another chart.  This one was sent to me by reader Tim Hart.  It shows Mark Hulbert's data for Gold timing letters...and it's at the lowest it's been in the 23 months shown on this chart...down at 5%.  And as Tim said..."From a contrarian point of view, this is quite bullish."  Yes, it is.

Reader Scott Pluschau has another blog on silver for us today.  It's headlined "Update on Silver with a follow up from the CFTC"...and the link is here.  What Scott found out from the CFTC was the cut-off for the Commitment of Traders Report comes at the close of Comex trading every Tuesday.  I thank him for digging up this info...and laying the issue to rest once and for all.

I have the usual number of stories...and the final edit, as always, is in your hands.


¤ Critical Reads

Home Builder Stocks at Highest Point in 2 Years After 6-Month Rise

After a bullish report on housing at a late summer investment conference in Dallas, the officials at Federated Investors decided to sink a few million dollars into the shares of the home builder Lennar.

Philip J. Orlando, Federated’s chief equities market strategist, was hoping for a return of 20 percent to 30 percent, confident in an improving jobs market and upticks in housing construction and sales data.

Like many other stocks in the home building industry, Lennar surged, nearly doubling in price.

Home builder stocks are at their highest level in two years, with the Standard & Poor’s index of 11 home builder stocks rising 80 percent since October, the most recent low for the industry.

This story showed up posted on The New York Times website on Wednesday...and I thank reader Phil Barlett for sending it along.  The link is here.


Insider Trading Ban for Lawmakers Clears Congress

The Senate gave final approval on Thursday to an ethics bill that bans insider trading by members of Congress, clearing the measure for President Obama, who called for such legislation in his State of the Union address two months ago.

The legislation was adopted by unanimous consent after the Senate voted, 96 to 3, to end debate on the bill, which was approved in the House last month by a vote of 417 to 2.

The lopsided votes showed lawmakers desperate to regain public trust in an election year, when the public approval rating of Congress has sunk below 15 percent.

This story was posted in yesterday's edition of The New York Times...and is another Phil Barlett offering.  The link is here.


JPMorgan Loses $373 Million Arbitration to American Century

JPMorgan Chase & Co. (JPM) was ordered by arbitrators to pay $373 million to American Century Investments over claims that executives led by Jes Staley enriched the bank at the expense of the fund-management firm.

The award, issued privately in August, focused on JPMorgan’s promise to promote American Century products when the bank acquired the firm’s retirement-plan services unit, or RPS, in 2003.

Because Staley, then JPMorgan’s asset-management chief, mistakenly thought there was a limit on the bank’s liability if it didn’t meet obligations, executives failed to make good on the deal, arbitrators found. Employees were instead rewarded for pushing JPMorgan’s own products, according to the ruling.

“In short, JPM and RPS stacked the cards against ACI,” the arbitrators wrote in the ruling.

I love it when someone wins big against the dark side of The Force.  This Bloomberg story was posted on their website late last night...and I thank West Virginia reader Elliot Simon for digging it up on our behalf.  It's worth the read...and the link is here.


Gangster Banks Keep Winning Public Business. Why? - Matt Taibbi

A friend of mine sent this article from Bloomberg, along with the simple comment: "Perfect." What's perfect? That the banks that have been caught repeatedly ripping off communities and municipalities -- banks that have paid hefty settlements for rigging bids, bribery and other sordid misdeeds -- keep winning the most public business. Apparently, our public officials aren't concerned about whom they hire to serve as the people's investment bankers.

The news about Chase and Bank of America continuing to dominate a market they’ve already admitted to feloniously rigging says a lot about the state of modern finance. Bloomberg offered a telling quote from a state official justifying the decision to continue to do business with these criminal banks...

“I haven’t found an investment bank that hasn’t had some problem in the last three years,” California Treasurer Bill Lockyer said in a telephone interview. “We do business with them all. I think they provide good service. I think they’ve been highly ethical with us.”

This is coming from an official whose state, California, has seen multiple bid-rigging cases in recent years, from Riverside to San Mateo to Sacramento to Los Angeles to Santa Barbara, for starters. So a quote like that is pretty sad. It tells you that the system works fine for state officials and banks -- and no one is representing the people who actually lose out.

Matt Taibbi over at Rolling Stone magazine is up on his soap box once again...and I thank Roy Stephens for sharing his blog with us.  The link is here.


Fed's Fisher sees no need for more monetary easing

The economy is in much better shape and does not need further help from the central bank, a top Federal Reserve official known for his hawkish policy views said on Thursday.

Although growth is "slower than we would like," Dallas Fed President Richard Fisher told Fox Business Network, "it's gaining momentum."

"We will not support further quantitative easing under these circumstances because there's a lot of money lying on the sidelines, lying fallow," he said according to a transcript provided by the network. "We don't need any more monetary morphine."

I thank Florida reader Donna Badach for sending me this Reuters story from yesterday...and the link is here.


Appeals court: Firms can sack older workers to cut costs

A landmark court case has paved the way for employers to dismiss staff based on age - flouting discrimination rules - to escape huge pension payouts.

The appeals court said on Thursday it was OK for an NHS trust to dismiss its chief executive as he approached 50 to avoid him clocking up pensions liabilities worth up to £1m.

Nigel Woodcock was told in 2007 he would be dismissed when he reached 49, giving him a pension worth £200,000. If the trust had let him work until 50, his pension pot would have risen to between £500,000 and £1m, so bosses terminated his post.

After a three-year battle, the Court of Appeal ruled today in the employer's favour, which will pave the way for public and private sector employers to legitimately dismiss staff based on age - even though the practice is unlawful.

I wouldn't want to be a senior executive and close to retirement in Britain.  This story was posted in The Telegraph yesterday...and is courtesy of Roy Stephens.  The link is here.


Ireland slumps back into recession

Ireland's economy sank back into recession in late 2011, despite logging its first annual growth for four years, official data showed.

Irish gross domestic product (GDP) shrank 0.2pc in the fourth quarter after a contraction of 1.1pc in the third quarter, the Central Statistics Office (CSO) said in a statement, placing Ireland back into a technical recession.

"With France and Germany's PMI coming in so low - they have been the catalyst that has been holding Europe together so it's a little bit of fear for some of the market participants," said Brad Thompson, chief investment officer at Stadion Money Management in Watkinsville, Georgia.

The Irish GDP figures include output generated by both domestic and foreign companies base in Ireland.

This story was posted in The Telegraph yesterday...and is another offering from Roy Stephens...and the link is here.


China and Australia in US$31 billion currency swap

China has signed a US$31 billion currency swap agreement with Australia, a step toward boosting the renminbi's profile in developed markets.

Beijing has established nearly 20 bilateral swap lines over the past four years, but Australia ranks as the biggest economy yet to sign such a deal, which analysts said could give a shot in the arm to Beijing's goal of internationalising its currency.

While central banks normally use swaps to provide liquidity to each other in the event of a financial crisis, China has been using them to lay the groundwork for the renminbi's slow march into global markets.

This Financial Times story from yesterday is printed in the clear in this GATA release...and the link is here.


High-frequency trading distorts commodities prices

High-frequency traders have caused U.S. commodity futures prices to disconnect from market fundamentals of supply and demand since the 2008 financial crisis, according to one of the authors of a forthcoming U.N. report.

Also known as black-box players, they plug algorithms into computers to generate numerous, lightning-speed automatic trades that are designed to make money from arbitrage on razor-thin price differences and movements.

An increasingly high correlation between commodities and equities, caused largely by high-frequency traders, means that prices for oil and other U.S.-traded contracts are more exposed to "sudden and sharp corrections", said a draft report seen by Reuters.

High-frequency trading is estimated to account for over half of all U.S. equity trade volumes and a smaller but rising share of commodity futures trades.

This Reuters piece from Wednesday was sent to me by Washington state reader S.A.  It's a must read in my opinion...and the link is here.


The Last Time People Bought Gold Coins At This Rate, The Economy Was On The Verge Of Falling Off The Cliff

The Financial Times reports that gold -- in addition to selling off over the past several weeks -- is seeing all kinds of slowness in the real, physical word.

The US Mint’s sales of American Eagle gold coins, seen as a good indicator of investor sentiment, fell in February and March to their lowest level since mid-2008, down about 70 per cent from last year. Open interest in gold futures on Comex in New York is close to a 2½-year low.

More worryingly, traders say, the physical markets Asia and the Middle East, which have traditionally provided a backstop to gold when prices fall, are also quiet. In India, historically the largest consumer of physical gold, the government last Friday announced it would double taxes on gold imports, triggering outrage among the country’s jewellers, who closed their shops this week in protest.

This story was posted on their website late yesterday afternoon...and is another Roy Stephens offering.  It's only 3-paragraphs long...and you just read them.  The link to the hard copy is here.


Why Gold Can Go the Distance: Frank Holmes

Gold's been knocked down lately, but several enduring factors have conditioned the yellow metal for an inevitable comeback.

Since the beginning of 2012, gold has trailed its precious metals peers, gaining only about 6 percent compared to double-digit returns for silver and platinum. At the end of February, gold was especially hard hit, following Ben Bernanke's announcement that there would be no additional quantitative easing and the European Central Bank offering additional LTRO loans to banks.

With this news, we've witnessed the fairly rare event of bullion falling below its 200-day moving average. In fact, over the past 10 years, there have only been about 30 times (or around 3 times per year) where gold has fallen below its 200-day moving average. And each time, gold has been down for the count for only an average of 10 days. This time around, I believe gold has the resilience to endure, as the long-term drivers remain in place.

This rather short [for Frank Holmes] essay on gold was posted over at the website yesterday...and is well worth the read.  I thank Roy Stephens for his final offering in today's column...and the link is here.


Thirteen year old gold sale has cost UK £11 billion

Gordon Brown’s sale of 400 tons of gold in 1999 has cost the United Kingdom £11 billion, said the Chancellor of the Exchequer, George Osborne, in his 2012 budget speech.

Osborne said the decision to sell the gold was “ of the worst economic judgements ever made by a chancellor.” Brown was Chancellor of the Exchequer under the then ruling Labour Party.

Osbourne’s dig at the opposition Labour Party during his Tuesday budget speech led to an uproar in House of Commons. He also announced the Treasury is getting back into bullion.

This story was posted over at the website...and I thank Australian reader Wesley Legrand for sending it.  The link is here.


Three King World News Blogs

The first blog is with my friend Bob Fitzwilson.  It's headlined "There Will be a Sudden Catastrophic Shift as Control is Lost".  The second is from Michael Pento.  It's entitled "Europe Crumbling, Japan on the Edge & the US to Follow".  And lastly is this Bill Fleckenstein blog headlined "Bernanke Dead Wrong About the Gold Standard".


GFMS Global Head: "Buy This Gold Dip" As $2,000/oz Possible

Philip Klapwijk, featured on Insider this morning, advised investors to "buy this gold dip”. 

Gold should be bought on this correction especially if we go lower still as we may need a shake-out of "less-committed investors."

Klapwijk suggested that a brief dip below $1,600 is on the cards but the global macro environment still favours investment, notably zero-to-negative real interest rates and he would not rule out further easing by either the ECB or the Fed before year end.

The Osborne gold comments were gold friendly despite the UK Treasury denying that the UK has any plans to rebuild their gold reserves.

This partial story was taken from a commentary that was posted over at yesterday...and I thank West Virginia reader Elliot Simon for sending it along.  The link is here.


Hoard of 30,000 Roman coins found near Roman Baths in Bath

These Roman coins were found by archaeologists working in Bath in 2007, it has been revealed.

The silver coins are believed to date from 270 A.D. and have been described as the fifth largest UK hoard ever found.

The coins are fused together and were sent to the British Museum. Conservators are expected to take at least a year to work through them.

This short, but very interesting story, is well worth the read...and I thank Scott Pluschau for sharing it with us.  It's posted over at the website...and the link is here.


Wall Street Journal misses the point about gold twice in one day

Today The Wall Street Journal published two stories about efforts by governments to hinder the acquisition of gold by their people. The first, about Turkey, is the last story in my column today. The second, about India, is appended.

Despite GATA's many hectorings of its reporters, some done in person, the WSJ refuses to acknowledge the big underlying story here, the danger to government power that is posed by an independent, competitive, supra-national currency, a currency whose suppression by Western central banks is a matter of long public if largely unreported record.

The introduction to this Wall Street Journal story was written by Chris Powell.  Both are contained in this GATA release...and both are must reads.  The link is here.


Turkey targets gold stashes

The Turkish government, facing a bloated current-account deficit that threatens to derail the country's rapid expansion, is trying to persuade Turks to transfer their vast personal holdings of gold into the country's banking system.

The push to tap into the individual gold reserves -- the traditional form of savings here -- is part of Ankara's efforts to reduce a finance gap that is currently about 10% of gross domestic product.

Government officials say the banking regulator will soon publish a plan to boost incentives for consumers to park their household wealth inside the financial system. Banking executives said they are considering new interest-yielding gold-deposit accounts that would allow savers to withdraw gold bars from specially designed automated teller machines.

This story was posted in yesterday's edition of The Wall Street Journal as well...and is posted in the clear in this GATA release.  I thank reader Bob Fitzwilson for being the first one through the door with this piece.  It, too, is a must read...and the link is here.



¤ The Funnies

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¤ The Wrap

It was another day of the same old stuff.  Nothing changed in the physical market...and the action was in the Comex futures market, which is all paper.  Using high-frequency trading tactics, 'da boyz' engineered the price lower...sell stops were hit...and down went the price in all four precious metals.

As I've said all week, I have no idea when the bottom will be in.  JPMorgan et al can keep this up as long as they think they can get more leveraged longs to sell out as they maneuver the precious metals prices lower.  Once they think they've covered as many shorts as they can...or gone long themselves...then the bottom will be in.

This is the same pattern that we saw during November and December...and the question I asked then, still applies now.  When the bottom is finally in and the subsequent rally begins, who will be go short against the technical fund longs and the small traders that come flooding back into the market?  If it's the usual Commercial traders, then the outcome will be the same as we are experiencing now.

It's always possible that JPMorgan et al will instigate the next rally on their own...going into the market and purchasing long positions to cover their short positions.  They did it in the past...and they may do it again.

The way to tell, is to watch the open interest numbers.  If open interest climbs as the prices rise, it's the same old, same old new long positions are met by new Commercial short positions.  On the other hand, if prices rise while open interest drops, then that's 'da boyz'  are covering short positions by buying a long...and that extinguishes open interest and it will show a decline.

So we just have to wait it out and see what happens.  We've still got five business days left in March before we hit first notice day for the April delivery month in gold...and as I've also mentioned before, we'll probably have to wait until after that date to see if the selling pressure subsides.

Today we get the long-awaited Commitment of Traders Report.  All of last week's big take-down will be in it and, hopefully, everything that happened going into the close of Comex trading on Tuesday when we had that big HFT event.  But, as I've also said before, 'da boyz' are great at withholding data when it suits them...and this may be one of those times.  We'll see.

Not much happened in Far East trading during their Friday...and volume was pretty light going into the London open.  The dollar index headed south just before that time... and, as of 5:13 a.m. Eastern time, is down about 45 basis points from its earlier high.  But that has had only a minor positive impact on the prices of both metals.  It seems that gold and silver only 'react' strongly if the dollar is in rally mode...and it's my opinion that the Commercial traders use a dollar rally of any size...that they themselves probably cover for their engineered sell-offs.

Here's the 5-day dollar index, to put this morning's drop into perspective for the week that was.

As of 5:18 a.m. Eastern time, gold is up about eight dollars...and silver is up the magnificent sum of 10 cents.  One can only imagine how much they would have fallen if the dollar index had rallied that amount.  Volume is up from the London open...but is not quite as high as it was this time on Thursday.

Since today is Friday, I'll be ready for pretty much any price scenario that shows up on my computer screen when I turn the beast on later this morning.

With the precious metals and their shares still on sale...but for how much longer, nobody knows...there's still the opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best (and current) well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

I hope you have a great weekend...and I'll see you here sometime tomorrow.