Casey Research Publication
Gold & Silver Daily
"Rallies in both gold and silver have been halted at their respective 50-day moving averages"
 

¤ Yesterday In Gold & Silver

Note: Starting tomorrow, I'll be at the Vancouver Resource Investment Conference until Monday night.  I will make every attempt to file all my columns on time, but it can't be guaranteed.  The other thing to note is that they will be a short as I can possibly make them.  I hope you understand, as I have other fish to fry while I'm there.  Ed

There isn't much to report about yesterday's action.  The gold price chopped quietly lower right from the New York open on Tuesday evening, with the low tick coming about 9:20 a.m. EST.  The subsequent rally lasted until about 11:10 EST---and after that, the gold price didn't do much.

The high and lows ticks, such as they are, were reported by the CME as $1,244.60 and $1,233.50 in the February contract.

Gold closed in New York on Wednesday at $1,242.00 spot, down three bucks from Tuesday's close.  Net volume was pretty light at only 91,000 contracts or so.

The chart pattern in silver was more or less the same as gold's.  The only difference worth noting was that it appeared that the low price tick came just after 9:30 a.m. GMT in London---and not around 9:30 a.m. EST in New York.

The high and low in silver was $20.27 and $19.905 in the March contract.

Silver finished the day at $20.20 spot, down 5.5 cents from Tuesday's close.  Volume, net of January and February, was a subdued 29,500 contracts.

There were similar looking rallies in platinum and palladium as well.  It appeared that palladium really wanted to make a serious move, but it also appeared as if there was a not-for-profit seller standing by to make sure that the price didn't suffer from too much "irrational exuberance".  Here are the charts.

The dollar index closed 80.67 late on Tuesday evening in New York---and then began to rally starting at 9 a.m. Hong Kong time on their Wednesday morning.  The rally topped out at precisely 9 a.m. EST in New York---and then faded a hair into the close.  The index finished the Wednesday session at 81.03, which was up 36 basis points on the day.

The stocks gapped down a bit over a percent at the open, but didn't take long to rally back into positive territory.  Most of the gains were in by 11:30 a.m. EST---and the HUI chopped sideways in a tight range for the remainder of the Wednesday session, finishing up 1.13%.

The silver equities follows a similar price path---and Nick Laird's Intraday Silver Sentiment Index closed up 1.95%.

The CME Daily Delivery Report for Wednesday showed that zero gold and 8 silver contracts were posted for delivery within the Comex-approved depositories on Friday.

There were no reported withdrawals in GLD---and as of 9:45 p.m. EST yesterday evening, there were no reported withdrawals from SLV.

The U.S. Mint had a tiny sales report yesterday.  They sold 2,000 ounces of gold eagles and 28,500 silver eagles.

Over at the Comex-approved depositories on Tuesday, they reported that 89,756 troy ounces of gold were transferred out of Brink's, Inc.---and directly into JPMorgan's warehouse.  The link to that activity is here.

As always, the big in/out activity was in silver.  They reported receiving 478,438 troy ounces of the stuff---and shipped out 575,836 troy ounces.  Of the amount reported received---475,440 troy ounces disappeared into JPMorgan's warehouse.  The link to that action is here.

Just as a point of interest, the next deposit of silver into the JPMorgan warehouse will move them into top spot [ahead of HSBC USA] with the largest physical silver inventory of the six Comex-approved depositories.  That's quite a feat considering the fact that on April 30, 2011---the day before the infamous drive-by shooting in silver---they didn't have one single troy ounce in their warehouse, either for themselves or their clients.  And as I've said before on a number of occasions, that can't be a coincidence.

I have the usual number of stories for a mid-week column, so I hope you find some of the ones posted below to be of interest.

 

¤ Critical Reads

The Blistering Recovery Continues: Week After Macy's, JCPenney Fires 2,000---Closes 33 Stores

JCPenney today announced that as part of its turnaround efforts, the Company will be closing 33 under-performing stores across the country in order to focus its resources on the Company`s highest potential growth opportunities.

These actions are expected to result in an annual cost savings of approximately $65 million, beginning in 2014. In connection with this initiative, the Company expects to incur estimated pre-tax charges of approximately $26 million in the fourth quarter of fiscal 2013 and approximately $17 million in future periods.

Remaining inventory in the affected stores will be sold over the next several months, with final closings expected to be complete by early May. The closings will result in the elimination of approximately 2,000 positions. Eligible associates who do not remain with the Company will receive separation benefits packages. Meanwhile, the Company is continuing its plans to open a new store location later this year at the Gateway II development in Brooklyn, N.Y.

"As we continue to progress toward long-term profitable growth, it is necessary to re-examine the financial performance of our store portfolio and adjust our national footprint accordingly," said Myron E. (Mike) Ullman, III, chief executive officer of JCPenney.  "While it`s always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success.

This short Zero Hedge piece was posted on their website shortly after the markets closed yesterday afternoon---and I thank reader 'David in California' for today's first story.

Read more...

America's Dwindling Economic Freedom

World economic freedom has reached record levels, according to the 2014 Index of Economic Freedom, released Tuesday by the Heritage Foundation and The Wall Street Journal. But after seven straight years of decline, the U.S. has dropped out of the top 10 most economically free countries.

For 20 years, the index has measured a nation's commitment to free enterprise on a scale of 0 to 100 by evaluating 10 categories, including fiscal soundness, government size and property rights. These commitments have powerful effects: Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity and social progress. Botswana, for example, has made gains through low tax rates and political stability.

It's not hard to see why the U.S. is losing ground. Even marginal tax rates exceeding 43% cannot finance runaway government spending, which has caused the national debt to skyrocket. The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy. The intervention impedes both personal freedom and national prosperity.

Every since reading G. Edward Griffin's classic tome "The Creature From Jekyll Island"---I've always known that the decline of America has been a deliberate act.  This op-ed piece showed up on The Wall Street Journal website early Monday evening---and is certainly worth reading in my opinion.  It's the first offering of the day from Phil Barlett.

Read more...

Regulators Ease Volcker Rule Provision on Smaller Banks

Federal regulators on Tuesday bent to the will of the banking industry and some lawmakers and revised a rule that would have forced community banks to take write-downs on a security that many had invested in before the financial crisis.

The revision to the Volcker Rule, announced late Tuesday by five regulatory agencies, would permit banks to continue to hold on to a special type of collateralized debt obligation.

The Volcker Rule, as approved by regulators in December, would have forced banks to rid themselves of C.D.O.’s backed by trust-preferred securities, or TRuPS. The provision set off an uproar from the banking industry, which said it violated the intent of the Volcker Rule, which was meant to rein in risk-taking by big Wall Street banks and not to result in a financial hit to smaller ones.

This story, also courtesy of Phil Barlett, put in an appearance on The New York Times website early on Tuesday evening.

Read more...

L.A. Times: Big Bank Mortgage Settlements Are Bogus

The hidden truth behind the huge fines the federal government has extracted from banks and Wall Street is that because of credits, tax write-offs and other tricks, the penalties are worth only a portion of what was announced, the Los Angeles Times reported.

In a show of non-partisan skepticism, Sens. Elizabeth Warren, D-Mass., and Tom Coburn, R-Okla., have introduced legislation to force a clear picture of what the fines are really worth.

"The measure reflects a rise in public discontent with settlements that look like major penalties but shrivel into wrist slaps when reality is accounted for," the LA Times reported.

This short article was posted on the moneynews.com Internet site early yesterday morning...and my thanks go out to West Virginia reader Elliot Simon.

Read more...

Deutsche, Citi feel the heat of widening FX investigation

Global investigations into alleged currency market manipulation intensified on Wednesday as U.S. regulators descended on Citigroup's London offices and Deutsche Bank suspended several traders in New York, sources told Reuters.

The presence of Federal Reserve and Office of the Comptroller of the Currency officials at Citi's Canary Wharf office in the east of London this week comes after Citi last week fired its head of European spot foreign exchange trading, Rohan Ramchandani, following a prolonged period on leave, one source familiar with the matter said.

The suspensions of staff at Deutsche Bank in New York and possibly elsewhere in the Americas followed investigations into "communications across number of currencies," a second source said.

This Reuters news item was posted on their website yesterday afternoon EST...and I found it embedded in a GATA release.

Read more...

'Reform or we leave E.U.' warns British chancellor

Speaking at the start of a two day conference on EU reform organised by the Open Europe think tank, Osborne said that the E.U. had to decide whether to "reform or decline".

"It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline," he added.

He also urged that Europe's labour market was becoming increasingly uncompetitive and was falling behind China and other economic blocs. Prime Minister David Cameron last year set out plans to renegotiate the terms of Britain's EU membership. The reforms are to be followed by a public vote.

His Conservative party are currently piloting a bill through parliament to guarantee a referendum on EU membership in 2017 if it wins the next election in 2015.

This news item, filed from London, appeared on the euobserver.com Internet site on Wednesday afternoon GMT...and it's another contribution from Roy Stephens

Read more...

Francois Hollande vows 'supply-side' assault on French state, doubles down on EMU austerity agenda

French president François Hollande has vowed an “electro-shock” to lift the French economy out of deep slump, promising to shrink the elephantine state and push through a raft of pro-business reforms.

The embattled French leader stunned the left-wing of his own Socialist Party by calling for a new economic strategy based on “supply-side” policies, accompanied by €30bn of fresh spending cuts by 2017 to pave the way for lower taxes and charges on companies.

The shift has been widely compared with Tony Blair's New Labour policies and the reform drive by German Chancellor Gerhard Schröder in 2004, though Mr Hollande vehemently denied any infection from market “liberalism” in a televised press conference.

“I was elected with the help of the Left and a I remain a Socialist,” he said, adding that it was possible to preserve the French welfare model by learning from the Nordic states. In reality the Scandinavians have been chipping away at benefits.

This Ambrose Evans-Pritchard commentary was posted on the telegraph.co.uk Internet site on Tuesday evening---and it's the second offering in a row from Roy Stephens.  It's worth skimming.

Read more...

Europe tightens up financial market rules

The Europe Union is to tighten regulation of financial markets under a deal to prevent any repetition of the rampant speculation which helped bring down banks and crash the global economy.

After two years of tough talks, the European Parliament and negotiators for the 28 member states agreed a deal in principle that sets new rules to regulate the market, known as MiFID II.

"These new rules will improve the way capital markets function to the benefit of the real economy," said the EU's financial markets commissioner, Michel Barnier.

This story, filed from Strasbourg, was posted on the fin24.com Internet site yesterday afternoon---and I thank South African reader B.V. for sending it our way.  It's worth the read.

Read more...

ECB Eases European Bank Stress Test By 25%, Lowers Capital Ratio Requirement From 8% to 6%

First the Volcker Rule was defanged when last night the requirement to offload TruPS CDOs was eliminated, and now here comes Europe where the ECB just lowered the capital requirement for its "stringent" bank stress test (the one where Bankia and Dexia won't pass with flying colors we assume) by 25%.

Some additional color from Bloomberg on what is becoming a complete farce of a stress test:

The European Central Bank favors requiring banks to show they can retain capital worth 6 percent of their assets when it puts them through a simulated recession later this year, said two euro-area officials with knowledge of the matter.

For the rest of the ECB’s bank balance-sheet review, known as the Comprehensive Assessment, the central bank is using a minimum capital requirement of 8 percent to evaluate lenders’ health under current conditions. That figure was reported by Bloomberg News on Oct. 22 and confirmed by the ECB a day later.

In other words, 8% under "current conditions" except in a "simulated recession" when the ECB will lower its capital needs requirement to 6%. One assumes the "simulated recession" will be different than the all too real recession Europe, and its record high unemployment, are currently in? And also, just when will the ECB expose how many hundreds of billions in bad debt loans the European banking system is currently toiling under?

This Zero Hedge piece was posted on their Internet site late yesterday morning EST---and it's worth skimming.  I thank Manitoba reader Ulrike Marx for her first contribution to today's column.

Read more...

Lagarde Warns Officials to Fight Deflation ‘Ogre’ Decisively

International Monetary Fund Managing Director Christine Lagarde urged policy makers in advanced economies to fight risks of deflation that would threaten a global recovery she called “feeble.”

Less than a week before the Washington-based fund releases its new global growth forecasts, Lagarde said momentum in the second half of last year should strengthen in 2014 as developed economies gain pace. While the fund plans to raise its forecast for the global economic expansion on Jan. 21, it remains below potential of about 4 percent, she said.

Central banks in the U.S., Japan and the euro area face inflation levels under their targets while trying to accelerate growth with policies including benchmark interest rates near zero and bond-buying programs. Lagarde said that while “the deep freeze is behind,” world growth remains “too low, too fragile and too uneven,” with some 200 million people needing employment.

This Bloomberg article was posted on their website mid-afternoon on Wednesday Denver time...and it's the second offering in a row from Ulrike Marx.  It's worth reading.

Read more...

'The Americans Lied': Trans-Atlantic 'No-Spy' Deal on the Rocks

Last summer, German Chancellor Angela Merkel promised her citizens a pact which would prohibit U.S. spying on German citizens. But since then, Washington has shown little interest in pursuing such a treaty. Now, officials in Germany fear the deal is dead.

Failed talks? Hardly. The negotiations "are continuing," says Germany's foreign intelligence service, the Bundesnachrichtendienst (BND). "We are still talking," says the German government. In other words, nothing has yet been decided. The No-Spy deal is still alive.

But the statements coming out of Berlin and Pullach, where the BND is headquartered, reek of forced optimism. Nobody wants it to look as though efforts have been abandoned toward a deal which would see the U.S. agree to swear off spying operations in Germany. Yet despite the assertions, most of those involved are slowly coming to the realization that a surveillance deal between Washington and Berlin isn't likely to become reality. The U.S. government is still digging in its heels.

On Tuesday, the German daily Süddeutsche Zeitung quoted one source who is familiar with the talks as saying "we won't get anything." The paper also reported that the US is refusing to promise that it won't monitor members of the German government and other politicians in the future.

No surprises here.  This very interesting news item was posted on the German website spiegel.de yesterday---and it's another offering from Roy Stephens.

Read more...

Snowden joins Ellsberg, Greenwald on new Freedom of the Press board

Former intelligence contractor Edward Snowden will join the likes of Pentagon Papers whistleblower Daniel Ellsberg and journalist Glenn Greenwald on the executive board of the non-profit Freedom of the Press Foundation, the group announced Tuesday.

The organization, formed barely a year ago with the goal of helping support and defend public interest journalism, confirmed Tuesday afternoon that the National Security Agency contractor-turned-leaker will join the group’s board starting this February.

Greenwald — the reporter who was among the first to collaborate with Mr. Snowden last year on a series of articles based off of those leaked NSA documents — said in a statement Tuesday that the board’s newest edition “is a perfect example of our group's purpose.”

This article appeared on the Russia Today website early Tuesday evening Moscow time---and my thanks go out to Roy Stephens one more time.

Read more...

Pope Cleans House at Bank With New Cardinals

Pope Francis made another move to clean house at the troubled Vatican bank on Wednesday, naming a new roster of cardinal advisers to replace the ones who were in place during its latest brushes with scandal.

On Feb. 16, 2013, just days after announcing his resignation, Pope Benedict XVI confirmed the existing members of the bank's supervisory body for another five years. The members included Benedict's longtime deputy and secretary of state, Cardinal Tarcisio Bertone, who was widely blamed for many of the Vatican's administrative shortcomings during Benedict's papacy.

Francis has now essentially undone Benedict's decree, relieving Bertone and the other commission members of their jobs as he moves forward with his reform of the bank, formally known as the Institute for Religious Works.

Here's more proof, if any was needed, that this particular brand of organized religion is rotten to its financial core.  This short must read AP story was posted on The New York Times website early Wednesday morning EST---and it's the final offering of the day from reader Phil Barlett.

Read more...

Seven killed as Russian security forces corner suspected militants in Dagestan

Three members of the Russian security forces and four gunmen were killed in a shootout on Wednesday during a sweep for Islamist militants, who have threatened to attack the Winter Olympics, which begin in Sochi next month.

After two suicide bombings in southern Russia in December, Moscow is on high security alert. Russian president Vladimir Putin has staked much personal and political prestige on the success of the Games, and put security forces on combat footing in Sochi.

Russia's National Anti-Terrorism Committee (NAC) said the dead militants included a man accused of carrying out a car bomb attack in the city of Pyatigorsk late last year that killed three people.

The shootout occurred on the same day that Russia's lower house of parliament, the Duma, introduced legislation aimed at broadening the powers of security services and boosting their oversight of the internet.

This news item was posted on theguardian.com Internet site early yesterday evening GMT---and it's courtesy of reader M.A.

Read more...

With China Awash in Money, Leaders Start to Weigh Raising the Floodgates

Move over, Janet Yellen and Ben Bernanke. Step aside, Mario Draghi and Haruhiko Kuroda. When it comes to monetary stimulus, Zhou Xiaochuan, the longtime governor of the People’s Bank of China, has no rivals.

The latest data released by China on Wednesday show that the country’s rapid growth in money supply has continued. Mr. Zhou and his colleagues at the Chinese central bank have only begun the difficult and dangerous task of reining it in.

The amount of money sloshing around China’s economy, according to a broad measure that is closely watched here, has now tripled since the end of 2006. China’s tidal wave of money has powered the economy to new heights, but it has also helped drive asset prices through the roof. Housing prices have soared, feeding fears of a bubble while leaving many ordinary Chinese feeling poor and left out.

This news item was posted on The New York Times website yesterday something---and it's definitely worth reading.  I thank Phil Barlett for his final contribution to today's column.  The article now sports a new headline.  The old one read "China Dwarfs U.S. in Monetary Stimulus".

Read more...

Five King World News Blogs/Audio Interviews

1. Art Cashin: "Central Planning Maze and a Firestorm of Inflation".  2. John Hathaway: "Gold Price to Super-Spike as Physical Flees West".  3. Robert Fitzwilson: "The Great Western Gold Robbery is About to End".  4. Ronald-Peter Stoferle: "6 of the Most Fascinating Charts You Will Ever See".  5.  The audio interview is with Rob Arnott.

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]

Read more...

Egon von Greyerz: Physical gold, the safest asset in an unsafe world

In this presentation, which includes various slides, Egon initially explains why we are at the end of a major era. He discusses the demise of the dollar and other currencies as well as the coming 90% fall of stock markets versus gold. He presents some very interesting graphs showing why U.S. debt can never be repaid. Egon also explains why risk is greater than ever and that the likely consequences will be QE to infinity and a depressionary hyperinflation. Finally he covers how to...and how to not...invest in gold.

This 20-minute video presentation was posted on the goldswitzerland.com Internet site yesterday.

Read more...

Government seeks gold purchase information from jewellers as smuggling rises

The government has asked jewellers to provide information on purchases of gold bars or jewellery worth more than 500,000 rupees by the end of this month, a move seen keeping a check on big transactions amid rising smuggling.

India has been trying to curtail shipments of gold, the second-biggest import bill after crude oil, as it seeks to curb a gaping trade deficit. The country last year raised import duty to 10 percent and tied gold imports to jewellery exports.

As a result, jewellers have been forced to depend on recycled or smuggled gold to meet demand.

The Income Tax Department has sought information such as the number and value of transactions, mode of payment and transaction code in a three-page letter sent to jewellers and seen by Reuters.

This must read Reuters story, filed from Mumbai, was posted on their website Wednesday evening IST---and it's the final offering of the day from Ulrike Marx.

Read more...

Another Chinese analyst says gold is crucial to his country's economic security

Gold researcher and GATA consultant Koos Jansen reports on another leading personage in China's financial markets, Zhang Bingnan, market analyst for China Central Television and vice president of the China Gold Association, who told a financial conference in Beijing last year that gold is essential to China's economic security.

This commentary by Koos was posted on his Internet site yesterday---and is another gold-related item I found embedded in a GATA release.

Read more...

Glenn Beck--and Germany's Gold

In this 20:30 minute video commentary from January 8, Glenn gets into what he thinks happened to Germany's gold that was stored in the United States.  This video is an absolute must watch---and I thank Richard O'Mara for bringing it to our attention.

Read more...

 

¤ The Funnies

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¤ The Wrap

Why am I calling it highly unusual that JPMorgan added 7,000 short contracts in silver between December 3 and January 7?

The simple answer is because the price of silver didn’t move that much in the time period. Oh, silver did rally as much as $1.50 briefly during December, but basically finished the month little changed. In fact, that period was one of the tamest times for price volatility for the entire year. Further, during that one month, there was no penetration of the important 50 day moving average. To be fair, there was technical fund short covering of some 12,000 contracts during that time and when the technical funds buy, the commercials basically have to sell. There were commercials (which I call the raptors) who held 40,000 long contracts on December 3 and those raptors did sell 5,000 long contracts from their big net long position.

What was highly unusual was that JPMorgan sold 7,000 new silver contracts short to satisfy the rest of the technical fund buying at prices hovering around (but mostly below) $20. The last time JPMorgan sold a significant number of new silver contracts short was back in August when the bank sold 6,000 new contracts short as silver broke above the 50 day moving average on its way to the summer run to $25. I know I repeat myself when I say that the key on any silver rally is whether JPMorgan adds to shorts or not; but that is the key, pure and simple. - Silver analyst Ted Butler: 15 January 2013

With volume as low as it was yesterday, I'm not prepared to read too much into yesterday's price action in either silver or gold.  I was just content to see the precious metal equities finish in positive territory despite the fact that the metals themselves finished in the red.

But we're certainly far from being out of the woods yet.  The rallies in both gold and silver have been halted at their respective 50-day moving averages---and as Ted Butler alluded to in the above quote, it probably occurred because JPMorgan went short more Comex silver contracts and sold another chunk of their long-side corner in the Comex futures market in gold.  That fact should be confirmed when the latest Commitment of Traders Report comes out on Friday afternoon.

Other than that, I don't have much to add to what I've already said further up in this column.

In Far East trading on their Thursday not much happened in any of the four precious metals up until shortly after 2 p.m. Hong Kong time.  At that point all of them developed a negative bias---and are all down a bit now that London has been open about 45 minutes.  Volumes aren't overly heavy for this time of day, so I'm not prepared to read too much into it at the moment, either.  The dollar index has been trading flat since the market opened at 6 p.m. in New York on Wednesday evening.

And as I hit the send button on today's efforts, there hasn't been too much in the way of price changes since I wrote the last paragraph.  Gold volume, net of roll-overs, is not overly heavy---and neither is silver's volume, even though its all of the HFT variety in the current front month.  The dollar index is down about 10 basis points---and just below the 81.00 mark.

See you tomorrow---from Vancouver.