Gold & Silver Daily
"The brief flurry of price excitement in both gold and silver at the London a.m. gold fix on Wednesday morning certainly wasn't allowed to last long."

¤ Yesterday In Gold & Silver

The gold price was up about ten bucks during early Far East trading on Wednesday...and then didn't do much of anything until a smallish rally began around 3:00 p.m. Hong Kong time, which is 2:00 a.m. on the east coast.

This rally lasted until the London a.m. gold fix at 10:30 a.m. GMT...and the moment that 'the fix was in' there were not-for-profit sellers there to smash the price down.  By the time Comex trading opened in New York yesterday morning at 8:20 a.m. Eastern time, the powers-that-be had the gold price down five dollars from Tuesday's close.  Every rally attempt after that, no matter how small, got sold off before it could develop into anything.

Gold closed the New York trading session at $1,615.00 spot...down just twenty cents from Tuesday's close.  Volume was around 124,000 contracts.

It was almost an identical situation in the silver market...although the price didn't do much during Far East trading before its 3:00 p.m. Hong Kong rally began.

Once the London a.m. fix was in, the silver price suffered the same fate as gold, except that the silver price finished down 24 cents to $29.32 spot.  Volume was around 26,000 contracts.

The dollar index declined about 55 basis points from the New York open on Tuesday night, with the low of the Wednesday trading session coming around 5:20 a.m. Eastern time...which, wonder of wonders, also coincided with the London morning gold fix at the precise same moment. Coincidence, you ask?  No chance of that.

From that point, the dollar index blasted higher...and gained back 50 basis points of its earlier loss.  The rally ended right at the open of Comex trading at 8:20 a.m. Eastern time.  Another coincidence?  Not bloody likely.

From there the dollar index basically traded flat for the rest of the New York trading session.  The gold price followed the dollar almost exactly yesterday, which I find suspicious in and of itself.  However, it does explain the price moves in gold and silver...but not the size of the moves...which were out of all proportion to the associated dollar price action.

The gold stocks pretty much followed the gold price during the New York trading session...and the HUI finished basically unchanged...down a microscopic 0.09%.

The silver stocks also finished down a bit on the day.  Nick Laird's Silver Sentiment Index closed down a smallish 0.42%.

(Click on image to enlarge)

The CME Daily Delivery Report showed that only 31 gold and 21 silver contracts were posted for delivery on Friday.  The link to the Issuers and Stoppers Report is here.

The GLD ETF showed a rather large withdrawal of 388,951 ounces...and there were no reported changes in SLV.  Here's the link to that activity.

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

On Tuesday, the Comex-approved depositories showed that 310,327 troy ounces of silver were added to their inventories...and 359,783 ounces were withdrawn.

Silver analyst Ted Butler had a few things to say about the raptors...the smaller commercial traders other than the 'Big 8'.  As of the last Commitment of Traders Report there were between 25 and 30 of them.

"The raptors may continue to rig the silver market short term, but it is important to recognize that they don’t sell on the way down, only on the way up. That means the raptors are likely to rig prices lower only when they can buy more, with the intent of selling out at higher prices to make a profit. When there is no more of an opportunity for the raptors and JPMorgan to buy to the downside, both will stop trying to rig prices lower. What determines when there is no more to buy is whether there are any more speculative longs to scare out of the market, or other speculative short sellers which can be tricked into selling short. There's no way to precisely measure that beforehand, but when we get into historical extremes in the COT, with both the raptors big net long and JPMorgan small net short, with the speculative long position also low, then we are usually close. That’s where we are right now, with Friday’s COT likely to confirm."

"I’ve never seen the raptors panic and sell out at a loss at lower prices, only at a profit to the upside. They did panic a bit near the top in April when they bought, as did JPMorgan, but conditions are the opposite of that currently. The only question is where the raptors will sell on a silver price rally. Will they be content to book a profit of a few dollars an ounce or will they hold out for more? I don’t know, but future COT reports will tell us. I can tell you that the stage is possibly set for a real conflagration to the upside if JPMorgan tries to buy aggressively from the raptors and/or the raptors decide to hold out for really high prices. It wouldn’t take much in the current illiquid trading conditions to ignite an upside price event."

I have a lot of stories today, so I hope you at least have the time to skim the few paragraphs that I've cut and paste from each one,


¤ Critical Reads

US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports

Thank you NAR for proving what everyone knew: that the US housing market is one big lie.  Odd: no mention of the primary reason for the "re-benchmarking", namely that the NAR is nothing but an advertising front for the US housing industry.

This is a short read with three most excellent charts.  It's definitely worth reading...and I thank Phil Barlett for sending me this piece.  The link is here.


The Financial Crisis on Trial: The SEC fingers the government-backed mortgage buyers

The Securities and Exchange Commission's lawsuits against six top executives of Fannie Mae and Freddie Mac, announced last week, are a seminal event.

For the first time in a government report, the complaint has made it clear that the two government-sponsored enterprises (GSEs) played a major role in creating the demand for low-quality mortgages before the 2008 financial crisis. More importantly, the SEC is saying that Fannie and Freddie—the largest buyers and securitizers of subprime and other low-quality mortgages—hid the size of their purchases from the market. Through these alleged acts of securities fraud, they did not just mislead investors; they deprived analysts, risk managers, rating agencies and even financial regulators of vital data about market risks that could have prevented the crisis.

This story was posted in yesterday's edition of The Wall Street Journal...and I thank Washington state reader S.A. for sending it along.  The link is here.


European Bank in Strong Move to Loosen Credit

After long resisting the kind of financial force Washington used at the height of the financial crisis in 2008, European central bankers on Wednesday pumped nearly $640 billion into the Continent’s banking system. The move raised hopes that the money could alleviate the region’s credit squeeze.

American officials and global economists have long urged the Europe’s central bank to take just such an aggressive stance — even as European political leaders have repeatedly failed to devise concrete near-term plans to address Europe’s debt problems and deteriorating finances.

Some analysts suggest the central bank’s new lending program represents a kind of back door to the easy-money policy pursued by the Federal Reserve after the collapse of Lehman Brothers in 2008, which is widely credited with averting a broader economic disaster.

This story was posted in The New York Times early yesterday morning...and is another Phil Barlett offering.  The link is here.


Herr Draghi or Signor Draghi, and the ECB's Santa Rally

The ECB’s back-door bail-out for Italy, Spain, Belgium, and… France? …is €489bn.

Roughly €300bn of today’s eagerly awaited LTRO tender is recycled old money from earlier support operations. The new money is €200bn. This alone is not going to shore up the sovereign states of southern Europe as they grind deeper into recession/depression.

Enjoy Mario Draghi's Santa Rally while it lasts. The euphoria is likely to dissipate once markets remember the sheer scale of the task at hand.

This Ambrose Evans-Pritchard offering was posted in The Telegraph...and is Roy Stephens first offering of the day.  It's worth reading...and the link is here.


ECB's €489bn loan to eurozone banks fails to calm markets

Banks gorged on €489.19bn of cheap loans offered by the European Central Bank (ECB) - but the gargantuan refinancing effort still failed to decisively address the raging debt crisis.

A total of 523 banks scrambled to take up the ECB’s offer to exchange illiquid assets for cut-price funding in the first of two three-year refinancing operations. The record half-trillion euro take-up – which was far greater than the market had expected – initially triggered a “sugar rush” of euphoria as the move was hailed as a decisive “game changer”. But stock markets fell as economists and financiers recognised that while the imminent danger of another credit crunch had been averted, the threat of sovereign defaults had not.

More proof that the current economic, financial and monetary system is a dead man walking...regardless of where on Planet Earth you are.  This story was posted in The Telegraph last night...and is another Roy Stephens offering.  It's a must read...and the link is here.


Massive Lending Operation: ECB's Risky Plan to Flood Banks with Cash

The European Central Bank has launched the biggest lending operation in its history, and banks pounced on the offer on Wednesday, borrowing almost a half-billion euros for three years at a low interest rate. Governments hope the banks will use the cash to buy sovereign bonds, but critics warn the ECB's strategy is risky and could stoke inflation.

It will be a tough year for banks. In 2012 overall they will have to pay back €725 billion ($953 billion) in debt, of which €280 billion will fall due in the first quarter alone. They will have to borrow fresh money to service this debt, but it's almost impossible for them to raise that money in the private market. Most of them have large holdings of European government bonds on their balance sheets, so they don't have the mutual trust necessary to lend each other large sums of money.

"The interbank market is pretty shut," said Dieter Hein, a finance expert at Fairesearch, an independent research company for institutional investors, banks and brokers. "Virtually no one outside is lending any money to euro-zone banks any more."

This story gives the perspective on the ECB's massive lending program from Berlin's point of view.  For that reason alone it's a must read as well.  It's another Roy Stephens offering that was posted over at yesterday...and the link is here.


The 'German Premier' - Task Force Leader Cleans House in Greece

Armed with 45 experts and 30 years of experience, Horst Reichenbach is in Athens to help the Greeks economize and institute reforms. His conclusions about their situation are sobering, but he also reports a new sense of determination for tackling the debt crisis there.

The OECD's suggestion for correcting these problems is to institute "a Big-Bang reform in the entire government apparatus."

Reichenbach puts it in his words, politely and without using the term Big Bang. "The efficiency of the Greek administration is not such that it would be possible to eliminate jobs," he says.

The International Monetary Fund (IMF) published its most recent report on Greece on Tuesday. Its findings were also devastating.

This is a very interesting read.  It was posted over at yesterday...and is Roy Stephens last offering of the day.  The link is here.


Doug Casey on Getting Out of Dodge

"Doug, a lot of readers have been asking for guidance on how to know when it's time to exit center stage and hunker down in some safe place. Few people want to hide from the world in a cabin in the woods while life goes on in the mainstream, but nobody wants to get caught once the gates clang shut on the police state the U.S. is becoming. How do you know when it's time to go?"

This is the lead question by Louis James in yesterday's edition of Conversations with Casey.  It's a must read from one end to the other...and the link is here.


The Ron Paul Portfolio

Republican presidential candidate Rep. Ron Paul marches to his own drummer in politics – and in his investment portfolio, too.

But Ron Paul’s portfolio isn’t merely different. It’s shockingly different.

Paul’s portfolio – fully 64% of his assets – is entirely in gold and silver mining stocks. He owns no Apple, no ExxonMobil, no Procter & Gamble, no General Electric, no Johnson & Johnson, not even a diversified mutual fund that holds a broad basket of stocks. Rep. Paul doesn’t own stock in any major companies at all except big precious-metals stocks like Barrick Gold, Goldcorp and Newmont Mining.

William Bernstein, an investment manager at Efficient Portfolio Advisors in Eastford, Conn., reviewed Rep. Paul’s portfolio as set out in the annual disclosure statement. Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. ”This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says.

This story appeared in The Wall Street Journal yesterday...and I thank Washington state reader S.A. for sharing it with us.  The link is here.


King World News' London trader explains desperate twists in metal price suppression

Here's a GATA release from yesterday for which Chris Powell has written an extensive preamble.

I've read this KWN blog a few times...and some of the commentary seems like pure speculation to me.  You be the judge, dear reader...and although I urge you to read it, I also urge you to read it with your eyes wide open.

I thank reader Roham Jackson for being the first one through the door with this story in the wee hours of yesterday morning...and the link to the GATA release is here.


Lawrence Williams: Gold the protector as democracies move toward totalitarianism

Gold, and perhaps silver, are still in a bull market phase which is likely to continue as governments print money, spin figures, manipulate markets and erode basic liberties.

MineWeb's Lawrence Williams cites GATA's work yesterday as he wonders aloud how much the markets are showing genuine activity and how much is actually intervention by governments.

This story is a must read as well...and I borrowed it from a GATA release yesterday.  It's posted over at the link is here.


It Ain’t Over ‘Til It’s Over? - Brian Pretti

Time to step back and have a look at the “rhythm” of gold over the last decade to hopefully provide perspective on not only the price of gold itself, but really on the character of the deleveraging cycle. We’ve experienced quite the nasty price correction as of late. Is it really that Euro banks have been either liquidating or accelerating gold leasing in order to raise precious capital? Sure could be. We also have a lot of recent converts to precious metals given the prior 25%+ two month run in prices we saw earlier this year. As is usually the case, the market gods need to teach these folks a lesson and separate the traders from the investors. That’s more than well underway.

This rather long piece was posted over at the website on Monday.  There are lots of excellent charts...and the essay is worth the read if you have the time.  I thank reader U.D. for sending it my way...and the link is here.


Gold's record shines again despite investor despair about it, Turk says

Interviewed by King World News yesterday, GoldMoney founder and GATA consultant James Turk marveled at the despair among gold investors even as the metal is about to finish the year up 17 percent in terms of the dollar, its 11th straight year of gains, and even as the European Central Bank is promising to loan infinite money at no interest in perpetuity to support insolvent governments and banks, "back-door quantitative easing."

James comments on the gold market are always worthy of your attention.  This KWN blog is no different.  I borrowed Chris Powell's preamble, for which I thank him...and the link is here.


Gold bottoming around $1,600...$2,100 likely early in 2012, Hinde report says

Hinde Capital's new report on the gold market surveys a number of indicators and concludes that gold is bottoming at around $1,600 and that a price of $2,100 is likely early in 2012.

This 6-page report is posted on the website...and the link is here.


Gold climbing 'wall of worry' just as it did in '70s, Lassonde tells King World News

Mining entrepreneur Pierre Lassonde reminds King World News that there were many big price setbacks during gold's bull run in the 1970s, setbacks ranging from 11 to 43 percent. Gold will continue to climb the proverbial wall of worry, Lassonde says, though he's inclined to think the price will be soft for quite a while into the new year before taking off again.

I thank Chris Powell for wordsmithing the above introduction...and the link to the KWN blog is here.



¤ The Funnies

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¤ The Wrap

The brief flurry of price excitement in both gold and silver at the London a.m. gold fix on Wednesday morning certainly wasn't allowed to last all the nice gains in both metals got pounded into oblivion within a couple of hours.  I also made a mental note of the fact that the gold price tried and 'failed' to break through its 200-day moving average, closing slightly below it at day's end...and I'm sure that was no accident.  Besides the dollar factor, I'm sure yesterday's early price action had something to do with the move by the ECB to lend all that new fiat to the many European banks that were lined up at the trough to get re-liquefied.

Not that it changes anything, of the problem is one of solvency more than anything else.  And as you already know, if it wasn't for accounting legerdemain, all the banks in the world would have collapsed back in the crash of 2008.

If the ECB hadn't stepped up to the plate, then all these banks would have been forced to sell assets for cash...and the first one that they would put up for sale would be U.S. Treasuries.  The banks would discover within hours that these 'assets' would go 'no ask' in a heartbeat, similar to what happen the moment that U.S. banks tried to sell credit default swaps many years ago.  They found almost instantly that they were worth pennies on the dollar.  The 'very liquid' U.S. Treasury market would freeze up in an instant unless the U.S. Federal Reserve was prepared to buy everything offered.  Ultra-low interest rate loans from the ECB prevented that scenario from developing.

The preliminary open interest number for Wednesday showed little change in either metal.  Gold open interest was down a few hundred contracts...and silver o.i. was up a bit more than that.  Since this activity occurred on a Wednesday, the final numbers won't show up until next week's COT report.

The final open interest numbers for Tuesday's trading day...which will be in tomorrow's COT report...showed small declines in o.i. in both gold and silver.

In Far East trading on Thursday, gold drifted quietly lower until 2:00 p.m. Hong Kong time, coming very close to the $1,600 spot price mark.  Then a bit of a rally developed going into the London open.

The silver price slid down to the $29 spot level by 2:00 p.m. in Hong Kong...and has been in rally mode ever since.  The rallies in both metals are far more subdued than the rallies that occurred this time yesterday.  The dollar has dropped about 30 basis points in the last few hours, so I'm sure that has contributed to the current price action...such as it is.

As of 5:20 a.m. Eastern time...a little over two hours into the London trading session...volumes in both gold and silver are about average, whatever that means these days.

I was hoping for some fireworks during the New York trading session yesterday, but that never materialized, as all the action occurred before the Comex open at 8:20 a.m. Eastern I'm not even going to hazard a guess as to what kind of price action we're going to see today.

I hope your Thursday goes well...and I'll see you here on Friday.