Gold & Silver Daily
"As Ted Butler pointed out on Saturday, the configuration of Friday's COT report for both gold and silver is still very bullish, with lots of room to run to the upside."
 

¤ Yesterday In Gold & Silver

The gold price came under steady selling pressure starting at precisely 8:00 a.m. Hong Kong time on their Monday trading day.  The sell off accelerated a bit shortly after London opened...and the low of the day was in about 9:30 a.m. GMT.

The price bounced off that bottom a couple of times after that, but the moment that the Comex opened in New York at 8:20 a.m. Eastern time, it was up...up...and away.  But once the price broke above $1,732 spot, there was obviously a seller there to make sure that the price didn't finish the day above the Friday New York close.

Gold closed at $1,730.30 spot...down $7.00 on the day.  Net volume was a very light 79,000 contracts...or thereabouts.

Silver's price path was similar...and it's low came at 11:30 a.m. in London, which might have been an early London silver fix.  The subsequent rally ran out of gas at 11:00 a.m. in New York right on the button, which also happened to be the close of London trading.

After the London close, silver got sold off about 40 cents, but gained about half of that back by the close of electronic trading in New York at 5:15 p.m. Eastern.

Silver closed at $33.50 spot...down 49 cents on the day.  Net volume was on the light side at 27,500 contracts, a lot of which would have been of the high-frequency trading variety.

The dollar index opened in a rally mode the moment that trading began in New York at 6:00 p.m. on Sunday evening...and at 9:00 a.m. Eastern time yesterday morning, was up about 55 basis points...and then spent the rest of the trading day giving back about 30 points of that gain.  The dollar index closed at the 79.10 level...up about 25 basis points from Friday.

The gold stocks pretty much followed the gold price action...and the HUI finished down 1.08%.

Considering the fact that silver was down about 50 cents on the day, the shares themselves hung in their very well...and Nick Laird's Silver Sentiment Index only closed down 0.84%.

(Click on image to enlarge)

Well, the CME's Daily Delivery Report showed all the deliveries for First Day Notice for the February delivery month in gold.  There were 893 gold and 114 silver contracts posted for delivery tomorrow.  The big short/issuer in gold was the Bank of Nova Scotia with 845 contracts...and taking the lion's share of the deliveries was Deutsche Bank with 472 contracts...and Credit Suisse First Boston with 247 contracts.

In silver, it was the three 'usual suspects' with the lion's share of the action.  This time Jefferies was joined by the Bank of Nova Scotia as a short/issuer...with 38 and 76 contracts respectively...and JPMorgan stopped/received 100 of those contracts...49 for its client account and 51 for its in-house [proprietary] trading account.  The link to the Issuers and Stoppers Report, which is worth skimming, is here.

The GLD ETF had no report yesterday...but the SLV ETF did.  Authorized participants added 3,158,805 ounces of silver...replacing, almost to the ounce, everything that had been withdrawn since the end of December.  Ted Butler suspects that much more is owed to the fund than that.

The U.S. Mint had a sales report.  They sold 1,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 385,000 silver eagles.  Year-to-date the mint has sold 122,500 ounce of gold eagles...12,000 one-ounce 24K gold buffaloes...and 6,082,000 silver eagles.

Friday was another busy day at the Comex-approved depositories.  They reported receiving 927,431 troy ounces of silver...and shipped a smallish 83,501 ounces out the door.  The link to that action is here.

Silver analyst Ted Butler has his usual weekly review posted for his paying subscribers on Saturday...and here are two free paragraphs...

"The price takedown starting in late-September and lasting through the end of December was all about commercial COT positioning and price manipulation. Especially in silver, the epic decline in price with the concurrent radical change in the COT structure was deliberate and intentional. Only a fool, or someone who refuses to see, would fail to recognize what just occurred. Silver (and gold) were driven lower in price to force speculative selling and to allow the commercials to buy massive quantities of what the speculators sold. After the commercials bought as much as they could possible buy, then prices rallied sharply. It's impossible for this commercial activity to have occurred with collusion and intent. That the CFTC sat by and allowed this to occur (once again) without defending and protecting the public or our free markets is beyond shameful.

"The CFTC’s failure to regulate aside, this last few months seem to have developed as explained in advance, if not predicted. I did not predict (or expect) the 35% price smash over the last few days of September; but I feel I have explained it adequately. There is no way that one can be invested in a market and not invested at the same time. All you can do is pay your money and take your chances. Risk grows as prices increase, but the structure of the COT is still bullish and not bearish. Maybe that will change in time, but until it does it is reasonable to expect higher prices. And maybe sharply higher prices."

Reader and technical analyst, Scott Pluschau, has a few things to say in his current blog.  His e-mail read "This week's COT report was an eye-opener in the 10-year treasury futures."  If you're interested in this sort of thing, here's the link to his blog.

Here's a graph that Washington state reader S.A. sent me yesterday.  It looks suspiciously similar to the one that was posted in a zerohedge.com article headlined "Europe's Scariest Chart" that reader Richard Craggs sent me yesterday.

(Click on image to enlarge)

Since it's Tuesday, I have more than the usual number of stories posted, so I hope you have the time to skim them all.

 

¤ Critical Reads

Freddie Mac Bets Against American Homeowners

Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

“We were actually shocked they did this,” says Scott Simon, who as the head of the giant bond fund PIMCO’s mortgage-backed securities team is one of the world’s biggest mortgage bond traders. “It seemed so out of line with their mission.”  The trades “put them squarely against the homeowner,” he says.

This story was posted over at the propublica.org website yesterday...and I thank reader 'David in California' for sending it along.  The link is here.

Read more...

Goldman Sachs Among Banks Fighting to Exempt Half of Swaps Books

More than half of the derivatives- trading business of Goldman Sachs, Morgan Stanley and three other large banks could fall largely outside the Dodd- Frank Act if they succeed in lobbying regulators to exempt their overseas operations, government records show.

The debate over the reach of Dodd-Frank has been among the most contentious aspects of the regulatory overhaul enacted by President Barack Obama after the 2008 credit crisis. The banks have met with regulators, testified to Congress and filed dozens of letters contending that they will suffer a competitive disadvantage if the regulations apply to their foreign arms.

This Bloomberg story was posted on their website late Sunday night...and I thank Washington state reader S.A. for sharing it with us.  The link is here.

Read more...

Walker's World: So Much for Davos

What a difference a week makes. Had the latest downgrades by Fitch or the leak of the latest German plan to impose discipline on the Greek economy come as the Davos elite were gathering, the mood in the Alps would have been much colder.

The tone for Davos was set by some temporary and probably mistaken signs of good news: The U.S. economy seemed to be recovering and consumer confidence was rising. China seemed to be avoiding a hard landing. The eurozone remained in crisis but the worst fears of a credit crunch had been eased by the extraordinary surge of $500 billion in low-cost lending by the European Central Bank. Even Spain and Italy seemed to be able to sell their latest bonds at less than punitive yields.

As a result, the Davos consensus was relatively upbeat, assuming that the world (if not Europe) would avoid a double-dip recession and that even the Germans were coming to realize that the single-minded pursuit of austerity would have to be balanced by some commitment to restoring growth.

But had Davos opened this week, the mood would have been different.

This UPI story was posted from Zurich yesterday...and is Roys Stephens first offering of the day.  The link is here.

Read more...

RBS top bankers set to share £30m bonus pot

Five top investment bankers at RBS are in line to pick up around £30m in bonuses and pay despite the fierce public backlash against bumper pay-outs at the taxpayer-controlled lender.

They are in line to take a big share of the bank's controversial £500m bonus pot.

Speaking at the at the EU Leaders Summit in Brussels David Cameron hit out at RBS, saying the bank needed to “do a better job,” especially “when they have had so much money from the taxpayer and they had made so many mistakes in the past.”

“What needs to happen is a sense of restraint, which is what the Government urged on RBS,” said Mr Cameron.

This is Roy Stephens second story of the day.  It was posted in The Telegraph on Monday...and the link is here.

Read more...

Spain's Finance Minister Cristobal Montoro admits unemployment rate has jumped to 24pc

Mr Montoro told a parliamentary commission on Thursday that official figures due out Friday will show 5.4m people were out of work at the end of December, up from 4.9m in the third quarter, when the jobless rate was 21.5pc.

Spain already has the highest unemployment rate in the 17-nation eurozone and is near its record of 24.5pc unemployment, set in 1993.

The new conservative Popular Party government has pledged major labor reforms in a desperate bid to halt further job losses. A similarly-aimed reform in 2010 by the previous Socialist government appears not to have had a major effect on the labor market.

The economy is expected to fall back into recession this quarter - GDP fell 0.3pc during the last three months of 2011 and is expected to slide further through March.

This third Roy Stephens offering was posted in The Telegraph last Thursday...and the link is here.

Read more...

Mario Draghi, the Latin Bloc’s monetarist avenger

The eurozone money supply is contracting at an accelerating pace on all fronts. The broad M3 gauge has fallen for the last three months in a row. A slump is already baked in the pie.

Credit to households and firms shrank by €90bn in December alone. It is the biggest drop in a single month since the launch of the euro, worse than after the Lehman collapse in October 2008 or at any time during the Great Recession.

One dreads to think what would have happened to Europe’s banking system and to the solvency of Italy and Spain if Mario Draghi had not come to the rescue before Christmas with unlimited three-year funding at 1pc, against almost any collateral: that is to say, if the mad Hayekians had still been in charge of the European Central Bank.

Here's Roy Stephens again with his fourth story of the day.  This Ambrose Evans-Pritchard offering was posted in The Telegraph on Sunday evening...and the link is here.

Read more...

We’re on the brink, warns Greece ahead of EU summit

Greece faces “the spectre of bankruptcy and all the dire consequences that entails”, the Greek prime minister warned on Saturday night.

Lucas Papademos said that unless the country’s international backers agreed to a new bail-out, Greece would be unable to pay off its loans and be forced out of the eurozone.

EU leaders will met in Brussels Sunday night amid growing concern that Greece will fail to implement the austerity measures its international backers are demanding as a condition of the latest package of financial support. Without that bail-out, Greece will be unable to repay €15 billion of loans due in March.

This is Roy Stephens offering #5.  It was from Sunday night's edition of The Telegraph...and the link is here.

Read more...

A Bluffing Game: European Politicians in Denial as Greece Unravels

Europe's politicians are losing touch with reality. Greece is broke, and yet Brussels wants to send the country billions in new loans, to which there is growing opposition within the coalition government in Berlin. Rescue efforts are hopelessly bogged down by bickering over who will ultimately step up.

Europe's politicians continue to battle reality. Everyone knows that Greece cannot repay its massive pile of debts, now at more than €350 billion ($459 billion). But instead of effectively reducing the financial burden, European politicians intend to approve new loans for the government in Athens and go on fighting debt with new debt. "If the country wants to remain in the euro zone, we should support it," says Austrian Chancellor Werner Faymann.

If Europe goes, so does the European Union, their currency...and the world's entire financial system right after that.  The stakes are mindboggling.  This story was posted at the German website spiegel.de yesterday...and is Roy Stephens offering #6 today.  The link is here.

Read more...

Merkel Signals Greece Debt Deal Delay

European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the euro.

Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years.

“What the Greeks have to do is show they are ready to implement the package,” Dutch Prime Minister Mark Rutte told reporters as he arrived for a European Union summit in Brussels today. “We can help Greece through this difficult phase, but then Greece has to execute all agreements they made with us.”

This Bloomberg story from late yesterday evening is Roy Stephens offering #7 in today's column...and the link is here.

Read more...

The World from Berlin: 'The Syrian Situation Could Hardly be More Hopeless'

Europe this week is making yet another effort to obtain a UN resolution against the regime in Syria. But more than 10 months after the uprising began, violence there remains intense. German commentators on Monday are unanimously skeptical about the Arab League's chances of bringing peace to the region.

After a violent weekend in Syria, European diplomats have had enough. Both British Foreign Secretary William Hague and French Foreign Minister Alain Juppe confirmed on Monday that they are heading for New York on Tuesday to urge the United Nations to pass a resolution aimed at the violent Syrian crackdown against anti-regime demonstrations.

Juppe and Hague hope to be able to persuade China and Russia to support such a resolution, one that has the backing of the Arab League. Both countries vetoed a draft resolution last October that threatened Damascus with sanctions and Moscow remains wary of any resolution that could authorize foreign military intervention. Both countries hold a veto in the UN Security Council.

This story was posted on the spiegel.de website yesterday...and I thank Roy Stephens for offering #8 today.  The link is here.

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Iran well prepared for the worst: Asia Times

Most discussions of possible United States military operations in the Persian Gulf, should Iran try to prevent maritime traffic from going through the Strait of Hormuz, generally say that while it would not be a cakewalk, it would not be an enormously difficult task either.

But that conventional wisdom is wrong, according to a recent report issued by an independent, non-profit public policy research institute in Washington DC. The report found that the traditional post-Cold War US military ability to project power overseas with few serious challenges to its freedom of action may be rapidly drawing to a close.

This 2-page report from the Asia Times this morning is a must read in my opinion...and the link is here.  I thank Roy Stephens for offering #9 of the day.

Read more...

Iran vows to stop "some" oil sales as inspectors visit

Iran sent conflicting signals in a dispute with the West over its nuclear ambitions, vowing to stop oil exports soon to "some" countries but postponing a parliamentary debate on a proposed halt to crude sales to the European Union.

The Islamic Republic declared itself optimistic about a visit by U.N. nuclear experts that began Sunday but also warned the inspectors to be "professional" or see Tehran reducing cooperation with the world body on atomic matters.

Lawmakers have raised the possibility of turning the tables on the EU which will implement its own embargo on Iranian oil by July as it tightens sanctions on Tehran over the nuclear program.

This Reuters story was filed from Iran on Sunday...and posted on the news.yahoo.com website...and I thank reader M. Angeles for sending it along.  The link is here.

Read more...

Iran Sanctions: India exploring Russia payment route

With the U.S. and the EU imposing fresh sanctions against Iran, India is exploring all possibilities to keep the Iranian oil flowing as it is critical to its energy security. One of the options being discussed is firming up an arrangement with Russia’s Gazprombank for paying to Iranian oil.

In the wake of the U.S. and the European Union approving fresh sanctions and an oil embargo against Iran, India has no choice but to step up its efforts to find new ways to pay for Iranian hydrocarbons.

Unlike Turkey, the current mediator between Indian and Iranian oil companies, one of the most convenient options seems to be using the Russian banking system, which is not facing a lot of pressure. To keep Iranian oil flowing as it contributes around 12 percent of New Delhi’s oil imports, India had started preparing in advance for the introduction of the EU oil embargo against Iran. An Indian multi-ministerial delegation visited Tehran from January 16 to 21 to discuss with Iranian colleagues the possibility of changing the current payment methods for Iranian oil.

This story was posted in the Tehran Times yesterday...and is Roy Stephens tenth offering in this column.  The link is here.

Read more...

South Korea says it can't join Iran sanctions now

South Korea's finance minister called Monday for more time to diversify oil sources amid pressure on Seoul to join US-led sanctions on Iranian oil.

Bahk Jae-Wan said negotiations with the U.S. were under way but called for a gradual approach to minimize damage to the economy. South Korea imports nearly 10 percent of its crude from Iran.

"Each nation has different circumstances...so there are many factors to consider...including what to do with existing contracts," he told reporters, describing the current volume of Iranian oil imports as "quite large".

This 3-paragraph story also appeared in the Tehran Times yesterday...and you just read them all.  The link to the hard copy is here.  This is Roy Stephens 11th story of the day.

Read more...

Mike Kosares: Survivalist George Soros

Billionaire investor George Soros is supposed to have sold his gold exchange-traded fund holdings, but Mike Kosares of Centennial Precious Metals observes that amid the world financial crisis Soros sounds more than ever like a gold investor. Soros, Kosares writes, now "seems to have moved away from politics as a final recourse to the crisis and begun to think about the practical business of personally surviving it."

I thank Chris Powell for providing the above introduction...and the story is posted over at the usagold.com internet site.  It's definitely worth your time...and the link is here.

Read more...

Lehrman calls on Republicans to unite on 'sound dollar' platform

Writing for The New York Sun, the industrialist, philanthropist, and Reagan gold commission member Lewis H. Lehrman urges the Republican presidential candidates to unite around a platform of returning the United States to a system of sound money anchored by the gold standard, but one carefully reconfigured for the modern age so it can last. Lehrman's commentary is headlined "Lehrman To Romney, Santorum: Join the Alliance for a Sound Dollar".

I borrowed the story, along with Chris Powell's preamble, from a GATA release yesterday.  It's posted in yesterday's edition of The New York Sun..and the link is here.

Read more...

Jim Rickards Audio Interview: King World News

In my Saturday column I posted a KWN blog by Jim that was headlined "Fed disinformation hides greater inflation, Rickards tells King World News".  Eric slid the audio interview into my in-box yesterday...and the link to that is here.

Read more...

Alasdair Macleod: FEDging the figures

Writing for GoldMoney, economist and former banker Alasdair Macleod today predicts that the U.S. Federal Reserve is aiming to increase the U.S. gross domestic product figure through inflation, mere higher prices, rather than any actual improvement in economic conditions, and that precious metals prices started to figure this out last week.

Once again I borrowed the story and the preamble from a GATA release...and the link to the goldmoney.com essay is here.

Read more...

Spring festival sparks a 'gold rush' in China

A gold rush swept through China during the week-long Lunar New Year holiday this year, with demand for precious metals and jewelry surging since the Year of the Dragon began.

Sales of gold, silver, and jewelry rose 57.6 percent during the week-long holiday at Caibai, one of Beijing's best-known gold retailers, according to data released by the Ministry of Commerce on Saturday.

Other jewelry stores across the country also saw sales boom during the period, with customers favoring New Year-themed gold bars, gold ingots, and other types of Dragon-themed jewelries.

I borrowed this story from a GATA release as well...and it was posted at the chinadaily.com website yesterday.  It's a must read...and the photo alone is worth the trip.  The link is here.

Read more...

Von Greyerz sees gold ready for big move up

Fund manager Egon von Greyerz told King World News yesterday that he expects much higher gold and silver prices...and then even hyperinflation to result from the vast expansion of the balance sheets of central banks around the world.

An excerpt from the interview is headlined "Von Greyerz: Gold Market Positioned for Massive Upside Move".  I thank Chris Powell for providing the introduction...and the blog is posted at the KWN website.  I'd say it's a must read...and the link is here.

Read more...

Sprott, Turk, Morgan, and Phillips speak at SilverSeek's online conference Tuesday

Tuesday means today!!!

GATA favorites Eric Sprott of Sprott Asset Management, James Turk of GoldMoney, David Morgan of Silver-Investor.com, and Julian Phillips of Gold Forecaster will speak at SilverSeek's Virtual Silver Investment Conference, to be held via the Internet starting at 10 a.m. Eastern time on Tuesday, January 31st...That's right about now!

Admission is free for those registering in advance, and registration is open now. To learn more or sign up, please visit the conference site at SilverSeek.com.  The link is here.

Read more...

Rick Rule - Gold, Silver, Takeovers & 2,000% Gains

Eric King sent me this Rick Rule blog from yesterday...and it's posted over at the King World News website.  The link is here.

Read more...

Turk expects imminent launch for monetary metals

GoldMoney founder and GATA consultant James Turk long has been bullish but in an interview with King World News yesterday, he sounded like he's anticipating imminent launch for the monetary metals as Western economies stumble and central banks destroy currencies.

This must read blog is posted at the KWN website...and the link is here.

Read more...

Gold Is The Hottest Currency In The World

The price of gold is roaring back from its latest temporary correction, sending the bears into  full withdrawal. If you sold your gold in December as it fell to $1525 an ounce, you’re probably feeling foolish at the incredible $210  rise to $1735– a 15% move in no time at all.

Gold, you see, is not a commodity like oil and copper and wheat. It is rather an alternative currency– one that  finds buyers when paper currencies like the Euro are being hugely increased in supply by the ECB to forestall a sovereign cum bank crisis in Europe. There’s $650 billion in European bank and sovereign debt coming die  before March 31, 2012 which can be sopped up by the $650 billion  gift from ECB to the banks at the bargain rate of 1%.  And more available from the European central bank– Europe’s very own Quantitative Easing program.

As the supply of gold cannot keep up with paper money(supply increases very little despite exploration),  and it can be bought without loss of any real interest income, it seems clear that the gold bull market is alive and well.

This story was posted in the Saturday edition of Forbes...and is Roy Stephens 12th and final offering in today's column.  It, too, is a must read...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

“I cannot predict how long policymakers can hold economic Armageddon at bay with spin, money creation, currency swaps, intervention in gold and silver markets, and outright lies.  The onset could be sudden and take place this year, but we shouldn’t underestimate the power of spin over a gullible public that trusts ‘their’ government and fervently believes that Muslim terrorists are out to get them...and that the demise of the Constitution, the product of a eight hundred year struggle that produced Anglo-American civil liberty, is worth the price of ‘safety’. There is no safety in a police state and a debauched currency.  The comfortable world that Americans have known is falling apart at the seams.” - Dr. Paul Craig Roberts...January 6, 2012

For the last trading day of the month going into First Notice Day of the February delivery month for gold, I really wasn't expecting a lot.  With net volume as light as it was, it wasn't hard for any interested party to knock gold and silver down...and they took the opportunity to do so...although platinum and palladium prices were barely affected.  But, with the January delivery month now off the board, it's a brand new ball game, so we'll see how things unfold from here.

The preliminary open interest numbers for yesterday showed a decent decline in gold...and a modest increase in silver o.i.  But whatever it means in the grand scheme of things, won't be know until this Friday's Commitment of Traders Report.

The same can be said for last Friday's final open interest numbers.  Despite the big rallies in both metals, gold o.i. was down a decent amount...and silver o.i. was basically unchanged.  I was very encouraged by those numbers.

As Ted Butler pointed out on Saturday, the configuration of Friday's COT report for both gold and silver is still very bullish, with lots of room to run to the upside.  But, as per usual, how high the price goes...and how fast this rally unfolds...is 100% dependent on how the traders in the Commercial category respond as the tech funds and small traders place their long positions...and I know that Ted is watching their every movement like a hawk.  So am I.

And as you can tell from the gold analysts above, everyone is expecting the prices of both gold and silver to rise significantly in the not-too-distant future.  As of this writing...and according to the netdania.com website...gold is up 11.5% so far this year...and silver is up 22.6%.  If all these predictions turn out to be true, it's going to a wild year in the precious metals...and all the trials and tribulations from last year will soon be forgotten.  We'll see.

As I mentioned in my first column of 2012...I considered the lows of December 29th to be the bottom for this move down, so the big rallies we've experienced over the last month have not come as a real big surprise to me.  It's what happens from hereon in that I'll be most interested in.

Both gold and silver are up a bit now that London has been open for trading for over two hours.  Gold is up $11 bucks...and silver is up two bits.  Volumes in both metals as of 5:13 a.m. Eastern time are already pretty chunky, so it's obvious that these rallies...small as they are...are not going unopposed.  It would be my guess that a large percentage of the current volume in each metal, would be of the high-frequency trading variety.

That's all I have for today...and I await the New York open with great interest...but always keeping in mind that "there are no markets anymore, only interventions."

See you tomorrow.