Gold & Silver Daily
"My concern still lies in the obscene and grotesque short positions held by JPMorgan Chase and Scotia Mocatta in silver."

¤ Yesterday In Gold & Silver

Even though the gold price began a long, slow decline starting around 1:00 p.m. Hong Kong time yesterday, I wouldn't read a whole heck of a lot into it.  We're into the last day of trading in the December contract...and as I said in 'The Wrap' last night, I'm not expecting much dramatic price action until after the weekend is done.  I don't consider Tuesday's price decline falling into the 'dramatic' category by any stretch of the imagination, as you've seen many examples of a JPMorgan-engineered waterfall price decline in the past.

Gold closed at $1,741.80...down $7.60 on the day.  Gross volume was an eye-watering 309,000 contracts...but net of all roll-overs, the volume was only around 88,000 contracts.

It was much the same story in silver.  It closed at $34.05 spot...down 13 cents from Monday.  Gross volume was around 104,000 contracts...and net volume around 29,000 contracts.

The dollar index started the Wednesday trading session at 80.13...and sat at that value until the 8:00 a.m. GMT London open.  By 10:30 a.m. in New York, the index was at its zenith...up to 80.46...and gave back a small portion of that going into the close.  The dollar index closed at 80.35...up 22 basis points on the day.

I'd guess that some, but not all, of yesterday's price action in gold and silver was currency related.

The gold stocks gapped down just about a percent at the open...and continued to slide as the day progressed.  The HUI closed on its absolute low of the day...down 2.67%.

The silver stocks appeared to have been hit even harder...and I only saw one green arrow in the group that I track.  But Nick Laird's Silver Sentiment Index closed down only 1.57%.

(Click on image to enlarge)

The CME's Daily Delivery Report wasn't very exciting.  It showed that only 6 gold contracts were posted for delivery tomorrow.

The GLD ETF showed that an authorized participant deposited 116,252 troy ounces of gold...and there were no reported changes in SLV.

Well, the new short interest numbers for both GLD and SLV were posted on the Internet site late yesterday evening.  There wasn't much change in SLV, as it showed a small decline of only 0.99% for the first half of November.  There are now 13,139,800 shares/ounces sold short in SLV...or 412.8 tonnes.  That represents 4.2% of the SLV ETF.

But the short position in GLD jumped up 17.79% from the last report.  GLD is now short 22,060,800 shares...or 2.21 million ounces of gold...68.6 tonnes.  That's 5.1% of the GLD ETF sold short.

One can only imagine how high the price of silver and gold might be if this amount of physical metal was purchased to cover these shorted shares that have no precious metals backing them.

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

It was an exciting day over at the Comex-approved depositories on Monday.  They only reported receiving 302,128 troy ounces of silver...but a whopping 2,368,812 troy ounces were shipped out the door.  Most of the activity was at Brink's, Inc...and the link to that is here.

I have the usual number of stories for a weekday column...and I hope you can find the time to run through the ones that interest you the most.


¤ Critical Reads

O.E.C.D., Slashing Growth Outlook, Warns of Global Recession

The Organization for Economic Cooperation and Development on Tuesday sharply cut its forecast for the world economy, warning that failure to end the euro crisis and avert a fiscal impasse in the United States could cause a global recession. 

The organization, based in Paris, predicted that gross domestic product in its 34 member countries, all of which have developed economies, would expand 1.4 percent in 2013, significantly below the forecast of 2.2 percent it made just six months ago.

Even that forecast assumes that United States lawmakers reach a budget agreement to prevent billions of dollars in tax increases and automatic spending cuts from taking effect automatically at the end of the year.

If the United States does not avoid that so-called fiscal cliff, “a large negative shock could bring the U.S. and the global economy into recession,” according to the forecast, written by Pier Carlo Padoan, the organization’s deputy secretary general and chief economist.

This story showed up on The New York Times website yesterday sometime...and I thank Phil Barlett for the first story in today's column.  The link is here.


Do You Live In A Death Spiral State?

Thinking about buying a house? Or a municipal bond? Be careful where you put your capital. Don’t put it in a state at high risk of a fiscal tailspin.

Eleven states make our list of danger spots for investors. They can look forward to a rising tax burden, deteriorating state finances and an exodus of employers. The list includes California, New York, Illinois and Ohio, along with some smaller states like New Mexico and Hawaii.

If your career takes you to Los Angeles or Chicago, don’t buy a house. Rent.

This story showed up in Forbes on Sunday...and I pulled this story from yesterday's edition of the King Report.  The link is here...and I found the page a little slow to load.


Exodus From Stocks Grows: 'Investors Are Turning Tail'

Fear of the “Fiscal Cliff” is causing the biggest exodus from U.S. stocks this year as investors essentially put their money under the mattress rather than trust Congress to come up with a compromise.

U.S. equity stock funds had a net outflow of just over $9 billion in the week ended Nov. 21, the biggest outflow for a single week this year, according to research firm EPFR Global.

The next biggest outflow was during the week ended Oct. 25, as fiscal cliff jitters rattled investors ahead of the election.

“Investors are turning tail because we have the fiscal cliff,” said Cameron Brandt, director of research at EPFR. “There are going to be people cashing in as we head into this period of uncertainty.”

This story appeared on the CNBC website early yesterday afternoon Eastern time...and I thank West Virginia reader Elliot Simon for sending it along.  The link is here.


Student Debt Bubble Officially Pops as 90+ Day Delinquency Rate Goes Parabolic

We have already discussed the student loan bubble, and its popping previously. Yesterday, we got the Q3 consumer credit breakdown update courtesy of the NY Fed's quarterly credit breakdown. And it is quite ghastly. As of September 30, Federal (not total, just Federal) rose to a gargantuan $956 billion, an increase of $42 billion in the quarter - the biggest quarterly update since 2006.

But this is no surprise to anyone who read our latest piece on the topic. What also shouldn't be a surprise, at least to our readers who read about it here first, but what will stun the general public are the two charts below, the first of which shows the amount of 90+ day student loan delinquencies, and the second shows the amount of newly delinquent 30+ day student loan balances. The charts speak for themselves.

They certainly do!  This is not a big read...but the charts are definitely worth the trip.  I thank 'David in California' for sharing it with us...and the link to this Zero Hedge article is here.


Why $16 Trillion Only Hints at the True U.S. Debt

A decade and a half ago, both of us served on President Clinton's Bipartisan Commission on Entitlement and Tax Reform, the forerunner to President Obama's recent National Commission on Fiscal Responsibility and Reform. In 1994 we predicted that, unless something was done to control runaway entitlement spending, Medicare and Social Security would eventually go bankrupt or confront severe benefit cuts.

Eighteen years later, nothing has been done. Why? The usual reason is that entitlement reform is the third rail of American politics. That explanation presupposes voter demand for entitlements at any cost, even if it means bankrupting the nation.

A better explanation is that the full extent of the problem has remained hidden from policy makers and the public because of less than transparent government financial statements. How else could responsible officials claim that Medicare and Social Security have the resources they need to fulfill their commitments for years to come?

No surprises here for most readers...and the unfunded liabilities are many multiples of this number.  This WSJ story was picked by the Internet site on Tuesday...and I thank Manitoba reader Ulrike Marx for sending it along.  The link is here.


Buffett: JPMorgan CEO Dimon Would Be Best Choice to Lead Treasury in Crisis

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon would be the best person to lead the U.S. Treasury Department in a financial crisis, billionaire investor Warren Buffett said.

“If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said, according to the transcript of an interview with Charlie Rose to be aired on PBS. “World leaders would have confidence in him.”

President Barack Obama is seeking to replace Treasury Secretary Timothy F. Geithner, who had said he planned to step down. Dimon, 56, testified before Congress and shuffled top managers this year after the bank disclosed a loss, now of more than $6.2 billion, stemming from a wrong-way bet on credit derivatives. Buffett has described Dimon’s annual letter to shareholders as a must-read.

If Dimon is as good at rigging other markets as he is at controlling precious metal prices, then he gets my you need a criminal of his stature to run things.  This story showed up on the Internet site early on Tuesday morning Eastern time...and I thank Elliot Simon for his second offering in today's column.  The link is here.


Bank of America CEO Brian Moynihan Apparently Can't Remember Anything

Thank God for Bank of America CEO Brian Moynihan. If you're a court junkie, or have the misfortune (as some of us poor reporters do) of being forced professionally to spend a lot of time reading legal documents, the just-released Moynihan deposition in MBIA v. Bank of America, Countrywide, and a Buttload of Other Shameless Mortgage Fraudsters will go down as one of the great Nixonian-stonewalling efforts ever, and one of the more entertaining reads of the year.

In this long-awaited interrogation – Bank of America has been fighting to keep Moynihan from being deposed in this case for some time – Moynihan does a full Star Trek special, boldly going where no deponent has ever gone before, breaking out the "I don't recall" line more often and perhaps more ridiculously than was previously thought possible. Moynihan seems to remember his own name, and perhaps his current job title, but beyond that, he'll have to get back to you.

The MBIA v. Bank of America case is one of the bigger and weightier lawsuits hovering over the financial world. Prior to the crash, MBIA was, along with a company called Ambac, one of the two largest and most reputable names in what's called the "monoline" insurance business.

Matt Taibbi tees Brian up and drives him down the fairway in this rather longish blog that was posted over at the Rolling Stone magazine website during the New York lunch hour yesterday.  It's another contribution from Ulrike Marx...and the link is here.


Credit Rating Firms in EU to Face Sovereign/Debt Limits

Credit rating companies face curbs on when they can assess government debt and restrictions on their ownership under draft plans agreed on by European Union officials and legislators.

Lawmakers from the European Parliament and Cyprus, which holds the rotating presidency of the EU, also agreed yesterday to let investors sue ratings companies if they lose money because of malpractice or gross negligence.

“We have reached a good result,” Michel Barnier, the EU’s financial services chief, said in an e-mailed statement. “With this agreement, we are taking another important step towards financial stability.”

Barnier proposed the tougher ratings rules after warnings from nations including France and Germany that downgrades of sovereign debt had deepened the bloc’s fiscal crisis. Barnier said last year that ratings companies were guilty of “serious mistakes” and shouldn’t be allowed to “increase market volatility” through ill-timed or unjustified downgrades.

The European Commission, the 27-nation EU’s executive arm, has said that tougher regulation is needed to boost competition for the so-called big three ratings companies, Fitch Ratings Ltd., Moody’s Investors Service Inc. and Standard & Poor’s. Negotiators at yesterday’s meeting brokered a draft deal on the rules, which must be formally approved by governments and by the full parliament before they can be implemented.

It will be interesting to see if this libel chill will make any difference to the credit rating agencies going forward.  This Bloomberg story...filed from Brussels...was posted on their Internet site early yesterday evening...and I thank Elliot Simon for digging it up on our behalf.  The link is here.


Beer Lovers Fear an Unequal Tax Bite in Wine Country

Simon Thillou likes to think of La Cave à Bulles, his shop here devoted only to beer, as a place where beer lovers can gather to taste new brews and, of course, discuss the state of the world. But this was one controversy he never saw coming, and wishes he never had: a proposed 160 percent increase in the tax on beer.

The increase is brutal; 160 percent is a lot,” said Mr. Thillou, 36, who prides himself on promoting French microbreweries. On a barrel near the entrance, a pile of fliers that say “+160% taxes on beer: Who is going to pay the price?” shows what he thinks of the government’s latest plan for raising revenue.

It is not just the tax increase — which would raise prices by 25 to 40 cents per bottle — that has him upset. “I am shocked that beer is the only target,” he said. “I am shocked that other alcohol producers aren’t affected.”

This story from The New York Times on Monday was sent to me by Phil Barlett...and the link is here.


EU-IMF agrees deal to cut Greek debt by €40 billion

The Eurozone has agreed a deal with the International Monetary Fund to unblock the Greek bailout with a package of measures worth €40bn (£32bn) aimed at bringing an immediate 20pc reduction to the country's debt.

The complex deal brings an end to a dispute between the EU and the IMF over the viability of Greek debt and gives the go-ahead by 13 December to an urgently needed €34.4 billion installment of the international aid programme to Greece.

Another €9.3 billion will be paid in three "tranches" in the first three months of next year.

This story was posted on the Internet site in the wee hours of Tuesday morning in London...and I thank Roy Stephens for finding it for us.  The link is here.


Francois Hollande shows true colours with threat to nationalise ArcelorMittal

Thirty years have passed since French president François Mitterrand launched Europe’s last great wave of nationalisation, seizing the banks, insurance groups, arms makers and steel industry in the culminating debacle of the Collectivist era.

The whole world has been living in an era of privatisation ever since.

So it seems like a strange step back in time to hear France’s minister of industrial renewal, Arnaud Montebourg, threatening a “temporary public takeover” of ArcelorMittal’s steel operations in the Lorraine plateau – purportedly to save the blast furnaces of Florange and their 2,500 workers, so sacred in the Socialist Party catechism.

It is even stranger to hear him say “we don’t want Mittal in France anymore”, more or less inciting the expulsion of the world’s must successful steel tycoon since the Scottish crofter Andrew Carnegie.

Here's Ambrose Evans-Pritchard in an article that was posted on The Telegraph website around 9:00 p.m. London time last night.  It's worth skimming...and it's another offering from Roy Stephens.  The link is here.


Egypt: Protesters descend on Tahrir Square

More than 100,000 people took to the streets of Cairo on Tuesday to protest against a decree by the Egyptian president, Mohamed Morsi, that grants him sweeping constitutional powers.

Columns of protesters from all over the Egyptian capital descended on Tahrir Square, the focus of the January 2011 revolution, in numbers that rivalled the rallies in the 18-day protest that toppled the authoritarian ruler Hosni Mubarak.

"Dictator" was the word being used to describe Morsi's new status after last Thursday's decree, which grants immunity for the president from judicial review as well as protecting a controversial constitutional assembly dominated by the group he is affiliated with, the Muslim Brotherhood.

This story was posted in The Guardian in the wee hours of the morning GMT...and was filed from Cairo.  It's another news item that's courtesy of Roy Stephens...and the link is here.


Japan Is Flexing Its Military Muscle to Counter a Rising China

After years of watching its international influence eroded by a slow-motion economic decline, the pacifist nation of Japan is trying to raise its profile in a new way, offering military aid for the first time in decades and displaying its own armed forces in an effort to build regional alliances and shore up other countries’ defenses to counter a rising China.

Already this year, Japan crossed a little-noted threshold by providing its first military aid abroad since the end of World War II, approving a $2 million package for its military engineers to train troops in Cambodia and East Timor in disaster relief and skills like road building. Japanese warships have not only conducted joint exercises with a growing number of military forces in the Pacific and Asia, but they have also begun making regular port visits to countries long fearful of a resurgence of Japan’s military.

And after stepping up civilian aid programs to train and equip the coast guards of other nations, Japanese defense officials and analysts say, Japan could soon reach another milestone: beginning sales in the region of military hardware like seaplanes, and perhaps eventually the stealthy diesel-powered submarines considered well suited to the shallow waters where China is making increasingly assertive territorial claims.

This Roy Stephens offering was posted on The New York Times website on Monday...and the link is here.


Two King World News Blogs

The first blog is with Dr. Stephen Leeb...and it's headlined "Gold, Silver & Natural Gas are Going to Soar".  The second and third blogs are with James Turk.  The first is entitled "Gold Shortage Forcing Drastic Steps by Central Planners"...and the second..."Financial System to Implode Within 24 Months".


Alasdair Macleod: Custody arrangements reduce security for GLD and SLV shareholders

GLD, the New York Stock Exchange-listed gold exchange-traded fund, appears to have quietly removed key investor protection with the apparent agreement of United Kingdom regulators.

By imputation, the same change in regulation applies to the silver ETF SLV, though less obviously so.

A revision to GLD's prospectus appears to have absolved its custodian and trustee from having to comply fully with the custody rules of the U.K. Financial Services Authority, a change that must have been undertaken with the agreement of the FSA and by implication the Bank of England, which oversees the London bullion market and is party to the London Code for Non-investment Products (the NIPS Code). This code now guides the actions of the management, trustees, and custodians of both ETFs.

SLV's prospectus has not been materially altered in this respect (other than by the addition of New York as a custody location) because its wording is already consistent with NIPS Code guidelines. But GLD's prospectus has changed.

This rather long and involved commentary about GLD and SLV by Alasdair is offered without comment.  It's posted on the Internet site...and the link is here.


ETF Securities Launches Bullion Trackers in Hong Kong

ETF Securities is launching three new commodity exchange-traded funds (ETFs) on the Hong Kong stock exchange as the firm builds out its footprint in Asia.

The three ETFs will provide exposure to gold, silver and platinum via holdings in metals and other ETFs. The new funds will be listed on Wednesday 28 November.

Fred Jheon, managing director and head of Asia Pacific at ETF Securities, told “We are the first ETP provider to launch a suite of physically backed precious metal products on the Hong Kong exchange.”

“This listing is the culmination of a year’s work of planning and working together with our business partners and regulators,” said Jheon.

This news item showed up on the Internet site yesterday...and I thank Ulrike Marx for her last story in today's column.  The link is here.


Grant Williams: Gold market manipulation is more than plausible

Grant Williams, editor of the "Things That Make You Go Hmmm" letter, suggests in his letter published yesterday that he follows GATA's work closely and gives it some credence, insofar as he notes in detail the growing demands for repatriation of central bank gold reserves held in vaults other than the owner's own.

Williams' broader topic is gold market manipulation, and he writes: "I believe there is no smoke without fire, and I always apply the two criteria of motive and means to any suspected conspiracy. In the case of gold (and silver), I cannot help but conclude that central banks and governments certainly have the motive to suppress prices (as they reveal only too clearly the extent to which the purchasing power of fiat currency is being debased), and as for the means. ...? Well, based on what we have seen in terms of intervention in the far larger sovereign bond markets in recent years, I think arguments over that particular part of the equation have been rendered somewhat redundant. ...

"The West sees gold as a means to hide the existence of inflation while the East sees it as protection from inflation. That means the West is selling gold whilst the East is buying it. ... The more central banks ask for audits and repatriation of their gold, the more that trend will accelerate; and the more that trend accelerates, the less gold will be left in the 'safe' confines of the Federal Reserve and the Bank of England."

The first 21 pages of Grant's latest commentary is reserved for subject of gold [and silver]...and it's an absolute must read.  It's embedded in an extensive preamble by GATA's Chris Powell...and I thank Australian reader Wesley Legrand for being the first reader to dig this story up.  The link is here.


Bob Bishop to speak at GATA fundraiser at Vancouver conference

There are already hundreds of reasons to come to the Vancouver Resource Investment Conference on January 20 and 21, 2013 -- expert speakers (many of them GATA-friendly), hundreds of exhibitors, and the spectacular beauty and excitement of the city (maybe the only one in Canada that will be above freezing at that time) -- but here's another one for you.

Bob Bishop, recently retired editor of what was the premier monetary metals mining newsletter, Gold Mining Stock Report, will speak at a fundraising cocktail party for GATA at the conclusion of the conference. The party will be held in the Cypress Room at the Pan Pacific hotel (a block from the Vancouver Convention Centre West, where the conference is being held) from 5 to 7:30 p.m. on Monday, January 21. There will be free snacks (if you get there before GATA's board does) and a cash bar (ditto), and while there will be no admission charge for the first 10,000 people to show up, please feel free to fill your secretary/treasurer's pockets with depreciating, soon-to-be-valueless fiat currency or bank checks drawn on the same.

This is another GATA release that's definitely worth reading...and the link is here.



¤ The Funnies

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Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization

Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.

Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.” 

Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained. 

Please visit our website for more information about the project.


¤ The Wrap

While I can’t pinpoint the timing, there is no way that JPMorgan can continue to manipulate silver forever. I’m assuming that the CFTC will not start to deliberately misreport the data in the COT and Bank Participation Reports because they never have done so in the past; but even that would only postpone JPMorgan abandoning its silver price manipulation. I know that many believe that JPMorgan is invincible, fortified by protection from the US Government, but some things transcend even the most powerful of large organizations. Forces of nature and basic laws of physics and supply and demand will always overwhelm human attempts to subvert those forces; the only question is when. In any market, an artificial price level caused by an intentional manipulation distorts the law of supply and demand and must end violently at some point. - Silver analyst Ted Butler...21 November 2012

As I said at the top of this column, I wouldn't read much into yesterday's price action considering the fact that this is the last week of roll-overs out of one of the busiest delivery months of they year.

But my concern still lies in the obscene and grotesque short positions held by JPMorgan Chase and Scotia Mocatta in silver...and probably gold as well.  There is absolutely no indication that these two bullion banks, plus others, are about to loosen their grip on the precious metals...and the danger of an engineered sell-off has increased significantly in the last couple of weeks.

Yesterday's price action did not change the structure of this Friday's Commitment of Traders Report to any significant extent...and all the damage was done on the big rise in all four precious metals last Friday.  That's the ugly number that Ted and I want to see.

There has been a bit more price weakness during the Far East trading day on their Wednesday.  Volumes are pretty decent...but most of it is roll-overs, as today is the last day for that.  The dollar index is trading sideways.

I don't have any idea of what will happen price wise going forward.  Based on the fundamentals, both gold and silver should be trading many orders of magnitude higher than they are now, but JPMorgan et al...with the help of the CME Group and the blessing of the CFTC...aren't allowing even a hint of a free market price structure in any of the four precious metals.

So nothing would surprise me...and all any of us can do is just sit and wait it out.  I've been doing it for twelve years...and I suppose a bit longer isn't going to kill me.

See you on Thursday.