Gold & Silver Daily
"As Bill Buckler said in his quote above...it's getting more blatant by the month...and so it is."
 

¤ Yesterday In Gold & Silver

The gold price was comatose through all of Far East trading...and then for an hour or so after the London open.  The smallish rally going into the London silver fix at noon local time, got sold off going into the Comex open in New York.

Twenty minutes after the open, gold rallied strongly, but got stopped in its tracks by the time it had rallied a bit over ten bucks.  The high of the day at that point was $1,687.40 spot.  Then it got sold down in the usual manner...with the New York low [$1,665.80 spot] coming around 11:15 a.m. Eastern time...and well below the Comex opening price.  From that low, gold recovered a bit until 1:00 p.m...and then traded sideways into the 5:15 p.m. electronic close.

Gold finished the Tuesday session at $1,673.20 spot...down $1.20 on the day.  Volume was very impressive...around 153,000 contracts...so it was obvious that "da boyz" used a fair amount of shorting to get the price to behave again yesterday.

Silver's price action in Far East trading was pretty quiet...and the low price tick [just under $31.60 spot] appeared to occur at the 8:00 a.m. GMT London open.  Then it rallied until the London silver fix was in...and that was its high of the day...somewhere over $32.10 spot.  Then, like gold, the price got sold down into the Comex open...and the subsequent rally ran into the same not-for-profit sellers that gold did.  However, silver's New York low...$31.54 spot...came at 10:45 a.m. Eastern time...and the subsequent rally followed the same price path as gold for the rest of the New York session.

Silver finished the day at $31.82 spot...up 6 cents.  Net volume was nothing special...around 34,500 contracts.

Obviously both gold and silver would have finished materially higher if JPMorgan et al hadn't shown up.  Both platinum and palladium outperformed both gold and silver yesterday.

The dollar index began trading on Tuesday morning at 79.56...and although it rallied as high as 79.78 around 3:00 p.m. in Hong Kong, it chopped lower for the rest of the day, closing at 79.54...virtually unchanged from the open.  Once again, the precious metal price action was totally unrelated to what the currencies were doing.

The gold stocks opened in positive territory, but couldn't hang onto those gains after gold ran into the not-for-profit seller that took gold from it's high tick to its low tick [a $22 range] in just over two hours.  The stocks hit their nadir at 12:45 p.m. Eastern...and then rallied a bit, before trading sideways into the close.  The HUI finished down at tiny 0.16%.

Most of the silver stocks I track finished in slightly positive territory...and Nick Laird's Intraday Silver Sentiment Index closed up a smallish 0.09%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 11 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Thursday.

There were no reported change in GLD yesterday...but there was a small withdrawal...139,049 troy ounces...of silver from SLV.  This was probably a fee payment of some kind.

Over at Switzerland's Zürcher Kantonalbank, they reported that their gold ETF declined by 13,914 troy ounces...and their silver ETF rose by 47,905 troy ounces...as of the close of business on February 4th.

The U.S. Mint had their first sales report for February.  They didn't sell any gold eagles or 1-ounce 24K gold buffaloes...but they did sell 675,500 silver eagles.

Monday was a very busy day over at the Comex-approved depositories.  They reported receiving 1,850,118 troy ounces of silver...and shipped 703,895 troy ounces of the stuff out the door.  This activity is worth checking out...and the link is here.

As the headline to today's column stated, there were record inflows into China through Hong Kong in December...and for all of 2012.  Normally Nick Laird would have the charts of this all done by now, but the website that contains all the data he needs has been down all of Wednesday on that side of Planet Earth, so he can't get at it.  Hopefully I'll have those charts for you in this space tomorrow.

I have somewhat fewer stories today than I did in yesterday's column...and I'll leave the final edit up to you.

 

¤ Critical Reads

Justice Department memo reveals legal case for drone strikes on Americans

A confidential Justice Department memo concludes that the U.S. government can order the killing of American citizens if they are believed to be “senior operational leaders” of al-Qaida or “an associated force” -- even if there is no intelligence indicating they are engaged in an active plot to attack the U.S.

The 16-page memo, a copy of which was obtained by NBC News, provides new details about the legal reasoning behind one of the Obama administration’s most secretive and controversial polices: its dramatically increased use of drone strikes against al-Qaida suspects abroad, including those aimed at American citizens, such as the  September 2011 strike in Yemen that killed alleged al-Qaida operatives Anwar al-Awlaki and Samir Khan. Both were U.S. citizens who had never been indicted by the U.S. government nor charged with any crimes.

The secrecy surrounding such strikes is fast emerging as a central issue in this week’s hearing of White House counterterrorism adviser John Brennan, a key architect of the drone campaign, to be CIA director.  Brennan was the first administration official to publicly acknowledge drone strikes in a speech last year, calling them “consistent with the inherent right of self-defense.” In a separate talk at the Northwestern University Law School in March, Attorney General Eric Holder specifically endorsed the constitutionality of targeted killings of Americans, saying they could be justified if government officials determine the target poses  “an imminent threat of violent attack.”

Wow! If I were an American citizen I'd be screaming at my congressman right now...and as soon as I got off the phone I'd be checking my own personal arsenal of weapons and ammunition.  The Amerika I used to know and love is now truly dead.  The people of Amerika need to wake up...and rise up...and take their country back.  This NBC News story was posted on their website yesterday...and I thank West Virginia reader Elliot Simon for being the first reader through the door with this story.  The link is here.

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To Kill an American: a New York Times Editorial

On one level, there were not too many surprises in the newly disclosed “white paper” offering a legal reasoning behind the claim that President Obama has the power to order the killing of American citizens who are believed to be part of Al Qaeda. We knew Mr. Obama and his lawyers believed he has that power under the Constitution and federal law. We also knew that he utterly rejects the idea that Congress or the courts have any right to review such a decision in advance, or even after the fact.

Still, it was disturbing to see the twisted logic of the administration’s lawyers laid out in black and white. It had the air of a legal justification written after the fact for a policy decision that had already been made, and it brought back unwelcome memories of memos written for President George W. Bush to justify illegal wiretapping, indefinite detention, kidnapping, abuse and torture.

The American Civil Liberties Union is suing to have the operational memo on those killings released, arguing that an American citizen has constitutional rights that a judge must make sure are being respected. We agree.

Going forward, he should submit decisions like this one to review by Congress and the courts. If necessary, Congress could create a special court to handle this sort of sensitive discussion, like the one it created to review wiretapping. This dispute goes to the fundamental nature of our democracy, to the relationship among the branches of government and to their responsibility to the public.

This editorial was posted on The New York Times website yesterday...and appears in print on page A24 of today's paper.  It's a must read...and I thank Phil Barlett for sending it along in the wee hours of this morning.  The link is here.

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Congratulations Charlottesville, Virginia! The First City To Pass Anti-Drone Legislation

Charlottesville, Va., has become the first city in the United States to formally pass an anti-drone resolution.

The resolution passed by a 3-2 vote and was brought to the city council by activist David Swanson and the Rutherford Institute, a civil liberties group based in the city. The measure also endorses a proposed two-year moratorium on drones in Virginia.

Council member Dede Smith, who voted in favor of the bill, says that drones are "pretty clearly a threat to our constitutional right to privacy."

“If we don’t get out ahead of it to establish some guidelines for how drones are used, they will be used in a very invasive way and we’ll be left to try and pick up the pieces,” she says.

This Zero Hedge posting was from last night...and is courtesy of Swiss reader B.G.  The link is here.

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Wall Street Journal notices currency market manipulation

"Devaluing a currency," one senior Federal Reserve official once told me, "is like peeing in bed. It feels good at first, but pretty soon it becomes a real mess."

In recent times foreign-exchange incontinence appears to have been the policy of choice in capitals from Beijing to Washington, via Tokyo. The resulting mess has led to warnings of a global "currency war" that could spiral into protectionism.

The roll call of forex Cassandras reads like a who's who of global finance and politics: German leader Angela Merkel, Federal Reserve Bank of St. Louis President James Bullard, Bundesbank President Jens Weidmann and Mervyn King, the outgoing governor of the Bank of England. And the list goes on.

The luminaries are wrong on a couple of points. The world isn't "on the verge" of a currency war, as they seem to think, but right in the middle of one. But -- and here's the good news -- there is a chance this confrontation might not end as badly as, say, the destructive devaluations that followed the Great Depression or even the turmoil of the Asian financial crisis of 1997-1998.

Maybe in a few years the newspaper will notice gold market manipulation as well.  This WSJ story from Monday was posted in the clear in this GATA release yesterday...and the link is here.

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Obama’s Tax Crackdown to Target Foreigners' Accounts in U.S. Banks

The Obama administration may soon ask Congress for the power to require more disclosure by U.S. banks of information about foreign clients' accounts to those clients' home governments, as part of a crackdown on tax evasion, sources said.

In a move facing resistance from some in the U.S. banking industry, two tax industry sources said the administration was considering asking Congress in an upcoming White House budget proposal for the authority to require more disclosure from U.S. banks.

The information-sharing effort stems from a fight by the Treasury Department against offshore tax evasion under the Foreign Account Tax Compliance Act, or FATCA, adopted in 2010 and set to begin taking effect at the end of 2013.

Well, dear reader, capital controls can't be too far away...so I hope you have some money outside your own country.  This article showed up on the moneynews.com Internet site yesterday...and I thank West Virginia reader Elliot Simon for sharing it with us.  The link is here.

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No Inflation? Commodities highest ever for this time of year

While every central banker and policy-leech spews forth the government-supplied statistics on inflation - noting that all is well, carry on - we recently pointed out that Gas Prices are their highest ever for this time of year. Of course, the standard supply constraints (or technical) reasoning was applied to dismiss this as transitory (even though it has continued to rise since); but what is perhaps more worrisome is the broad-based nature of the real inflation that is leaking into our global supply chain.

The 24-commodity heavy S&P GSCI index (widely recognized as a leading measure of general price movements and inflation in the world economy) has never been as high in early February as it is currently - ever. And with global growth stagnating at best, it seems a tough call to blame 'recovery' for this inflating (fastest pace in 8 years) raw material price leaking cost-push inflation (and margin-compression) into the real economy.

This short Zero Hedge commentary comes complete with two excellent graphs...and I thank Matthew Nel for sharing it with us.  The link is here.

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Many welcome departure of Canada's pesky penny

The penny is on the way out, and that's good news for people tired of dealing with the nuisance coin.

The Royal Canadian Mint stopped distributing pennies Monday after more than 150 years of production. But it was Finance Minister Jim Flaherty who announced the penny's demise about a year ago, saying the cost of manufacturing a coin was actually 1.6 cents.

Across the country now big and small merchants are beginning to round cash transactions to the nearest five-cent increment. For example, a $1.02 transaction would round down to $1, but a purchase of $1.03 would round up to $1.05.

This story was posted in the Ottawa Citizen yesterday...and I found it hiding in a GATA release.  The link is here.

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RBS investment chief John Hourican to resign and waive £4m bonus over LIBOR scandal

John Hourican, chief executive of markets and international banking at the Royal Bank of Scotland, will leave the bank with the minimum pay-off to which he is entitled – a year’s basic salary of £700,000 – as he becomes the most senior executive at the taxpayer-backed lender to leave his job in the wake of the rate-rigging scandal.

Mr Hourican’s departure is expected to be announced to RBS staff as the bank publishes details of a settlement of around £400m over accusations it manipulated key global borrowing rates between 2005 and 2010. It is not known whether the bank will admit any liability.

The Irish banker is expected to forgo share awards worth £4m as part of a series of moves by the bank intended to defuse public anger, that will also see about £250m deducted from RBS’s bonus pool.

It's only money...and he's not going to jail.  This story appeared on the telegraph.co.uk Internet site early this morning GMT...and the link is here.

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Hollande warns on euro strength, denounces markets for currencies

Francois Hollande has issued a clear warning that the current strength of the euro could damage the fragile economic recovery in Europe, calling for international action to stem currency distortions.

"The euro should not fluctuate according to the mood of the markets," the French president told the European parliament in Strasbourg. "A monetary zone must have an exchange rate policy. If not, it will be subjected to an exchange rate that does not reflect the real state of the economy."

He said he was not calling for the European Central Bank to set an exchange rate target, but he demanded "an indispensable reform" of the "international monetary system."

He added: "If not, we are insisting on countries making efforts to be competitive which are destroyed by the rising value of the euro."

This story was posted in the Financial Times yesterday...and is posted in the clear in this GATA release.  It's worth reading...and the link is here.

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Young and Stuck: Spain's Well-Educated Move Back Home

"This year will shape my future," says García. Just as the real estate bubble was bursting, he and a former fellow student, Manuel Vivar, 35, decided to start a business under the promising name Dinamo. Now, says García, they either have to make enough money with renovations, "or I'll have to give up and try something completely different, like design or photography."

These are times of "total uncertainty" in Spain, says García. Hundreds of thousands of other young Spaniards are in the same position. Nationwide, more than half of people under 25 can't find jobs, while in Andalusia the figure is higher than 62 percent. Those who are a little older -- around 30 and well educated -- are seeing their lifelong dreams turn into failures.

Many are forced to do what García and Vivar have done. The two grown men gave up their apartments and moved back into their parents' homes, because they were no longer making enough money. According to figures by the European Union statistics agency Eurostat, 37.8 percent of Spaniards under 35 are now living with their parents.

This story was posted on the spiegel.de Internet site early yesterday afternoon Europe time...and I thank Roy Stephens for sending it.  The link is here.

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Farm Wars: EU Grapples with Costs of Subsidizing Agriculture

European Agriculture Commissioner Dacian Ciolos wants to reform Europe's agricultural policy, but resistance from the farming lobby threatens to derail his plans. It will be to the detriment of citizens, who are expected to pay for a highly subsidized industry that is harmful to the environment.

The European Union plans to spend about €60 billion, or about 40 percent of the entire EU budget, on agriculture this year alone. It's a lot of money for an economic sector that generates less than 2 percent of the bloc's gross domestic product and employs less than 6 percent of its workforce.

"Subsidies are not a birthright," the commissioner says. "Those who expect billions in taxpayer money should also have to do something in return."

Farm subsidies are a real sacred cow in Europe...and if you know nothing about it...it's a must read.  Not that this doesn't go on in other countries as well, because it does...the USA included.  The article was posted on the spiegel.de Internet site yesterday...and is the second offering in a row from Roy Stephens.  The link is here.

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Greek Finance Minister Gets Bullet in the Mail

Greece's finance minister was sent a bullet and a death threat from a group protesting home foreclosures, police officials said on Monday, in the latest incident to raise fears of growing political violence.

The package was sent by a little-known group called "Cretan Revolution", which warned the minister against any efforts to seize homes and evict homeowners, police sources said. The group sent similar letters to tax offices in Crete last week.

Yannis Stournaras, a respected economist who became finance minister in June, has angered many Greeks by championing austerity policies demanded by the European Union and International Monetary Fund as the price for bailout aid.

This Reuters story was embedded in this article posted over at Zero Hedge yesterday...and it's courtesy of reader "David in California".  The link is here.

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Bus Station Erupts With Heckling at Argentine Finance Minister and His Family

Things are looking bad for Argentina's economy — central bank reserves are at 2007 lows due to capital flight, inflation is heading up, and the IMF is ready to punish the country for manipulating economic statistics.

This is not the time when, as a Minister of the Economy, you want to get caught coming back from vacation in Uruguay with your family.

But that's just what happened to Vice Finance Minister Axel Kicillof, a young father, and his wife as they were taking the Buquebus shuttle home from beach spot Colonia del Sacramento in Uruguay, La Nacion reports.

You can check the video courtesy of infobae.com. It's only about 6 minutes long but La Nacion reports that the heckling lasted for about a half an hour.

The rest of this short story...along with the link to the video clip...was posted over on the businessinsider.com Internet site just before lunch Eastern time yesterday...and it's the second offering in a row from reader "David in California".  The link is here.

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People's Bank of China Injects Record Cash into Money Market

China's central bank on Tuesday injected CNY 450 billion into the money markets through open market operations, reports said. This was the largest ever single-day injection.

The People's Bank of China conducts repurchase agreements and offers bills to maintain short-term liquidity.

The bank has introduced more funds as liquidity tightened ahead of the Chinese Spring Festival holiday.

Those three short paragraphs were all there was to this RTTNews story that was posted on the ino.com Internet site yesterday...and the link to the hard copy is here.

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Asia Loses Top Two Central Bankers as Shirakawa Quits, Zhou Prepares to Retire

The two most influential men in Asia's financial markets will step down next month leaving investors guessing as to how new central bank chiefs in China and Japan will steer two of the world's most important economies.

China's official financial news publication, the China Securities Journal, reported earlier this week that People's Bank of China governor Zhou Xiaochuan will leave his post in March after ten years at the helm of the nation's central bank. The news was followed by the early resignation announcement earlier Tuesday by Bank of Japan governor Masaaki Shirakawa, who steps down a month before his five-year term was due to expire.

Each departure has been largely telegraphed to financial markets - the 64-year old Zhou's name was omitted from the influential Communist Party Central Committee at the last major regime change in November, and Japan's new Prime Minister, Shinzo Abe, has made no secret of his desire to see the 63-year old Shirakawa out the door - but the leadership gap is likely to cause some concern as each economy navigates a new path to growth.

This news item was posted on the ibtimes.co.uk Internet site early yesterday afternoon GMT...and I thank Manitoba reader Ulrike Marx for her first offering in today's column.  The link is here.

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Three King World News Blogs

The first is with Nigel Farage...and it's headlined "The West is Headed into Orwellian Nightmare and Bankruptcy".  The second blog is with Ron Rosen.  It's entitled "Danger For Stocks, Gold & Silver Ready For a Big Move".  Lastly is this Rick Rule Interview...and it bears the title "His Surprising and Remarkable Predictions for 2013".

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Doug Casey Interviews Peter Schiff on Gold, Inflation, and Interest Rates

Two highly successful libertarian iconoclasts – Peter Schiff and Doug Casey – in a wide-ranging, thought-provoking conversation covering precious metals, the status of Peter's father, Irwin Schiff, the near future of the US dollar, and much more. 

This interview was posted on the Casey Research website on Monday...and in case you didn't notice it, I thought I'd post it in today's column.  The video interview runs for just under 27 minutes...and the link is here.

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New York Sun: Virginia in the Vanguard

Yesterday, the New York Sun lauded Virginia for its legislature's considering establishing a metallic standard for money.

The Sun says: "'Our nations most fundamental principles -- equal rights, rule of law, private property rights, individual liberty -- still require a dependable dollar to be meaningfully preserved,' the Washington Post quotes the Virginia bill as saying. This is precisely why the study that Virginia is considering could prove to be so important. By our lights this is another area -- like public service unions, spending and tax reduction, entitlement reform, eminent domain protection, and vouchsafing the right to keep and bear arms -- where the states are leading the reform effort in the country."

I borrowed 'all of the above' from a GATA release yesterday. The Sun's editorial is headlined "Virginia in the Vanguard"...and the link is here.

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Sprott Precious Metals Round Table - Get the Real Story

Join with Eric Sprott, Rick Rule and John Embry, widely-recognized experts in precious metals investing, and learn why precious metals offer such a compelling investment opportunity.

This event is occurring on line on February 12, 2013 at 2:00 p.m. Eastern Time...and you can register for this free round-table discussion by clicking here.

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"We Buy Gold" - Dennis Miller: Casey Research

Florida Avenue is the main drag in our little town in central Florida. In less than a mile, you're likely to see three or four folks standing on the sidewalk wearing headphones, bopping to music, and waving big glittery signs or arrows with "We Buy Gold" written across them. It's a common sight across many cities today.

During my annual trip to Arizona, my friend Phil asked me about gold. He owns some gold with no emotional value tied to it, and I convinced him of two things. First, he should not sell his gold; and second, he should hold it in a portable form with an easily recognizable value, like Gold Eagles. If things really get tough, he wouldn't want to have to barter jewelry with no easily agreed-upon value.

There are many places where he could probably sell his jewelry, but how would he know if he was getting a fair price? I didn't know either, but I knew I had a friend who would.

This wonderful essay was for subscribers only at one point...and that was about six months ago.  Now it's been posted in the clear...and it's a wonderfully informative read.  The link is here.

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Up to 25% of India’s gold may be smuggled in: Klapwijk

An estimated quarter of the gold flowing into India is coming through irregular channels given the “anti-gold” stance adopted by the government of one of the world's leading gold markets‚ Philip Klapwijk‚ global head of metal analytics at GFMS Thompson Reuters.

You have a government that is clearly anti-gold in India and it is using the duty system to try hold back demand‚” he said. In January the government raised the duty on gold imports to 6% from 4%.

“What this is doing is stimulating the smuggling of gold into the country. It may be that at least a quarter of the gold coming into India is coming through unofficial channels‚” he said.

The source of scrap metal‚ which comes primarily from jewellery recycling‚ generally slowed around the world compared to 2011. “The big exception was India‚ where much higher rupee prices for gold teasing out a much higher levels of scrap‚” he said.

When Jon Nadler resurfaces, it will probably be within the confines of the World Gold Council, GFMS, or some such anti-gold organization...where he will be buddies with the likes of Mr. Kalpwijk, or Jeff Christian at CPM Group.  Phillip is strong with the dark side of The Force as well...and it's never a good time to guy gold in his opinion, either.  This story appeared on the businessnews.howzit.msn.com Internet site yesterday...and I thank Ulrike Marx for bringing it to my attention...and now to yours.  The link is here.

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Hong Kong 2012 net gold flow to China hit record high

Hong Kong’s net gold flow to mainland China jumped 47 percent in 2012 to a record high of 557.478 tonnes, indicating robust demand in China, which vies with India to be the world's top gold consumer.

Hong Kong shipped 114.372 tonnes of gold to China in December, also a record high for monthly exports. The former British colony received 19.644 tonnes of gold from the mainland in that month.

Its total gold shipments to China in 2012 jumped 94 percent from the 2011 total to over 832 tonnes, but imports also were six times higher at 274.684 tonnes, data from the Hong Kong Census and Statistics Department showed on Tuesday.

This Reuters story, filed from Singapore yesterday, was posted on the mineweb.com Internet site...and I thank Ulrike Marx for her final offering in today's column.  It's a must read...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

The blatant manipulation of paper to "control" the price of the physical metal is ongoing and getting more blatant by the month. The more debt that the central banks monetise, the more vital it is that there are no distractions in this process. It is crucial to keep everybody INSIDE the paper money and sovereign debt system. It is equally crucial, therefore, to discourage any temptation to venture outside it. - Bill Buckler...Gold This Week...02 February 2013

Another day...and another obvious intervention in the gold and silver markets.  As Bill Buckler said in his quote above...it's getting more blatant by the month...and so it is.  It's hard to believe that not everyone sees it...or will acknowledge it even if they do.  The forces of Mordor must be delighted that the precious metals world is still full of such Benedict Arnold-types...especially the miners...who will never lift a finger to help their stockholders.

At the moment, we appear to be in a 'holding pattern'...but holding for what?  If you're a TA person, the chart screams of an imminent break out...but in a managed market it's hard to take TA seriously.  And as I've pointed out on numerous occasions over the years, JPMorgan Chase et al can paint any chart pattern they want...and this might be what they're painting now.  How it ultimately resolves itself is still unknown...but we're all hoping for up...and up big.  Time will tell.

Here's the 3-year gold chart...and as you can tell, this 'consolidation pattern' is getting very long in the tooth.

(Click on image to enlarge)

Yesterday, at the close of Comex trading, was the cut-off for Friday's Commitment of Traders Report...and the February Bank Participation Report.  Just eye-balling the price action during the reporting week, I'd guess that there won't be a lot of change in this week's COT Report in either metal.  But, after last week's big surprise in silver, I'll refrain from carving that prediction in stone.

In Wednesday trading in the Far East, not much of anything happened price wise...and that's still the case now that London has been open for about forty-five minutes as I write this paragraph.  Volumes are light...and I would guess that most of it is of the high-frequency trading variety.  The dollar index began to rally in early afternoon trading in Hong Kong...and appeared to hit its zenith just a few minutes after the London open...a pattern very similar to yesterday's dollar index action at that time of day.

And as I hit the 'send' button at 5:10 a.m. Eastern time, there's still not much happening in early London trading.  Volumes are still light...and both gold and silver are down a bit.  I'd guess that has something to do with what the dollar index is doing, as it's up about 25 basis points at the moment.

But, as is almost always the case, the real price shenanigans start when the Comex opens at 8:20 a.m. Eastern...or once the noon silver fix is in, in London...which is 7:00 a.m. in New York.  I'd guess that today's trading action will follow a similar pattern.

That's all I have for today...and I'll see you here tomorrow.