Gold & Silver Daily
"It's my opinion that the rallies in all four precious metals were met by short selling by JPMorgan et al."

¤ Yesterday In Gold & Silver

Not surprisingly, there was little price activity in gold on Thursday during the Far East trading day, or in the London market that followed.

This sideways price action continued well into the New York session, but once the London p.m. gold fix was in at 10:00 a.m. Eastern time, the gold price tacked on a bit more than ten bucks right up until London closed for the day, which was 4:00 p.m. local time in London...11:00 a.m. in New York.  Then it got sold off a hair before trading sideways for the rest of the day.

Gold's high tick of the day was $1,666.40 spot...and it's low tick was somewhere around the $1,653 price mark.

Gold closed the Thursday session at $1,662.90 spot...up $3.50 from Wednesday.  Volume was light...around 111,000 contracts...with the lion's share of that occurring during the Comex trading session around the big price jump.  It would be my bet that the "usual suspects" were going short on that rally, as it didn't look like a short covering rally to me.

Here's the New York Spot Gold [Bid] chart on its own, so you can see the Comex trading action in more detail.

The silver price chopped sideways within a dime of the $30.00 price level before developing a negative bias going into the noon London silver fix...7:00 a.m. in New York...where there was a sharp spike down to its low of the day.  From there it rallied higher before taking off [along with gold] at around 10:25 a.m.

This rally also ended in flames at the London close...11:00 a.m. in New York...before getting sold off further going into the 1:30 p.m. Comex close.  From there it traded more or less sideways during the electronic market.

Silver's high tick of the day was recorded by Kitco as $30.59 spot.

Silver closed at $30.14 spot...up a dime on the day...but like just about every other day this week, would have closed a lot higher if it hadn't run into not-for-profit sellers once again.  Volume was decent at 37,000 contracts, as the big rally that began at the London silver fix did not go unopposed.  I'm sure that JPMorgan et al were buying the short side of that rally right up until the London close.

The New York Spot Silver [Bid] chart is shown below.

Platinum and palladium had even more interesting price paths yesterday.  Not only completely different than gold or silver, but completely different from each other...and here are the 3-day Kitco charts for each.

The dollar index opened around the 79.60 mark...and then spiked up a hair at 1:00 p.m. Hong Kong time...and then slid about 30 basis points down to 79.40 a few minutes after the 8:00 a.m. GMT London open.  It then traded more or less sideways until precisely 10:00 a.m. in New York...the London p.m. gold fix...and from there it took off to the upside...topping out around 79.78 at 12:30 p.m. Eastern time.  Then it slid a little into the close...finishing the Thursday session around 79.66...up a whole 6 basis points.

The rally in gold and silver in New York yesterday mostly coincided with the rally in the dollar index as well...and I'll let you read into that whatever you wish.

The gold stocks started in the red at the 9:30 a.m. Eastern time open, but followed the gold price higher.  The stocks peaked out at precisely 11:00 a.m...and then sold off a bit going into the New York lunch hour.  But from there they worked their way slowly higher once again...and hit a new high for the day around 3:30 p.m. But then a thoughtful seller appeared and sold the stocks down over a percent in less than fifteen minutes.  As a result, the HUI only finished up 0.58%.

Pardon me for thinking so, but it sure looked like someone was painting the tape going into the close.  But maybe it's just me looking for black bears in dark rooms that aren't there.

The silver stocks finished mixed on the day as well, but most of the seven stocks that make up Nick Laird's intraday Silver Sentiment Index closed in the green...finishing up 0.40% on the day.  Note the sell-off in the silver stocks as well.  Maybe there is a black bear, and I just haven't found it yet.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 43 gold and 57 silver contracts were posted for delivery on Monday...the last day of 2012.  The link to yesterday's Issuers and Stoppers Report is here.

With only one more delivery day left in the December contract, there are still a fair number of gold and silver contracts still left open.  Silver's December open interest dropped a huge 412 contracts yesterday...and another 100 contracts the day before...leaving the above mentioned 57 contracts left...and I sure would like to know why someone backed out of deliveries these sizes at such a late date.

Then checking the CME's preliminary volume and open interest report from yesterday's trading day in the wee hours of this morning, I note that another 175 gold, along with 49 silver contracts were added at the very last moment to the December delivery month, so someone has to come up with those amounts by the end of trading on Monday.  It will be interesting to see who the short/issuers are on those contracts...and I'll have that info for you tomorrow.

The CME should post the First Day Notice numbers for delivery into the January contract for both gold and silver on their Internet site late this evening.  They shouldn't be overly large, as January is not a regular delivery month for either metal.  But whatever the numbers are, they'll be in my Saturday column as well.

There were no reported changes in either GLD or SLV...and the U.S. Mint had no sales report yesterday, either.

The Internet site updated the mid-month short positions for both GLD and SLV on Wednesday evening...and there weren't any big changes.  The really big changes in both ETFs occurred after the cut-off for this latest report from the that data won't be available until around mid-January.  This is already "yesterday's news" as Ted Butler would say.

What the new report showed was that the short position in SLV only declined by 5.46%...or about 1,047,000 shares/ounces.  The total short position in SLV now sits at 18,118,000 shares/ounces...or just a bit over 563 metric tonnes...about 9 days of world silver production.

The short position in GLD shares fell by 4.11%...about 977,000 shares, or approximately 98,000 ounces of gold.  The short position in GLD now sits at 22.82 million shares, or 2.28 million ounces.

With the big 3-day engineered price sell-off in gold and silver that took place between December 18-20 not in this data...along with the millions of ounces of silver deposited in SLV over that same time's obvious that the data would look a lot of different if they could take a snapshot right now.  As it stands at the moment, we'll have to wait until mid January.

The other amazing thing that hasn't happened, is that there have been no major redemptions in either GLD or SLV since the current sell-off really got started on December 12th.  And now that I'm looking at the hard numbers, GLD has only shed about 19,000 ounces of gold ...and SLV has actually added 7.0 million ounces of silver during that same time period.  I'm only speculating at this point, but it looks like some entity is covering a monster short position that they may have in SLV...and GLD...and they were buying all the shares that others were selling into the engineered price decline that JPMorgan et al created in the first place.  But I'm sure that was all part of the plan. 

Over at the Comex-approved depositories on Wednesday, they reported receiving 623,726 troy ounces of silver...and shipped a smallish 2,949 ounces of the stuff out the door.  The link to yesterday's activity is here.

It was a slow news day yesterday, which is no surprise considering the time of year, so I hope you have the time to run through most of the stories posted below.


¤ Critical Reads

U.S. retailers scramble after lackluster holiday sales...worst since 2008

The 2012 holiday season may have been the worst for retailers since the 2008 financial crisis, with sales growth far below expectations, forcing many to offer massive post-Christmas discounts in hopes of shedding excess inventory.

While chains like Wal-Mart Stores Inc and Gap Inc are thought to have done well, analysts expect much less from the likes of book seller Barnes & Noble Inc and department store chain J. C. Penney Co Inc.

Shares of retailers dropped sharply on Wednesday, helping drag broader indexes lower, as investors realized they were likely to be disappointed when companies start to report results in a few weeks' time.

This Reuters story was posted on their website late on Wednesday afternoon...and I borrowed it from yesterday's edition of the King Report.  The link is here.


Fiscal cliff fears grow, while consumer confidence plunges

The steep drop in confidence intensified the pressure on President Barack Obama and Republican leaders to reach a deal that avoids the cliff, shorthand for $600bn (£373bn) of spending cuts and tax rises due to take effect from January 1st.

On Wall Street, investors reacted with alarm to the first evidence that the political paralysis in Washington is sapping the confidence of consumers whose spending still makes up the lion's share of the American economy. The Dow Jones Industrial Average closed down 0.1pc at 13,096.31, while the S&P 500 also fell 0.1pc to 1,418.09.

The well-respected survey from the Conference Board showed that consumers' expectations for the next six months tumbled to 66.5, the weakest reading in a year, from 80.9 in November. The overall confidence index dropped to 65.1 in December from 71.5 in November.

"The scale of the drop really intensifies the concerns about the potential economic implications from the $600bn of tax rises and spending cuts due to hit in less than a week," said James Knightley, an economist at ING. Unless a deal is reached "a return to recession is a realistic possibility".

This story appeared on The Telegraph's website late yesterday evening...and the link is here.


Social Security Ran $47.8B Deficit in FY 2012; Disabled Workers Hit New Record in December: 8,827,795

The Social Security program ran a $47.8 billion deficit in fiscal 2012 as the program brought in $725.429 billion in cash and paid $773.247 for benefits and overhead expenses, according to official data published by Social Security Administration.

The Social Security Administration also released new data revealing that the number of workers collecting disability benefits hit a record 8,827,795 in December--up from 8,805,353 in November.

The overall number of Social Security program beneficiaries—including retired workers, dependent family members and survivors and disabled workers and their dependent family members—also hit a record in December, climbing from 56,658,978 in November to 56,758,185 in December.

This article was posted on their website on Wednesday...and I thank Scott Pluschau for sending it.  The link is here.


Chart of the Day: The US Stock Market Is Now One Of The Most Expensive In The World

U.S. stocks have been outpacing earnings growth in recent periods.  This means that price-earnings multiples have been expanding.

However, Morgan Stanley's Greg Peters is concerned that these multiples are getting a little too high for comfort.

"Our regional preference is for [Emerging Markets], and in particular [Asia excluding Japan] over [Latin America], while we would underweight the US, as it is a relatively expensive market, a crowded trade, and has the most earnings risk," writes Peters.

This story was posted on the Internet site early on Wednesday afternoon...and is another item I borrowed from yesterday's edition of the King ReportThe chart is definitely worth a look...and the link is here.


Matt Taibbi on the Biggest Wall Street Scandal of 2012

Rolling Stone's Matt Taibbi has skewered his fair share of financial faux pas and corporate bigwigs throughout 2012. Yet his prize for the Biggest Wall Street Story of the Year goes to the massive—but little understood—Libor scandal.

“If it’s true that the 16 biggest banks in the world were fixing global interest rates, then it’s hard not to argue that that’s not the biggest financial corruption case in history,” Taibbi says in a web exclusive for Current TV. “I fully expect that we’ll find out in the end that American banks were involved in this scandal."

This short story...and short embedded video...were posted on the Internet site yesterday...and I thank Roy Stephens for finding it for us.  The link is here.


Mortgage Nightmares: Evictions Become Focus of Spanish Crisis

After a record number in 2012, evictions in Spain have become the symbol of a crisis that shows no signs of improving. Next year isn't likely to be any better, but with more attention now being paid to those losing their homes, relief in the form of legal reform may soon be on the way.

Some 400,000 eviction proceedings have been opened in Spain since 2007, with roughly half of the families involved having already lost residential properties due to foreclosures. For most of them, these were their homes. Now, in the fifth year of the financial crisis, the evictions have become an iconic image of the country's economic plight. During the first six months of this year alone, the Consejo General del Poder Judicial, which oversees and organizes the Spanish judiciary, registered 94,502 repossessions -- and the evictions reached a record 532 a day during the first half of 2012.

According to a forecast by the Spanish central bank, the number of foreclosures will increase by another 30 percent in the coming year. And as the year draws to a close, there is no end in sight to the financial crisis. The outlook for 2013 is grim.

No surprises here...a big boom, followed by an even bigger bust...with the banks standing by with open arms to scoop up real assets purchased with money they created out of thin air.  This story showed up on the German website yesterday...and I thank Roy Stephens for his second offering in a row in today's column.  The link is here.


Shopping Paradise: Rich Chinese and Russians Flock to Germany to Spend

Germany is increasingly becoming a destination of choice for wealthy shoppers from Russia and China with customs officials struggling to keep up. Exclusive jewelers across the country are quickly hiring and training staff to serve the new clientele.

Working as a customs officer at Hamburg Airport is a job that requires good instincts, patience and tenacity. One quality, however, should be avoided: envy.

German customs officials have seen far more luxury goods pass through their checkpoints this year than they will ever be able to afford themselves. Take, for example, the Russian traveler who bought three Patek Philippe watches, together worth over €1.5 million ($2 million). Or another Russian who revealed a weakness for the relatively modestly priced watches from Lange & Söhne, each worth just €50,000. Still, the man had purchased no fewer than 18 of these timepieces. They weren't all for himself, the man explained: "These are for my friends I'm going to celebrate my 50th birthday with."

Likewise, it's not unheard of for an extended Arab family to bring through customs purchases of Louis Vuitton handbags and Hermès fashions worth over €100,000.

This interesting read was also posted on the Internet site yesterday...and it's also courtesy of Roy Stephens.  The link is here.


Lagarde Warning: IMF Concerned about Possible German Austerity

International Monetary Fund head Christine Lagarde has said that Germany should not be looking at measures aimed at consolidating its finances, apparently in concern over a SPIEGEL report indicating that the German Finance Ministry is working on a far-reaching package of spending cuts and tax hikes for introduction following general elections next autumn. In an interview with the Thursday edition of the influential weekly Die Zeit, she said that Germany needs to continue to work as a counterbalance to the biting austerity programs passed in crisis-stricken countries in Southern Europe.

Germany and other countries "can afford to move ahead with consolidation at a slower pace than others," Lagarde said. "That serves to counteract the negative effects on growth that emanate from the cuts made in crisis countries."

The comments come just days after SPIEGEL reported that Finance Minister Wolfgang Schäuble is working on a list of consolidation measures. The measures may include a hiking of the value-added tax (VAT) rate of 7 percent for items such as food and public transportation to the standard 19 percent. The government would also slash its contribution to the German health fund and the retirement age would automatically rise in accordance with life expectancy. The goal of the package is to prepare Germany for the constitutionally anchored debt brake, which will severely impact Berlin's ability to take on debt in the coming years.

I wonder if Ms. Lagarde is aware of just how irrelevant the organization she heads, is becoming?  This is another story from Roy's fourth offering in a row.  The link is here.


Behind the Scenes in Brussels: EU Summit Reveals a Paralyzed Continent

What happens behind closed doors at an EU summit, when European leaders are among themselves? SPIEGEL has reconstructed the negotiations at the most recent meeting in Brussels in December based on documents and accounts given by numerous sources. It was a summit of hopelessness.

The haggling is in full swing at this hour -- North against South, rich countries against poor ones, German Chancellor Angela Merkel against French President François Hollande. They're stuck on a word, one that would normally have a beautiful, positive sound: common. The word "common" is dividing Europe. This is what it has come to in this night of hard-fought negotiations.

For more than six hours now, the leaders of the European Union have been meeting in Brussels to discuss the future. They are here to agree on a document, and according to item 12 of that paper, there is to be a "common backstop" for the new banking union, a sort of shared resolution fund for worst-case scenarios also referred to more technically as a "shock absorption capacity."

Germany wants the word "common" deleted. So do Sweden, Finland, Denmark and the Netherlands. France wants to keep the word in the document, as do Italy, Spain and Portugal. The northern countries are afraid that they'll be asked to pay even more than they already do, while the south is hoping for more shared responsibility in the crisis. The dispute continues for three-quarters of an hour. The northern countries win the fight and the word "common" is stricken from the closing statement of the most recent EU summit.

This is Roy's last offering in today's column...and it's certainly a must read.  It's another story that was posted over at the Internet site yesterday...and the link is here.


Egypt fears run on its banks as it imposes limit on amount people can withdraw

The move to ban leaving with more than £6,000 came as thousands of Egyptians withdrew savings from banks to hoard cash at home.

Anxiety about a deepening political and economic crisis has gripped the country in past weeks, with many people rushing to buy dollars and take out their savings from banks.

The panic came as the country’s new president, Mohammed Morsi, called for ‘unity’ after a referendum approved a controversial constitution which gave him and Islamist allies more powers.

This article showed up on the Internet site on Wednesday...and I thank Scott Pluschau for bringing it to our attention.  The link is here.


King World News: Next Move May be a Stunning $3,620 for Gold and $125 Silver

The following charts were put together exclusively for King World News by Kevin Wides, out of Switzerland.  Once again, this is a way for all King World News readers globally to take an important step back and look at the big picture in both gold and silver as we head into 2013.  These charts show the next pulse higher for gold and silver may stretch to $3,620 and $125, respectively.

Well, dear reader...those prices [and higher] are certainly possible...but only if JPMorgan et al allow it.  As I said yesterday, what happens in the precious metals is 100 percent up to them...and the situation hasn't changed since I said that.  The link to this KWN blog is here.


A rare look inside a Swiss gold refinery

Well, dear reader....not only is it a rare look, but it has to be the shortest tour on this BBC video clip from December 26th lasts for 1 minute and 57 seconds.  You won't learn much...but the eye candy is worth the trip...and I thank West Virginia reader Elliot Simon for sharing it with us.  It's posted on the Internet site...and the link is here.


Trader Sees a 'Sleeper' Bet on This Metal

Increasing demand in the auto industry is leading some traders to place bets on one of the less familiar precious metals: palladium.

"It is my sleeper bet for 2013," said Dan Dicker in an interview on CNBC's Squawk Box. "It's a real industrial metal. It's in very short supply. It's had a very steady run. It's under-traded, under-owned and one of those industrial metals. It's one of those sleeper metal plays that you can make."

"Long term we like platinum and palladium," said Jeffrey Christian, Founder & Managing Director, CPM Group, in an appearance on CNBC World. "These are commodities that are used in every car manufactured and sold in the world and auto sales on a global basis are at record levels and it's going to continue to be that way.

But he had a caution...

Christian, like his adopted twin brother Jon Nadler over at Kitco, is always on the lookout for a parade to rain on.  All optimism is qualified by some idiotic reason...and the one he gives is pretty flimsy.

One of the things that we should give thanks for is that the main stream media hardly quotes Jon anymore...and the sooner the same fate befalls Jeff Christian, the better off we'll all be.

This CNBC story from yesterday has two embedded videos.  The one with Dan Dicker runs for 5:49 minutes...and the one that contains commentary by Jeff Christian runs 5:15 minutes.  It's Elliot's second contribution in a row in today's column...and the link is here.  And despite my tirade, it's worth your time.


India’s ultra rich: younger, richer and buying gold

India’s community of high net worth individuals [HNI] is growing fast and, for them, the most favoured form of investment is gold.

The HNI population in India rose by around 20.86% in 2010, and their wealth is estimated to have grown by more than 11%, to $530 billion. India is one of the fastest growing HNI segments in the world, currently contributing approximately 1.2% to the global HNI wealth.

“The number and wealth of the ultra HNIs has leapfrogged in the last decade. With an estimate that in the next five years, there would be about 219,000 such households, up from the current 62,000 households, their net worth is also expected to grow five times,'' says Rupesh Nagoria, product head at broking firm, Alchemist House.

I found this story posted on the Internet site late last night...and it's definitely worth reading.  The link is here.



¤ The Funnies

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¤ The Wrap

Any man who thinks he can be happy and prosperous by letting the government take care of him, better take a closer look at the American Indian. - Henry Ford

Well, even though volume was 'light' was far more substantial than the volume on Wednesday...and as I said further up, it's my opinion that the rallies in all four precious metals were met by short selling by JPMorgan et al...or it could have been their high-frequency traders just 'spoofing' these markets lower.  Of course nothing will be known for sure until the COT Report on January 4th, but that's the way I see it at the moment.

Today's COT Report will be posted on the CFTC's website at 3:30 p.m. Eastern time sharp...and I'll be more than interested in what the numbers have to say.  I'll also glean whatever I can from Ted...and I'll have that data for you in tomorrow's column as well.

Take your pick of either "watching paint dry...or grass grow" as that pretty much sums up the trading activity during the Far East session on their Friday.  Of course with the weekend here...and the year winding down...I'm not expecting much for the remainder of today in London or New I'm sure what few traders there are left, will be out the door early...and won't show up at their desks again until next Wednesday...the first trading day of the New Year in Europe and here in North America.

As I hit the 'send' button at 4:35 a.m. Eastern time, the prices of both silver and gold aren't doing much of anything...volumes are light, especially in silver...and the dollar index barely has a pulse.  Of course it was more or less like this yesterday at this time...and look what happened the moment that the London silver fix was in at noon GMT.  So, despite what I said in the previous paragraph, I'll reserve judgment for the moment.

Enjoy your weekend...or what's left of it if you live west of the International Date Line...and I'll see you here tomorrow.