Gold & Silver Daily
"All the 'significant' price action that mattered occurred during the New York trading day again yesterday."

¤ Yesterday In Gold & Silver

The gold price didn't do much yesterday.  Its small overnight gain turned to a small loss as the price got sold down into its low of the day at $1,686.10 spot shortly before 9:00 a.m. Eastern.  From there, gold rallied to it's 'high' of the day of $1,697.30 just minutes after 12:00 o'clock noon in New York

From there, it got sold off a hair into the close.  The scale of the Kitco chart makes yesterday's price action look far more dramatic than it really was.

Gold finished the Tuesday trading session at $1,691.80 spot...up $1.70 on the day.  Net volume was very light...around 90,000 contracts.

The silver price action was somewhat different.  It traded either side of $32 the ounce for most of the Far East trading day...and from it's 2:00 p.m. Hong Kong high of $32.10 spot, it got sold down to its low of the day [$31.79 spot] which came less than an hour before the 8:20 a.m. Eastern time Comex open.

From there, silver rallied slowly and steadily until about 11:30 Eastern time...before trading sideways into the 1:30 p.m. Comex close.  Then it popped to its high of the day [$32.46 spot] just a few minutes before 2:00 p.m....and from there it got sold off two bits into the close.

Silver closed on Tuesday at $32.21 spot...up 19 cents from Tuesday...but would have finished materially higher if that not-for-profit seller hadn't shown up around 2:00 p.m.  Volume was decent...around 39,000 contracts.

The dollar index opened at 80.03...and traded sideways until precisely noon Hong Kong time...and that's when Japan announced that its new "QE to Infinity" operation was officially underway.

The index fell about 25 basis points over a few hours...and then fluctuated wildly over that range before stabilizing around 11:00 a.m. Eastern time.  From there it sold off a hair into the close.  The dollar index finished the Tuesday session at 79.87...down a whole 15 basis points. Not surprisingly, there was no co-relation between the precious metal price action and the currency moves yesterday.  Here's the 3-day chart so you can see the entire 24-hour move on Tuesday.

The gold shares rose about a percent and a half by around 11:30 a.m. Eastern time...and then more or less traded flat for the balance of the day.  The HUI finished up 1.41%.

With the odd exception...CDE being the most significant one...most silver stocks finished in positive territory.  But because of CDE, Nick Laird's Intraday Silver Sentiment Index only closed up 0.40%.

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The CME's Daily Delivery Report showed that only 15 silver contracts were posted for delivery tomorrow.  That brings the month-to-date total up to 710 contracts in silver...which is pretty decent for a non-delivery month...and we still have quite a chunk of January left to go.

For the first time in January, GLD actually reported a deposit, as an authorized participant added 106,498 troy ounces yesterday.  SLV went the other direction, as an AP withdrew 1,450,851 troy ounces of silver.

The U.S. Mint had a sales report.  They sold 4,500 ounces of gold eagles...and a whopping 27,000 one-ounce 24K gold buffaloes...which has to be a one-day record.  Of course there were no silver eagles reported sold...and I will be rather surprised if they show any more during January, even if they have some to report.

There was a lot of activity over at the Comex-approved depositories on Friday.  They reported receiving only 50,767 troy ounces of silver...but shipped 1,171,584 ounce of the stuff out the door.  The link to that activity is here.

Joshua Gibbons...the Silver Bar King of SLV...had the following for me on Monday.  But because I couldn't get access to my e-mail address, I couldn't post it in Tuesday's here it is now.

Hi Ed,

"I've finished much of the analysis [on the big 18 million ounces deposit in SLV last week. - Ed], which can be seen in detail at my website here...[which is a must view. - Ed]

"To summarize slightly, JPM added a new SLV warehouse in New York, with 10.0 Moz deposited, which appears to be designed to facilitate transfer of COMEX warehouse receipts to shares of SLV and vice-versa.  Almost all of that silver is from COMEX-approved refiners.

"The rest of the silver went to warehouses in London, with about 85% of that silver from refiners that are not COMEX approved.  That means that in order to get those bars into COMEX, the silver would have to be melted and made into new bars by a COMEX-approved refiner and shipped to New York.  2.9 Moz of that silver came from Aurubis AG in Germany, which rarely supplies silver to SLV (only once in the last 2 years, in August of last year).  However, almost all of the rest of the silver deposited was from refiners that often supply silver to SLV (most likely an Authorized Participant [such as JPM] has contracts with them to supply a certain amount of silver every month if needed by SLV).  These were likely freshly minted bars.

"I would not be surprised if the next report on short positions shows that the SLV short position is gone (or perhaps up to a few hundred thousand shares), which would suggest that JPM held the entire SLV short position and collected this near 20 Moz of silver to get out of it.  It makes for an innocent sounding excuse to investigators; "Yes, we had a large short position in SLV, but it was just to hedge, as we added silver to a new warehouse in New York to make it easier to get silver into the ETF, and we exited the position as soon as the warehouse was opened." - Joshua

Here are a couple of other items that should have been in Tuesday's column that I couldn't get at...and here they are now. Neither needs any explanation from me.  The 'click to enlarge' feature works wonders here.

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After some vicious editing...I feel that I have the stories down to a reasonable number...but there are a lot of King World News blogs/interviews in this column.  These should have been in Tuesday's column as well.


¤ Critical Reads

Americans Collecting Disability Increased 1,385,418—Now 1 for Each 13 Full-Time Workers

During President Barack Obama’s first term, the number of Americans collecting federal disability insurance increased by 1,385,418 to a record 8,827,795.

Forty-two years ago, in December 1968, there were 51 people working full-time in this country for each person collecting disability.

In January 2009, the month Obama was inaugurated, there were 7,442,377 Americans collecting federal disability insurance, according to the Social Security Administration. By December 2012, the latest month reported, there were 8,827,795 collecting disability, an increase of 1,385,418. With 115,868,000 people working full-time in December, according the Bureau of Labor Statistics, there was 1 person collecting disability for every 13 people working full-time.

In the comparable period of George W. Bush’s first term—January 2001 through December 2004—the number of people taking disability went from 5,052,895 to 6,197,664, an increase: 1,144,769.

This story was posted on the Internet site on Sunday...and I found it in yesterday's edition of the King Report.  The link is here.


Jamie Dimon Laments Too-Big-to-Fail? Give Me a Break

Jamie Dimon is at it again. Speaking to his bank's clients yesterday during a panel discussion in Koenigstein, Germany, the chairman and chief executive officer of JPMorgan Chase & Co. said regulators and banks should come up with a system that lets lenders go broke without hurting the world economy.

"We've got to get rid of too-big-to-fail," Dimon said, according to a Bloomberg News article this morning. "We have to ensure big banks can be taken down without harming the public and at no cost to them."

Remarks such as these, coming from the head of JPMorgan, are maddening.

Jonathan Weil is in full cry in this very short op-ed piece that was posted on the Bloomberg website early yesterday morning Mountain Time.  I thank Washington state reader S.A. for sending it...and the link is here.


SEC bars Egan-Jones From Rating the US and Other Governments for 18 Months

It's refreshing to see that the SEC has taken a much needed break from its daily escapades into and is focusing on what is truly important, such as barring outspoken rating agency Egan-Jones from rating the US and other governments.

From the SEC: "EJR and Egan made a settlement offer that the Commission determined to accept. Under the settlement, EJR and Egan agreed to be barred for at least 18 months from rating asset-backed and government securities issuers as an NRSRO. EJR and Egan also agreed to correct the deficiencies found by SEC examiners in 2012, and submit a report – signed by Egan under penalty of perjury — detailing steps the firm has taken." Hopefully the world is no longer insolvent in July of 2014 when this ban runs out.

You can't make this stuff up!  This Zero Hedge piece was posted on their Internet site yesterday...and it's courtesy of Marshall Angeles.  The link is here.

Bloomberg's Jonathan Weil has a short piece on the Egan-Jones story as well.  Here's the link.


Fed official alleges Geithner may have alerted banks to rate cut

In the summer of 2007, as storm clouds gathered over the world's financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and other banks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official.

Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation during a Fed conference call in August 2007, and he stuck to his 5-year-old claim against the current U.S. treasury secretary in a statement provided to Reuters on Friday.

"From conversations I had prior to the video conference call on August 16, 2007, I was aware of discussions among a few large banks about borrowing from their discount windows to support the asset backed commercial paper market," Lacker said in the statement. "My understanding was that (New York Fed) President Geithner had discussed a reduction in the discount rate with these banks in connection with these initiatives."

This Reuters story showed up on the Internet site in the wee hours of Saturday morning..and it's courtesy of Brian Farmer.  The link is here.


Markets Tumbling, Yen Soaring After Historic Move By The Bank of Japan

Late Monday night Eastern time, the Bank of Japan unleashed its widely expected, but historic easing. It set an inflation target of 2%, and announced unlimited QE.

As it was expected, the yen spiked on the news, and the Nikkei eventually ended lower.

Meanwhile European markets are tumbling, with big indices off over 1%.

The US market was closed on Monday, so it will be playing catch up.

This very brief Bloomberg piece was posted on their website in the early hours of yesterday morning.  I thank Scott Pluschau for sending it...and the link is here.


Revolutionary Japan is suddenly the centre of world affairs

So Japan may not slide into genteel oblivion after all. To the surprise of the Japanese people, their country is smack in the middle of two riveting dramas that threaten to upturn the global strategic landscape in short order. 

We all watch with disbelief as China and Japan rattle sabres over the Senkaku/Diaoyu islands, so like the seemingly minor events that drew Europe's alliance systems into conflict from 1911 onwards.

Against this, Japan's economic policy revolution seems tame. Yet forces are being unleashed that could have powerful effects through the world's asset markets and trading system.

Premier Shinzo Abe has vowed an all-out assault on deflation, going for broke on multiple fronts with fiscal, monetary, and exchange stimulus.

This must read Ambrose Evans-Pritchard offering was posted on the Internet site early on Sunday evening...and I thank Scott Pluschau for his second offering in a row in today's column. The link is here.


In China, Widening Discontent Among the Communist Party Faithful

Barely two months into their jobs, the Communist Party’s new leaders are being confronted by the challenges posed by a constituency that has generally been one of the party’s most ardent supporters: the middle-class and well-off Chinese who have benefited from a three-decade economic boom.

A widening discontent was evident this month in the anticensorship street protests in the southern city of Guangzhou and in the online outrage that exploded over an extraordinary surge in air pollution in the north. Anger has also reached a boil over fears concerning hazardous tap water and over a factory spill of 39 tons of a toxic chemical in Shanxi Province that has led to panic in nearby cities.

This article appeared on The New York Times website on Saturday...and is certainly worth reading.  I found it yesterday's edition of the King Report...and the link is here.


China can debate market rigging even as West can't

China's securities regulator said intervention in the nation's stock market is necessary at "key moments" because it isn't mature, the official Xinhua News Agency reported.

"Volatility is high, and don't forget, China is still a developing country," Xinhua quoted China Securities Regulatory Commission Chairman Guo Shuqing as saying at a national securities and futures supervision meeting.

Net share purchases by China's social security fund were 42.8 billion yuan ($6.9 billion) last year and totaled 42.7 billion yuan by qualified foreign institutional investors, Xinhua cited Guo as saying. They were the biggest net purchasers, Xinhua reported.

I found this Bloomberg item embedded in a GATA release late yesterday morning...and the link is here.


Troika Travails: Split Emerges Over Cyprus Bailout Package

Cyprus is in urgent need of money from the euro rescue fund, but the troika responsible for the bailouts is split over how it should be structured. The IMF is worried that the country's debt load is not sustainable.

When euro-zone finance ministers meet in Brussels on Monday, a welcome guest will be missing. Christine Lagarde, 57, the French managing director of the International Monetary Fund (IMF), is currently unwilling to discuss giving aid money to ailing euro-zone member Cyprus. For some time now, the Americans in particular have been eyeing the IMF's involvement in Europe with suspicion, causing the Frenchwoman to hit the brakes time and again. "I have no mandate for that" is a statement that the euro-zone finance ministers have heard only too often from Lagarde.

As such, it remains to be seen whether the IMF will ultimately participate in a loan program for Cyprus. A number of countries, Germany first and foremost, have said that IMF participation is crucial. The statutes of the European Stability Mechanism (ESM), the euro zone's €700 billion ($931 billion) permanent backstop fund, stipulate that the IMF must rubber stamp a country's debt sustainability before any cash can flow.

This very interesting read appeared on the Internet site on Sunday...and it's the first of the day from Roy Stephens. The link is here.


An Arduous Friendship: Differences of Opinion Mark Franco-German Relations

Though France and Germany are coming together this week to celebrate 50 years of postwar friendship, the two countries are growing further apart. Both countries are less interested in finding common ground on important issues and that attitude is preventing them from solving problems facing Europe.

People in the two countries respect one another, Le Maire says, but their cultures and their political traditions are in many ways diametrically opposed. On both sides of the border, fewer and fewer people are learning the other country's language, and the two nations hold fundamentally differing views of what Europe should be. "The relationship between our two countries is a difficult one," Le Maire says. "We need to recognize that fact and take it as our starting point."

This story was posted on the German website yesterday...and it's courtesy of Roy Stephens as well.  It's certainly worth reading...and the link is here.


Bundesbank chief warns that central banks are being pushed into currency war

Loading central banks with more tasks and pressing them to pursue more aggressive monetary policies could risk a round of competitive devaluations, European Central Bank policymaker Jens Weidmann said on Monday, citing pressure on the Bank of Japan.

Weidmann is the latest in a string of policymakers worldwide to warn of the threat of a "currency war" as central banks pump out cash to support their economies, reducing their value in the process.

He said the pressure that Japan's new government has put on the Bank of Japan to deliver bolder monetary easing endangered the central bank's independence, as did the actions of Hungary's government.

"Already alarming violations can be observed, for example in Hungary or Japan, where the new government is interfering massively in the business of the central bank with pressure for a more aggressive monetary policy and threatening an end to central bank autonomy."

This Reuters article was posted on their website yesterday...and Chris Powell posted it in a GATA release in the wee hours of this morning.  The link is here.


Top Spanish official in graft scandal

A former treasurer of Spain’s ruling People’s Party (PP) hid away his wealth in a Swiss bank account.

Court documents from an on-going judicial investigation into former PP treasurer Luis Barcenas revealed the account held up to €22 million, reports Reuters.

Spanish Prime Minister Mariano Rajoy on Saturday (19 January) said he would crack down on corruption after the documents had been released.

“I will not waiver against inappropriate conduct,” said Rajoy.

This story was filed from Brussels...and was posted on the Internet site on Sunday.  It's Roy Stephens' third offering in today's column...and the link is here.


Secret papers show extent of senior royals' veto over bills

The extent of the Queen and Prince Charles's secretive power of veto over new laws has been exposed after Downing Street lost its battle to keep information about its application secret.

Whitehall papers prepared by Cabinet Office lawyers show that overall at least 39 bills have been subject to the most senior royals' little-known power to consent to or block new laws. They also reveal the power has been used to torpedo proposed legislation relating to decisions about the country going to war.

The internal Whitehall pamphlet was only released following a court order and shows ministers and civil servants are obliged to consult the Queen and Prince Charles in greater detail and over more areas of legislation than was previously understood.

I must admit that, initially, this story caught me completely by surprise.  But, on sober second thought, I came to the conclusion that I had been hopelessly naïve all these years.  I consider it a must read...and I thank Federico Schiavio for bringing this article to my attention...and now to yours.  The link is here.


A Doug Casey Hat Trick

Here are three interviews with our illustrious leader...and they are definitely worth your time, if you have it, as two of them are rather lengthy.  The first is with Lauren Lyster over at her new job at the Yahoo Finance website.  It was posted on their Internet site early Friday morning...and runs for 4:28 minutes.  The link is here...and I thank Washington state reader S.A. for sending it.

The next interview runs 31:35 minutes.  It was conducted by Andy Duncan over at the Internet site on January 15th...and the link is here.

Lastly is this speech that Doug gave in Vancouver, B.C. back on July 28, 2012.  It was just posted in the public domain over at the Internet site on January 9th.  This one runs for an hour...and the link is here.


Seven King World News Blogs/Audio Interviews

Some of these are new...and some of them are from this past weekend.

1. Bill Haynes: "As Silver Shortage Intensifies, More Retail Products Disappear".  2. Dan Norcini: "Something Substantial Has Just Changed in the Silver Market".  3. Citi analyst Tom Fitzpatrick: "Silver is Setting Up for a Stunning 56% Surge".  4. John EmbryGold Super-Spike to be Dwarfed by the Mania in Silver".  5. Pierre Lassonde: "This Gold Mania Will Compare to 1980 Silver Run". 6. Audio interview with James Turk.  7. Audio interview with Gerald Celente.  


Hugo Salinas Price: Ambrose Evans-Pritchard beats about the bush

To argue with Ambrose Evans-Pritchard is risky. He is well-informed, he has travelled much, writes well and has a sharp intellect. Yet, I must affirm that he is mistaken in some of the opinions expressed in his recent article at “The Telegraph” new Gold Standard is being born” January 17, 2013.

In the article he refers to the “(old) Gold Standard dynamic at work with all its destructive power, and the risk of sudden ruptures always present.”

I take it that he refers to the pre-WW I Gold Standard, and the financial chaos that broke out in 1930, to which he refers as “the destructive power” of the Gold Standard. That chaos should not be attributed to the Gold Standard as it existed, but to the previous expansion of credit in violation of the rules of the Gold Standard. The pain of the 1930’s was the correction which the Gold Standard imposed upon the financial diddling with credit expansion which the Powers had adopted; what was “destructive” was their policy of credit expansion beyond savings. If you stick your finger in the fire, don’t blame fire for its “destructive power”; just refrain from doing that.

I know Hugo personally...and he, along with Ambrose, are people that I wouldn't want to get into an in-depth discussion with on this issue...either individually or I'd get buried in relatively short order.  This article is definitely worth reading.  It was posted over on the Internet site last Thursday...and I thank West Virginia reader Elliot Simon for finding it for us.  The link is here.


Is India Fighting a Losing Battle Against Gold Bugs?

Prashant Tejnani, owner of a jewelry store in India's financial capital Mumbai, said news of the government's latest tax hike on gold imports sent an initial wave of panic through vendors in the city's bustling Zaveri Bazaar, or jewelry market - but he expects the impact on demand to be fleeting.

"Gold will always retain its shine in India. An increment of 2 percent will curb demand initially, for one or two months, but once people get used to it, they won't mind paying the extra," Tejnani, whose family has been in the jewelry business for 50 years, told CNBC on Tuesday.

Gold is India's second largest import after oil and has led to an increase in the country's current account deficit which stood at 5.4 percent of gross domestic product in the July-September quarter. This insatiable appetite for gold led the government to increase the tax on its import to 6 percent, from an earlier 4 percent, on Monday.

This story originated with CNBC Asia...and it was posted on the CNBC website very early yesterday morning Eastern time.  It's Elliot Simon's second offering in a row...and the link is here.


Indian Jeweler Becomes Billionaire as Gold Price Surges

T.S. Kalyanaraman is beloved by his customers and detested by his rivals for bringing transparency to jewelry sales in India, where haggling is the norm.

He opened a shop in the southern Indian state of Kerala in 1993 and taught customers how to test the purity of their gold to expose cheating craftsmen. He was also the first jeweler in town to attach price tags to his gold and gem collection, angering competitors who accused him of ruining the trade.

Two decades later, the 65-year-old has become a billionaire as a 12-year rally in gold prices fails to damp demand in India, the world’s largest consumer of the precious metal. He owns 44 stores in India and plans to open 36 more by March 2014, including five in the Middle East.

This longish article was posted on the Bloomberg website late Monday evening Mountain Time...and I thank Mumbai reader Avi Raheja for sharing it with us.  The link is here.


Standard Bank says physical gold purchases unusually high

Physical gold demand has been unusually strong for this time of year, with "good buying" from Southeast Asia, according to Standard Bank Plc.

The Standard Bank Gold Physical Flow Index signaled demand climbed to the highest since November, the bank wrote in an e-mailed report yesterday. Purchases typically pick up toward the end of the year amid religious festivals and the wedding season in India. Gold reached a four-week high of $1,696.28 an ounce in London on January 17th.

"It was strong in November and that's normally a usual seasonal pattern that we see coming through from Indian post-monsoon, wedding season buying," Marc Ground, a commodity strategist at Standard Bank in Johannesburg, said by phone yesterday. "The fact that January is as high as we see in November usually -- that's unusual. There was probably some Indian buying ahead of this tariff increase."

This Bloomberg article showed up on their Internet site just before midnight last night Mountain Time...and I found it in a GATA release.  The link is here.


Bundesbank's gold repatriation is 'world historical,' Rickards says

Having relocated from Russia Today to Yahoo Finance's "Daily Ticker" program, Lauren Lyster today interviewed fund manager and "Currency Wars" author James G. Rickards about the Bundesbank's attempt to repatriate some of Germany's gold, a move Rickards considers "world historical" in importance, confirming that gold is "the real base money, high-powered money."

Rickards also expects that China this year or next will announce a tripling or quadrupling of its gold reserves after acquiring the metal surreptitiously.

I borrowed 'all of the above' from a GATA release late last night Pacific Time...and it's an absolute must watch. The interview is five minutes long and can be viewed at Yahoo Finance website here.



¤ The Funnies

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¤ The Wrap

Don't think of it as 'gun control'...think of it as 'victim disarmament'. If we make enough laws, we can all be criminals. The possession of arms by the people is the ultimate warrant that government governs only with the consent of the governed. - Jeff Snyder

The volumes were light once again yesterday but, setting that aside, all the 'significant' price action that mattered occurred during the New York trading day again yesterday.  That applied to all four precious metals...and they all met the same price-capping fate as the day wore on.

Both gold and silver are knocking on the door of their respective 50-day moving averages...and gold is threatening to break above the $1,700 price mark as well.  But, as I noted several times last week, once it gets a sniff of that price, there seems to be a not-for-profit seller lurking about to make sure it doesn't happen.  The same can be said for silver above the $32 spot price mark.  Will they be allowed to break out this time, as it's obvious from the volume and trading action that "da boyz" are going short all comers on this rally as well so, sooner or later, it will end in the same old way unless they stand aside or get over run, but there's no hint of that at the moment. 

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I also noted that platinum closed above the gold price yesterday.  Platinum is now getting into overbought territory as well.  However, the other three precious metals still have a ways to go before they're in that position.

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As I hit the 'send' button at 5:20 a.m. Eastern time, both gold and silver are trading basically unchanged from their Tuesday closing prices in New York.  Volumes are on the lighter side...and most of it's high-frequency trading.  The dollar index is dead.

That's more than enough for one day...too much, actually...but I had to get caught up from the conference on the weekend, plus my ISP's problems with their e-mail system, so you got everything in this column.  Hopefully things will be back to 'normal' by this time to tomorrow...and I'll see you then.