Gold & Silver Daily

¤ Yesterday In Gold & Silver

It was a very quiet trading day in gold on Monday---and even the the price spike that came minutes after the close of COMEX trading yesterday, didn't have a lot of volume associated with it.  But it did improve moral a bit, as the gold price managed to close above $1,200 spot.

The low and high tick were reported by the CME Group as $1,187.30 and $1,209.30 in the February contract.

Gold finished the Monday session in New York at $1,204.20 spot, up $11.10 from Friday's close.  Net volume was 117,000 contracts.

Here's the 5-minute tick chart courtesy of Brad Robertson---and it shows the volume associated with the post-COMEX close price spike---and it was only around 9,000 contracts in total.

Silver didn't do much of anything yesterday either and, including the price spike, traded within about a two bit range for the entire session.  It was just another day where silver was kept on a very tight price leash.

The low and high ticks were recorded as $16.165 and $16.44 in the March contract.  Volume, net of December and January, was only 27,000 contracts.

Platinum rallied until around 10:30 a.m. in Zurich on their Monday morning---and then chopped sideways into the New York close.  Platinum finished the day at $1,228.00 spot, up ten bucks on from Friday's close.

Palladium spent most of the Monday session above the $800 spot price mark.  The high tick came shortly before 10 a.m. in Zurich---and once the London gold fix was in, the price was taken back below the $800 spot price mark.  It closed at $798 spot, down 3 bucks.

The dollar index closed late on Friday afternoon at 89.36---and didn't do much until 2 a.m. Hong Kong time.  At the point it rallied to its 89.54 high, before slowly rolling over.  The decline got more serious as the New York session progressed---and it appeared that 'gentle hands' were there to catch a falling knife as the index broke through the 89 level, hitting its 88.92 low tick shortly after 2 p.m. EST.  It rallied unsteadily from there---and the dollar index closed at 89.12---down 24 basis points from Friday.

It would have obviously closed much lower if allowed to continue trading freely, which it obviously wasn't after 2:10 p.m. EST.  Here's the 3-day chart.

The gold stocks opened in positive territory, but began to sell off almost immediately, hitting their low ticks [and down over 2 percent] just minutes before noon EST.  From that point they chopped sideways until the surprise rally in gold just minutes after the COMEX close.  They were up almost 2 percent at one point, but sold off in the last hour of trading.  The HUI closed up 0.85%.

The silver equities followed a very similar pattern, but since they were sold down much harder during the early going in New York, they had a much bigger hole to dig themselves out of.  Even though they managed to make it into positive territory, they finished basically unchanged, as Nick Laird's Intraday Silver Sentiment Index closed down a tiny 0.06%.

The CME Daily Delivery Report showed that 753 gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  In gold, the two short/issuers of note were Scotiabank and JPMorgan out of its client account with 160 and 592 contracts respectively.  HSBC USA stopped 264 contracts---and JPMorgan out of its in-house [proprietary] trading account was the long/stopper on 486 contracts, sticking it to its clients for the benefit of the company once again.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in December dropped by 28 contracts, down to 1,935 contract---also minus the 753 contracts posted for delivery in the previous paragraph.  Silver's December o.i. declined by 29 contracts down to 587 contracts still open---minus the 5 contracts mentioned above.

There was another withdrawal from GLD by an authorized participant yesterday.  This time 57,648 troy ounces were taken out.  And as of 9:22 p.m. EST yesterday evening, there were no reported changes in SLV.

There was another silver eagles sales report from the U.S. Mint on Monday.  They sold 495,500 of them.  No gold eagles or gold buffaloes were sold.  It's another record year for silver eagles sales, as 42,864,000 have been sold so far in 2014---compared to 42,675,000 reported sold in 2013.

BIG GOLD editor Jeff Clark sent me this silver eagle story posted on the Internet site on Sunday.  It's headlined "2015 American Eagle Silver Bullion Coins Available January 12"---and it's very much worth reading.  It's also posted in the Critical Reads section further down.

It was another whopper in/out day in both gold and silver over at the COMEX-approved depositories on Friday.  In gold---186,465 troy ounces were reported received, with the lion's share going into JPMorgan and Scotiabank.  There were 10,383 troy ounces shipped out the door.  The link to that activity is here.

In silver---600,325 troy ounces were reported received---and 1,064,019 troy ounces were shipped out the door.  The 600,325 troy ounces were received at the CNT Depository---and the withdrawals were spread around between four of the six depositories.  The link to that action is here.

Although the 'unofficial' China gold imports through Hong Kong figures for October were reported about ten days ago in stories from Reuters and Bloomberg, the 'official' numbers weren't released until yesterday.  They show that 77.626 tonnes imported.

As you may be aware, I had written off the chart below many months ago, as it was becoming obvious that it was no longer a proxy for gold being imported into China.  The last three months have shown that I may have been premature in my opinion, as it's obvious China is buying gold from all sources now, even to the point of resurrecting imports through Hong Kong.  Here's Nick Laird's most excellent chart---and it has returned to moving from lower left to upper right with a new vigor.

I have an embarrassingly large number of stories for you today---and since I refused to edit them further, I'll leave the final edit up to you.


¤ Critical Reads

Fortune's Sloan: Financial Markets Have Gone Cuckoo

For those who may wonder if U.S. financial assets are distorted and far out of alignment with reality, it's worth noting that Apple — and even Italy — can now borrow money more cheaply than Uncle Sam can.

The rate on 10-year Treasury securities has been trading at 2.28 percent, while two of the poorest nations of Europe were paying less than that to borrow. Italy was paying 1.98 percent and Spain was paying only 1.83 percent.

"Have financial markets lost their collective mind? In some ways, it's starting to look like that," Fortune Senior Editor at Large Allan Sloan wrote in a column for The Washington Post.

He noted the U.S. government can print dollars to redeem its debt, while European nations cannot — they must leave it up to the European Central Bank to authorize printing of euros.

Today's first news item appeared on the Internet site at 06:00 a.m. EST on Monday morning---and it's courtesy of West Virginia reader Elliot Simon.


Jim Grant Sums it All Up in 2 Stunning Paragraphs

Likely it will be even more baffled than we are. Imagine trying to explain the present-day arrangements to your 20-something grandchild a couple of decades hence - after the crash of, say, 2016, that wiped out the youngster's inheritance and provoked a central bank response so heavy-handed as to shatter the confidence even of Wall Street in the Federal reserve's methods...

I expect you'll wind up saying something like this:  "My generation gave former tenured economics professors discretionary authority to fabricate money and to fix interest rates.  We put the cart of asset prices before the horse of enterprise.  We entertained the fantasy that high asset prices made for prosperity, rather than the other way around.  We actually worked to foster inflation, which we called 'price stability' (this was on the eve of the hyperinflation of 2017)."

"We seem to have miscalculated."

This brief article was posted on the Zero Hedge website on Sunday at 11:30 a.m. EST---and my thanks go out to Phil Barlett for finding it for us.


McDonalds Implodes, Reports Worst U.S. Sales in Over a Decade

If one ignores all traditional, staple indicators of a growing economy, such as stable (not plummeting) crude demand, stable (not plummeting) holiday spending and stable (not plummeting) McDonalds comp store sales, then indeed the US economy has "decoupled" from the rest of the world, and those who wish to demonstrate the same intellectual capacity as Tim Geithner, will welcome you to the (latest non-)recovery.

And yet for those, who are leery of seasonally-adjusted government data (showing soaring low-wage jobs offset by crashing employment in the energy sector and M&A synergies which mysteriously are never captured), or sentiment surveys and confidence polls (of Wall Street executives and government workers), here is the latest data from McDonalds. Showing the worst US comp store sales in nearly 12 years at -4.6%, one does wonder if following America's inability to even pay for sub-$1 meals, mass starvation will follow?

This short Zero Hedge story from yesterday has two charts embedded---and it's worth your while.  I thank reader Brad Robertson for sharing it with us.


Job Market Growth Hovers Near 2-Year Lows, Fed's Labor Market Index Shows

Despite the utter exuberance at Friday's payrolls data -which 'everyone' saw as nothing but indicative of escape velocity and utopia in America's near future - the Fed's new multifactor model of the US jobs market shows growth sliding to just 2.9% MoM. This is the almost the slowest growth since Aug 2012.

This is another tiny Zero Hedge article.  It appeared on their Internet site at 10:22 a.m. EST yesterday morning---and I thank Manitoba reader U.M. for sending it.


Negative Interest Rate Policy Arrives in the U.S. -- TBTF Banks Tell Customers to Move Their Cash or be Charged Fees

Back in June, the world was speechless when Goldman's head of the ECB, Mario Draghi, stunned the world when he took Bernanke's ZIRP and raised him one better by announcing the ECB would send deposit rates into negative territory, in the process launching the Neutron bomb known as N(egative)IRP and pushing European monetary policy into the "twilight zone", forcing savers to pay (!) for the privilege of keeping the product of their labor in the form of fiat currency instead of invested in a global Ponzi scheme built on capital market so broken even the BIS can no longer contain its shocked amazement.

Well, the U.S. economy may be "decoupling" (just as it did right before Lehman) and one pundit after another are once again (incorrectly) predicting that the Fed may raise rates, but when it comes to the true "value" of money, U.S. banks have just shown that when it comes to spread between reality and the economic outlook, the schism has never been deeper.

As The Wall Street Journal reports, far from paying for the privilege of holding other people's cash (and why would they with nearly $3 trillion in positive carry excess reserves sloshing around) US banks - primarily of the TBTF variety - "are urging some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits."

This longish Zero Hedge article from yesterday showed up on their website at 2:30 p.m. EST on Monday---and it's the second offering in a row from reader U.M.


Dollar surge endangers global debt edifice, warns BIS

Off-shore lending in US dollars has soared to $9 trillion and poses a growing risk to both emerging markets and the world's financial stability, the Bank for International Settlements has warned.

The Swiss-based global watchdog said dollar loans to Chinese banks and companies are rising at annual rate of 47pc. They have jumped to $1.1 trillion from almost nothing five years ago. Cross-border dollar credit has ballooned to $456bn in Brazil, and $381bn in Mexico. External debt has reached $715bn in Russia, mostly in dollars.

A chunk of China's borrowing is disguised as intra-firm financing. This replicates practices by German industrial companies in the 1920s, which hid their real level of exposure as the 1929 debt trauma was building up. "To the extent that these flows are driven by financial operations rather than real activities, they could give rise to financial stability concerns," said the BIS in its quarterly report.

"More than a quantum of fragility underlies the current elevated mood in financial markets," it warned. Officials are disturbed by the "risk-on, risk-off, flip-flopping" by investors. Some of the violent moves lately go beyond stress seen in earlier crises, a sign that markets may be dangerously stretched and that many fund managers do not really believe their own Goldilocks narrative.

This Ambrose Evans-Pritchard commentary showed up on the Internet site at 1:16 p.m. GMT on their Sunday afternoon---and it's definitely worth reading.  I thank South African reader B.V. for bringing it to my attention---and now to yours.


Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next

The price of oil has plunged nearly 40% since June to $65.63, and junk bonds in the US energy sector are getting hammered, after a phenomenal boom that peaked this year. Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued! But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.

And the erstwhile booming leveraged loans, the ugly sisters of junk bonds, are causing the Fed to have conniptions. Even Fed Chair Yellen singled them out because they involve banks and represent risks to the financial system. Regulators are investigating them and are trying to curtail them through “macroprudential” means, such as cracking down on banks, rather than through monetary means, such as raising rates. And what the Fed has been worrying about is already happening in the energy sector: leveraged loans are getting mauled. And it’s just the beginning.

How bad is it? The number of leveraged loans in the oil and gas sector trading between 80 and 90 cents on the dollar (blue line in the chart below) has soared parabolically from 0% in September to 40% now. These loans are now between 10% and 20% in the hole!

Oil and gas stocks are bleeding: the Energy Select Sector ETF (XLE) is down 21% from June; S&P International Energy Sector ETF (IPW) down 29% from early July; and the Oil & Gas Equipment & Services ETF (XES) down 42% from early July.

This commentary appeared on the Internet site on Sunday---and I thank reader U.D. for passing it around yesterday.


U.S. intelligence fears violence, deaths abroad after CIA torture report release

The U.S. intelligence agencies predict that the publication of a Senate report on the use of torture on terror suspects by the CIA will cause “violence and deaths” abroad, with security beefed up at U.S. foreign installations.

The 480-page report on Central Intelligence Agency’s interrogation techniques after 9/11 is to be to be released next week. The document is a summary of a larger 6,000-page study, which still remains classified.

The U.S. intelligence agencies as well as foreign governments have said privately that the publication of the paper will be used by the extremists to promote deadly violence, Rep. Mike Rogers, a Michigan Republican, told CNN’s State of the Union program.

Rogers questioned the very need for the report to be released as the investigation of CIA torture by the Justice Department saw no criminal charges filed.

This news item put in an appearance on the Russia Today website at 9:17 p.m. Moscow time on their Sunday evening, which was 1:17 p.m. EST.  It's the first offering of the day from Roy Stephens.  It's worth reading---as is this next piece headlined "Bush blasts CIA torture report even before its release".  It's also a Russia Today offering from 5:25 p.m. on Monday afternoon Moscow time---and it's courtesy of Roy Stephens as well.


Ron Paul: Reckless Congress 'Declares War' on Russia

Today the U.S. House passed what I consider to be one of the worst pieces of legislation ever. H. Res. 758 was billed as a resolution “strongly condemning the actions of the Russian Federation, under President Vladimir Putin, which has carried out a policy of aggression against neighboring countries aimed at political and economic domination.”

In fact, the bill was 16 pages of war propaganda that should have made even neocons blush, if they were capable of such a thing.

These are the kinds of resolutions I have always watched closely in Congress, as what are billed as “harmless” statements of opinion often lead to sanctions and war. I remember in 1998 arguing strongly against the Iraq Liberation Act because, as I said at the time, I knew it would lead to war. I did not oppose the Act because I was an admirer of Saddam Hussein – just as now I am not an admirer of Putin or any foreign political leader – but rather because I knew then that another war against Iraq would not solve the problems and would probably make things worse. We all know what happened next.

That is why I can hardly believe they are getting away with it again, and this time with even higher stakes: provoking a war with Russia that could result in total destruction!

This must read commentary by Ron Paul appeared on his website on Thursday---and I thank reader Jim Skinner for bringing it to my attention on the weekend.


Basel Faults E.U. for Deviations From International Bank Standards

Global banking regulators rebuked the European Union for failing to properly implement capital rules intended to avert another financial crisis.

The Basel Committee on Banking Supervision said that European legislation to apply the international standards is “materially non-compliant,” the lowest grade given by the group so far in its review process of member nations.

Deficiencies in EU rules include “the treatment of exposures to SMEs, corporates and sovereigns,” as well as exemptions to part of Basel’s treatment of derivatives trades, the group said in a report on its website today. The committee also published a report on the U.S., judging it “largely compliant” with the standards known as Basel III.

The latest Basel standards more than triple the minimum amount of core capital that internationally active banks must have to at least 7 percent of their risk-weighted assets, while also toughening rules on how banks should measure the possibility of losses on their investments.

This Bloomberg article from last Friday was picked up by the website---and it's the second offering of the day from reader B.V.


U.S. Dollar remains Strong - Italy downgrade casts gloom over euro zone

U.S. and European stocks fell on Monday after weak Chinese and Japanese data stoked worries about slowing global economic growth, while oil prices sank to five-year lows on expectations of oversupply into 2015.

The euro sagged to 2-1/2-year lows against the dollar after European Central Bank policymaker Ewald Nowotny warned of a "massive weakening" of the euro zone economy and said the purchase of state bonds could provide a boost. His comments came just days after Standard and Poor's downgraded its credit rating on Italy, the bloc's third-largest economy, to a level just above junk status.

Nowotny's remarks raised bets in the bond market for a fresh round of ECB stimulus in the first quarter of 2015.

This Reuters piece, filed from New York, appeared on their Internet site at 4:50 p.m. EST yesterday---and I thank Orlando, Florida reader Dennis Mong for sending it.  Since Dennis sent it our way, the Reuters 'thought police' have changed the headline.  It now reads "U.S. stocks stumble, oil falls to five-year lows".  I liked the first headline better.


E.U.'s Juncker Folds to Gazprom on South Stream Pipeline

European Commission President Jean-Claude Juncker has insisted the $40 billion South Stream natural gas pipeline can still go ahead and accused Russia of holding E.U.-member Bulgaria to ransom when it said it had abandoned the project.

Speaking after talks with Bulgarian Prime Minister Boiko Borisov, whose country South Stream would traverse making it a major beneficiary, Juncker rebutted Russia’s statement that EU competition rules had killed it. He told reporters issues relating to the pipeline were not insurmountable and he was working with Bulgaria to address them.

Russia said on Monday it had abandoned the pipeline, which would have bypassed Ukraine, Gazprom’s traditional transit route for Russian gas, citing E.U. competition requirements for a pipeline’s ownership to be divorced from its cargo. It said it was working on an alternative route via Turkey.

Juncker accused Moscow of blackmailing Bulgaria, which retains strong political and economic ties with Moscow and is almost entirely dependent on Russia for its gas. “I am not accepting the simple easy idea that Bulgaria can be blackmailed as far as these energy relations are concerned,” Juncker said.

You couldn't make this stuff up.  This news item from the Internet site appeared on their Internet site on Monday sometime---and I thank Casey Research's own Bud Conrad for passing it around yesterday.  I borrowed the headline from the Zero Hedge spin on this piece.


Hollande discusses Ukraine crisis with Putin in Moscow

French President François Hollande made an unscheduled stop in Moscow on Saturday to discuss the Ukraine crisis with Vladimir Putin, telling the Russian leader that Moscow and the West must overcome their divisions and work together.

"I think we must get rid of the walls that separate us," Hollande said in Moscow. "We must find solutions together."

Putin struck a moderate tone in his remarks on Ukraine. “I very much hope that in the near future we will have a final cease-fire agreement” in east Ukraine, Putin said in televised remarks. Without a full truce, he said, “it is difficult to picture Ukraine as a territorially integral country”, adding that Russia “supports the territorial integrity of Ukraine”.

Hollande stopped in the Russian capital on his way back from a visit to Kazakhstan, a day after vowing to work towards a de-escalation in the Ukraine conflict.

This story showed up on the Internet site on Sunday sometime---and I thank Roy Stephens for sending it our way.


Merkel Digs Own Grave, Doubles Down With Harsh Anti-Russia Rhetoric

As we reported last week, Angela Merkel has come under fire by her three predecessors – Schroeder, Kohl and Schmidt – over her uncompromising stance towards Russia.

Those wondering how she will react to such criticism did not have to wait for long.

Die Welt am Sonntag has just printed an interview with her under the header: „Angela Merkel blames Moscow for the destabilization of Eastern Europe“.

Those still hoping that her words had somehow, sometimes been equivocated, or even mistranslated, will now have to face facts: Angela Merkel really is a staunch servant of the American empire.

Merkel's words leave no room for dialogue and compromise. She is right, her critics are wrong, and Putin is a evildoer who must pay the price for his actions.

This must read news item appeared on the Internet site early Monday evening Moscow time---and it's another contribution from Roy Stephens.


60 Hi-Profile German Leaders Sign Petition Condemning Merkel's Russia Policy

Apologies for the funny translation, we just ran this German article from Die Zeit through GoogleTranslate, but you get the idea.  

This is not a minor thing, and a sign that Merkel is in big trouble.

The list is chock-a-block of heavy hitters and contains former top politicians, (mayors of Berlin and Hamburg, chancellor, president, head of top party, minister of defense, prime ministers of Germany's 16 Bundeslander (like states), ambassador to Russia), top religious leaders, famous actors, scientists, business leaders, and prominent journalists.

If Merkel is known for anything, it is that she doesn't stand for anything, believe in anything, and this flexibility and pragmatism has kept her at the top of the heap for ages now.

We bet she will roll with the new reality in Germany and soften her line on Russia.  Either that or she will get booted out.

This very interesting article was posted on the Internet site early yesterday evening Moscow time---and it's the second offering in a row from Roy Stephens.  It's worth reading as well.


Athens on fire as rioters mark anniversary of police killing of teen

Greek police used tear gas and water cannons to disperse crowds during clashes in the capital. Athens was gripped with protests marking six years since police shot dead an unarmed teenager during an anti-austerity rally.

At least 8,000 demonstrators marched in Athens on Saturday commemorating the sixth anniversary since the police slaying of Alexandros Grigoropoulos. Grigoropoulos' murder on December 6, 2008 sparked violent clashes across Greece, with cars being burned, shops looted, and police attacked in a number of Greek cities.

The violence on Saturday began at 19:30 in the evening by a group of some 200 black-clad masked men, local media reported. They started setting on fire cars and bank ATMs and threw Molotov cocktails and other projectiles at police in the bohemian neighborhood of Exarchia, where Grigoropoulos was killed.

This Russia Today news item showed up on their website at 1:34 a.m. Moscow time on their Sunday morning---and I thank reader Harry Grant, who lives very close to where all these events occurred, for sending it along.


Kiev ignored E.U. request to close East Ukraine airspace days before MH17 crash – report

The European air traffic control regulator urged Kiev to close the southeast of Ukraine for civilian aircraft days before the MH17 flight was downed near Donetsk, but the plea was ignored by local authorities, a new report claims.

Eurocontrol experts spoke privately to their Ukrainian colleagues about the danger of the situation in the east of the country, unnamed sources in the organization told the Sunday Times newspaper.

They were reportedly concerned that by that time anti-Kiev militias had already downed about 20 Ukrainian military planes; that the communication frequencies were jammed in the Donetsk Region; and that the Russian and Ukrainian air-traffic controllers couldn’t exchange information.

However, Eurocontrol lacks power to affect national governments’ decisions, and Kiev continued to allow civil planes to use airspace over war-torn Donetsk and Lugansk regions, the report said.

This story put in an appearance on the Russia Today Internet site at 8:27 p.m. Moscow time on their Sunday evening, which was 12:27 p.m. in New York.  It's another offering from Roy Stephens.


Sanctioned Russian banks begin testing national payment system next week

Russia’s Rossiya and SMP banks, which fell under Western sanctions, are among the eight lenders that will start testing the country’s new national payment system on December 15.

"The pilot project involves SMP Bank and Rossiya Bank, those for which the story is very critical and important. These are quite large banks,” the head of the Russian National payment system (NPS) Vladimir Komlev said in an interview with Rossiya 24 TV.

The move comes as a part of Russia’s ambitious initiative to move away from the Western dominance of its financial markets. Last month the Russian Central Bank said it would have its own international inter-bank payment system, an alternative to the global SWIFT network up and running by May 2015.

Gazprombank, Rosbank, Alfa Bank and Ural Bank for Reconstruction and Development are among eight other banks to join the pilot project. They were selected based on the size of business, location and technology platform, Komlev said.

This Russia Today news article appeared on their Internet site at 1:18 p.m. Moscow time on their Monday afternoon---and it's the second-last offering of the day from Roy Stephens.


Analysis: What’s behind the U.K. ‘return’ to the Middle East?

Britain is to open a new £15 million naval base in Bahrain, the country’s Foreign Office announced Friday, which will be the first permanent UK military presence in the Middle East in more than 40 years.

Under a deal signed with the Bahraini government, improvements will be made to the Gulf state’s Mina Salman Port, which is already used on an ad-hoc basis by four UK mine-hunter ships, creating a permanent forward operating base.

The base will “enable Britain to send more and larger ships to reinforce stability in the Gulf” said UK Defence Secretary Michael Fallon. “We will now be based again in the Gulf for the long term,” he said.

The move represents a potentially significant shift in British defence strategy.

That much money in Bahrain doesn't get one far, but it is a foot in the door, I suppose.  This appeared on their Internet site on Sunday sometime---and it's the final contribution of the day from Roy Stephens, for which I thank him on your behalf.


China trade data well below expectations

Trade data from the world's second largest economy, China, came in well below expectations on Monday, heightening fears of a sharper slowdown.

China's exports rose 4.7% in November from a year ago, compared to market forecasts of a 8.2% jump.

Imports fell 6.7% in the same period against predictions of a 3.9% rise.

The surprise slump in imports led the trade surplus to hit a record $54.5bn (£35bn), the highest in 14 years.

While the trade surplus, which is up 61% compared to last year, will add to economic growth in the fourth quarter, it does suggest the government needs to step in to stimulate growth, said Dariusz Kowalczyk, economist at Credit Agricole.

This news item put in an appearance on the Internet site at 11:28 p.m. EST on Sunday evening---and I thank Elliot Simon for sending it.  It's worth reading.


'Gold-obsessed' Chinese officer's graft case worth $5 billion: magazine

A former senior Chinese military officer was obsessed with gold and often ferried gold bars for bribes in a luxury car, a Hong Kong magazine reported on Monday, in connection with a graft case which investigators estimate is worth some $5 billion.

The government charged Lieutenant General Gu Junshan, who had been deputy director of the logistics department of the People's Liberation Army, with corruption in March, and he is suspected of selling hundreds of military positions.

Phoenix Weekly, a magazine run by Hong Kong broadcaster Phoenix Television which has close ties with the Chinese government, said that total ill-gotten gains amounted to some 30 billion yuan ($5 billion), including about 600 million yuan in bribes accepted by Gu.

Gu also loved gold, especially gold statues of Buddha, though he preferred receiving ground up gold rather than gold bars when he was taking bribes, the magazine added, in a story widely carried by mainland Chinese news websites.

This very interesting Reuters news item, filed from Beijing in the wee hours of Monday morning EST, is definitely worth reading.  It's another contribution from Manitoba reader U.M.


Japan's recession worse than thought, data shows

Japan’s economy contracted more than initially thought in the July-September quarter, revised official data revealed Monday, showing the world’s third largest economy sank deeper into recession.

The economy shrank 0.5% quarter-on-quarter, worse than the 0.4% estimated in initial data released three weeks ago, the Cabinet Office said.

The reading was much worse than the median forecast of a 0.1% quarterly shrinkage in a survey by the Nikkei economic daily.

The drop came after a 1.7% contraction in the April-June quarter, meeting a common definition of a recession as two consecutive quarters of negative growth.

This news story appeared on the Internet site at 3:20 p.m. JST on their Monday afternoon---and it's courtesy of reader M.A.


Justin Raimondo: Pearl Harbor and the Engineers of War -- How FDR lied us into WW2

What gets me are the lies. Iraq’s "weapons of mass destruction" – Iran’s (nonexistent) nuclear weapons program – the Vietnamese "attack" in the Gulf of Tonkin – Germans bayoneting Belgium babies – the sinking of the USS Maine: over the long and bloody history of US imperialism, these are just a few of the fabrications US policymakers have seized on to justify Washington’s aggression. It’s quite a record, isn’t it? Not only that, but there’s been little if any acknowledgment by the American political elites that they’ve ever lied about anything: it’s all been thrown down the Memory Hole, along with whatever sense of shame these people ever had.

Indeed, if there is an award for sheer shamelessness then surely it must go to the court historians who preserve the myth of Pearl Harbor, insisting that the Japanese launched a "sneak attack" on the US fleet. The official version of the narrative is that the Americans, dewy-eyed innocents all, were simply minding their own business, not bothering anybody and certainly not aggressing against the predatory Japanese, who were fighting harmless "agrarian reformers" led by Mao Tse-Tung in China. Suddenly, totally without provocation, and out of the clear blue the Japs – to use the term routinely employed by the Roosevelt administration and its media minions at the time – crossed thousands of miles of Pacific Ocean to commit murder and mayhem for no good reason other than their own inherent evil.

What’s amazing is that even though this nonsense has been thoroughly and repeatedly debunked over the years by historians concerned with discovering the truth – as opposed to getting tenure at some Ivy League university – the Big Lie is still not only believed by the hoi polloi but also stubbornly upheld by the "intellectuals." As to whether they actually believe it or not, that’s largely irrelevant as far as they’re concerned. As Arthur Schlesinger, Jr., the archetypal pointy-headed liberal intellectual – and idolator of FDR – put it: "If he [the President] was going to induce the people to move at all, he had no choice but to trick them."

This rather short essay by Justin, which is your absolute must read commentary of the day, appeared on the Internet site yesterday---and I thank Dan Lazicki for sending it our way.  It dovetails perfectly with the James Perloff piece in my Saturday column headlined "Pearl Harbor: Roosevelt's 9/11".


Commodity Benchmarks Are Open to Manipulation, Law Firm Says

Almost two-thirds of commodity market participants say that benchmarks used to set the price of everything from crude oil to ethanol to zinc are vulnerable to manipulation, according to a new study.

The report, to be published today by U.K. law firm Clyde & Co., shows that 64 percent of 170 respondents are concerned methods used by price reporting agencies to set commodity benchmarks could be manipulated. Reasons given in the survey include sample groups that are too small, a lack of independent oversight and the fact price creators are also traders who can benefit from influencing prices.

“It is an issue that there is a lack of confidence,” Clare Hatcher, a consultant with Clyde & Co.’s International Trade and Commodities Group, said in a phone interview.

Benchmark prices and the way they are determined have come under scrutiny after scandals in markets including foreign exchange, precious metals and the London interbank offered rate, or Libor, showed that some participants had conspired to manipulate benchmarks. The European Commission raided the offices of producers BP Plc, Royal Dutch Shell Plc, Statoil ASA and price reporting agency Platts last year as part of an investigation into fuel-price benchmarks.

This Bloomberg article, filed from Geneva, showed up on their website at 11:26 a.m. Denver time yesterday morning---and it's courtesy of reader M.A.


Citigroup Panicked Over Fraud at Chinese Ports: Mercuria

Citigroup Inc. was in a “state of panic” when alleged fraud was uncovered in two Chinese ports, Mercuria Energy Group Ltd.’s lawyer said as a London trial over disputed metal finance deals got under way.

“The discovery of the fraud was a massive problem for Citi as it was their metal and it was at their risk,” Mercuria lawyer Graham Dunning told a London judge. “There was a state of panic.”

The disputed copper and aluminum is under lock down in the ports of Qingdao and Penglai, where Chinese authorities are investigating an alleged fraud. Neither side can get access and they don’t know how much of the metal is there, Dunning said at a pretrial hearing in August.

Citigroup argues that it effectively delivered the metal to Mercuria under the terms of a sale-and-repurchase agreement by handing over warehouse receipts. The bank says it is owed about $270 million. Mercuria, a Cyprus-based firm with major trading operations in Geneva, argues the products were never properly delivered.

“It appears that substantial quantities may be missing from the warehouses or may be the subject of multiple pledges,” Dunning said today.

This very interesting Bloomberg article, filed from London, appeared on their website at 6:46 a.m. MST last Wednesday---and I thank reader U.D. for passing it around  yesterday afternoon.


Max Keiser: Two Gold Interviews with GATA's Chris Powell

GATA's secretary/treasurer was interviewed last week about gold price suppression by Max Keiser on the Russia Today network's "Keiser Report" program. The interview is about 13 minutes long and begins at the 15:35 mark of this video that showed up on their Internet site on Friday sometime.

The second RT video interview with Chris, also posted on the Internet site last Friday, begins at the 12:35 minute mark---and the link to that one is here.  I thank Patrick Leavens for bringing the second interview to our attention.

Both are worth watching, but the second one especially.


2015 American Eagle Silver Bullion Coins Available January 12

"Allocation" continues to be the keyword when it comes to bullion sales of American Eagle silver coins. On Friday, the United States Mint announced that the rationing process of Silver Eagles will be used for the remaining inventory of 2014-dated coins, and that it will also apply when next year’s coins debut.

In the same announcement, the Mint indicated its inventory of the 2014 American Silver Eagle would be depleted soon and that it was transitioning to production of 2015-dated coins. Based on current demand, the 2014 coins are expected to last through the week of December 15th. Next year’s coins, the Mint said, would launch on January 12, 2015.

It is almost certain that this year will become the new record holder for annual Silver Eagle sales. The most recent figures from the Mint list 42,368,500 sold through December 5. The current record happened last year at 42,675,000 coins. As such, just over 306,500 need to be purchased for a new annual record.

In related news, production of 2014 American Eagle and American Buffalo Gold Bullion Coins has ceased, but sales will continue until remaining inventories are sold. 2015-dated gold bullion coins will become available, without allocation, on January 5, 2015. However, if any inventories remain of this year’s coin, they will be sold on a fixed ratio basis along with the new ones.

This silver-related news item appeared on the Internet site on Sunday---and I thank Casey Research's own Jeff Clark for sending it to me yesterday.


Bank of England's former deputy governor misleads about gold and credit creation

In an interview today with Russia Today's Sophie Shevardnadze, Sir Howard Davis, former deputy governor of the Bank of England and former director of the London School of Economics, makes the most elementary mistake in his objection to restoration of a gold standard for currencies. That is, Davis says a gold standard "would radically reduce the amount of credit and would cause a worldwide depression that would make the 1920s look like a holiday."

But of course the amount of credit supported by a gold standard would depend entirely on the price established for currency convertibility into gold, a price that could be revised from time to time. While Britain's return to a gold standard for the pound in 1925 is now widely regarded as a deflationary mistake, it is because the pound's value in gold was set too high, at the parity in force prior to the First World War and the inflation caused by the war. If the gold price for convertibility was set high enough, a gold standard could support infinite money and infinite credit.

That was established by the famous trillion-dollar platinum coin idea in the United States a few years ago.

This very interesting commentary, filed from Munich at 2:02 p.m. Europe time on their Monday afternoon,  was posted on the Internet site---and it's definitely worth reading.


Jim Rickards: Central Bank Gold Buying Shows Readiness for 'Demise of the Dollar'

The central banks of Russia and China have been major buyers of gold this year, and that shows they realize the international monetary system is in a real pickle, says James Rickards, author of "The Death of Money: The Coming Collapse of the International Monetary System."

Russia has purchased about 150 metric tons of gold in 2014, according to its central bank Governor Elvira Nabiullina, driving its holdings to 1,149.8 metric tons, the highest since at least 1993.

"By purchasing gold, China and Russia have indicated that they understand how fragile things are and that they're getting ready for the demise of the dollar," Rickards told The New York Times.

"At the same time, other countries have been watching what they're doing and are saying to themselves, 'If things are really that bad, then we better get our gold back,' possession being nine­ tenths of the law."

This short article appeared on the Internet site yesterday---and it's courtesy of Elliot Simon.


Jim Rickards: Interview on Canada's Broadcast News Network

This 5:51 minute video interview appeared on the Internet site at 8:15 a.m. EST last Friday.  The headline on the page reads "Mark your calendars for April 23, 2015".

The interesting part of that was that there was no mention made of that date anywhere in the interview.  I fired off an e-mail to Jim and asked him what that was all about---and his reply to me was "I don't know. The producer put that in there.  It may have come up in a conversation, but I don't recall why.  If it comes to me, I'll let you know."

I marked it on my calendar anyway, so we'll see what happens, if anything.

Although the interview has similar subject material regarding his book, it's presented in a much different way---and he talks about about Canada's gold, or lack thereof, so it's definitely worth your while if you have any time left.  As usual, I thank reader Harold Jacobsen for sending it our way.


7 Questions Gold Bears Must Answer

A glance at any gold price chart reveals the severity of the bear mauling it has endured over the last three years.

More alarming, even for die-hard gold investors, is that some of the fundamental drivers that would normally push gold higher, like a weak U.S. dollar, have reversed.

Throw in a correction-defying Wall Street stock market and the never-ending rain of disdain for gold from the mainstream, and it may seem that there’s no reason to buy gold; the bear is here to stay.

If so, then I have a question. Actually, a whole bunch of questions.

This commentary by BIG GOLD's Jeff Clark appeared on the Internet site yesterday---and its' worth reading.


Indian Current-Account Gap Widens to Largest in a Year

India’s current-account deficit widened more than estimated to the largest since the quarter through June 2013 as exports slowed and gold imports surged.

The July-September shortfall in the broadest measure of trade widened to $10.1 billion from $7.8 billion the previous quarter, the Reserve Bank of India said in a statement yesterday. That compared with a $9.4 billion median estimate in a Bloomberg survey of 16 economists. The gap amounts to 2.1 percent of gross domestic product, lower than the level the central bank considers sustainable.

A recession in Japan and deteriorating outlook for the euro-area are keeping a lid on demand for Indian products as Prime Minister Narendra Modi seeks to revive manufacturing in Asia’s third-largest economy. Any further increase in gold shipments after authorities again eased import curbs last month will probably be partly offset by a drop in oil prices.

“Gold imports are likely to increase but they are not as attractive as they used to be in early 2013 as an asset class, so that should limit the pick-up in demand,” Anubhuti Sahay, an economist at Standard Chartered Plc in Mumbai, said by phone. “Oil is a much bigger proportion in the total imports and lower prices should benefit.”

This gold-related news item, file from Mumbai, put in an appearance on the Bloomberg website, at 10:10 p.m. Mountain Standard Time last night---and it's the final offering of the day from Manitoba reader U.M.---for which I thank her on your behalf.


Koos Jansen calculates year-to-date Chinese gold demand at 1,212 tonnes

Bullion Star market analyst and GATA consultant Koos Jansen calculates net Chinese wholesale gold demand for the first 11 months of the year at 1,212 tonnes, with demand remaining strong. Jansen also disputes recent gold demand data reported by Bloomberg.

Koos's commentary appeared on the Singapore Internet site on Monday local time---and I found it in a GATA release.  It's on the longish side, so topping up your coffee first might be an idea.



¤ The Funnies

Cypress Development Corp. is a Canadian gold, silver and base metals exploration company developing projects in Red Lake, Ontario, Canada, and in Nevada, U.S.A.

Cypress holds a 100% interest in the approximately 1140 acre Gunman Zinc-Silver Project located in White Pine County, northeast of Eureka, Nevada. Three RC drill programs totaling approx. 38,000 feet have been completed by Cypress on the Gunman project with significant grades between 5% to 33% per ton zinc and 0.5 to 15.0 oz per ton silver over considerable widths encountered. Zinc could represent the next big base metal play due to ongoing demand growth and the closures of 3 major mines in Canada, Australia and Ireland and not enough supply coming on stream from new projects. Sentiment could shift towards zinc, with prices potentially rallying in anticipation of tightening supplies. Please visit our website for more information.


¤ The Wrap

Following a  recent pattern of uneven, but still heavy overall movement of metal coming into and moving out from the COMEX-approved silver warehouses, [last] week’s physical turnover of silver surged to 7.3 million oz, the highest weekly turnover since September. Total COMEX silver inventories rose by 700,000 oz to 177.7 million oz.  Stated differently, this week’s physical silver turnover in the COMEX warehouses was ten times greater than the net increase in total inventories.

Remarkably, this has been the pattern for the full year (and longer) in that there has been a frantic and consistent turnover or churn in COMEX silver inventories while the total level of inventories remains mostly flat. It’s a pattern that has never occurred previously in other COMEX metals and is strongly suggestive of overall supply/demand tightness; but the most peculiar aspect of the turnover is that it is hardly mentioned, even though the data are published daily and easily retrieved. Very recently, there has been a pickup in COMEX gold warehouse movements but more in the way of steady withdrawals than in the frantic turnover seen in the COMEX silver warehouses. - Silver analyst Ted Butler: 06 December 2014

Despite the rather dramatic spike in gold and silver prices just after the COMEX close yesterday, Monday really wasn't much to look at from a price perspective.  Yes, I was happy to see it, but in the overall scheme of things, it doesn't matter, as we're still sitting around the 50-day moving averages in both gold and silver---platinum as well.  A resolution up or down is yet to be seen, although I'm not overly happy about the prospects considering the deterioration in the Commercial net short positions in both metals over the last month.  But as I said on Saturday, it may not matter.  Only time will tell---and all we can do is watch and wait.

But the table is set if 'da boyz' want to smash silver and gold again.  But there's nothing to say that we couldn't blast higher from here as well.

Here are the charts for the four precious metals, plus crude oil, which hit an ugly new low yesterday.

As I type this paragraph, the London open is about twenty minutes away.  After selling off a few dollars to the $1,200 spot mark, the gold price has rallied back to unchanged.  Silver hit its Far East low shortly before 2 p.m. Hong Kong time---and rallied sharply back above unchanged, but got capped [at least for the moment] at exactly 3 p.m. Hong Kong time.  Platinum and palladium are a dollar or so above unchanged as well.

Gold volume is a bit over 22,000 contracts at the moment---and silver's volume is just above 3,600 contracts.  The dollar index, which peaked out around the 89.26 level around 11:30 a.m. in Hong Kong trading, dipped back below the 89.00 level, where it appeared that 'gentle hands' showed up for the second time in twelve hours.  At the moment, the index is down 10 basis points.

I continue to be amazed by the record silver eagle/silver maple leaf sales in the face of absolutely awful retail demand.  And as Ted Butler said in his quote above, the frantic churn in COMEX silver stocks for about the last two years continues unabated, to which you can add Friday's big in/out movements that I reported at the top of this column.  Even the recent in/out action in gold at the COMEX-approved depositories is raising eyebrows.

Also the continuing slow-but-steady increase in SLV physical inventories, especially in the face of continued---and at the moment, non-ending---declines in GLD.  This rise in SLV also flies in the face of the enormous amounts of silver being withdrawn at the same time.  Ted feels, and I agree, that one or more large entities are removing physical silver by converting shares so that they don't have to report a holding of more than 5 percent of that ETF to the SEC.

And not to be forgotten in all of this is the internal structure of the Commitment of Traders Report.  As Ted has said, the raptors [the Commercial traders other than the 'Big 8'] have had their heads handed to them for the first time in history in both silver and gold over the last month.  I'll steal part of a paragraph he wrote about this is in his Saturday column---"What matters more is that a certain significant, but unquantifiable, level of liquidity and market making may have just been removed from silver (and gold) with the financial demise of what were formerly important players. Not only does this suggest increased price volatility going forward, it also sharpens what was already the prime price determinant ahead – whether JPMorgan and the other big silver (and gold) shorts will add aggressively to short positions on the next rally to cap and control the price. The forced liquidation of 19,000 raptor long contracts increases, by at least that amount, to what the big silver shorts must sell short on the next rally."

Along with all these extreme conditions in the precious metals, similar conditions exist in copper and crude oil---along with an extreme long position in the U.S. dollar index.  Then there's the nose-bleed stock market valuations in both the U.S. and world wide, combined with a bond market priced to absolute perfection.

These extremes can't last forever---and I can't shake the feeling that all this will resolve itself sooner rather than later.

Of course I, along with others, have been saying more or less the same thing for the last few years---and so far, nothing---as conditions continue to get more extreme.  But Jim Rickards snowflake/avalanche scenario awaits at some point---and it's not a question of if or when either, as it's now only a matter of when.

So we wait some more.

And as I hit the 'send' button on today's efforts at 5:20 a.m. EST, I note that all four precious metals had tiny rallies going into the London/Zurich open, but all are below their opening highs as the rallies got sold down before they got very far.

Gold volume is just north of 34,000 contracts---and silver's volume is at 5,700 contracts.  The dollar index hit its current low just before the 9:00 a.m. GMT in London, but has rallied a hair since then---and is currently down 18 basis points at 88.94.

Today, at the close of COMEX trading, is the cut-off for this Friday's COT Report---and I have no clue as to how today's price action may unfold.  I vote for up---but with JPMorgan et al still very much in control of all four precious metals, plus a few other key commodities, it's a crap shoot as to how the Tuesday trading session will turn out.

That's all I have for today, which was way too much---and I'll see you here tomorrow.

Ed Steer