Casey Research Publication
Gold & Silver Daily
"Whether it was real buyers and sellers, or just high-frequency traders duking it out, is hard to tell."
 

¤ Yesterday In Gold & Silver

As I mentioned in 'The Wrap' in yesterday's column, the gold price didn't do a lot in Far East or early London trading yesterday...and volumes were very light.

Of course that all changed about an hour after the Comex open...and then the fight was on.  It was down, up, down until 1:00 p.m Eastern time...and from there the gold price traded quietly into the close.

If you're looking for an explanation...I don't have one, sorry.  All I know is that volume exploded during that three hour time period...and whether it was real buyers and sellers, or just high-frequency traders duking it out, is hard to tell.  Whatever it was, it was hardly the free market in action.

Anyway, when the smoke cleared, gold closed the Thursday session in New York at $1,671.00 spot...down $6.30 on the day...and well off its high  Volume was an immense 189,000 contracts, give or take.  The low and high ticks came about an hour apart...and Kitco recorded them as $1,662.10 and $1,684.40 respectively. 

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

It was pretty much the same price pattern in silver, so I'll spare you the blow-by-blow description.  The only big difference was that silver never recovered after the second sell-off that began shortly before 11:00 a.m. Eastern time...the close of the London bullion market.

The New York low and high ticks were $31.22 and $32.04 spot respectively...an intraday move of about a buck [3 percent] in three hours of trading.  Of course there was nothing free market about this price action, either.

Silver closed at $31.46 spot...down 39 cents.  Net volume was very chunky at 46,000 contracts.

Here's the New York Silver [Bid] chart on its own...

Both platinum and palladium finished down on the day as well, but did not have chart patterns that looked remotely like gold and silver...and here are their respective charts.

The dollar index opened trading in the Far East at 79.74...and then gently sold off about 15 or 20 basis points before heading higher in a hurry starting around 7:40 a.m. in New York...and by the time the face plant in gold and silver began at 9:20 a.m. Eastern time, over half of the dollar index gains were in for the day.

The index reached its zenith shortly before 11:00 a.m. Eastern time...and the start of the second sell-off in both gold and silver.  From there the index traded just about ruler flat into the close...finishing the Thursday session at 80.24...up an even 50 basis points on the day.

You pretty much have to be dreaming in Technicolor if you saw any correlation between the precious metal prices and that currency move yesterday...but the mentally challenged PM analysts...which cuts through a large swath of the talking heads these days...will point to that as the reason...as they just aren't smart enough to think of anything else...and if they do, they dare not mention it.

The gold stocks pretended like those price moves hardly occurred at all...although the high tick of the day came shortly before 11:00 a.m. Eastern time...the peak of the dollar index and the beginning of the second sell-off in both gold and silver.

The HUI closed with a small gain of 0.21%...which is better than the alternative.

It was pretty much the same for the silver stocks.  Despite the negative close for the metal itself, the associated equities finished mixed...and Nick Laird's Silver Sentiment Index closed down a tiny 0.08%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed no delivery activity in either gold or silver within the Comex-approved depositories.  Only 59 copper contracts were posted for delivery on Monday.

And, much to my surprise, both GLD and SLV had authorized participants deposit metal yesterday.  In GLD it was 58,079 troy ounces...and in SLV it was a pretty chunky 821,932 troy ounces.  About 2.2 million ounces have been deposited in SLV since the beginning of the month.

While on the subject of SLV, their bar list has been updated with the prior week's activity...and you can find their latest weekly bar analysis for that ETF posted over at the about.ag/SLV Internet site linked here.

The U.S. Mint had a sales report yesterday.  They sold 33,000 ounces of gold eagles...along with another 98,000 silver eagles.  No one-ounce 24K gold buffaloes were reported sold yesterday...and none have been sold so far this month.

It was another busy day over at the Comex-approved depositories on Wednesday.  They reported receiving 311,160 troy ounces of silver...and shipped a rather large 1,430,433 troy ounces out the door.  The link to that activity is here.

Here's a chart that Nick Laird whipped up last night...and you, dear reader, are the first to see it.  As you can tell, it's self-explanatory, which is my favourite kind of chart.

I have a more reasonable number of stories for you today...at least compared to the last couple of days.

 

¤ Critical Reads

Consumers Borrowed More in December

U.S. consumer borrowing rose in December, a hopeful sign for the strength of the economy although debt taken on through revolving facilities like credit cards fell during the month.

The Federal Reserve said on Thursday consumer credit increased by $14.59 billion in December after rising by a slightly revised $15.91 billion in November.

Economists polled by Reuters had forecast consumer credit rising $13.4 billion after advancing by a previously reported $16.05 billion in November.

This very short Reuters piece was picked by CNBC yesterday afternoon...and I thank West Virginia reader Elliot Simon for today's first story.  The link is here.

Read more...

Fed Has Bought More U.S. Gov’t Debt This Year Than Treasury Has Issued

On Dec. 31, the total debt of the U.S. government was $16.4327 trillion and then-Treasury Secretary Tim Geithner announced that the government had hit what was then the legal debt limit. Last week, however, Congress enacted a law to suspend the federal government debt limit until May 18, 2013, and allow the administration to resume increasing the debt.

By the close of business on Wednesday, Feb. 6, according to the U.S. Treasury, the total federal debt had climbed to $16.4799 trillion—an increase of $47.2 billon for the calendar year.

At the close of business on Jan. 2, the Federal Reserve had owned $1.661 trillion in U.S. Treasury securities. By the close of business on Feb. 6, it owned $1.7172 trillion—an increase of $51.1 billion for the calendar year.

This article appeared on the cnsnews.com Internet site yesterday...and I thank Scott Pluschau for sending it.  The link is here.

Read more...

Short U.S. Government Bonds ‘Right Now’: Jim Rogers

With the Federal Reserve and now Bank of Japan printing massive amounts of money, billionaire investor Jim Rogers told CNBC's "Closing Bell," he is shorting U.S. government debt.

"It's all artificial what's going on right now," Rogers said. "The Federal Reserve is printing money as fast as they can. The Bank of Japan said 'we're going to print unlimited money.'"

He called the Fed's monetary stimulus "outrageous."

This CNBC story, with a 9:53 minute embedded video interview with Maria Bartiromo, was posted on their website late yesterday afternoon Eastern time after the markets had closed for the day.  It's Elliot Simon's second offering in today's column...and the link is here.

Read more...

Mark Carney on rate targets, QE and recovery

Mark Carney is widely regarded as peerless among central bankers - but what does the man who will govern the new super-powered Bank of England actually think? Here's our take on Carney's economic views.

This short piece was posted on The Telegraph's website early Thursday morning GMT...and it sure sounds like Mr. Carney is going to "Print, or die" just like every other central banker.  I thank Manitoba reader Ulrike Marx for sending it our way.  The link is here.

Read more...

Ireland votes to liquidate Anglo Irish Bank

The Irish parliament has voted through emergency legislation to wind down Anglo Irish Bank as the country attempts to cut the cost to the taxpayer of rescuing the collapsed lender. 

Anglo Irish Bank, now known as IBRC, will be liquidated under the plan and its outstanding debt will be converted into a new long-term bond intended to spread the repayment over a longer period of time cutting the cost to the state.

The changes will require the consent of the European Central Bank, which is expected to come today, and follows negotiations between Irish and ECB officials.

At present, the Irish government must pay €3.1bn (£2.7bn) every year to service the debt it took on to rescue the bank, equivalent to about 2pc of the country's GDP over the next decade.

This is a follow-on story to the one I posted on this issue in yesterday's column, but now the deal is done.  This article appeared on the telegraph.co.uk Internet site late yesterday morning GMT...and it's Roy Stephens' first offering of the day.  The link is here.

Read more...

ECB gives blessing to 'historic' debt deal for Ireland

"Today's outcome is an historic step on the road to economic recovery," Irish Prime Minister Enda Kenny said on Thursday in the Irish parliament.

"The new plan will likely materially improve perceptions of our debt sustainability in the eyes of potential investors in Ireland," Kenny added.

Meanwhile, in Frankfurt, the wording from Mario Draghi was everything but spectacular.

This story was posted on the euobserver.com Internet site late yesterday afternoon Brussels time...and it's Roy Stephens' second offering in a row.  It's worth skimming...and the link is here.

Read more...

Austerity Summit: EU Budget Compromise Faces Major Hurdles

EU leaders are meeting in Brussels on Thursday and Friday to hammer out a budget for the next seven years. Massive differences over how much to spend on agriculture, development and administration will make a compromise extremely difficult.

The German chancellor is preparing herself for a tough summit. The European Union has set aside two days for leaders to negotiate a new EU budget, setting priorities for spending from 2014 to 2020. Angela Merkel is cautiously hopefully her position will prevail. "We're going to try, but there's no guarantee," a source close to her said. Last November, the heads of state and government failed miserably to reach a compromise on the budget. Now they're hoping the second time's the charm.

The likelihood of the 27 member states united under one budgetary vision hinges in large part on Germany and France, and on the good will of all those taking part. If there's no agreement, leaders would have to put together a new EU budget every year, using the prior year as a starting point. Sources in Berlin, however, said that was "not a negotiation target." They want a breakthrough.

This story appeared on the German website spiegel.de yesterday...and I thank Roy for his third offering in a row.  The link is here.

Read more...

François Hollande snubs David Cameron over drive to cut EU budget

President François Hollande dug in his heels against David Cameron's drive to slash the EU budget in Brussels on Thursday, staying away from a meeting with the prime minister and Chancellor Angela Merkel aimed at forging a compromise.

As European leaders joined battle over almost €1 trillion in EU spending for the seven years up to 2020, Hollande led a troika of France, Italy, and Spain apparently resolved to resist Downing Street.

Cameron met Merkel and the two EU presidents, Jose Manuel Barroso and Herman Van Rompuy, to explore the potential for agreement. Hollande was expected to attend the meeting which went on for more than one hour. When he did not show, Van Rompuy, chairing the summit, repeatedly phoned the French leader to summon him to the negotiation.

This article was posted on the guardian.co.uk Internet site in the wee hours of this morning GMT and, once again, my thanks go out to Roy Stephens.  The link is here.

Read more...

Germany shoots down Hollande's exchange rate plea

The German government has moved quickly to shoot down a plea by French President Francois Hollande for the EU to agree measures to control the euro's exchange rate.

Government spokesman, Steffen Seibert, said Wednesday (6 February) that Angela Merkel's administration would not support a move away from the euro's floating exchange rate.

"We are convinced that exchange rates reflect the economic fundamentals, especially flexible ones. We are open to a discussion with France about it, but the German government doesn't think that an exchange rate policy is an appropriate instrument to boost competitiveness. It may set some short-term impulses, but nothing sustainable," he said.

Here's another article from Roy Stephens.  This one showed up on the euobserver.com Internet site early on Wednesday evening.  The link is here.

Read more...

Deutsche Bank suspends more traders for alleged Libor-rigging

The BBC understands that five traders, based in Frankfurt, were suspended on Tuesday.

Deutsche has been looking into alleged manipulation of the Libor and Euribor benchmark lending rates.

Libor and Euribor are used to price hundreds of trillions of pounds worth of financial contracts, including loans and mortgages to businesses and individuals.

Deutsche said in a statement: "Upon discovering that certain employees acted inappropriately, we have suspended or dismissed employees, clawed back unvested compensation, and will continue to do so as we complete our investigation."

The bank declined to confirm how many staff were suspended on Tuesday, nor how many had previously been dismissed or suspended.

This article was posted on the bbc.co.uk Internet site during the Wednesday lunch hour...and I thank reader "David in California" for sending it.  The link is here.

Read more...

Man trampled as hundreds of desperate Greeks scuffle for food

A fruit and vegetable handout in Greece led to one man being trampled on Wednesday, calling attention to the desperate conditions in the crisis-hit country. Some 55 tons of produce was given away by farmers who were protesting high production costs.

The person was injured when he was pushed by a crowd trying to grab the goods and fell and hit his head.

The chaos was sparked when food stalls ran out of fruits and vegetables, prompting dozens of people to rush to a nearby truck.

It was an “every man for himself” situation as the Greeks shoved their way to the front of the truck, competing for the food that was left. The 55 tons of food was completely gone in under two hours.

This Russia Today story was posted on their website very late on Wednesday evening...and it's certainly worth running through, as there are lots of photos.  It's Roy Stephens' final offering in today's column...and the link is here.

Read more...

Cliff Küle interviews Doug Casey

Cliff Küle's Lindsey Blumell interviews Doug Casey of Casey Research

Doug Casey had not written a book in 15 years, but now the respected author & professional investor is out with his new book Totally Incorrect .. He talks to Cliff Küle about his unique writing approach, why he wants to talk about what others shy away from - topics such as why NASA is a waste of money, whether or not Lincoln & FDR were really great American Presidents

In our one-on-one interview, we chat about where the U.S. stands now in terms of its fiscal cliff - "The bankruptcy of the U.S. government is an accomplished fact.", explains how the U.S. federal government deficits are really $4 Trillion per year, not just over a trillion dollars per year - operating this way is going to destroy the U.S. dollar.

This interview was posted on the cliffkule.com Internet site on Tuesday...and it runs about 20 minutes.  The link is here.

Read more...

James Rickards: Global Monetary System Headed for Collapse

The world currency system is riding down the road to catastrophe, says James Rickards, senior managing director of Tangent Capital Partners.

The world already has entered a currency war that began in 2010 on the heels of the Federal Reserve’s massive easing program, he tells Wall Street Journal Digital Network. Since then, plenty of nations have joined in, including Brazil, Switzerland and Japan, says Rickards, author of “Currency Wars: The Making of the Next Global Crises.”

“All major central banks are easing,” he says. “Eventually so much money will be printed that this will lead to inflation. The endgame is collapse of the international monetary system — sometime sooner than later.”

His currency view makes Rickards a huge bull on gold. His long-term price estimate is $7,000 an ounce, more than four times the current price of $1,677. Gold could trade in a range between $3,000 and $10,000, Rickards says. “We’re not going to get there all at once.”

I agree totally with Jim's assessment.  This absolute must read commentary was posted over at the moneynews.com Internet site early Wednesday evening...and I thank Elliot Simon for digging it up on our behalf.  If I had to pick just one story for you to read out of today's column...this would be it...and the link is here.

Read more...

Three King World News Blogs/Audio Interviews

The first blog is with Michael Pento...and it's headlined "Gold to Spike as Fears of Fed Exiting QE are Preposterous".  Next is this interview with Robert Fitzwilson. It's entitled "Calls for Printing $30 - $100 Trillion Now, it is Out of Control".  The audio interview is with Nigel Farage

Read more...

CME Cuts Gold, Silver Margins

Any trader of paper gold and silver will likely never forget the endless and certainly parabolic barrage of margin hikes that the CME imposed in the spring and summer of 2011 which had only one purpose: to break the back of the relentless anti-fiat rally in the precious metals (and which culminated with the historic May 1 take down of silver when the metal plunged some 15% in the span of seconds).

Since then, perhaps as a result of initial and maintenance margins still at residual levels indicative of when the S&P was some 30% lower and some $4 trillion less in slushing global central bank liquidity, the upside euphoria in gold and silver has been decidedly hobbled, perhaps so much that the CME is now scrambling to find a whole new set of gullible investors who will obediently put their money in the paper trap, only to see a surge followed by yet another mauling from soaring margin demands.

This short story includes a list of the new margin and maintenance prices from the CME's website.  This story was posted over at the Zero Hedge website last night...and it's Elliot Simon's final offering in today's column.  The link is here.

Read more...

This story shall the good man teach his son

Last night Jim Sinclair appealed to his comrades in golden arms for a little courage.

"Gold has always been a war between sound finance and debt-ridden currencies," Sinclair writes. "When you entered the fray you joined a band of brothers and sisters as foxhole buddies in this war for both gold's and our freedom." He proposes that they take a simple pledge not to be frightened and then offers Kenneth Branagh's performance of the St. Crispin's Day speech from "Henry V," likely the greatest and noblest passage from Shakespeare, who has the king's eloquence and righteousness carrying his vastly outnumbered soldiers to victory over the French army at Agincourt.

Gold bugs surely are engaged in a war -- not just a war between sound finance and dishonest currencies but a war between democracy and plutocracy, imperialism and national self-determination, truth and lies, justice and fraud, a war against all the power and money in the world.

The rest of Chris Powell's comments, plus the link to Jim's article, is posted at the gata.org Internet site...and the link is here.

Read more...

Turkey will not halt Iran gold exports despite sanctions pressure

Turkey will not be swayed by U.S. sanctions pressure to halt gold exports to Iran but Tehran’s demand for the metal may fall this year, Economy Minister Zafer Caglayan said on Thursday.

U.S. officials are concerned that Turkey’s gold sales, which allow Iran to export natural gas, provides a financial lifeline to Tehran, which is largely frozen out of the global banking system by Western sanctions imposed over its nuclear programme.

Trade in Turkish gold bars to Iran via Dubai is drying up as banks and dealers increasingly refuse to buy the bullion to avoid sanctions risks associated with the trade.

Turkey has a six-month U.S. waiver exempting it from financial sanctions against Iran, which is due to expire in July.

This Reuters story was filed from Istanbul yesterday...and found its way onto the mineweb.com Internet site.  I thank Ulrike Marx for today's must read last story...and the link is here.

Read more...

 

¤ The Funnies

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  • Low risk exploration strategy

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  • Antofagasta has provided US$ 350,000 for all anticipated Alvalade JV expenses for Q1 2012.

Please visit our website for more information.


 

¤ The Wrap

The catalyst for a spike into the $2,500 to $3,000 price range will be an announcement by China, probably in late 2013 or 2014, that they have acquired 4,000 tonnes or more in their official reserve position. This will put China on an equal footing with the US in terms of a gold-to-GDP ratio and validate gold as the real foundation of the international monetary system. Once that position is validated, gold will move to the $7,000 range in 2015 and beyond. Any lower price level is deflationary and must be avoided at all costs by central banks. The key is that the US and IMF do not want gold to achieve its full potential price until China has acquired its appropriate "share" of official gold reserves. Any other outcome is unacceptable to China. - Jim Rickards

The above quote came out of the February edition of Casey Research's BIG GOLD...and if you're not a subscriber, you should be.  The link to the website is here...and it costs nothing to look around.

I have no further comments to make on yesterday's price action in both gold and silver, except to repeat my prior observation, that it didn't look like free-market price action to me.

However, I took a peek at the preliminary open interest numbers for Thursday on the CME's website just now...and I was surprised to see that there was basically no change in gold...and a drop of about a thousand contracts in silver.  I don't know what to read into this...and I'll be more than interested in the final numbers when they're posted on their website later this morning.  However, as is usually the case, the true picture won't be revealed until February 15th...the next COT Report...because yesterday's price activity won't be in the one that comes out later this afternoon Eastern time.

While on the subject of the COT Report, I'll be particularly interested in what the silver numbers will be in the report later today.  After last week's big surprise, I'm not sure what to expect.  But whatever they show, I'll have it for you in tomorrow's column...along with the data from the latest Bank Participation Report which is published today...and extracted from the same data set as the COT Report.

There was no price activity worth mentioning in Far East trading on their Friday.  London has been open about forty-five minutes as I write this paragraph...and there's little price action there, either.  Volumes are light...and it's almost all in the front month in both silver and gold...so it's a good bet that what volume there is, is of the high-frequency trading variety.  The dollar index is down about 20 basis points at the moment.

And as I hit the 'send' button at 5:00 a.m. Eastern time...nothing has changed since I wrote the above paragraph more than an hour prior.

Before heading out the door, I'd like to remind you...as I do most every Friday...that the precious metal stocks have never been this cheap versus the price of gold itself...and it certainly appears to be the time to take the plunge if you haven't already.  So I'd like to remind you one more time that there's still an opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take out a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Enjoy your weekend...and I'll see here tomorrow.