Gold & Silver Daily
"Since February 9th, there has been 4.1 million ounces of silver withdrawn from SLV, even though the silver price has basically traded sideways for the last month."

¤ Yesterday In Gold & Silver

By 3:00 p.m. in Hong Kong on their Tuesday afternoon, gold was up about seven dollars...and from there until shortly before the Comex opened in New York, the gold price gave back about half of that gain...such as it was.

But the moment that trading began in New York, it was a whole new ball game.  In four separate steps, gold rose another twenty dollars...and closed virtually on its high of the day.

Gold closed at $1,760.30 spot...up $26.20 from Monday's close.  Net volume, which was pretty chunky around the London open...checked in around 188,000 contracts.  A bunch of that volume was from Monday, so it wasn't as heavy as it seemed, but heavy enough nonetheless.

As I pointed out in 'The Wrap' in yesterday's column, the rally going into the London open on their Tuesday morning ran into some real resistance...and it's obvious that the $20 rally in New York ran into heavy resistance as well.

It was pretty much the same price action in silver.  Nothing much happened until shortly before 2:00 p.m. in Hong Kong on their Tuesday afternoon.  The subsequent rally ran into a lot of resistance...and every penny of those gains...and a few cents more...disappeared by 12:30 p.m. in London.

Then, in a manner very similar to gold, away silver went to the upside when the Comex opened less than an hour later.  The high of the day [$34.58 spot] came moments before the Comex trading day ended at 1:30 p.m. Eastern time.  Silver then got sold off about two bits into the close.

Silver finished the Tuesday trading day at $34.35 spot...up 74 cents.  Net volume [after removing the roll-overs and Monday's trading volume] was around 36,000 contracts.  I was expecting a much higher volume number than that...and was happy that it was 'only' that much.

The dollar index spent Tuesday in a wild 40 basis point trading range around the 79.00 mark...which is exactly what it was doing when I wrote about it twenty-four hours ago as well.

The gold stocks gapped up...and then added to their gains for the next hour or so.  But by 11:00 a.m. Eastern..more or less...they traded basically sideways in a very tight range, despite what the gold price did after that.  The HUI finished up 3.08% on the day.

It almost goes without saying that the silver stocks put in a robust performance as well...helped along immensely by the Hecla Mining announcement of silver-linked dividends.  Nick Laird's Silver Sentiment Index closed up 3.35%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that only 24 gold contracts were posted for delivery on Thursday.

The GLD ETF showed a small increase yesterday as an authorized participant shipped in 9,718 troy ounces.  But it was a different story over at the SLV ETF yesterday, as 680,164 ounce were reported withdrawn.

Obviously the silver was more desperately needed elsewhere, as there was nothing in the price activity during the last two or three trading days that would warrant such a withdrawal.  Since February 9th, there has been 4.1 million ounces of silver withdrawn from SLV, even though the silver price has basically traded sideways for the last month, at just under $34 the ounce.

The U.S. Mint started off the week with a sales report...but a very small one.  They sold 1,000 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 115,000 silver eagles.  Month-to-date sales are pretty pathetic...16,000 ounce of gold eagles...4,500 one-ounce 24K gold buffaloes...and 950,000 silver eagles.

The Comex-approved depositories reported receiving 930,708 ounces of silver on Friday...and shipped 457,876 ounces out the door.  The link to that action is here.

I have slightly fewer stories today than I did yesterday, which suits me just fine...and you as well, I would suspect.


¤ Critical Reads

Some Doubt a Settlement Will End Mortgage Ills

Even as government officials prepare to unveil new standards this week for how banks treat millions of Americans facing foreclosure, housing advocates and homeowners are skeptical the rules will be able to do something past efforts have not: provide a beleaguered borrower with one individual to help them navigate the mortgage maze.

While the entire process of seeking a mortgage modification is complicated and time-consuming, few elements are as maddening as the inability to get through to a representative at the bank, or being asked for the same documents again and again.

So the promise of a single point of contact has emerged as a crucial element in the much-ballyhooed $26 billion settlement reached earlier this month involving state attorneys general, the federal government and the five biggest mortgage servicers. These rules will apply nationwide and come with commitments of strong enforcement by federal and state authorities, but they carry a familiar ring for those experienced in the foreclosure process.

This story was in the Monday edition of The New York Times...and I thank reader Phil Barlett for sending it along.  The link is here.


As Dow Passes 13,000 In Nominal Terms, Here Is The "Real" Picture

Three charts that perhaps will calm the nominal euphoria as Dow 13,000 screams across the screens. Since May 2008, the Dow is unchanged in price and down 50% in 'real' gold terms. The picture is just as disheartening from the start of 2011 and 2012. Next stop Dow 20,000 and Gold 20,000?

From May 2008, the Dow priced in Gold is down 50% while we have nominally recovered unchanged. From the start of 2011. The Dow is up 11.35% while in real terms it is down 12.4%...and from the beginning of this year, the Dow is up 4.8% while in gold 'real' terms, it is down 4.25%.

This short piece from yesterday is another Phil Barlett offering.  The charts are certainly worth the trip...and the link is here.


Under Volcker, Old Dividing Line in Banks May Return

The Volcker Rule, and its limitations on bank trading, may have the unintended effect of dividing the world back into investment banks and commercial banks. The unusual twist here is that Goldman Sachs and Morgan Stanley may end up stuck on the wrong side of the fence, treated under the law as commercial banks instead of the investment banks they once were.

The backdrop to this issue is that it is increasingly clear that banks are simply unable to make as much money from proprietary and other trading businesses as they did before the financial crisis. Take Goldman Sachs. In 2007, Goldman had revenue of $7.6 billion from traditional investment banking, but $31.2 billion in revenue from trading-related operations. Last year, Goldman had just $17.3 billion in revenue related to trading operations.

This is a trend likely to accelerate. Under the Dodd-Frank regulatory overhaul, derivatives are to be traded on central clearing agencies rather than between investment banks as before the financial crisis. Heightened bank capital requirements prevent warehousing large amounts of securities and increase the cost of financing. Then there is the Volcker Rule, which is likely to substantially reduce much of the banks’ profits from their trading businesses.

This is the third story in a row from The New York Times...and the third in a row from Phil Barlett.  The link is here.


As US Debt To GDP Passes 101%, The Global Debt Ponzi Enters Its Final Stages

Yesterday, without much fanfare, US debt to GDP ratio hit 101% with the latest issuance of $32 billion in 2 Year Bonds. If the moment when this ratio went from double to triple digits is still fresh in readers minds, is because it is: total debt hit and surpassed the most recently revised Q4 GDP on January 30, or just three weeks ago.

Said otherwise, it has taken the US 21 days to add a full percentage point to this most critical of debt sustainability ratios: but fear not, with just under $1 trillion in new debt issuance on deck in the next 9 months, we will be at 110% in no time.

This short piece was posted over at yesterday...and I thank Australian reader Wesley Legrand for bringing it to my attention.  It's worth the read...and the graphs are great.  The link is here.


New Bailout Is a Reprieve for Greece, but Doubts Persist

Greece may have dodged a default with its last-minute bailout deal, but longer-term doubts over its ability to repay its staggering debts remain, raising questions about whether even more rescue money will eventually be needed.

European leaders were to sign off on Greece’s second bailout of about 130 billion euros ($172 billion) at their summit meeting in Brussels next week — subject to Greece’s taking immediate steps to put into effect the deep structural changes that they agreed to.

Greece must also persuade, if not actually force, its private sector bondholders to accept a higher-than-expected loss of more than 70 percent on their holdings to reduce Greece’s debt stock by the targeted amount of 100 billion euros.

This is another Phil Barlett offering from The New York Times yesterday...and the link is here.


How Goldman Sachs Helped Mask Greece's Debt

Nick Dunbar, author of The Devil's Derivatives, reveals how the country turned to investment bank Goldman Sachs for help getting around the deficit rules in order to join the Eurozone.

In his report for BBC's Newsnight, some of those who did the deal, talk publicly for the first time.

This 10-minute video was posted over at website on Monday.  I thank reader 'T. Unger' for sending this my way...and it's well worth watching.  The link is here.


A Political Establishment in Freefall: Greece Lurches to Left Amid Radical Austerity

There are many uncertainties in Greece today: whether the country can remain in the euro zone, whether the €130 billion ($171.8 billion) second bailout package will sufficiently reduce the insolvent country's staggering debt load, and whether the Greeks will ever implement the reforms their international creditors are demanding of them. At the moment, only one thing seems predictable: that nothing will remain the same. "Everything is changing, and everything is frightening," writes the newspaper Kathimerini.

Only with great difficulty was the transitional government of Prime Minister Lucas Papademos able to commit last week to the reforms that the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) had demanded -- and its commitment came at a high political price. The nationalist right-wing Popular Orthodox Rally (LAOS) withdrew from the government, and the heads of the two large traditional parties, the Panhellenic Socialist Movement (PASOK) and the conservative Nea Dimokratia (ND), or New Democracy, saw 43 of their members resign or be expelled from their respective parties.

The lesson can be summed up with two words: "panta rhei," or everything flows. No political commentary these days describes the situation in Greece as clearly as these words from ancient Greece.

This story was posted over at the German website yesterday...and I thank Roy Stephens for sending it along.  The link is here.


Averting the Next Greece: Portugal Needs More Money To Stay Afloat

With its massive austerity measures, Portugal has become the poster child of the troika of the EU, ECB and IMF. But the country is still stuck in a deep recession and it is unclear how it will return to growth. It may need to rely on European loans for years to come.

Nothing is sacred to Pedro Passos Coelho, not even Carnival. Portugal's prime minister expects government employees at their desks and working on Entrudo, the traditional high point of the country's Carnival celebrations, which falls on this Tuesday.

This is "not the time to talk about tradition," the conservative head of state has commanded those of his citizens who see the move as an attack on their culture. Rather, he says, they should stop "whining" about austerity measures. It's time, the prime minister adds, to break free of old structures and to change "lazy and sometimes self-involved patterns of behavior."

Fans of Carnival celebrations are not the only ones affected -- churchgoers and nationalists will have to make bitter sacrifices as well. In response to this national state of emergency, the Portuguese government plans to do away with four public holidays. Corpus Christi and Assumption are to be crossed off the calendar without a replacement, and public holidays celebrating Portugal's first republic and the 1640 end to its union with Spain can no longer be commemorated, as is customary, with family celebrations and an extended siesta.

Portugal, like Greece, is dead meat as well.  I consider this 2-page story on Portugal a must read...and it's another Roy Stephens offering from yesterday's edition of  The link is here.


Michael Pento - Money Supply & Inflation Exploding Around the World

Europe's central planners have resorted to the ECB doing a massive counterfeiting scheme in an attempt to bailout insolvent nations.

This has never worked from Hungary, to Bosnia, to Argentina, to Weimar Germany.  Inflation can never bail you out of insolvency.  Because central bankers around the world believe that inflation is equivalent to growth, they are going to persist on this monetization of insolvent debt.

All of your developed countries from Japan, to Europe and America are in a condition of insolvency.  As I said, central bankers are trying to monetize this debt away.  It will never work, it has never worked and it cannot work...

This blog was posted over at King World News yesterday...and the link is here.


Rick Rule - Greek Bailout and What it Means for Gold

Here's another blog that Eric King sent my way yesterday.  It's posted over at the KWN website as well...and the link to that is here.


Nigel Farage - Catastrophe Imminent & Gold to Break $2,500

Here's the last King World News offering of the day.  Eric sent me this blog yesterday afternoon...and the link is here.


Nick Barisheff: Bullion Management Group Interview

This audio interview with Nick Barisheff runs for an hour, so you may want to top up your coffee before you hit the 'play' button.  It was posted over at the website on Monday...and the link is here.


John Embry: Machinations to blame for end-of-year slide

This 2-page offering from Sprott Asset Management's chief investment strategist, John Embry, was posted in the February edition of the Investor's Digest of Canada...and I thank Australian reader Wesley Legrand for bringing it to my attention.  It is, of course, a must read...and it's posted over at the website.  The link is here.



¤ The Funnies

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Pelangio Exploration Inc. (PX:TSX-V; PGXPF:OTC) announced the results of seven diamond drill holes totaling 1,574 metres from its ongoing drilling program at the Pokukrom East zone on the Manfo Property in Ghana.  Highlights of the results included:

·        1.19 g/t gold over 113 metres, including 9.05 g/t gold over 7 metres;
·        2.60 g/t gold over 64 metres, including 11.94 g/t gold over 10 metres; and
·        16.72 g/t gold over 4 metres.

The results continued to confirm a higher grade, shallow north plunging core of Pokukrom East zone with an open plunge of 600 metres from near surface in previously reported hole SPDD-088 (7.01 g/t gold over 19 metres) to 210 metres depth in the holes reported this week.  Warren Bates, Senior Vice President Exploration, commented: “These are our best holes on the Manfo Property to date. These holes represent the north-plunging core of higher grade mineralization at Pokukrom East, now demonstrating an open plunge length of 600 metres.Please visit our website to learn more about the project and request additional information.


¤ The Wrap

I was delighted to see both gold and silver head higher in New York yesterday...but unhappy about the fact that the strong rallies that started before London opened early yesterday morning, were sold off pretty hard.  As I mentioned at the start of this column, there was very big volume in both gold and silver yesterday...particularly in these rallies are obviously running into strong resistance from the usual traders in the Commercial category.

We still need to see both metals power higher from here in order to form a clear break out.  Yesterday's price action in New York was a good start, but we'll need more price action like that...and soon.

All of yesterday's price and volume data will be in Friday's Commitment of Traders Report, if it's all reported in a timely manner, that is.  And because of the holiday on Monday, yesterday was the cut-off for that report.  With a new COT weekly cycle now starting, it will be interesting to see how JPMorgan et al allow gold and silver prices to perform during the next day or so.

Looking at overnight action, both metals got sold off a bit right from the open in New York at 6:00 p.m. Eastern time last night...and although they both recovered somewhat going into the London open, both got sold down again at the usual time...just a few minutes before trading began at 8:00 a.m. GMT.  As I hit the 'send' button at 5:18 a.m. Eastern time, gold is down about seven bucks...and silver is down about 25 cents.

With the subdued price action, the volume numbers are lower than they were this time yesterday...but not by a lot, at least in gold.  The roll-overs out of the March delivery month in silver are getting more frantic as the days go by.  First Day Notice for March is next Wednesday, the 29th.  As of this writing, there are still 94 silver contracts open in February...and it remains to be seen if the owners of these remaining contracts will sell, roll over, or stand for delivery.  We'll know in the next five business days.

The dollar index is still hanging in there...very tight to the 79.00 mark for the third day in a row.

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See you on Thursday.