Gold & Silver Daily
"This phenomenon of rescuing stocks via SPH manipulation has become a market staple"
 

¤ Yesterday In Gold & Silver

The gold price traded in a very tight range in Far East and Europe trading---and the price activity only started getting interesting in the lead-up to the 2 p.m. EST FOMC report.  The high of the day came shortly before that time---and the price gyrations upon the release of the news didn't go far in either direction.  By 3:25 p.m. the gold price was back to where it started at the close of trading on Tuesday.

Then out of the blue a seller appeared in the thinly-traded New York electronic market, and in less than half an hour had peeled over $16 off the price.  After that, the gold price traded sideways into the close.

The CME recorded the high and low ticks as $1,244.00 and $1,215.20 in the February contract.

Gold close the Wednesday session at $1,218.70 spot, which was down $12.40 from Tuesday's close.  Net volume was reasonably heavy at 165,000 contracts.

It was more or less the same chart pattern in silver, although there was a sharp spike up between 2:30 and 3 p.m. in electronic trading that got dealt with in the usual manner.  After that, the silver price pattern returned to the mirror image of the gold price---and was soon back below $20 spot---and that's where it remained for the rest of the day.

The high and low for the day were recorded by the CME at 19.425 and $20.265 in the March contract---an intraday price move of over 4%.

Silver finished the trading session at $19.73 spot, down 22 cents from Thursday's close.  Net volume was also pretty heavy at 47,500 contracts.

Platinum and palladium didn't do a lot on Wednesday, but did get caught in the 2 p.m. crossfire along with gold and silver, but the effects were more muted.  The downward price pressure was more in sympathy with the other two precious metals, rather than much direct interference.  Here are the charts.

The dollar index closed on Tuesday at 80.04---and then traded flat until around 9:30 a.m. in London.  The smallish rally from that point topped out at 80.19 at 8:30 a.m. EST in New York, before falling back to unchanged by the London p.m. gold fix.  There were some pretty wild gyrations shortly before---and immediately after---the Fed news, and the index had dropped below the 80.00 mark by 2:30 p.m. EST.  But someone was there to catch a falling knife---and the index blasted back above the 80 mark in very short order, and by 4 p.m. was at the 80.49 mark.  From there it traded up a bit into the close, finishing the day at 80.59---which was up 55 basis points from Tuesday's close.

I note that the dollar index chart over at ino.com stopped working shortly after 3 p.m. EST, so the best I could do on short notice, thanks to Nick Laird, was this 5-day chart from the marketwatch.com website.

The gold stocks opened in positive territory and continued to work their way higher as the trading day progressed.  There were a lot of gyrations on the FOMC news, but the stocks were still up about a percent before gold got sold down starting just before 3:30 p.m. EST.  Of course the gold equities followed---and the HUI finished down 1.48%.

The silver equities turned in a similar chart pattern and performance, as Nick Laird's Intraday Silver Sentiment Index closed down 1.26%.

The CME's Daily Delivery Report showed that 31 gold and 38 silver contracts were posted for delivery within the Comex-approved depositories on Friday.  30 of the gold contracts were stopped by JPMorgan in its in-house [proprietary] trading account.  In silver they stopped 21 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

As usual, there was another withdrawal from GLD yesterday, this time an authorized participant took out 135,035 troy ounces.  And as of 7:51 p.m. EST yesterday evening, there were no reported changes in SLV.

The good folks over at Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs as of the close of business on Friday, December 13.  Their gold ETF showed a decline of 44,998 troy ounces---and their silver ETF showed a decline of 119,923 troy ounces.

And, for the third day in a row, there were no reported sales from the U.S. Mint.  One has to wonder if they are finished selling 2013 bullion products for the rest of December, as this lack of sales is unprecedented for this time of year.  We'll see.

There was very little in/out movement in either gold or silver at the Comex-approved depositories on Tuesday.  In gold, there were 1,428 troy ounces reported shipped out---and in silver there 989 troy ounces shipped out.  Nothing was reported received in either metal.

I don't have that many stories today, so I hope you have the time to read the ones that are of interest.

 

¤ Critical Reads

Fed "Tightens", Tapers $10 Billion - Full Redline

Despite the world of mainstream media pundits proclaiming the U.S. is recovering nicely and that a taper is priced in (and the warning that the 5-year auction gave this morning that it's not), markets are already reacting violently to the Fed's decision to announce a small 'taper' (and more dovish forward guidance).

As a reminder, here are the four reasons why the Fed was cornered into tapering... as we have noted numerous times before; the "taper" is all about economic cover for a forced move the Fed has to make.

Simply put, they were cornered and needed to Taper sooner rather later.

This commentary was posted on the Zero Hedge website at 2:01 p.m. EST yesterday...and is definitely worth reading.  I thank reader M.A. for today's first story.  There was also a 2-page story in the New York Times on this as well.  Roy Stephens sent it my way...and the link to that is here.

Read more...

Poor 5-Year Auction With Huge Tail, Stick-saved By Primary Dealers

If Tuesday's 2-year auction was strong to quite strong, with a soaring Bid to Cover and a yield stopping through the When Issued, yesterday's 5-year auction of $35 billion in 5-year paper was ugly to very ugly.

But it was the plunge in Indirects from 50% to half that number, or 25.8% that was the true surprise, as it was the lowest Indirect take down since December of 2008!

This meant that the natural backstop, Primary Dealers, had no choice but to buy 62.4% of the final allocation, the highest allotment since April of 2009. In other words, while the near end of the curve is well bid, things are starting to go bump in the night at or around the belly of the curve. Look for much more pain if indeed the Fed were to announce the start of tapering today.

That's about all there is this short Zero Hedge piece [referenced in the ZH story above] from yesterday.  The chart, which speaks volumes, is a must to see...and I thank Casey Research's own Bud Conrad for sending it our way.

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James Rickards on Bernanke's best and worst decisions

Fed/Bernanke apologist Phillip Yin interviews Jim on Tuesday...and it's obvious where his feelings lay.  Of course Rickards just trashes him and Bernanke with great ease.  James is always the smartest guy in any room that he's in...and he makes Yin look like a complete idiot. This 5:41 minute youtube.com video is a must watch.   My thanks go out to reader Harold Jacobsen for digging up this video for us.

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Climate change expert's fraud was 'crime of massive proportion,' say feds

It took Patrick Sullivan, assistant inspector general for investigations at the E.P.A., just one week to uncover a million dollar fraud overlooked by the government agency for over a decade. John Beale, at one point the E.P.A's highest paid employee, convinced the E.P.A he was working overseas as an agent for the CIA when he was actually "riding his bicycle, reading books and working around his house" in Virginia.

The EPA’s highest-paid employee and a leading expert on climate change deserves to go to prison for at least 30 months for lying to his bosses and saying he was a CIA spy working in Pakistan so he could avoid doing his real job, say federal prosecutors.

Beale’s lawyer, while acknowledging his guilt, has asked for leniency and offered a psychological explanation for the climate expert’s bizarre tales.

The two sentencing memos, along with documents obtained by NBC News, offer new details about what some officials describe as one of the most audacious, and creative, federal frauds they have ever encountered.

You couldn't make this stuff up if you tried.  And I certainly wouldn't believe a thing that came out of his mouth about climate change, either.  This very interesting story showed up on the nbcnews.com Internet site on Monday...and I thank Casey Research's own Jeff Clark for sharing this with us.

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Merkel compared NSA to Stasi in heated encounter with Obama

In an angry exchange with Barack Obama, Angela Merkel has compared the snooping practices of the U.S. with those of the Stasi, the ubiquitous and all-powerful secret police of the communist dictatorship in East Germany, where she grew up.

The German chancellor also told the US president that America's National Security Agency cannot be trusted because of the volume of material it had allowed to leak to the whistleblower Edward Snowden, according to the New York Times.

Livid after learning from Der Spiegel magazine that the Americans were listening in to her personal mobile phone, Merkel confronted Obama with the accusation: "This is like the Stasi."

This amazing story was posted on theguardian.com Internet site early Tuesday evening GMT...and it's courtesy of South African reader B.V.

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NSA methods reminiscent of those used in USSR under Stalin – Lavrov

Russia’s Foreign Minister has compared the way NSA obtains permission for its surveillance with the way Soviet people received sentences in Stalin-era courts.

Sergey Lavrov has spoken of the NSA activity as of “unlimited and uncontrolled” intervention into private lives. “It is necessary to draw a distinctive borderline between what law enforcement agencies really need for carrying out their work, for protecting citizens, and what appears to be intrusion into private life without any limits and control. And it’s exactly the latter, as far as I understand, which took place in the case with the American NSA,” Lavrov said.

Lavrov has promised to lobby for an international condemnation of the practice.

This news item was posted on the Russia Today website yesterday afternoon Moscow time...and it's courtesy of Roy Stephens.

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Obama Panel Recommends New Limits on N.S.A. Spying

A panel of outside advisers urged President Obama on Wednesday to impose major restrictions on the National Security Agency, arguing that in the past dozen years its powers had been enhanced at the expense of personal privacy.

Specifically the panel of five intelligence and legal experts recommended that Mr. Obama restructure a program in which the N.S.A. systematically collects logs of all American phone calls — so-called metadata — and a small group of agency officials have the power to authorize the search of an individual’s telephone contacts. Instead, the panel said, the data should remain in the hands of telecommunications companies or a private consortium, and a court order should be necessary each time analysts want to access the information of any individual “for queries and data mining.”

This must read 2-page article was posted on The New York Times website yesterday...and is another contribution from Roy Stephens.

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Three former bankers charged with €7.2bn fraud

Three former senior bank officials have appeared in court charged in connection with an alleged €7.2 billion fraud.

Former chief executive of Irish Life & Permanent (IL&P) Denis Casey and the bank’s former finance director Peter Fitzpatrick appeared today in the Dublin District Court along with the former head of treasury at Anglo Irish Bank John Bowe.

The three men were charged with conspiracy to defraud the public under common law.

In addition, a separate charge was brought against Mr Bowe for false accounting in relation to these deposits in Anglo Irish bank under section 10 of the Theft and Fraud Act.

This story was posted on the irishtimes.com Internet site late yesterday afternoon GMT...and it's another contribution to today's column from Roy Stephens.

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E.U. reaches deal to protect bank savings

E.U. lawmakers have made a breakthrough in banking union talks after agreeing on rules to protect people's savings, ending a two-year impasse between MEPs and ministers.

Under the deal brokered on Tuesday night (17 November), the first €100,000 of savings per depositor and per bank will be guaranteed if the bank gets into financial difficulty.

Banks will also be required, for the first time, to put in place financing schemes to ensure that money is available to reimburse savers.

This news item, filed from Brussels, was posted on the euobserver.com Internet site yesterday morning Europe time...and once again I thank Roy Stephens for sending it along.

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Masked Army: Shadowy Jihadist Group Expands Rapidly in Syria

A murderous Islamist group called ISIS is obstructing Syrian rebels in their battle against President Bashar Assad's regime. The Free Syrian Army seems barely able to put up a fight in the face of their brutal tactics.

The sender was unidentified, but the young engineer knew who the email was from as soon as he opened the attachment. Beneath a picture of the brutally mutilated corpse of Muhannad Halaibna, a civil rights activist known throughout the northern Syrian city of Raqqa, was a single sentence: "Are you sad now about your friend?"

Mere hours later, the engineer and 20 other members of the Syrian opposition -- doctors, city council members and activists -- escaped from Raqqa into Turkey. They weren't fleeing Syrian President Bashar Assad's regime, but a new and terrible power that has no face and goes by many names. The official name of this al-Qaida branch, which has broken away from Osama Bin Laden's successors, is the "Islamic State of Iraq and Syria" (ISIS). "Daaisch" is the most common abbreviation of the group's name in Syria. "But we call them the Army of Masks," says Basil, the engineer who fled the country, "because their men rarely show their faces. They dress in black, with their faces covered."

Normally a 2-page essay such as this one from the German website spiegel.de yesterday afternoon Europe time, would be something that could wait until Saturday's column...but not this time.  It certainly falls into the must read category for all serious students of the New Great Game.

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West signals to Syrian opposition that Assad may stay

Western nations have indicated to the Syrian opposition that peace talks next month may not lead to the removal of President Bashar al-Assad and that his Alawite minority will remain key in any transitional administration, opposition sources said.

The message, delivered to senior members of the Syrian National Coalition at a meeting of the anti-Assad Friends of Syria alliance in London last week, was prompted by rise of al Qaeda and other militant groups, and their takeover of a border crossing and arms depots near Turkey belonging to the moderate Free Syrian Army, the sources told Reuters.

"Our Western friends made it clear in London that Assad cannot be allowed to go now because they think chaos and an Islamist militant takeover would ensue," said one senior member of the Coalition who is close to officials from Saudi Arabia.

If you read the previous spiegel.de story on this issue, then this Reuters piece, filed from Amman, is a also a must read.  It was posted on their Internet site in the wee hours of yesterday morning EST...and I thank U.A.E. reader Laurent-Patrick Gally for digging this one up on our behalf.

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Indian consular official’s N.Y. arrest sparks diplomatic row

A diplomatic row between India and the U.S. over the arrest of an Indian diplomat in New York escalated on Wednesday, with New Delhi announcing retaliatory measures, including examining the work conditions of Indians employed in U.S. consulates.

The spat was triggered by the December 12 arrest of Devyani Khobragade, a deputy consul general at the Indian Consulate in New York, on charges of visa fraud and making false statements about how much she paid her housekeeper, an Indian national.

Khobragade was later released on a $250,000 bond after pleading not guilty to the charges.

The Khobragade case has sparked widespread outrage across India, with a usually fractious parliament uniting to condemn the diplomat's arrest and treatment in New York.

This interesting story showed up on the france24.com Internet site yesterday and, once again, my thanks go out to Roy Stephens.

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Amid Chinese Rivalry, Japan Seeks More Muscle

Taking Japan a step further from its postwar pacifism, Prime Minister Shinzo Abe approved a new five-year defense plan on Tuesday that calls for the acquisition of drones and amphibious assault vehicles to strengthen the nation’s military as it faces the prospect of a prolonged rivalry with China over islands in the East China Sea.

While Mr. Abe described the spending plan as “proactive pacifism,” it continues a trend started earlier this year when Mr. Abe began to reverse a decade of military cuts to help offset China’s rapid military buildup and the relative decline of American influence in the region.

He is building on moves by previous prime ministers to inch Japan toward what many here call a more “normal” nation that can defend itself. While Mr. Abe, an outspoken conservative, has long wanted to wean the country from what he and other nationalists consider excessive pacifism and an unhealthy negativity about its World War II-era past, the tensions with China have made a skeptical public more willing to accept an expanded military.

Well, dear reader, maybe it's just me...but it seems like these stories about the New Great Game are becoming more predominant in the news with each passing month.  This particular news item, filed from Tokyo, was posted on The New York Times website on Tuesday sometime...and it's the final contribution of the day from Roy Stephens.

Read more...

Four King Word News Blogs

1. Art Cashin: "Expect No Fed Taper...and Here's the Problem".  2. Michael Pento: "Fed Tapering and Propaganda to Lead Down a Disastrous Road".  3. Bill Fleckenstein: "The Fed Has Set Markets Up For a Major Crisis".  4. Jeffrey Saut: "The All-Important Chart For Gold and Silver Post-Fed Meeting".

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]

Read more...

Pentagon Less Dependent on China Rare Earths, Report Says

China’s virtual monopoly on rare earth elements used in high-technology applications has been loosened, decreasing the risk that supplies to U.S. defense contractors could be disrupted, according to the Pentagon’s latest assessment of the nation’s industrial base.

“Global market forces are leading to positive changes in rare earth supply chains, and a sufficient supply of most of these materials likely will be available to the defense industrial base,” said the Pentagon report by Elana Broitman, the Defense Department’s top official on the U.S. industrial base. “Prices for most rare earth oxides and metals have declined approximately 60 percent from their peaks in the summer of 2011.”

“An increase in supply of material from outside of China” and the substitution of other substances have reduced reliance on China since 2011, when it controlled 95 percent of the world’s supply and imposed export restrictions, said the report, which was sent to Congress last week.

This Bloomberg piece was posted on their website late on Tuesday evening Denver time...and my thanks go out to reader Ken Hurt for sending it our way.

Read more...

No immediate plans to remove gold distortions - RBI

The Reserve Bank of India (RBI) has no immediate plans to remove the distortionary restrictions it has placed on the gold market.

Speaking at a press conference after the announcement of the bank's mid-quarter review, RBI Governor Raghuram Rajan said "Gold restrictions are a a necessary distortion at this point to restore balance to the CAD. Going forward, we would not like this distortion to persist, and we would like to remove it."

He went on to add that the RBI measures, the prime driver to narrow the current account deficit (CAD) to 1.8% in the second quarter, would be withdrawn once the deficit stabilises on its own, beyond the imposed gold restrictions.

Although this story may seem similar to the two stories on this subject that I posted in Tuesday's column, there are some notable differences.  So if Indian gold demand is something that floats your boat, then this will be worth the read.  This news item, filed from Dubai, was posted on the mineweb.com Internet site yesterday...and I thank Ulrike Marx for sending it along.

Read more...

Doug French: A Fed Policy Change That Will Increase the Gold Price

For investors having a rooting interest in the price of gold, the catalyst for a recovery may be in sight. "Buy gold if you believe in math," Brent Johnson, CEO of Santiago Capital, recently told CNBC viewers.

Johnson says central banks are printing money faster than gold is being pulled from the ground, so the gold price must go up. Johnson is on the right track, but central banks have partners in the money creation business—commercial banks. And while the Fed has been huffing and puffing and blowing up its balance sheet, banks have been licking their wounds and laying low. Money has been cheap on Wall Street the last five years, but hard to find on Main Street.

Professor Steve Hanke, professor of Applied Economics at Johns Hopkins University, explains that the Fed creates roughly 15% of the money supply (what he calls "state money"), while the banks create "bank money," which is the remaining 85% of the money supply.

This is all well and good, but the precious metals will only rise in price when "the word" goes out to JPMorgan et al to put their hands in their respective pockets and let these markets rip to the upside, which is precisely what they'd do---and in a New York minute as well.  This commentary by Doug was posted on the Casey Research website yesterday...and is definitely worth reading.

Read more...

John Embry: Suppression of precious metals continues

As we edge closer and closer to the end of 2013, gold and silver markets remain subdued.

For reasons financial, economic and geopolitical, they've had ample cause to rise.

But because precious metals are the canaries in the coal mine, the economic and political powers that be in the West are petrified that a rise in gold and silver would spike interest rates.

Very simply such a situation would put 'Paid' to the financial system as we know it.

This commentary by John was printed in the December edition of Investor's Digest of Canada...and it falls in the absolute must read category.  It was posted in the clear over at the sprott.com Internet site yesterday.

Read more...

 

¤ The Funnies

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¤ The Wrap

It’s really quite simple – a manipulated market is defined by a concentrated position; a free market has no such concentration of holdings. Let me make it more specific. For the past six years, one entity (JPMorgan) has often been the sole new short seller on every silver price rally of significance. This is how and why the silver manipulation has persisted. This is how and why the manipulation will end, namely, JPMorgan not adding to Comex silver short positions. I suppose it is possible that this crooked bank may find a way to disguise future additional Comex silver short sales, but barring that it comes down to whether JPMorgan shorts more silver or not as to whether the manipulation is terminated. - Silver analyst Ted Butler: 18 December 2013

Well, if there ever was a more perfect time when markets had to be managed to perfection, the FOMC news at 2 p.m. EST yesterday was one of them.  As GATA's Chris Powell so eloquently put it more than five years ago---"The are no market anymore, only interventions."  And as Bill King said in this morning's edition of the King Report---"SPHs tanked on the announcement but someone immediately rescued the S&P futures with aggressive purchases. This phenomenon of rescuing stocks via SPH manipulation has become a market staple."

If any further proof was needed, here's what the DOW chart looked like yesterday.  It began to head south the moment the news broke, but strong hands were there to catch a falling knife.

The U.S. dollar index looked very similar to that before a not-for-profit buyer showed up there as well.

And, with that in mind, exactly the opposite happened in the precious metals, but they needed some help on their south-bound journey---and they got it, although some of that help arrived embarrassingly late.

In Far East trading on their Thursday, the rally attempts in both gold and silver were handled in the same old way, with the engineered price decline in silver being the most egregious.  Gold volume wasn't overly heavy during the Hong Kong/Tokyo trading session but, not surprisingly, silver's volume was much heavier.  And, with the London open about 20 minutes away, the dollar index---which had topped out at 80.65 at precisely 11 a.m. Hong Kong time---is now down 10 basis points from its New York close on Wednesday.

Five minutes after I wrote the above paragraph, the HFT boyz showed up---and took gold down once more.  Then shortly after the London open, both gold and silver---along with platinum---got hit once again.  Gold hit a new low of $1,198 in the March contract, a low that goes all the back to the July low.  Silver isn't back to its early December low yet, but it got close at $19.13 in the March contract.  Palladium is showing unchanged on the day at the moment.  Gross volume in gold is north of 60,000 contracts---and over 16,000 contracts in silver.  The dollar index is still down a bit as I sent this e-mail off to Stowe in Vermont at 5:15 a.m. EST.

Here are the latest charts just as I hit the send button.

How the rest of the Thursday trading session unfolds could prove interesting---and not just in the precious metal market, either..  The across-the-board market interventions are now so obvious, that only the willfully blind can't/won't acknowledge it; or as the famous Upton Sinclair quote goes---"It's difficult to get a man to understand something, when his salary depends upon his not understanding it."

See you on Friday---but if you live west of the International Date Line, the weekend is upon you already, so have a good one.