Gold & Silver Daily
"You can see that over those 1,000 trading days, the rallies that begin in the Far East run into a not-for-profit seller about five minutes before trading begins in London."

¤ Yesterday In Gold & Silver

The high in gold was about 2:30 p.m. Hong Kong time...about ninety minutes before London opened yesterday...and it was all down hill from there, but at a very leisurely pace.

Once the London p.m. gold fix was in shortly after 10:00 a.m. in New York, the sell off got more serious...and by the close of Comex trading at 1:30 p.m. Eastern time, 'da boyz' had peeled another twenty plus dollars off the gold price.  From there, the price recovered a few dollars going into the close of electronic trading in the New York Access Market.

The gold price closed at $1,732.00 spot...down $12.90 spot.  Net volume was decent...around 139,000 contracts.

The silver price pretty much followed the gold price.  The spike at the London open...and the one that followed a bit over an hour later...proved to be the highs in silver for the day...and from that point, like gold, silver developed a slightly negative bias until the London p.m. gold fix was in.  Then in the next ninety minutes, silver got sold off 75 cents...but the subsequent recovery from the low of the day ran into a not-for-profit seller at precisely 1:00 p.m. Eastern time.

From there, the silver price almost got sold down to its prior low...before recovering about two bits going into the New York close at 5:15 p.m. Eastern time.

Silver closed back below the $34 spot market at $33.94...down 21 cents on the day.  Net volume, was a very chunky 42,000 contracts.

The dollar index did precisely nothing, spending all of Wednesday between 78.5 and 78.7.

The London p.m. gold fix was the obvious high in the precious metal stocks yesterday...and the HUI was actually up over a percent at that point.  Then it all fell apart once the 'fix' was in...and after the Comex close at 1:30 p.m. Eastern, the gold stocks flat-lined into the close.  The HUI finished down 0.73% on the day.

The silver stocks finished the day mostly down as well...but not by much...and Nick Laird's Silver Sentiment Index closed lower by only 0.63%.

(Click on image to enlarge)

The CME Daily Delivery Report was a real yawner only 10 gold contracts were posted for delivery on Friday.

There were no reported changes in either GLD or SLV.

There was another smallish sales report from the U.S. Mint.  They reported selling another 2,000 ounces of gold eagles....500 one-ounce 24K gold buffaloes...and 40,000 silver eagles.  I'll update the month-to-date figures when they're a little more exciting.

The Comex-approved depositories reported receiving 300,197 troy ounces of silver on Tuesday...and all of it went into Brink's, Inc.  There were no withdrawals.

Silver analyst Ted Butler had a few things to say about the current state of affairs in the three and a half year long investigation into the silver price manipulation on the Comex.

"Unlike the current silver investigation, the previous [two] investigations were concluded by the Commission in months, not years. Timing aside, all three silver investigations share a commonality apart from stemming from the same basic core allegation of manipulative short selling. That commonality is the Commission’s refusal to conduct a fair and balanced investigation. I confess to being the instigator behind all three silver investigations (with you being the enabler). Not once, in any of these investigations has the agency ever contacted me or anyone I know who is familiar with the allegations. I even complained to the CFTC’s Inspector General about the one-sidedness of the process. How can you conduct a balanced investigation on manipulative short selling when you only question one side, the shorts?"

"The real problem with the findings of the CFTC of no manipulation in their previous investigations is two-fold. First, it provides a shield and comfort to the perpetrators of the manipulation in that they can continue to hide behind the agency’s findings in the furtherance of an active crime in progress. The longer the CFTC takes to act or report on its current investigation, the comfort to the manipulators is maintained, at a cost to nearly everyone else. Second, the prior findings put the agency in a tricky spot. Because the Commission had previously found nothing amiss in the silver market on two separate occasions, if the agency uncovers any wrongdoing in silver in the current investigation it will, effectively, contradict its former findings. Obviously, it will be loath to do so."

"The fact that the Commission will contradict its former findings should it now find something wrong in silver may explain the unprecedented delay on the part of the Enforcement Division to act. But the reluctance to reverse the former findings is a weak excuse for the Commission to fail in its most basic mission, namely, preventing fraud, abuse and manipulation. Most importantly, the silver manipulation is a crime in progress...and the Commission’s delay in terminating it, has allowed for untold continuing damage to thousands of market participants at the hands of the manipulators. Not once, but twice in 2011 did the silver market plunge by 35% in a matter of days on deliberate price moves lower. It's impossible for a world commodity to suddenly plunge 35% in days without some radical change in real supply and demand in a free market. Aside from proving that the silver market is still manipulated, these price plunges would not have occurred had the Commission acted expeditiously in concluding its current silver investigation."

I have edited the number of stories down to what I feel is a manageable number, so I hope you have time for them all.


¤ Critical Reads

U.S. Faces Downgrade If No Plan: Chambers

The U.S., lacking a plan to contain $1 trillion deficits, faces the prospect of another rating cut in six to 24 months depending on the outcome of November elections, according to John Chambers of Standard & Poor's.

America has had an AA+ rating with a negative outlook since Aug. 5 when the New York-based unit of McGraw-Hill Cos. stripped the nation of its AAA ranking for the first time, citing the government’s failure to agree on a path to reduce deficits. The U.S. has a one-in-three chance of another downgrade, Chamber said today during an S&P sponsored Webcast.

“What the U.S. needs is not so much a short-term fiscal tightening, but it has to have a credible medium-term fiscal plan,” said Chambers, managing director of sovereign ratings. “That is going to have to say something about entitlements, and that is probably going to have to say something about revenues.”

Washington state reader S.A. sent me this Bloomberg story yesterday...and the link is here.


Ban on Insider Trading Faces G.O.P. Revisions

Lobbyists were in a tizzy on Tuesday over provisions of a Senate-passed ethics bill that tighten regulation of lobbying and require secretive “political intelligence” firms to register in the same way as lobbyists.

Representative Tim Walz, Democrat of Minnesota, said the bill, to ban insider trading by members of Congress, was being rewritten behind closed doors by House Republican leaders.

“How ironic,” Mr. Walz said. “Insiders now appear to be writing a bill meant to ban insider trading.”

The bill is intended to restore trust in Congress, but Mr. Walz said the revisions could “make the cynicism that’s rampant in America even greater.”

I think I hear the sound of one hand clapping.  This story was posted in The New York Times on Tuesday...and I thank Phil Barlett for sending it along.  The link is here.


Wall Street Groups Seek to Delay CFTC Limits on Speculation

Two Wall Street groups asked a federal judge to delay a U.S. Commodity Futures Trading Commission rule that limits speculation, saying the regulation is already imposing “significant, irreversible costs.”

The International Swaps and Derivatives Association Inc. and the Securities Industry and Financial Markets Association filed a request yesterday with U.S. District Judge Robert Wilkins in Washington, urging him to put the rule on hold while he considers their legal challenge.

“Compliance efforts will include restructuring of corporate relationships and divestment -- irreversible changes in ownership,” Eugene Scalia, a lawyer for the groups, said in the filing. “These costs are being incurred now and will continue to rise absent a preliminary injunction, and they will be impossible to recoup if the rule is invalidated -- as it likely will be.”

I feel for them, but I can't quite reach them.  This Bloomberg story was posted over at the website yesterday...and it certainly worth running through.  I thank Florida reader Gabe Ferrer for bringing it to my attention.  The link is here.


Brokers suspended in LIBOR manipulation inquiry

More than a dozen traders and brokers in London and Asia have been fired, suspended, or put on leave by their employers as a multinational probe into alleged manipulation of crucial global lending rates accelerates.

Regulators have been investigating US and European banks that help set interbank lending rates in London and Tokyo since late 2010, in an intensive profile inquiry that spans three continents and involves at least nine separate enforcement agencies.

In the last few months, officials have also expanded their enquiries to both hedge funds that place big bets on movements in those rates, and the interdealer brokers that serve as go-betweens with the banks, according to people familiar with the probe.

Once these regulators are through there, they can head on over to the CFTC and get to the bottom of the precious metals price management scheme.  It doesn't sound like it would take them three and half years to discover the obvious.  This Financial Times story was posted in the clear in this GATA release...and the link is here.


For Greece a tear, for Brussels a blush

Very quickly: some of you will have seen that Greece’s tax revenue from VAT collapsed by 18.7pc in January from a year earlier.

Nobody can seriously blame tax evasion for this. It has happened because 60,000 small firms and family businesses have gone bankrupt since the summer.

The VAT rate for food and drink rose from 13pc to 23pc in September to comply with EU-IMF Troika demands. The revenue effect has been overwhelmed by the contraction of the economy.

Overall tax receipts fell 7pc year-on-year.

This is a damning indictment of the EU-imposed strategy. Greece is chasing its tail. The budget deficit is stuck near 8pc to 9pc of GDP because the economic base is shrinking so it makes little difference whether or not Lucas Papademos secures tri-party agreement today – or soon – for a debt deal.

The Greek parliament still has to vote and there is a sauve qui peut mood among MPs who don’t want to be stoned to death (metaphorically) by the polloi – hoi or otherwise.

This very short Ambrose Evans-Pritchard offering from yesterday's edition of The Telegraph is worth the read...and it's Roy Stephens first offering of the day.  The link is here.


Greece agrees on bailout terms

After three days of high drama, political posturing and brinkmanship, Greece's coalition government reached a tentative agreement on the draconian terms required to unlock €130bn (£109bn) in aid for the crisis-hit country on Wednesday night, although the marathon negotiations were set to continue into the small hours.

One senior aide said that by the time the Greek finance minister, Evangelos Venizelos, boarded a plane at 7am to attend Thursday's eurogroup meeting in Brussels, he would have the "finalised text of the agreement in his hands".

Panic hovered over the talks, widely seen as a last chance for Greece to keep bankruptcy at bay. Athens faces debt repayments amounting to €14.5bn in barely six weeks' time – money it simply does not have. Taking the discussions down to the wire had exasperated European leaders and seen markets gyrate in recent weeks.

This story was posted in The Guardian shortly after midnight...and I thank Roy Stephens for digging up this story on our behalf.  The link is here


Who Loaned Greece the Money?

Saving Greece from financial ruin and bankruptcy was not the major concern.  The problem was all the financial institutions that lent Greece all that money in the first place.  If Greece went bankrupt, it would have taken all these other banks with them...and the financial system as we know it today, along with it.

Here, in semi-tractor trailer trucks stacked full of €100 notes, is what Greece owes...and to whom.  It's posted over at the website...and is well worth the look.  I thank reader Jeffrey Lewis for sending me this pictorial essay late last night...and the link is here.


German Industrial Production Unexpectedly Fell in December

German industrial output unexpectedly dropped the most in three years in December as Europe's debt crisis weighed on confidence and the global economic slowdown damped demand.

Production fell 2.9 percent from November, when it stagnated, the Economy Ministry in Berlin said today. That’s the steepest decline since January 2009. Economists had expected output to remain unchanged, according to the median of 41 forecasts in a Bloomberg News survey. In the year, production rose 0.9 percent when adjusted for working days.

While the German economy probably shrank 0.25 percent in the final three months of last year, data this year suggest it may avoid recession, which is commonly defined as two consecutive quarterly contractions. Business sentiment jumped to a five-month high in January and factory orders gained 1.7 percent in December, driven by demand from outside the 17-nation euro area.

This story was posted on the Bloomberg website on Tuesday...and I borrowed it from yesterday's King Report.  The link is here.


Spain pain: ‘Iran oil embargo to backfire on Madrid’

Madrid is becoming concerned at how it is going to compensate for the half of its oil imports which will be lost due to the EU embargo on Iranian oil. The economic crisis is only adding to Spain’s woes.

Spain is suffering the greatest damage from the embargoes against Iran and has always expressed support for the resumption of talks,” said Pedro Antonio Villena Perez, Spain’s new ambassador to Iran on Tuesday in Tehran, as quoted by Iran’s Press TV.

Perez pointed out that Madrid is not among the countries supporting the ban on Iran’s oil and banking sector.

This story was posted on the Russia Today website early this morning...and is another Roy Stephens offering.  The link is here.


Iran's Arsenal Of Sunburn Missiles Is More Than Enough To Close The Strait

Any good armchair general with a good search engine and time on their hands can figure out in a hurry that the song and dance about Iran being unable to close the Strait if Hormuz for long is just a plain crock. Worse than a crock. Yet, this big Orwellian lie persists, so once again I have to set the record straight. Iran has the capability of not only closing the Strait for some time, but creating a world of hurt for the U.S. Navy’s 5th Fleet.

I posted a story about these Sunburn/Onyx anti-ship cruise missiles in this column several years back...and this version showed up in The Wall Street Examiner yesterday...and then was picked up by the website.  It's a must read...and I thank reader Joe Facchini for sending it along.  The link is here.


Want to sell your jewelry? Duluth police want your picture

Duluth police say they want to treat jewelers and antique dealers like pawn shops when it comes to their dealing in precious metals.

A draft city ordinance calls for any Duluth business that purchases precious metal items from the public to be licensed and equipped to provide daily electronic reports of its transactions to a statewide system. Any business purchasing an item that’s more than 1 percent gold, silver or platinum by weight would need to provide notice of the transaction and furnish a picture of the item or items purchased — as well as a color photo of the seller.

But the proposed ordinance has received a chilly reception from several in the local business community, including Dave Blustin, owner of Garon Bros. Jewelry, who called it “onerous.”

Big Brother inches ever closer.  I'm sure glad that I don't live in the U.S.A.  The story was posted in the Duluth News Tribune on Tuesday...and I thank West Virginia reader Elliot Simon for digging this up on our behalf.  The link is here.


Gold miners need gold above $1650 to keep nose above water

Speaking to Mineweb from the sidelines of the 2012 African Mining Indaba conference, AngloGold Ashanti CEO, Mark Cutifani, said, at a price of $1,650 per ounce, gold miners are “only just returning the weighted average cost of capital for the industry”.

This is the number that gold miners need to work from on a real basis he says, but added, “The average cost to produce an ounce of gold, all up, everything loaded in, is about $1,200 to $1,250.

Harmony Gold CEO, Graham Briggs, agrees with Cutifani saying, from Harmony’s perspective, the all-in cost to pull an ounce of gold out of the ground is around $1,250. This figure includes everything from the cost of the Harmony head office to maintenance and its exploration programme which is why it is higher than the $958/oz cash operating cost figure reported by the miner at its half year results on Monday.

This story was filed from South Africa yesterday...and was posted at the website.  I thank reader U.D. for sending it my way...and the link is here.


Japan’s interest in gold and silver is growing

Trading data shows that Japan’s interest in gold and silver has climbed year on year.

“Concerns about the Japanese economy and continuing debasement of the yen may be leading Japanese diversification into gold,” said Mark O’Byrne, executive director at GoldCore, noting that Japan had been “notably absent” in the gold market in recent years.

The “scale of domestic savings in Japan remains enormous,” he said. “This would be a new and potentially extremely important source of demand in the gold market, which could help contribute to much higher gold prices.”

This short article, posted over at the website on Tuesday, is Roy Stephens final offering of the day...and the link is here.


John Hathaway - People Are Right to be Scared...and gold is a Necessity

Eric King send me this John Hathaway blog yesterday...and I consider it a must read.  It's posted over at the King World News website...and the link is here.



¤ The Funnies

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¤ The Wrap

It was just another day off the calendar as Ted Butler mentioned to me on the phone yesterday.  It's still unknown how this is all going to resolve the upside, or the downside.  As is usually the case, the smallish rally that developed during the Far East trading day, got hit shortly before London opened for business...and if you look at the Kitco gold chart at the top of this column, you'll see that was pretty much the case for the last three days running.

To prove that's no fluke, here's Nick Laird's Intraday Average Gold Price Movements chart once again that takes in four years of data...about 1,000 trading days...according to the insert on Nick's chart below.  You can see that over those 1,000 trading days, the rallies that begin in the Far East run into a not-for-profit seller about five minutes before trading begins in London.

(Click on image to enlarge)

This ain't rocket science, dear reader, it's the Anglo/American gold price fixing scheme in action.  Over this four year period, the price bias, on average, has been negative from five minutes before the London open, until 11:35 a.m. in New York.  It's been like that since at least 1999...and is still in force as of this writing.

In Far East trading earlier today, it appeared to be the same pattern, as the smallish rally in gold that developed, got rolled over around 3:30 p.m. Hong Kong time...which was 7:30 a.m. in London...30 minutes before their open.  In silver, both small rally attempts got sold off in Far East trading...and the silver price rolled over at the same time as the gold price.  Both metals are about unchanged as of 5:11 a.m. Eastern time...and volumes are getting up there, which is typical of the high-frequency trading programs going on at the moment.  The dollar index isn't doing a lot.

It will be interesting to see how the price pattern in both metals develop as the trading day proceeeds.

That's pretty much all I have for today.  Tomorrow we get the new Commitment of Traders Report...along with the new Bank Participation Report...and I doubt that either will make for happy reading.

See you on Friday.