Gold & Silver Daily
 

¤ Yesterday In Gold & Silver

I'd forgotten all about the jobs report when I first saw the precious metal charts yesterday morning---and the price activity made perfect sense once I discovered that fact.

The gold price rose and fell a few bucks during the Far East and early London trading sessions on their Friday---and the gold price was back to unchanged by 1 p.m. in London, which was twenty minutes before the COMEX open and thirty minutes before the job numbers were released.

The sell-off began at 1 p.m. GMT---and then the HFT boyz spun their algorithms at 8:30 a.m. EST---and once the sell stops were hit, the technical fund/managed money long holders headed for the exits in droves.  The low tick of the day came a few minutes after London closed for the weekend---and the gold price didn't do much after that.

The CME Group recorded the high and low ticks as $1,269.00 and $1,228.20 in the April contract.

Gold closed the Friday session in New York at $1,233.30 spot, down $31.20 from Thursday's close.  Net volume was pretty heavy at 194,000 contracts.

Here's the 5-minute gold chart from yesterday, with over 90 percent of the volume coming between the 8:30 a.m. EST release of the job numbers---and the low tick of the day that came shortly after 11 a.m. in New York.  I thank Brad Robertson for sending it---and don't forget to add 2 hours for EST, as this chart is MST.  The 'click to enlarge' features helps this chart---and every other one in my column as well.

The silver price chopped more or less sideways until the noon silver fix was done in London---and then it rallied a bit until 1 p.m. GMT.  After that, the silver price followed the gold price chart to the letter right up until the low tick was in minutes after 11 a.m. EST.  From there the silver price rallied a bit into the close.

The high and low prices were recorded as $17.37 and $16.545 in the March contract.

Silver closed yesterday at $16.685 spot, down 53.5 cents from Thursday's close.  Net volume was 48,000 contracts.

The price paths in platinum and palladium were more of the same.  Platinum got clobbered for 30 bucks---and palladium was closed down 8 dollars.  Here are the charts.

The dollar index finished the Thursday trading session at 93.59---and traded more or less flat through all of Far East and early London trading.  A few minutes before the job numbers hit the tape, the index went vertical, but the rally became more subdued once the numbers were actually out.  The dollar index topped out around 94.75 shortly before the 1:30 p.m. EST COMEX close---and it gave up handful of basis points during the remainder of the Friday session.  The index closed at 94.67---up 108 basis points.

Here's the 6-month U.S. dollar index chart so you can see where we're at as of Friday's close.

As you're already more than aware, the gold stocks got crushed---and despite a couple of weak rally attempts, they closed almost on their lows of the day, as the HUI was smoked to the tune of 5.43 percent.

The silver equities followed a similar path, but their performance [relatively speaking] was somewhat better, as Nick Laird's Intraday Silver Sentiment Index closed down 'only' 3.95 percent.

The CME Daily Delivery Report showed that only 4 gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  Nothing to see here.

The CME Preliminary Report for the Friday trading session showed that February open interest in gold declined by 56 contracts, leaving 786 contracts still open.  In silver, February o.i. dropped from by 67 contracts, leaving 25 contracts remaining.

There were no reported changes in GLD yesterday---and as of 7:17 p.m. EST yesterday evening, there were no reported changes in SLV.

After the big engineered price declines in both gold and silver yesterday, I'll be more than interested in the activity in GLD next week.  I'm not expecting much of anything to happen in SLV, as it's a given that the custodian---JPMorgan---along with other authorized participants, are covering their short positions in SLV that they established in lieu of depositing real silver during the rally just ended.

And as I said in this space yesterday, the latest short positions in both GLD and SLV, as of the end of January, will be posted on the shortsqueeze.com Internet site on Monday---and I'll have the details for you in Tuesday's column.  I'm expecting a big decline in the short position in GLD, along with a huge increase in the short position in SLV.

There was another small sales report from the U.S. Mint yesterday.  They sold another 141,500 silver eagles---and that was all.

Month-to-date the mint has sold 2,500 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and 752,000 silver eagles.  Based on these sales, especially in gold, the silver/gold ratio isn't worth computing, as it's well over 100 to 1---and rather meaningless.

However, having said that, it appears the the mint is producing silver eagles at maximum capacity despite the fact that gold sales both month-to-date and year-to-date are stinking up the place.  I know for a fact that retail precious metal sales suck right now, so Ted's big silver buyer [JPMorgan] is probably picking up all the silver eagles that the retail buyers aren't.

I'm expecting the Royal Canadian Mint to post its 2014 annual report on its website soon---and I'm sure that they had a very strong 4th quarter for silver maple leaf sales as well, along with another record year.  I'll let you know when it comes out, as I'm checking their website on a daily basis now.

There was almost no in-out activity in gold worthy of the name over at the COMEX-approved depositories on Thursday---803 troy ounces in, and 3 kilobars out.  There was finally some decent activity in silver, as 597,794 troy ounces were reported received---and 661,947 troy ounces were shipped out.  Virtually all of the activity was at the Scotiabank depository.  The link to the silver action is here.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday showed a decent improvement in silver---and a rather smallish improvement in gold.

In silver, the headline number in the legacy COT Report showed that the Commercial net short position improved by 5,394 contracts, or 27.0 million troy ounces.  The new Commercial net short positions now stands at 281.0 million troy ounces.  Ted pegs JPMorgan's short position at 20,000 contracts, or 100 million troy ounces, over a third of the total Commercial net short position.

Under the hood in the legacy report, the managed money traders in the technical fund category reduced their long positions by 1,466 contracts and added 1,371 short contracts.

I didn't have a change to talk to Ted Butler yesterday, but I got a 2-line e-mail from him with the highlights---and not much else---so I don't have all the details.

In gold, the Commercial net short position declined by only 2,887 contracts, which equates to 288,700 troy ounces, which is only a tiny improvement.  The Commercial net short position in gold now sits at 20.33 million troy ounces.  Ted says that JPMorgan's long position has vanished---and they may actually be short the gold market again.

But in the Disaggregated Report the Managed Money traders reduced their long position 5,800 contracts, but they also reduced their short position by 889 contracts as well.

Of course the above numbers are "yesterday's news" after the big engineered decline in gold and silver on Friday, so we'll just have to wait another week to see what the new numbers show.

Here's Nick's "Days of World Production to Cover COMEX Short Positions" for all physically traded commodities on the COMEX.  I note that the short position of the Big 8 traders in silver remains unchanged from last week at 156 days.

And as ugly as the overall COT numbers are, the new February Bank Participation Report [BPR] was even more depressing.  I could hardly believe them as I was writing them down---and the deterioration is more than obvious in the BPR charts in gold and silver---and to a lesser extent in platinum as well.

In gold, "3 or less" U.S. banks are net short 56,738 COMEX gold contracts, which is a monstrous blow-out from their 8,616 contract short position they held in the January BPR.  In ounces it's a 4.1 million ounce change for the worst.  Since there are "3 or less" U.S. banks involved, the bulk of these short positions are held by HSBC USA and Citigroup.  But as Ted mentioned in his comment in the COT Report, JPMorgan may actually hold a small short position in the COMEX gold market as well.

Also in gold, "21 or more" non-U.S. banks are net short 76,255 COMEX gold contracts.  The prior month they were short 51,991 contracts.  This is an increase of more than 24,000 contracts, or 2.4 million ounces held short from the January report.  It's my opinion that Canada's Scotiabank holds about 40 percent of this amount all by itself, at least it did in January's BPR, but that ratio may have decreased slightly in the February report, but not by much.

Here's Nick's chart showing those changes---and you have to go back a couple of years to see an uglier Bank Participation Report in gold than you're looking at here.  Note that the long positions in gold held by the U.S. and non-U.S. banks combined are the smallest they've been since early 2010---and the short positions of these same banks are the largest they've been since February 2013.  Charts #4 and #5 are the two you should concentrate on---and the 'click to enlarge' feature really helps here.

In silver, "3 or less" U.S. banks are currently net short 18,968 COMEX silver contracts.  In the January BPR, these same banks were net short 10,240 COMEX silver contracts, an increase of 85 percent in just one month.  Since Ted says that JPMorgan is short 20,000 contracts by themselves, that means that the other two banks, or maybe one U.S. bank, has to be net long the COMEX silver market.  If there are two banks, they would be HSBC USA and Citigroup, the same as gold---and if only one bank, I'm sure it would be HSBC USA.

Also in silver, "12 or more" non-U.S. banks are net short 28,753 COMEX silver contracts.  In January, these same banks were net short 18,046 COMEX silver contracts, an increase of just under 60 percent in one month.  Canada's Scotiabank most likely holds about 50 percent of the February BPR COMEX short position all by itself---and that may be a conservative number.

Here's the Bank Participation Report chart for silver updated with February's data---and as you can tell from Chart #4, the short positions of the U.S. and foreign banks combined hasn't been this large since January of 2013.  Don't forget the 'click to enlarge' feature.

In platinum, "3 or less" U.S. banks are net short 7,522 COMEX platinum contracts in the latest BPR.  In the January BPR, these same banks were short 4,188 contracts, which is an 80 percent increase in just one month.

Also in platinum, "15 or more" non-U.S. banks are net short 9,782 COMEX contracts.  The prior month they were short 6,260 COMEX contracts, a more than 50 percent increase in one month.

In palladium, "3 or less" U.S. banks are net short 8,260 COMEX contracts which is an improvement from the January BPR when these same banks were short 8,376 contracts.  It wasn't a large change for the better, but at least the change was in the right direction.

Also in palladium, "14 or more" non-U.S. banks are currently net short 2,370 COMEX contracts, a big improvement [21%] from the 3,010 COMEX contracts they were short this metal in the January BPR.

But checking the palladium BPR chart below, these month-over-month improvements are an illusion, as these banks have been massively short the palladium market for more than two years now.  Before that, their presence was virtually non-existent, especially the non-U.S. banks.

As you can tell, with the exception of palladium, the banks of the world---especially the "3 or less" U.S. banks, have been going massively short against all comers since these latest rallies in gold, silver and platinum began at the start of 2015.  Along with a couple of Wall Street investment houses, these are "da boyz'---the sellers of last resort---and you can call them what you like.

Nick sent along a couple of charts last evening that I'll stick in here.  The first is the official gold imports to China via Hong Kong during December.  Six months ago I'd written this chart off as irrelevant, but that was obviously a premature decision, as 71.381 tonnes were imported in December.

The other chart is the weekly withdrawal report for the Shanghai Gold Exchange.  For the week ending Friday, January 30, withdrawals were an impressive 53.669 tonnes.

I have a lot of stories today, along with a bunch that I've been saving for my Saturday column---so I hope you have the time over the weekend to read the ones that interest you.

 

¤ Critical Reads

Why is Goldman Suddenly Banging the Table on the Scariest Chart in the Jobs Report

Following the January jobs report, Goldman's chief economist Jan Hatzius appeared on CNBC but instead of joining Steve Liesman in singing the praises of the "strong" the report (which apparently missed the memo about the crude collapse), he decided to do something totally different and instead emphasize the two series that none other than Zero Hedge has been emphasizing for years as the clearest indication of what is really happening with the U.S. labor market: namely the recession-level civilian employment to population ratio and the paltry annual increase in average hourly earnings.

This is what Hatzius said:  "The employment to population ratio is still 4% below where it was in 2006. You can explain 2% of that with the aging of the population that still leaves quite a lot of room potentially, and the wage numbers are telling us we are just not that close, although we are getting closer."

Closer to what? Why the most dreaded event for any FDIC-backed hedge fund in the world: the Fed not only ending some $3 trillion of liquidity injections but actively starting to remove liquidity by tightening monetary conditions and rising rates.

Hatzius' punchline: "I think the case for "patience" is still quite strong." In other words, the U.S. may be creating almost 300K jobs per month, but stocks are still not high enough.

In case anyone didn't notice, the Dow actually closed down on the day on Friday.  I'm sure that the powers that be aren't happy about that.  This is another Zero Hedge piece from yesterday.  This one was posted on their website at 2:30 p.m. EST yesterday afternoon---and it's another contribution from Dan Lazicki.

Read more...

Stocks will be 'ripped to smithereens': SocGen bear

Societe Generale's notoriously bearish strategist, Albert Edwards, has warned that the deflation threat currently dogging the euro zone is greater in the U.S. and that equity markets will soon be "ripped to smithereens."

"The deflationary fault line on which the U.S. sits is every bit as precarious as that of the euro zone, but is being disguised," he said in a new research note on Thursday.

"The scales will soon lift from the market's eyes."

Despite years of central bank easing, consumer price growth across the world has begun to stagnate with the euro zone recently falling into deflationary territory - when consumer price growth turns negative. An official flash figure for the 19-country region last week showed prices fell by 0.6 percent year-on-year in January.

The 2:53 minute embedded video clip in this story appears unrelated.  This article showed up on the cnbc.com Internet site at 8:20 a.m. EST on Thursday morning---and I thank Brad Robertson for sharing it with us.

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The New York Sun: The Fed's right mind?

It looks like the Federal Reserve is starting to worry about Senator Rand Paul's plan to audit the central bank. The way the Hill newspaper, which covers Congress, puts it this week is that the Fed is "lashing out" at Mr. Paul's plan, which, it said, could gain traction now that the Republicans are in control of the Senate as well as the House. It quotes the president of the Dallas Fed, Richard Fisher, as demanding, in an interview, "Who in their right mind would ask the Congress of the United States -- who can't cobble together a fiscal policy -- to assume control of monetary policy?"

Who in their right mind? How about George Washington, James Madison, Alexander Hamilton, and the rest of the rest of the authors of the Constitution. ...

If the Congress is so inept at budgeting, why has the Federal Reserve been buying up the paper it's kiting? The Fed has taken onto its books more than $2 trillion in federal debt.

This editorial appeared on The New York Sun website yesterday---and I found it in a GATA release.

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World record debt of $199 trillion could drag economies into another crisis - study

Global debt has soared by $57 trillion since the outbreak of the financial crisis in 2007, with the debt to GDP ratio jumping to above 500 percent in Japan. This raises questions about financial stability and poses a threat of another crisis.

“After the 2008 financial crisis and the longest and deepest global recession since World War II, it was widely expected that the world’s economies would deleverage. It has not happened. Instead, debt continues to grow in nearly all countries, in both absolute terms and relative to GDP. This creates fresh risks in some countries and limits growth prospects in many,” according to new research carried out by consultants McKinsey in 47 countries.

The amount of world debt reached $199 trillion at the end of 2014, with the growth rate exceeding the pace of global economic expansion and the debt to GDP ratio increased from 269 to 286 percent.

“Higher levels of debt pose questions about financial stability and whether some countries face the risk of a crisis.”

No kidding!  Really?  Who would have thought that.  This news item, which is worth reading, appeared on the Russia Today website at 10:53 a.m. Moscow time on their Friday morning, which was 2:53 a.m. EST.  This news story is courtesy of South African reader B.V.  This story also appeared on The Telegraph's website yesterday as well---and the headline over there reads "Instead of paying down its debts, the world’s gone on another credit binge".  I thank Roy Stephens for that one.

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Doug Noland: "What Happened to Deleveraging?"

Bloomberg’s Simon Kennedy did a nice job with “A World Overflowing With Debt,” as did the Financial Times’ Ralph Atkins with “Debt Mountains Spark Fears of Another Crisis.”

Kudos to Richard Dobbs, Susan Lund, Jonathan Woetzel and Mina Mutafchieva, of the McKinsey Global Institute, for their comprehensive (136 page!) report:  “Debt and (Not Much) Deleveraging.” Preferring to let quality research speak for itself, I’ve excerpted extensively:

“What Happened to Deleveraging?  The global financial crisis of 2007–08 was sparked by the accumulation of excessive debt and leverage in many advanced economies, particularly in the household and financial sectors. After the September 2008 collapse of Lehman Brothers, governments took unprecedented actions to preserve the financial system. One reasonable expectation in the years following the crisis and the ensuing global recession was that actors across the economy would reduce their debts and deleverage. However, rather than declining, global debt has continued to increase. Total global debt rose by $57 trillion from the end of 2007 to the second quarter of 2014, reaching $199 trillion, or 286% of global GDP. Rising government debt in advanced economies explains one-third of the overall growth, as falling tax revenue and the costs of financial sector bailouts raised public sector borrowing. Growing debt of developing economies accounts for half of the growth. China’s total debt has quadrupled since 2007, reaching $28 trillion, accounting for 37% of growth in global debt.”

“Government debt has grown by $25 trillion since 2007, and will continue to rise in many countries, given current economic fundamentals… Government debt in advanced economies increased by $19 trillion between 2007 and the second quarter of 2014 and by $6 trillion in developing countries.”

Doug Noland's weekly Credit Bubble Bulletin appeared on this website yesterday evening---and sometime over the weekend I'll get around to reading it, as his commentaries are always on my must read pile.

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U.S. Rig Count Collapse Accelerates, Production Stays High

The worldwide rig count ended January at 3,309, down 261 from December but it is the US and Canada that is dominating that collapse. Following last week's all-time record absolute drop of 94 rigs (over 7%, most since April 2009), the oil rig count dropped for the 9th week in a row (down another 83 to 1,140 rigs - down 27% in last 9 weeks) as it tracks the 4-month lagged oil price perfectly.

The Permian basin saw the biggest cut in rig count. This is the lowest oil rig count since Dec 2011 (down 19.5% YoY) and lowest total rig count in the U.S. since March 2010 - down 25% in the last 9 weeks). Hopes of production cuts are simply wrong as the last four times that rig counts have dropped, no production cuts have occurred.

This short Zero Hedge piece contains some excellent charts---and is worth the trip for that reason alone, if the subject interests you, that is.  It showed up on their website at 1:12 p.m. yesterday afternoon EST---and it's another contribution from Dan Lazicki.

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Massive Oil Deflation - Warning From Mike Maloney In 2010

Here is a flashback to Mike Maloney's speech at the 2010 Russian Banking Conference in Sochi, Russia. Although the predicted move in oil took longer than anticipated, it is playing out nonetheless.

Watch this amazing video to see Mike warning Russia's banking and government elite that their time in the sun may soon be coming to an end. This video was originally posted on our Wealth Cycles channel on September 21, 2010.

Mike doesn't pull any punches here.  This 25:36 minute video clip was posted on the youtube.com Internet site on Tuesday, but for content and length reasons, had to wait for today's column.

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Denmark's Central Bank Fiercely Defends Currency Peg

Denmark's central bank governor pledged to face down speculators testing its currency peg to the euro, saying he would do "whatever it takes" to defend it.

Lars Rohde told the Financial Times that Nationalbank could "go on forever" defending the peg, after lowering interest rates four times in three weeks to a global record low of minus 0.75 per cent. It has also swelled its balance sheet to a record size by printing krone in an attempt to weaken the Danish currency.

"The main message is that we are ready to do whatever it takes to defend the peg. We have unlimited access to Danish krone and we have no restrictions on our balance sheet," he said, in his first public comments since the recent quadruple rate cuts.

Talk is cheap---but someday they'll have to withdraw support, it's a simple as that.  The above three paragraphs are all that is posted in the clear in this Financial Times story from Friday---and I found it embedded in another GATA release.

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Alexis Tsipras Tours Europe as Greek Government Begins Reform

Something has happened in Greece that has not happened like this anywhere else in Europe: A handful of neophyte politicians, intellectuals and university professors have taken over the government. It feels like a small revolution instead of a handover of duties. And that's not only because many members of the previous administration deleted their hard drives and took their documents with them, or that there initially wasn't even any soap in the government headquarters. No, the new government has upended the rules of the Greek political system -- and spurred into action a Europe that is still unsure how it should react to the rebels.

In Athens you can also see the euphoria reflected in the city's traffic, which is a yardstick for the crisis. The streets had often been half empty, because fewer people were traveling to work, the gasoline was expensive, the mood gloomy. But now the city center is just as clogged as before. The people are once again in motion.

Even though only 36 percent of voters chose Syriza, 60 percent of Greeks are happy with new government's first few days. If there were new elections, support for the party could grow and Tsipras could renounce his coalition partner. Although he may be entertaining that scenario privately, members of the government deny that it is in the cards. But to maintain this enthusiasm, Tsipras now needs to show a real accomplishment: an end of the German "austerity mandate." Which means that he doesn't merely need to convince the Greeks, he needs to conquer Europe.

For this reason, Alexis Tsipras and his finance minister Giannis Varoufakis have embarked on a roadshow -- Nicosia, London, Paris, Rome, Brussels and, finally, Berlin. The trip will be a balance between defiance and charm, and along the way he will be confronted with fears and a ticking clock. The current aid program for Greece runs out at the end of February, and on top of that, Greeks have withdrawn billions of euros from their private savings accounts in the past several weeks.

This essay showed up on the German website spiegel.de at 8:07 p.m. on Friday evening Europe time---and Roy Stephens pulled it off their website about twenty minutes after it was posted.  I also sports a new headline which reads "Defiance and Charm: A Measured First Week for New Greek Leader".

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Why did Greece's Varoufakis bring up Nazis in Berlin?

Within a fortnight as Greece's finance minister, he has rocked up to the UK's Downing Street in a leather trench coat and electric blue shirt, redefined icy body language with the Dutch finance minister and now, on his first visit to Berlin, talked openly about an issue that many seasoned politicians would shy away from.

"Germany must be proud of the fact that Nazism has been eradicated here," he said in a press conference with his German counterpart.

In a TV interview the night before, he brought up the economic depression in Weimar Germany that brought Adolf Hitler to power.

Not quite Basil Fawlty level, but Mr Varoufakis certainly did "mention the war" - and hopes he got away with it.

This interesting article appeared on the bbc.com Internet site at 2:34 p.m. EST on Friday afternoon---and I thank reader B.V. for his second offering in today's column.

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Greek stand-off pushes Europe to the brink

One of the curiosities of financial markets is that when confronted with the possibly catastrophic consequences of unfolding events, they tend to assume rational, least-damage outcomes, a mind-set they stick to right up to the moment they’re proved wrong.

Perhaps the most famous example was in the run up to the First World War: even after the assassination of Archduke Ferdinand, markets remained in a state of blissful unconcern, notwithstanding the ever more deafening sound of sabre rattling. Nobody could surely be so stupid as to go to war. But they were, and as the borders closed, the world succumbed to one of the worst financial crises in modern history.

By now you will have guessed where this is heading. I was at a presentation in the City the other day, listening to some leading bond market strategists giving their thoughts on the outlook for interest rates. Naturally, they were asked about Greece. The prevailing view was that some kind of compromise would be cobbled together, one that would allow both sides to claim victory and prevent a messy Greek exit from the euro. “There is common, rational ground between Berlin and Athens in terms of flexibility around the size of the primary surplus and the interest rate Greece is charged on its debts,” one of the strategists said.

Really? What perhaps ought to be the case is, in practice, a very long way from it. The first cracks in this oddly sanguine view of a fast deteriorating situation appeared on Wednesday night, when the European Central Bank said it would refuse to take Greek collateral.

Why markets had assumed a different result is a bit of a mystery; it was always inevitable that the ECB would stop providing support if the terms of the bailout were breached. In all currency zones, central bank “lender of last resort” facilities are conditional on solvency, and in no universe could Greece be regarded as solvent.

This commentary by Jeremy Warner appeared on the telegraph.co.uk Internet site at 7:00 p.m. GMT on their Thursday evening---and I thank Roy Stephens for sending it our way.

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S&P Downgrades Greece, Suggests Worst Case Scenario With Bank Runs and "Capital Controls": Full Report

And the hits keep coming. On the heels of a demand for repayment of ECB's profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on...

  • GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER

This downgrade comes just 5 months after upgrading Greece because "risks to fiscal consolidation in Greece have abated." EUR/USD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again.

What is scariest, is that a day after we first noted the increasing whispers of capital controls and bank runs, S&P itself mentions this!

In our view, a prolongation of talks with official creditors could also lead to further pressure on financial stability in the form of deposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece's exclusion from the Economic and Monetary Union.

This news item put in an appearance on the zerohedge.com Internet site at 1:14 p.m. EST on Friday afternoon---and once again my thanks go out to reader Dan Lazicki.  Another ZH piece, bearing slightly different information was posted on their website at 3:02 p.m. EST.  It's headlined "Eurogroup Gives Greece 10 Day Ultimatum: Apply For Bailout or Grexit"---and I thank Dan for this one as well.

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Pepe Escobar: Troika Trojan horse: Will Syriza capitulate in Greece?

The 2015 Greek tragedy is a sorry (financial) remix of the Trojan War. But now the troika (ECB, EC, IMF) has replaced Greece, and Greece is the new Troy.

It is now crystal clear the ECB will pull no punches to turn Greece into a European failed state. The rationale: others – from Spain to even, in the near future, France – must not entertain funny ideas. Toe the austerity line, or we’ll get medieval on you.

It was so predictable that the destiny of Athens – and in fact the euro – would ultimately rest in the hands of ECB Governor Mario ‘Master of the Universe’ Draghi, purveyor of the latest QE which in thesis will grant an austerity-ravaged Europe a little extra time to pursue ‘reforms’.

Some background is essential. The troika sold Greece an economic racket, but it’s the Greek people that are paying the price. Essentially, Greece’s public debt went from private to public hands when the ECB and the IMF ‘rescued’ private (German, French, Spanish) banks. The debt, of course, ballooned. The troika intervened, not to save Greece, but to save private banking.

Pepe doesn't gild any lilies in this essay.  It appeared on the Russia Today website at 7:10 a.m. Moscow time on their Friday morning---and the first person through the door with this was reader B.V.

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Putin meets Merkel, Hollande behind closed doors in Moscow

Media reports earlier suggested that Hollande and Merkel’s visit to Moscow was a snap decision made without consulting Washington. After Hollande said on Thursday that “together with Angela Merkel we have decided to take a new initiative,” French media hinted that the decision to visit Moscow came as an attempt to present a viewpoint on solving the Ukrainian crisis that differs from the US one.

Le Nouvel Observateur reported that this “historic initiative” on Hollande and Merkel’s part was preceded by “secret” talks between Paris, Berlin and Moscow. The French weekly also suggested that the EU leaders are meeting Putin “to get ahead of the Americans, who are trying to impose their solution to the problem on Westerners: a transfer of weapons to Ukraine.”

There is clearly a disagreement between Washington and Brussels over arming Ukraine, says Nicolai Petro, Professor of Politics at the University of Rhode Island.

This must read news item appeared on the Russia Today website at 5:55 p.m. Moscow time on their Friday afternoon, which was 9:55 a.m. in New York.  The story is courtesy of Roy Stephens.

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Peskov: joint document is being drafted after Putin-Merkel-Hollande meeting

Russia, Germany and France are working on the draft of a likely joint document for the implementation of the Minsk Accords, Russian presidential press-secretary Dmitry Peskov said after Friday’s talks by the leaders of Russia, France and Germany, adding that on Sunday the troika and Ukraine’s President Pyotr Poroshenko would summarize the results of that work in a telephone conversation.

"On the basis of proposals formulated by the French president and the German chancellor joint work is in progress to draft the text of a likely joint document for the implementation of Minsk Accords that would incorporate proposals by the Ukrainian president and those formulated today and added by Russian President Vladimir Putin," Peskov said.

He explained that was being done "for presenting this text and these proposals for approval to all parties to the conflict."

"The work will go on and its preliminary results will be summarized next Sunday, in a Normandy format telephone conversation at the summit level," Peskov said.  He described the just-ended talks as meaningful and substantive.

This news item, filed from Moscow, appeared on the itar-tass.com Internet site at 2:16 a.m. Moscow time on their Saturday morning, which was 6:16 p.m. in New York Friday evening---and I thank Roy Stephens for sliding it into my in-box in the wee hours of this morning.

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Poroshenko to discuss Donbas settlement in Munich on Saturday

Ukraine’s President Petro Poroshenko will discuss settlement in Donbas on Saturday during his visit to Munich and will meet officials of the European Union, United States and NATO military alliance, deputy chief of Ukraine’s presidential staff Valery Chaly said on Friday.

Poroshenko is to start his working day with a meeting of NATO Secretary General Jens Stoltenberg, he said.

"We anticipate NATO’s announced clear-cut position, which we are ready to react to," Chaly said noting that it included "concrete ways of interaction and NATO’s trust funds for Ukraine."

Chaly said a tripartite meeting of Poroshenko, US Vice-President Joe Biden and German Chancellor Angela Merkel was planned.

This interesting news item, filed from Kiev, was posted on the itar-tass.com Internet site at 9:53 p.m. Moscow time on their Friday evening---and it's the second contribution in a row from Roy Stephens.

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A Multi-polar world. Evgeny Fedorov talks to Turkish Aydınlık

Evgeny explains the road-map from the uni-polar world, where vassal states are kept under control using terrorist organizations (AQ, ISIS, etc) and color revolutions, to the multi-polar world, based on voluntary partnerships and national sovereignty.

Among the details are the re-direction of the South Stream gas pipeline via Turkey and specific measures to take Russia out of its economic crisis: lower interest rates, de-dollarization and freezing corporate debt payments under counter-sanctions.

No flies on this guy, as he has a keen grasp of the entire Ukraine/Russia situation---and beyond.  If I had to pick just one story/video for you out of today's column, this would be it!  The 12:15 minute video interview, with subtitles, was conducted back on January 11---and it falls squarely in the absolute must read/watch/listen category.  For time/content reasons, it's another item that had to wait for my Saturday missive.

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William Pesek: Is China preparing for currency war

China has entered the global monetary-easing fray, along with more than a dozen other economies, after its central bank surprised investors by cutting reserve requirements 50 basis points to spur lending and combat deflation. But Beijing may be raring for an even bigger and more perilous fight -- in the currency markets.

Reducing the amount of cash that banks are required to set aside (to 19.5 percent), as China has just done, is largely symbolic -- a don't-panic-we're-on-top-of-things reassurance to international markets and local property developers. Still, the move is also an inflection point. China is in all likelihood about to loosen monetary policy considerably to support economic growth. If global conditions worsen, China's one-year lending rate, now at 5.6 percent, could head toward zero.

At the same time, something else is afoot in Beijing could have even greater global impact. The central bank is cooking up measures to widen the band in which its currency trades. People's Bank of China officials say it's about limiting volatility as capital zooms in and out of the economy. Let's call it what it really is: the first step toward yuan depreciation and currency war.

This commentary appeared on the Bloomberg website at 9:25 p.m. EST on Thursday evening---and it's definitely worth reading.  I found this on the gata.org Internet site.

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The Same Old Dirty Tactics---Venezuela: a Coup in Real Time

There is a coup underway in Venezuela. The pieces are all falling into place like a bad CIA movie. At every turn a new traitor is revealed, a betrayal is born, full of promises to reveal the smoking gun that will justify the unjustifiable. Infiltrations are rampant, rumors spread like wildfire, and the panic mentality threatens to overcome logic. Headlines scream danger, crisis and imminent demise, while the usual suspects declare covert war on a people whose only crime is being gatekeeper to the largest pot of black gold in the world.

This week, as The New York Times showcased an editorial degrading and ridiculing Venezuelan President Maduro, labeling him “erratic and despotic” (“Mr. Maduro in his Labyrinth”, NYT January 26, 2015), another newspaper across the Atlantic headlined a hack piece accusing the President of Venezuela’s National Assembly, Diosdado Cabello, and the most powerful political figure in the country after Maduro, of being a narcotics kingpin (“The head of security of the number two Chavista defects to the U.S. and accuses him of drug trafficking”, ABC, January 27, 2015). The accusations stem from a former Venezuelan presidential guard officer, Leasmy Salazar, who served under President Chavez and was recruited by the U.S. Drug Enforcement Agency (DEA), now becoming the new “golden child” in Washington’s war on Venezuela.

Two days later, The New York Times ran a front-page piece shaming the Venezuelan economy and oil industry, and predicting its downfall (“Oil Cash Waning, Venezuelan Shelves Lie Bare”, Jan. 29, 2015, NYT). Blaring omissions from the article include mention of the hundreds of tons of food and other consumer products that have been hoarded or sold as contraband by private distributors and businesses in order to create shortages, panic, discontent with the government and justify outrageous price hikes. Further, multiple ongoing measures taken by the government to overcome the economic difficulties were barely mentioned and completed disregarded.

No surprises here, as the American Empire is everywhere.  This short essay showed up on the counterpunch.org Internet site on Monday---and had to wait for a spot in today's column.  It's certainly worth reading if you have the interest---and I thank Brad Robertson for sharing it with us.

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Sprott Money Weekly Wrap up with Eric Sprott

Listen to Eric Sprott share his views on the geopolitical situation in the Eurozone, growing skepticism about U.S. economic data, the amount of gold being sold in the GLD, and silver margin increases.

This 10:22 minute audio interview with Eric was conducted by my friend Geoff Rutherford---and it's worth your while.

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South Africa power cuts threatening mining output

The Energy Intensive Users Group of Southern Africa's Shaun Nel says load shedding are becoming too frequent for the largest users to plan their production processes.

Mining companies in South Africa risk missing output targets because of the largest power-plant breakdowns in three years, the biggest mines lobby said.

The regularity of cuts is making it difficult for companies’ to remain flexible and work around them, said Roger Baxter, chief operating officer of the Chamber of Mines.

Eskom Holdings SOC Ltd., the utility that provides 95 percent of the nation’s power, rationed supply for a fourth straight day and the seventh time this year. Its aging plants are breaking down more often and the startup of new capacity has been delayed by construction issues and labor unrest. The country is the world’s no. 1 producer of platinum, the sixth- largest of gold and seventh-biggest of coal.

This very interesting Bloomberg news item put in an appearance on the mineweb.com internet site at 11:47 a.m. EST on Friday morning---and I thank Dan Lazicki for bringing it to my attention, and now to yours.

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Jim Rickards: The Dollar Will Die with a Whimper, Not a Bang

Officially, China reports that it has 1,054 metric tonnes of gold in its reserves. However, these figures were last updated in 2009, and China has acquired thousands of metric tonnes since without reporting these acquisitions to the IMF or World Gold Council.

Based on available data on imports and the output of Chinese mines, it is possible to estimate that actual Chinese government and private gold holdings exceed 8,500 metric tonnes, as shown in the chart below.

Assuming half of this is government owned, with the other half in private hands, then the actual Chinese government gold position exceeds 4,250 metric tonnes, an increase of over 300%. Of course, these figures are only estimates, because China operates through secret channels and does not officially report its gold holdings except at rare intervals.

China’s gold acquisition is not the result of a formal gold standard, but is happening by stealth acquisitions on the market. They’re using intelligence and military assets, covert operations and market manipulation. But the result is the same. Gold is flowing to China today, just as gold flowed to the U.S. before Bretton Woods.

This must read commentary by Jim appeared on the dailyreckoning.com Internet site yesterday---and it's the final offering of the day from Dan Lazicki, whom I thank on your behalf.

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Koos Jansen: Shanghai gold off-take in January was 'staggering'

In the last trading week of January another huge quantity of gold left the vaults of the Shanghai Gold Exchange (SGE). According to the latest SGE data nearly 54 tonnes were withdrawn in week 4 (January 26 – 30), down 24% w/w. Year to date a staggering 255 tonnes has been withdrawn, up 4% from the strongest January ever in 2014.

Corrected by the volume traded on the Shanghai International Gold Exchange (SGEI), withdrawals in week 4 were at least 42 tonnes. Year to date withdrawals corrected by SGEI volume were at least 230 tonnes.

This commentary by Koos appeared on the Singapore Internet site bullionstar.com sometime yesterday---and I found it embedded in another GATA release.  It's definitely worth reading.

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¤ The Funnies

Here are three different desert environments that I photographed during the drive between Phoenix and Tuscon.  All were taken in what is called the Sonoran Desert---and the vegetation, including the amounts and types of cactus that grow, varies wildly depending on elevation, yearly precipitation and location.  Some places there's very little or none---and some places it's overwhelming, such as shown in the third photo.  I went for a walk at that spot---and I'd describe it as a benign, but potentially lethal environment.  One wrong move, false step, or moment of inattention---and you're in a world of hurt.

The deserts of Arizona have a beauty all their own---and it's an area that I could have spent much more time in, if I'd had it to spend.  But, after my first foray into the desert, I acknowledged to myself that I always entered that environment at my own risk, knowing that I had to give it the respect it deserved---and demanded.

By the way, the "click to enlarge" feature works well here.















Integra's Lamaque South Gold Project and Sigma-Lamaque Milling Complex and Mines are located directly east from the city of Val-d’Or along the prolific Abitibi Greenstone belt in the Province of Québec, Canada, approximately 550 km northwest of Montréal. Québec is rated one of the best mining jurisdictions in the world. Infrastructure, human resources and mining expertise are readily available.

The Company’s primary focus is on production planning for its high-grade Lamaque South project. The Lamaque South property is divided into three clusters, the North, South and West cluster. The primary targets are the high-grade Parallel Zone in the North Cluster and the Triangle Zone in the South Cluster. The acquired Sigma Mill, located 1 kilometer from the Parallel Zone and 3 kilometers from the Triangle Zone, is a fully-permitted, 2,200 ton per day mill and tailings facility. The Sigma-Lamaque Mill and Mining Complex include the historic Sigma and Lamaque Mines which operated for 75 and 52 years respectively and produced more than 9 million ounces of gold in total. Please visit our website for more information.

 

¤ The Wrap

Silver has been and is manipulated in price due to a large concentrated short position held on the COMEX by 8 or fewer traders, mostly banks and financial institutions. The price manipulation is so entrenched that the big shorts can’t gracefully dissolve their large concentrated position without creating a disorderly market – they have to cause the price to fall sharply in order to induce enough selling so that they can buy back a portion of their short positions profitably. If they refrain from adding new shorts on any price rally, the price will run away to the upside.

Completing this rotten kettle of fish is that the federal regulator, the CFTC, and the self-regulator, the CME, have been forced to throw in with JPMorgan and the other COMEX short crooks because to do otherwise would end the scam and bring unimagined shame to the regulators. So we have powerful Wall Street entities in bed with the regulators overseeing them, all united in wanting to continue the silver manipulation and delay or avert the day of reckoning. - Silver analyst Ted Butler: 04 February 2015

Today's pop "blast from the past" is from Montreal singer Gino Vannelli.  His big hit U.S. hit was from 1978---and it's linked here.  But my personal favourite is from 1979---and that one is linked here.

Today's classical "blast from the past" is from the fertile brain of Finland's Jean Sibelius.  It's one of his tone poems---and it's exquisite, at least in my opinion.  It features the English horn, an instrument you hardly ever hear, as there's no solo music for it.  But Sibelius uses the instrument to stunning effect in The Swan of Tuonela which he composed in 1895---and the link is here.  I've posted this before, but it's been a while.

If I'd known on Thursday about the Friday jobs report, I would have been happy to predict an engineered price decline in my Friday column, as the table was certainly set for it in advance because of the extreme short positions held by the Big 8 traders.

But despite the joyous job number news---and the success of the sell-off in the precious metals on Friday---it didn't help the major indexes in New York, as they all closed down on the day.

If you check the 6-month gold and silver charts below, you'll see that some damage was down to a couple of the major moving averages in both metals yesterday.  But, as Ted Butler would say, it's not really the moving averages that count, but the number of long contracts that the Big 8 can entice the Manged Money traders to sell---and how many short contracts they can induce them to buy as well.  That, and that alone, will be the determining factor as to how low we go in price this time around, as it is on every sell-off.

Without doubt we had a very decent improvement in the Commercial net short positions in both gold and silver yesterday, but just looking at the volume numbers from the CME, we have miles to go to the downside if JPMorgan et al really want to push it.  But can they, or will they, remains the big question.

I'd guess that there are other issues besides the current structure of the Commitment of Traders that is weighing on the precious metal market at the moment.  The only thing that we don't for sure is when these "other issues"---like supply and demand for instance---will be allowed to manifest themselves in the price.  But it's a given that they will at some point.

It's also amazing to watch how the powers-that-be-can keep a lid on precious metal prices in the face of some of the worst financial and political news that I can remember.  However,  when you can sell short as many contracts as necessary on the COMEX because when you're in bed with the regulators, anything is possible.  However, if China's demand figures for January are legitimate, it's obvious that they're "going for gold" in a big way at the moment---and it will be interesting to see how long it lasts, considering the fact that the Chinese New Year is less than two weeks away.

That's all I have for today---and I await the Sunday open in New York with some interest.

See you next week.

Ed Steer