Gold & Silver Daily
"We get the jobs report at 8:30 a.m. EST---and I'm expecting the usual price shenanigans"
 

¤ Yesterday In Gold & Silver

It was pretty quiet in the gold market yesterday.  The smallish rally that began after the 10:30 a.m. London gold fix got dealt with in the usual manner once Comex trading began in New York at 8:20 a.m.---as the did the smallish rally that started at noon EST.  All in all, the Thursday trading session was a mini version of what happened on Tuesday and Wednesday.

The high and low price ticks aren't even worth my time to look up.

The gold price closed yesterday at $1,227.70 spot, which was up $1.80 from Wednesday's close.  Volume, net of  roll-overs out of the February contract, was extremely light at around 81,000 contracts.

I mentioned in this space yesterday that I was wondering about all of the activity in the out-of-the money futures month in 2015 and 2016.  I remembered to ask Ted for his opinion---and he said that he was almost certain that these contracts represented one leg of spread trade, so my take on it was wrong.

The silver chart for Thursday looked like its golden cousin, and was also a mini version of its Tuesday and Wednesday silver charts as well, with the sell-offs coming at the precisely the same moments.

The low and high ticks, such as they were, were reported by the CME as $19.38 and $19.71 in the March contract.

Silver closed on Thursday in New York at $19.545 spot, down 2.5 cents from Wednesday---and as you can tell from the chart below, if a willing seller hadn't put in an appearance five minutes before the Comex close yesterday, the silver price would have finished materially higher.  That applies to the gold price as well.  Gross volume in silver was 38,000 contracts, which was a 20% decline from Wednesday's volume figures---but still pretty chunky for what should have been a 'low volume' day.

JPMorgan et al played "Whack-A-Mole" with the platinum price yesterday, with the first hit coming at the Comex open as the price was about to go vertical.  There were two other rallies in New York that were dispatched in the same manner, with the last one coming at the 1:30 p.m. EST Comex close.  Palladium didn't do much.  Here are the charts.

The dollar index closed on Wednesday afternoon in New York at 81.08---and then didn't do much until 1 p.m. Hong Kong time.  Then it sank down to 80.91 just after 9 a.m. in London.  The rather tepid rally from there rolled over about three hours later---and the index began to head south with a vengeance.  Not surprisingly, there was someone there waiting to catch that falling knife at the 80.87 mark---and the index blasted up to 81.16 in less than 30 minutes.  From there it drifted lower in fits and starts, closing the Thursday session around 80.94---which was down 14 basis points on the day.

The gold stocks gapped down about a percent at the open---and then chopped higher until five minutes before the Comex close.  And as you already know, it was at that point "da boyz" showed up and stepped on the gold and silver prices for the second time during the New York session---and the rest, as they say, is history.  The HUI finished down 1.47%, almost on its low of the day.

The silver stocks opened almost unchanged, but then headed south immediately---and never looked back.  Nick Laird's Intraday Silver Sentiment Index closed down a chunky 3.37%.

The CME's Daily Delivery Report showed that no silver or gold contracts were posted for delivery within the Comex-approved depositories on Monday.  I can't remember the last time when there no deliveries posted in both metals on the same day.

There were no reported changes in GLD on Thursday---and as of 9:43 p.m. EST yesterday evening, there were no reported changes in SLV, either.  But when I checked their website at 3:26 a.m. EST this morning, I was amazed to discover that 1,443,633 troy ounces had been deposited in SLV yesterday.  Go figure!

The good folks over at Switzerland's Zürcher Kantonalbank finally got around to updating their gold and silver ETFs.  The last report I got from them was way back on December 13.  The data in this report is from January 3.  In the three week reporting interval, their gold ETF showed withdrawals totaling 100,635 troy ounces---and their silver ETF declined by 631,022 troy ounces.

Joshua Gibbons, the "Guru of the SLV Bar List", updated his website with SLV's closing report for this week---and here is what he had to say: "Analysis of the 08 January 2014 bar list, and comparison to the previous week's list -- 1,580,571.2 troy ounces were removed (all from Brinks London), and no bars were was added or had a serial number change."

"The bars removed were from: Handy Harman (0.9M oz), Asarco (0.3M oz), Degussa (0.2M oz), and 14 others.  As of the time that the bar list was produced, it was overallocated 285.7 troy ounces.  All daily changes are reflected on the bar list."  The link to Joshua's website is here.

As usual, there was nothing from the U.S. Mint, as there webpage still shows the 2013 year.

Over at the Comex-approved depositories on Wednesday, they didn't report receiving any gold, but 63,976 troy ounces were shipped out---and all except 100 ounces of that came out of the Scotia Mocatta warehouse.  The link to that activity is here.

It was another big day in silver at these same depositories.  Nothing was reported received, but 1,354,270 troy ounces were reported sent out the door.  Brink's, Inc. and Scotia Mocatta is where virtually all the action was---and the link to that is here.

Nick Laird over at sharelynx.com had a juicy little tidbit/scoop for me/us in the wee hours of this morning, which I'm more than happy to share with you here.  Nick was checking to see if the official gold imports into China through Hong Kong for November had been posted.  They had, but he didn't have time to update the chart, so I'll have that for you in tomorrow's column.  But here's what he did pick up from that website: 

"In addition to the heightened Chinese imports, they imported an astounding 15.44 tonnes [of gold coins] in November, well above their long term average of 1.4 tonnes.  This number is almost double any other monthly import of gold coins into China over the last 12 years, their second highest import month is June 2011 with 8.57 tonnes.  Can't wait to see December imports of gold coins into China!!!"

Nick also sent the screen shot of the relevant data from their website.  It's all "Greek" to me, of course, but Nick says that the confirming data is in there.

One has to wonder where all these gold coins were minted, as it would take a fair chunk of time to convert that much bullion into a finished product.  Maybe there will be more information forthcoming in the days and weeks ahead.

I have a decent number of stories for you today, and most of them are worth reading if you have the time.

 

¤ Critical Reads

The Most Reliable Indicator of An Approaching Market Top

However, the most reliable indicator of risk—although not as precise as money flow—is sentiment. It won’t give you the exact day, week or even month of an important market turn. We use our other indicators for that. However, it does give you a great indication when the market is getting very vulnerable near a top, and a bargain near a bottom.

At market tops, there is almost unanimous bullish sentiment. The biggest money managers, the analysts most featured in the media, and the public are all bullish and declare that the bull market will continue for a long time. Caution is thrown to the wind. Money managers abandon the practice of keeping a cash cushion in their clients’ portfolios. They are fully invested.

Some may ask, why is this bullish sentiment not positive for the market? The answer is simple: when everyone is fully invested, there is no money left to drive stock prices higher. When finally the evidence says that perhaps the environment isn’t as great as thought, the selling starts. But money managers can’t buy more stocks at lower prices because they are already fully invested. Therefore, the decline continues, the selling accelerates, the bad news items become more frequent. And that is how bear markets start.

This most excellent commentary by Bert Dohmen of Dohmen Capital Research Group  was posted on the Forbes website on Monday afternoon...and I consider it a must read for sure.  I thank reader U.D. for today's first posting.

Read more...

Big Six U.S. Banks’ 2013 Profit Thwarted by Legal Costs

Combined profit at the six largest U.S. banks jumped last year to the highest level since 2006, even as the firms allocated more than $18 billion to deal with claims they broke laws or cheated investors.

A stock-market rally, cost cuts and a decline in bad loans boosted the group’s net income 21 percent to $74.1 billion, according to analysts’ estimates compiled by Bloomberg. That’s second only to 2006, when the firms reaped $84.6 billion at the peak of the U.S. housing bubble. The record would have been topped were it not for litigation and other legal expenses.

Wall Street’s largest banks, set to report fourth-quarter earnings starting Jan. 14, are contending with fresh accusations they misled buyers of mortgage-backed securities, rigged markets or turned a blind eye to suspicious activity by customers. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, whose company announced more than $23 billion in settlements of government and private disputes in the past 12 months, has said legal expenses at his firm will remain high.

Let's call these legal expenses by their real name, dear reader---and that is they are licensing fees, a cost of doing business.  I doubt very much that this will change as the years roll by.  This Bloomberg story was posted on their Internet site early yesterday morning Denver time...and I thank reader Ken Hurt for sending it our way.

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The New Bill Gross Trade Is Getting Slammed

Bill Gross, manager of the world's biggest bond fund at PIMCO, is out with his latest monthly investment outlook today.

His advice: don't fight the Fed. Bet that it will keep its commitment to stimulating the economy via zero interest-rate policy for the next two years — even as it winds down its bond-buying program — by moving your money out of the long end of the interest rate curve and into the short end.

Gross expects the curve to steepen (i.e., he expects interest rates in the long end to rise faster than those in the short end) as the Federal Reserve tapers quantitative easing throughout 2014 while at the same time keeping the commitment laid out by its forward guidance to hold its policy rate — to which rates on bonds in the short end of the curve are tied — at current levels between 0.00 and 0.25% for the next two years.

This news item was posted on the businessinsider.com Internet site late yesterday morning...and it the first contribution of the day from Roy Stephens.

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REPORT: Dell Layoffs Are About To Hit And Could Be Huge

Dell has been working its way up to a massive layoff and the pink slips could be coming any time now, the Register reports.

Sources told the Register that Dell may lay off as many as 20% of its U.S. sales and marketing people and 30% of its sales and marketing staff in Europe. It's hard to say how many actual jobs will be cut across Dell's entire employee base of 111,300 people.

Dell sent us this statement that neither confirms nor denies a pending layoff, nor the number of jobs involved.

Along with the bad news from Macy's and Sears...this sort of new story should come as no surprise now that the Christmas season is over and the true state of retails sales in America become apparent.  I thank 'David in California' for sending this our way.

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JPMorgan To Exit Foodstamp, Other Prepaid Cards Business

Mess with us, we'll mess with you. That is the message one can derive from JPMorgan's surprise announcement that it plans to "sell or wind down its business of issuing prepaid cards for corporate payrolls and government tax refunds and benefits." Which also includes the infamous Electronic Benefits Transfer, or foodstamps, card. According to Reuters, the product, which has been offered with cash and treasury services to companies and governments, "had become a headache of risks in operations and regulations, according to a person familiar with the matter who was not authorized to speak publicly."

Curiously, it was just over two years ago when JPM said this about its EBT business: "This business is a very important business to JP Morgan,” Christopher Paton, the company’s managing director of treasury services, told Bloomberg News in 2011. “It’s an important business in terms of its size and scale. We also regard it as very important in the sense that we are delivering a very useful social function. We are a key part of this benefit delivery mechanism. Right now volumes have gone through the roof in the past couple of years or so … The good news from JP Morgan’s perspective is the infrastructure that we built has been able to cope with that increase in volume."

This very interesting article showed up on the Zero Hedge website during the New York lunch hour yesterday...and it's the second offering of the day from reader 'David in California'.

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Officers at U.S. nuclear missile base suspended in illegal drugs case

Two officers whose hands were on the nation’s nuclear trigger have been suspended from duty for alleged possession of illegal drugs, Air Force officials told NBC News on Thursday.

The two ICBM missile launch officers are assigned to the 341st Air Wing at Malmstrom Air Force base in Montana and would be responsible for launching nuclear-armed Minuteman 3 intercontinental ballistic missiles.

The security clearances for the two have been suspended, effectively relieving them from duty pending an investigation into the alleged possession of illegal drugs.

This NBC News story was posted on their Internet site late Thursday afternoon EST...and I thank Manitoba reader Ulrike Marx for sharing it with us.

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U.S. government attempts to block lawsuit against NSA

Lawyers from the Justice Department have urged a judge to halt a lawsuit against the NSA’s spy programs. This comes after the judge’s previous ruling that the NSA’s collection of metadata was likely unconstitutional and "almost Orwellian" in nature.

On Wednesday, government lawyers appealed to US District Court Judge Richard Leon to put court proceedings on hold for two lawsuits against the NSA filed by conservative legal activist, Larry Klayman.

Klayman has challenged the legality of the NSA’s programs that collect and store the metadata of American citizens on a massive scale.

The lawyers argued that if the lawsuits were allowed to go further, they would lead to the disclosure of classified information which would represent a “significant risk” to national security.

This news item put in an appearance on the Russia Today website early Thursday afternoon Moscow time, which was very early in the morning in New York.  I thank South African reader B.V. for finding it for us.

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Record number of Americans now identify as politically independent

A record number of Americans, 42 percent, now say they identify politically as an independent, more than the number of those who say they are Democrat or Republican, according to a new poll.

The Gallup figures published Wednesday are the latest reason to celebrate for independents, who have seen their numbers steadily on the rise during the partisan bickering that has plagued Washington through the Bush and Obama presidential administrations.

Meanwhile, self-identified Republicans fell to 25 percent, the lowest total for the GOP in 25 years, while democratic identification has remained consistent at 31 percent over the past four years since dropping from 36 percent in 2008.

This Russian Today news item was posted on their Internet site in the wee hours of Thursday morning Moscow time...and it's the second contribution in a row from reader B.V.

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European parliament invites Edward Snowden to testify via video

A European parliament committee has invited Edward Snowden to testify via video link in its investigation of U.S. surveillance practices.

The justice and civil liberties committee voted 36-2 with one abstention on Thursday to seek testimony from the former NSA contractor, who has exposed the reach of the U.S. secret surveillance apparatus.

No date has been proposed and it was not immediately clear if Snowden would accept the invitation.

This news item was posted on theguardian.com Internet site early yesterday afternoon GMT...and it's courtesy of Roy Stephens.

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E.U. inquiry draft finds NSA, GCHQ activities ‘illegal’ – report

An E.U. parliamentary inquiry condemns “unprecedented” and “indiscriminate” mass data gathering by US and British agencies, calling for the practice to stop and questioning its legality, according to a draft committee report obtained by the Guardian.

The 51-page draft report prepared by the European parliament’s civil liberties committee’s rapporteur, British MEP Claude Moraes, has in the “strongest possible terms” condemned mass surveillance activities of the US National Security Agency (NSA) and its British counterpart, Government Communications Headquarters (GCHQ).

The document is still being discussed and has not been voted on yet. However, the draft clearly calls on the US, the UK and European governments to halt the collection of data that the intelligence agencies gather on “an unprecedented scale and in an indiscriminate and non-suspicion-based manner,” and to safeguard their citizens against mass surveillance by the letter of law.

This Russia Today posting showed up on their Internet site just before midnight Moscow time on Thursday evening...and it's courtesy of reader B.V. once again.

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State oil fund makes all Norwegians crown millionaires

Norway’s sovereign wealth fund has grown so much that it makes every Norwegian citizen a “theoretical” millionaire. The country reached the milestone thanks to a recent increase in oil and gases prices during 2013.

While the rest of Europe remains mired in financial crisis, Norway has quietly been amassing a huge fortune which reached 5.11 trillion crowns ($828 billion) on Wednesday, according to figures from the country’s central bank - Norges Bank.

The new figure is over a million times Norway’s population which totaled 5,096,300 in the third quarter of 2013.

This very interesting news item showed up on the Russia Today website during the Moscow lunch hour yesterday...and it's another contribution from Roy Stephens.

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Draghi keeps low rates pledge, but is he playing with fire?

The ECB keeps rates on hold, despite a surprise fall in core inflation in December. Lloyds Bank’s Trevor Williams says he’s concerned the ECB is not taking more action to support the euro zone economy.

This 5:39 minute video clip was posted on the Reuters website sometime yesterday...and my thanks go out to Roy Stephens once again.

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Barroso triumphant as jobless Europe wastes five (precious) years of global recovery

José Manuel Barroso has declared victory again. The European Commission chief tells us that the eurozone crisis is over. The scorched-earth contraction policies have succeeded.

Ireland has conducted a "clean exit" and is tapping the bond markets again. Latvia has joined the euro and is now the EU's fastest growing country.

"This shows that the programs do work when they are properly implemented," he said.

Senhor, it shows no such thing. Ireland is highly competitive (second best in EMU after Finland on the World Bank gauge).

Ambrose Evans-Pritchard has his knickers in a twist once again as he hangs Barroso out to dry in a classic AE-P tirade.  This blog was posted on The Telegraph's website yesterday sometime...and it's another contribution from Roy Stephens.  I'm sure Nigel Farage got a fair amount of pleasure from reading it...and you should as well, as it's an absolute must read.

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Security alert in southern Russia as bodies found in bomb-rigged cars

Russian authorities said on Thursday that security forces had been put on combat alert in the southern Stavropol region after the discovery of six bodies with gunshot wounds in four different cars, three of which were rigged with explosives.

Only one of the bombs went off and no one was hurt. But the killings are further heightening security concerns ahead of the Winter Olympics in Sochi, which also lies near the Caucasus region, where an Islamic insurgency is simmering.

Russia has already tightened security before next month's Games, on which President Vladimir Putin has staked a lot of political and personal prestige, and is on high alert after suicide bombers killed at least 34 people in separate attacks in the southern city of Volgograd last month.

The corpses were discovered on Wednesday in two separate districts outside the regional capital Stavropol, a gateway to the North Caucasus, where Russia faces an insurgency by Islamist militants who have threatened to try to prevent the Olympics going ahead.

This news item was posted on the telegraph.co.uk Internet site yesterday morning GMT...and it's worth reading if you have the time.  It's also another contribution from Roy Stephens.

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A Brother's Vengeance: The Preacher Who Could Topple Turkish P.M. Erdogan

The greatest threat yet to Turkish Prime Minister Erdogan comes from a former ally. Muslim preacher Fethullah Gülen and his influential followers seem determined to accomplish what the recent protest movement could not: overthrowing the current regime.

Turgut Keles loved his premier. He maintained his support of Turkish Prime Minister Recep Tayyip Erdogan through early summer, when demonstrators in Istanbul were protesting the redevelopment of Gezi Park. When Erdogan held a rally for tens of thousands of supporters, Keles was in the first row.

But just half a year later, everything has changed. "Erdogan must go," the former fan now says, adding that the prime minister has "betrayed" millions of Turks. Keles long voted in favor of Erdogan's conservative Justice and Development Party (AKP). But his support of the party is exceeded by his admiration of Muslim preacher Fethullah Gülen, the leader of a powerful civic movement that is now at odds with Erdogan. 

This background story was posted on the German website spiegel.de yesterday during the Europe lunch hour...and my thank go out to Roy once again.

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China Tells Banks to Improve Disclosures in Shadow-Lending Fight

China’s banking regulator told lenders to publish data including off-balance-sheet assets and interbank liabilities as the government steps up scrutiny of the shadow-finance industry.

Lenders with total assets of 1.6 trillion yuan ($264 billion) or more must publish 12 indicators within four months of the end of each financial year, the China Banking Regulatory Commission said in a statement yesterday. The requirement is in line with rules published by the Basel Committee on international banking regulation in July, the CBRC said.

China’s State Council imposed new controls on the shadow-banking industry with an order that targets off-the-books loans and shores up enforcement of current rules, three people familiar with the matter said this week. The Cabinet order highlights concern that lending outside the banking system, estimated by JPMorgan Chase & Co. at 36 trillion yuan, or 69 percent of 2012 gross domestic product, may threaten the financial system’s stability.

This story appeared on the Bloomberg website early on Thursday evening MST...and is worth reading if you have time.  Once again I thank Roy Stephens for sending it our way.

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Alasdair Macleod: Index trackers and their effect on gold and silver futures

GoldMoney research director Alasdair Macleod writes today that increased weightings of gold and silver in two major market indexes are likely to put upward pressure on precious metals prices.

Macleod's commentary is headlined "Index Trackers and Their Effect on Gold and Silver Futures" and it's posted at GoldMoney's Internet site.  I found this short essay posted over at the gata.org Internet site yesterday.

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Bank of America Merrill Lynch slashes gold call to $1,150 and warns it could get uglier

In one of the first, if not the first, calls on gold this year, Bank of America Merrill Lynch slashed its average 2014 forecast for the shiny stuff by 11% to $1,150 an ounce on Thursday, with a warning it could get even uglier.

Strategist Michael Widmer said his biggest gold worry is a lack of buyer interest, as investors have been a marginal driver of prices in recent years. A gain of around 2% so far this year hasn’t really convinced him either.

He adds that not even traditional buying of physical gold in India and China will be enough to keep prices from falling.

Blah, blah, blah.  More main stream trash talk.  I saw similar stories the first time gold poked its nose above $300 the ounce.  How are those commentators doing these days?  This drivel was posted on the marketwatch.com Internet site early yesterday morning EST...and it's the final contribution of the day from Roy Stephens, for which I thank him.

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How the Big Guns Are Playing Gold Mining Stocks

You could argue only fools would buy gold mining stocks today. If that’s the case, there may be a lot of idiot savants out there.

The Direxion Daily Gold Miners Bull 3x Shares exchange-traded fund, which uses leverage to amp up exposure to mining stocks, is down more than 90 percent over 12 months, yet assets have risen from $460 million to $642 million. The Market Vectors Gold Miners ETF, down 51 percent, has seen assets jump from $2.5 billion to $6.7 billion. Gold bullion, meanwhile, is down 25 percent.

It’s easy to chalk up the funds' growth to the contrarian kookiness of gold bugs. The truth is more complicated. Institutional investors see unusual opportunities in gold mining stocks. Some figure the gap between the prices of gold bullion and mining stocks is so wide that they can make profitable bets on that valuation gap narrowing. Others see improvements in management and operations of miners. A third group likes mining stocks simply because they hope to profit from the stocks' volatility.

This must read Bloomberg commentary was posted on their website yesterday morning Mountain Standard Time...and my thanks go out to Washington state reader S.A. for bringing it to our attention.

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India eases gold lending rules

Under the new rules, non-banking finance companies can lend up to 75% of the value of gold, from 60%.

The central bank revised the rules because their gold loan portfolios were showing only moderate growth.

Lending against gold is a fast-growing business in the Indian economy, and the industry is valued at more than $20bn (£12bn).

This tiny story was posted on the bbc.co.uk Internet site early yesterday morning EST...and I thank Ulrike Marx for her second offering in today's column.

Read more...

Silver inventory reaches 16-year high after worst rout since 1981

Stockpiles on the Comex in New York touched 176.28 million ounces today, the highest since July 1997. Inventories have climbed for seven straight sessions, the longest stretch since February. The supplies rose for a third year in 2013, the longest span of annual gains in a decade.

“This could well be an indication that demand has slowed down to an extent,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. The drop may also reflect eroding investor interest in silver exchange-traded products, he said.

Blah, blah, blah yet again.  I'll have more on this in The Wrap, as Ted Butler wrote about this very subject in his mid-week column to paying subscribers on Wednesday.  This short Bloomberg story showed up on the mineweb.com Internet site yesterday...and I thank reader Neil West for sliding it into my in-box late last night MST.

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Lawrence Williams: Wishful thinking on gold – but for all the right reasons

The pro-gold fraternity has been unwavering in its positive utterances on where the gold price is headed, while mainstream analysts disagree. But longer term China will likely hold the key.

The strong pro-gold commentators have at least been consistent in their views on gold and where it is headed.  Indeed, they may well be partly correct in their views, but the timescales over which their scenarios will likely be played out, and the price levels likely to be reached, are indeed more wishful thinking than reality. 

True, gold made a promising start to the year, but already seems to be beginning to waver as the New York bankers and traders get back to work after the Christmas/New Year break which seems to be getting more like the European one in longevity.  One shouldn’t forget that last year’s high point for gold for the year was achieved on January 2nd and it was mostly the downward slope from then on, exacerbated by some remarkably strange COMEX trading from time to time in the process.

That is not to say that the gold price will follow the same kind of pattern in the year ahead, but one doubts it is likely to rise as far and as fast as the out and out gold wishful thinkers might have us believe.  As we have already pointed out in these pages there is still plenty of scope for downwards pressures to come into play and many of the bank analysts, for example, are predicting yet more tough times ahead for gold investors, although a downwards path throughout the year is no longer quite as unanimous among this particular fraternity – renowned for its reactive forecasts rather than its truly analytical ones.

This commentary by Lawrie certainly falls into the must read category.  It was posted on the mineweb.com Internet site yesterday...and I thank Ulrike Marx for today's last story, and her third and final contribution to today's column.

Read more...

 

¤ The Funnies

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¤ The Wrap

How fortunate for governments that the people they administer don’t think. -  Adolf Hitler

As I mentioned at the top of this column, the gold and silver chart patterns on Thursday were almost identical to the chart patterns on both Tuesday and Wednesday---so it shouldn't be a stretch of most people's imaginations to see how tightly that the precious metal prices in general, and gold and silver prices in particular, are being controlled.

As I mentioned in my comments on the Bloomberg/Mineweb story about Comex silver stocks in the Critical Reads section, silver analyst Ted Butler featured that very topic in his mid-week column on Wednesday---and I'll steal a few paragraphs from it, so you can see what his thoughts are.

"A while back (I can’t remember exactly when), I wrote that growing inventories for a precious metal does not mean that prices can’t rise substantially and that things needed to be put into perspective. The best example is gold. Total world inventories of gold have grown every single day for the past 5,000 years, and that inventory growth alone hadn’t prevented the price from moving higher over time. Therefore, those concerned about inventory growth would never invest in gold, as world inventories have done nothing but grow over the centuries. Yet few investors even think about growing world inventories in gold. That’s because the amount of people (prospective gold investors) and buying power have grown as much or more than actual gold supply and inventories have grown.

The same metric must be applied to silver. Yes, the world depleted silver inventories non-stop for more than half a century and world inventories have now begun to grow after 65 years of depletion to near-exhaustion. But any precious metal that has investment demand must be considered differently than a commodity with no investment demand.

"As a result of 65 continuous years of silver inventory depletion, there are now less silver ounces in the world than there are gold ounces; where formerly there were five times more silver ounces than gold ounces. While world silver inventories are down 90% since 1940 to just above one billion ounces, world gold inventories are up from 2 billion oz to 5.5 billion oz. Yet, despite the stunning about face in relative inventories and with silver, in effect, becoming rarer than gold, the relative price of silver compared to gold is the same as it was 60 years ago. In other words, in 1950 the silver/gold ratio was near the same 63 to 1 ratio that it is today.

"How can that be? How can one comparable commodity lose 90% of its inventory and another comparable commodity have its inventory almost triple and there be no change in relative price? There is no free market explanation for what I just described. The only possible explanation is price manipulation, which is why I devote so much time to the subject. Price manipulation is not the focus of this article, but it’s never far away when discussing silver and gold. In fact, the relative inventory change in gold and silver over the past 60 years with no change in relative price is proof of manipulation on its face. It also means that silver is much more manipulated in price than in gold, and an incredible investment opportunity.

I wish I could post the whole thing, but if I did, I know that he would not be amused, so you'll have to settle for this tiny excerpt unless he posts it in the public domain at a later date.

Today is a busy news day.  We get the jobs report at 8:30 a.m. EST---and I'm expecting the usual price shenanigans to occur in both gold and silver.  We also get the latest Commitment of Traders Report---and the monthly Bank Participation Report as well, so I'll have lots to talk about in tomorrow's missive.

In Far East trading on their Friday, there were a couple of rally attempts in gold, but both got turned back---especially the one that occurred shortly before 2 p.m. Hong Kong time.  The same can be said for the silver price, as it's attempt to blast above the $20 price mark got stopped cold at $19.84 in the March contract.  London has just opened as I write this paragraph---and volumes are on the lighter side, but heavier than they were this time on Thursday.  The dollar index is comatose.

Before heading off to bed, here's something that you may be interested in.  I had lunch with "Casey Club" life member Dr. B.C. here in Edmonton on Saturday---and he wanted me to pass along something that he though might be of interest regarding an organization called the Silver Health Institute. Two of the principals of this organization, Dr. Gordon Pedersen and Dr. Bryan Frank, have just published a short book entitled "The Most Precious Metal".

The most precious metal during a crisis is silver, but not because of its role as a monetary metal. Silver is not the most precious metal because of global supply, its current ‘price’, or investor sentiment. It is not the most precious metal because of its role in photovoltaic solar panels or electronic circuits. It certainly isn’t the most precious metal because it makes for a nice set of earrings or tableware. There is nothing wrong with any of these uses of silver, but silver has a much higher purpose that clearly makes it the most important metal any person could own.

Silver is nature’s finest germ killer. Simply by being silver, this most precious metal’s elemental properties are toxic to pathogenic microorganisms while simultaneously being non-toxic to healthy cells and pro-biotic bacteria.

A 41-page pdf sample of the book is available for free here.  If this topic interests you, I urge you to check out the links provided.  [I'm not making a dime off this, so it's not a sales pitch per se. - Ed]

And while on the subject of "Casey Club" life members---I'm sure you've received several notifications [including one that Casey Research sent out yesterday] about the ultra-exclusive Casey's Club, which they've opened for a very short period of time.  It has a very high sticker price, but as I've said countless times in this column---quality investment advice pays; it never costs.  If you have an interest, the link to all you need to know is here.

And as I hit the send button on today's efforts at 5:15 p.m. EST, it appears that the precious metal prices are back under control in early London trading after their spike up in afternoon trading in Hong Kong.  Gold is currently up about six bucks---and silver is up about two bits.  Volumes are up a bit more since the London open, but nothing out of the ordinary---and the dollar index is attempting to break back above the 81.00 mark.

Today is Friday---and with all that's going on out there in the world these days, I don't even want to hazard a guess as to what may or may not happen in the precious metal world.  But as I've frequently said, nothing will surprise me when I power up my computer later this morning.

Enjoy your weekend, or what's left of it---and I'll see you here tomorrow.