Gold & Silver Daily

¤ Yesterday In Gold & Silver

The gold price was under sporadic and quiet selling pressure during the Wednesday trading session, as the big traders had to be out of their futures contracts by the close of COMEX trading yesterday afternoon.  The news, or lack thereof, from the FOMC meeting ended up manifesting itself as a small squiggle on the chart below---and that was all.

The high and low were reported by the CME Group as $1,293.30 and $1,279.00 in the February contract.

Gold finished the trading session in New York yesterday at $1,283.30 spot, down $8.80 from Tuesday's close.  Gross volume was over the moon at 344,000 contracts, but netted out to only 26,000 contracts.

After getting sold down its low tick shortly after 12 o'clock noon Hong Kong time, the silver price began to chop quietly higher---and was actually a few pennies above unchanged by the time the smoke went up the chimney at the Fed.  Then it got sold down about fifteen cents---and closed slightly lower on the day.

Silver traded within a 20 cent range all day long yesterday, so the high and low ticks aren't worth the effort of looking up.

Silver closed on Wednesday at $17.96 spot, down 7 cents from Tuesday's close.  Net volume was very quiet at only 22,500 contracts.

Platinum followed a similar chart pattern as silver---and was a buck or so above unchanged by the COMEX open.  But that was as high as the price got, as it was sold down from there in rather choppy trading.  The metal was closed on its absolute low of the day---$1,249 spot---and down 11 bucks from Tuesday.

Palladium also dipped a bit into the Hong Kong lunch hour---and its subsequent rally lasted until the 1:30 p.m. EST close of COMEX trading.  Then it got sold down a few dollars into the close of electronic trading.
Palladium added 14 dollars to its price yesterday, closing at $793 spot.

The dollar index closed late on Tuesday afternoon in New York at 94.09---and made it as high as 94.37 in early trading in the Far East.   Then it dipped down to its 93.99 low about 10:20 a.m. GMT in London---and from there it was up, up and away until around 4:20 p.m. EST in New York.  The index traded flat from there, closing at 94.63---up 54 basis points from Tuesday.

Th gold stocks gapped down about two percent at the open---and then made it back to almost unchanged once the London p.m. gold fix was done.  From there it chopped sideways until a minute or so after 2 p.m. EST when the Fed "news" came out---and the shares got sold down pretty hard from there, but rebounded a hair into the close.  The HUI got smacked for 3.60 percent.

The silver equities got sold off a bit more than two percent at the open yesterday---and they also chopped sideways until the same minute that the gold shares began to head south.  But the silver shares headed south faster---and Nick Laird's Intraday Silver Sentiment Index got lambasted for 5.55 percent, which was hugely out of proportion to the 7 cent loss in the silver price itself.

We're seeing a lot of counterintuitive moves in the precious metal stocks vs. the metals themselves these days, both up and down---and I must admit that I'm at a loss to explain it.

The CME Daily Delivery Report showed that 9 gold and 15 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that January gold open interest increased by 17 contracts---and now sits at 21 contracts.  Silver's January o.i. increased from 15 to 17 contracts.  So despite the deliveries tomorrow that I mentioned in the previous paragraph, there are still some contracts left open in January.  But whether they're delivered into or not, they have to disappear by tomorrow's preliminary report.

There were no reported changes in GLD yesterday---and as of 9:49 p.m. EST yesterday evening, there were no changes reported in SLV.

The good folks over at Switzerland's Zürcher Kantonalbank updated their website with the activity in both their gold and silver ETFs as of the close of trading on Friday, January 23---and this is what they had to say.  Their gold ETF added 14,958 troy ounces---but their silver ETF went in the other direction, selling off a chunky 134,772 troy ounces.

There was a sales report from the U.S. Mint yesterday.  They sold 1,500 troy ounces of gold eagles---2,000 one-ounce 24K gold buffaloes---and another 161,000 silver eagles.

It was another day with no in/out action in gold at the COMEX-approved depositories on Tuesday and, surprisingly enough, there was absolutely no in/out activity in silver, either.  It's been a very long time since that's happened.

After two days in a row with a huge amount of stories, I have somewhat fewer stories in today's column, but a decent number are definitely worthy of your attention---and I hope you have time for them.


¤ Critical Reads

National Weather Service apologizes for blizzard forecast miss

Some are calling the blizzard a likely bust, and National Weather Service's meteorologist Gary Szatkowski apologized on Twitter, saying they didn't get it right.

This 1:42 minute video clip appeared on the Internet site at 8:32 a.m. EST on Tuesday morning---and today's first news item is courtesy of West Virginia reader Elliot Simon.


David Stockman: The Wreck of the Monetary Hesperus

For 73 months running the Fed has lashed the money markets to the gross financial anomaly of ZIRP. Never before in the history of the world has any central bank or other monetary authority decreed that overnight money shall be indefinitely free to gamblers or that liquid savers should have their hard earned wealth chronically confiscated by negative returns after inflation and taxes. And, needless to say, never have savers and borrowers in a free market struck a bargain night after night after  night at 0% for six years running, either.

Yet now comes another Fed meeting and announcement that our monetary overlords will be “patient” with zero cost money for several more meetings. Indeed, there are even hints that the era of ZIRP could extend beyond mid-summer—that is, for more than 80 months.

So an urgent question screams out. Don’t these obstinate zealots realize that zero cost overnight money has only one use, and that is to fund the carry trades of Wall Street gamblers?

Accordingly, are they not even more culpable than Longfellow’s skipper, who perished along with the fair daughter he lashed to his ship’s mast because he insouciantly belittled a ferocious storm made by nature?  By contrast, these benighted folks at the Fed are actually fueling their own hellish financial storm, thereby leaving in mortal danger the main street economy which they, too,  have foolishly nailed to the mast of ZIRP.

This commentary by David appeared on his website yesterday sometime---and I thank Roy Stephens for sending it.  It's worth reading.


Yale's Roach: Global 'Monetary Policy Has Lost Discipline and Coherence'

Many economists have expressed enthusiasm about the European Central Bank (ECB)'s 1.1 trillion euro quantitative easing (QE) program announced last week. Stephen Roach, a senior lecturer at Yale's School of Management, wasn't one of them.

"In the QE era, monetary policy has lost any semblance of discipline and coherence," Roach, former chairman of Morgan Stanley Asia and the firm's chief economist, writes in an article for Project Syndicate.

"As [ECB President Mario] Draghi attempts to deliver on his commitment [to protect the euro], the limits of his promise — like comparable assurances by the Fed and the Bank of Japan — could become glaringly apparent. Like lemmings at the cliff’s edge, central banks seem steeped in denial of the risks they face," he notes.

Lemmings?  I like the way this guy thinks.  It was an article that appeared on the Internet site at 6:00 a.m. EST yesterday morning---and it's the second offering of the day from Elliot Simon.


Senator Rand Paul re-introduces 'audit the Fed' bill

Republican U.S. Sen. Rand Paul, a potential 2016 presidential candidate, on Wednesday re-introduced a bill that would expose the Federal Reserve's monetary policy discussions and decisions to a congressional audit.

The Kentucky senator's move to re-introduce the bill, along with 30 co-sponsors, comes as Republican lawmakers and some Democrats increase their efforts to rein in the U.S. central bank and make it more transparent.

The Fed gained broad regulatory powers and implemented massive stimulus measures after the 2007-2009 financial crisis, expanding its balance sheet to $4.5 trillion.

Republican U.S. Rep. Thomas Massie of Kentucky introduced a similar bill in the House of Representatives this month.

This Reuters article put in an appearance on their Internet site at 4:28 p.m. EST on Wednesday---and I found it embedded in a GATA release.


Canada Just "Revised" All of Its 2014 Job Gains 35% Lower

Who can forget the farce conducted by Canada's labor statistics office back in August when, as we reported, "Canada Releases Atrocious Jobs Data; Then Revises It Above The Highest Estimate Following Public Outcry." It was then that we got our first hint that when it comes to massaging data, Canada is on par with China and even the US.

Well, Statistics Canada just outdid itself moments ago when it reported that those 185,700 jobs gains it had previously reported for all of 2014... well, it was only kidding, and after a second look, the number has been revised a whopping 35% (!) lower to only 121,300. How long until a light bulb goes over the BLS' head and the US department of seasonal adjustments decides to do the same?

This Zero Hedge article appeared on their website at 8:47 a.m. EST yesterday---and I thank Dan Lazicki for sending it our way.


Draghi's Dangerous Bet: The Perils of a Weak Euro

The recent decision by the European Central Bank to open the monetary floodgates has weakened the euro and is boosting the German economy. But the move increases the threat of turbulence on the financial markets and could trigger a currency war.

The concern could be felt everywhere at this year's World Economic Forum in Davis, the annual meeting of the rich and powerful. Would the major central banks in the United States, Europe and Asia succeed in stabilizing the wobbling global economy? Or have the central bankers long since become risk factors themselves? The question was everywhere at the forum, being addressed by experts at the lecturns and by participants in the hallways.

Central banks, said Harvard University economics professor Kenneth Rogoff, are surely the greatest source of uncertainty in the eyes of the financial markets, a statement that was not disputed by others on the panel. The fact that monetary policies at central banks in the US, Europe, Japan and elsewhere are drifting apart poses a major risk for the stability of financial markets, he said.

"It's important for the international community to work together to avoid currency wars which no one can win," Min Zhu, deputy managing director of the IMF, told the conference.

This longish commentary is worth reading if you have the time.  It was posted on the German website at 11:08 a.m. Europe time on their Wednesday morning---5:08 a.m. EST.  It's the contribution of the day from Roy Stephens.


Greek Credit Risk Spikes, Default Probability Tops 70%

Greek default risk has surged in recent days and today as it becomes clear what Syriza expects from Europe, short-term CDS are at post-crisis highs with 5Y CDS implying a 76% probability of default (based on standard recovery assumptions - which may be a little high in this case). Given the domestic bank dominance in the buying of domestic government debt, Greek banks are getting hammered as everyone's favorite hedge fund trade is an utter bloodbath. Greek stocks overall are down and GGBs are tumbling once again - back at 16 month lows (given back all the ECBQE hope bounce). Perhaps not surprising moves, given new Greek Finance Minister Yanis Varoufakis reality-exposing comments yesterday, "the problem with the bailout is that it wasn’t really a bailout... it was an extend and pretend, it was a vicious cycle, a debt-deflationary trap, which destroyed our social economy."

This short article, chock full of charts, is definitely worth your time---and it was posted on the Zero Hedge Internet site at 10:14 a.m. EST yesterday---and it's another contribution from Dan Lazicki.


Germans in shock as new Greek leader starts with a bang

In his first act as prime minister on Monday, Alexis Tsipras visited the war memorial in Kaisariani where 200 Greek resistance fighters were slaughtered by the Nazis in 1944.

The move did not go unnoticed in Berlin. Nor did Tsipras's decision hours later to receive the Russian ambassador before meeting any other foreign official.

Then came the announcement that radical academic Yanis Varoufakis, who once likened German austerity policies to "fiscal waterboarding", would be taking over as Greek finance minister. A short while later, Tsipras delivered another blow, criticising an E.U. statement that warned Moscow of new sanctions.

The assumption in German Chancellor Angela Merkel's entourage before Sunday's Greek election was that Tsipras, the charismatic leader of the far-left Syriza party, would eke out a narrow victory, struggle to form a coalition, and if he managed to do so, shift quickly from confrontation to compromise mode.

No surprises here.  This absolute must read Reuters article, filed from Berlin, appeared on their website at 1:29 p.m. EST yesterday afternoon---and I thank Harry Grant, our man in Greece, for bringing it to my attention---and now to yours.


PACE strips Russia of voting rights until April over Ukraine, Russia quits for 1 year

The Parliamentary Assembly of the Council of Europe (PACE) has decided not to restore Russia’s voting rights until April. Moscow was first stripped of its rights in PACE after Crimea joined Russia last year.

In turn, Aleksey Pushkov, the chief of Russia’s PACE delegation and chairman of the State Duma's Foreign Affairs Committee, said: “We are exiting PACE until the end of the year.”

As PACE stripped Russia of the right to vote in its governing bodies, we can no longer speak of any contacts with the organization,” he explained.

This news item, also from Russia Today, was posted on their Internet site at 7:23 p.m. Moscow time on their Thursday evening---and was edited early this morning Moscow time.  Once again I thank Roy Stephens for sharing it with us.


PACE 'ceases to be a forum' for solving Ukraine crisis following Russia's exclusion

The Ukraine conflict can only be solved with Moscow at the table, but the West has taken away one of the few forums where the issue could be discussed, political analyst Martin McCauley told Russia Today, speaking on PACE’s decision to strip Russia's voting rights.

RT: Did you expect PACE to uphold the suspension of Russia’s voting rights?

Martin McCauley: I was rather surprised because it was a very split decision – 35 to 34. The assembly was obviously split right down the middle with the majority of one, so it could have gone either way. And as one of the delegates said, this is a negative move because if you want to enter dialogue with Ukraine, you must have Russia there as a partner.

The Ukrainian crisis cannot be solved without Russia. And therefore the Parliamentary Assembly of the Council of Europe is one of the forums for that. And this now ceases, and therefore there is one forum less. And one can look forward, hopefully, that Russia would come back to the debating chamber and present its point of view. But it does not look like that, because Russia may, in fact, give up on the Council of Europe for this year.

This short interview showed up on the Russia Today website at 2:47 a.m. Moscow time on their Thursday morning---and it's also courtesy of Roy Stephens.  It's worth reading.


Corruption is greatest threat to Ukraine sovereignty

When Aleksandr Lapko received his drafting notice from the Ukrainian defence ministry, he was faced with a dilemma: either spend $2000 of his own money (the equivalent of 10 average monthly wages in the military) to buy the military equipment needed to serve, or pay a $2000 bribe to be declared medically unfit for service.

He chose the first option and is now working with the NATO liaison office in Ukraine.

This story, published by Transparency International, captures in a nutshell the challenges faced by Ukrainians in their daily struggles: either pay from their own money to cover for the endemic corruption of officialdom, or bribe their way out of a rut.

This malaise has become so prevalent that Ukrainians barely shrugged when Prime Minister Yatsenuk said earlier this year that 40 percent of all state procurements are lost each year to graft.

This very interesting---and sadly true opinion piece appeared on the Internet site at 5:36 p.m. Europe time on their Wednesday afternoon---and it's another article that Roy dug up for us.


Russia extends term of sojourn for Ukrainian citizens of recruitment age

Russia’s Federal Migration Service said on Wednesday it has extended the period of sojourn in Russia for Ukrainian citizens of the recruitment age for more than 90 days.

"Under the current rules, Ukrainian citizens of this category are allowed to stay in Russia less than 90 days. In case of overstaying, they are to face administrative charges. Being guided by humanitarian considerations, Russia’s Federal Migration Service has taken a decision to extend terms of sojourn for the above mentioned categories of Ukrainian citizens," the press service of the Federal Migration Service said.

According to the service’s statistics, more than 2.430 million Ukrainian citizens are currently staying in Russia, of whom 1.172 million are men of recruitment age. Apart from that, more than 800,000 forced migrants from eastern Ukraine have found shelter in Russia.

This is another very interesting article---and it was filed from Moscow---and posted on the Internet site at 9:38 p.m. yesterday evening local time.  The stories from Roy just keep on coming.


Kremlin: Ukraine gas networks idled by 2019

European natural gas consumers need to prepare the infrastructure needed to avoid Ukrainian territory by 2019, an official from Russia's Gazprom said Wednesday.

Europe gets about a quarter of its natural gas needs met by Russian suppliers, though the majority of that runs through a Soviet-era transit network in Ukraine. Simmering conflict, and gas contract issues reaching back to at least 2006, exposes that artery to risk.

The Kremlin has worked to advance transit networks that avoid Ukrainian territory, most recently with Turkish Stream, a revamped project that replaces the now-scrapped South Stream pipeline. By 2019, Ukrainian networks will be idle and Gazprom Chairman Viktor Zubkov said Europe needs to be ready.

"Considering the decision made on re-directing supplies from 2019, European partners do not have so much time [for infrastructure preparation]," he said from a European gas conference in Vienna.

This UPI news item, filed from Vienna, appeared on their Internet site at 6:19 a.m. EST Wednesday morning---and once again it's courtesy of Roy Stephens.


Russia’s PM signs multi-billion dollar anti-crisis plan

Russian Prime Minister Dmitry Medvedev has signed a one-year anti-crisis plan designed to stabilize the economy. The document includes 60 measures and will cost at least $35 billion (2.3 trillion rubles).

The final cost hasn’t yet been calculated but the official statement published Wednesday shows that as for now the Government is going to spend about $35 billion, which also includes the $15 billion (one trillion rubles) bailout for Russian banks agreed last year.

Last Friday, Russia’s Agency for Deposit Insurance approved a list of 27 lenders that will get the bailout money including VTB Group ($4.5 billion, which is around 310 billion rubles), Otkrytie group ($1 billion or 65.1 billion rubles) and Vnesheconombank (VEB) ($300 million or 20.4 billion rubles).

As part of the plan, Russia will also create a bank for ‘bad debt’ that will collect corporate debt and problematic company assets.

This news items appeared on the Russia Today website at 11:38 a.m. yesterday morning Moscow time---and once again I thank Roy Stephens for digging it up for us.


Russian Sanctions Might Be Obama’s Greatest Blunder

One of the greatest foreign policy blunders of the Obama Administration was the push by the U.S. for economic sanctions against Russia. That led to Russia fleeing into the arms of China for refuge. In response, Russia, Europe’s largest and most populated country, is now intent on moving its vast storehouse of resources eastward, strengthening America’s largest emerging rival.

Over the last two years, the two countries have completed a $700 billion agreement for Russia to deliver energy to China, amounting to about 17% of Chinese annual supply, for a period covering twenty years, with China financing much of the initial costs of pipeline construction.

What Russia has done, in that one move, is to help repair a major hole in China’s military armor, making it invulnerable to a U.S. cut-off of sea-born energy supplies, which until now was one of the greatest fears of Chinese military strategists.

From the Chinese perspective, this is a gift that fulfills its wildest dreams. It’s also a gift that could severely undermine the West's plans to deliver expensive Liquified Natural Gas (LNG) to China and Asia, while already facing competition from Qatar and Australia LNG, will now also run up against Russian pipeline gas through China.

This must read essay appeared on the Internet site this past Sunday---and I thank Casey Research's own Bud Conrad for passing it around early yesterday morning.


Chinese yuan now top 5 major international payment currency

The Chinese currency is the 5th most-used currency in international payments, according to the SWIFT network responsible for international financial transactions. Breaking into the top 5 is symbolic to balance dollar-denominated payments.

In 2014, yuan payments doubled by 102 percent, and increased by 20.3 percent in December alone, compared to the same time period last year, SWIFT said Wednesday. The yuan, or renminbi, surpassed the Canadian and Australian dollars.

"It is a great testimony to the internationalization of the renminbi and confirms its transition from an 'emerging' to a 'business as usual' payment currency," Wim Raymaekers, Head of Banking Markets at SWIFT said in a statement.

2.2 percent of all SWIFT payments made in December were yuan-denominated, according to the Brussels-based payment operator. Ahead of the yuan are the US dollar, euro, British pound, and Japanese yen, which has a 2.7 percent share.

This brief article was posted on the Russia Today website at 3:20 p.m. Moscow time yesterday afternoon---and is worth skimming.  It's the second-last offering of the day from Roy Stephens.


Singapore becomes ninth country to weaken currency this month

Singapore unexpectedly eased monetary policy, sending the currency to the weakest since 2010 against the U.S. dollar as the country joined global central banks in shoring up growth amid dwindling inflation.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said in an unscheduled statement Wednesday it will seek a slower pace of appreciation against a basket of currencies. It cut the inflation forecast for 2015, predicting prices may fall as much as 0.5 percent.

The move was the first emergency policy change since one following the Sept. 11, 2001 attacks for the MAS -- which only has two scheduled policy announcements a year -- reflecting how the plunge in oil has changed the outlook in recent months. Singapore becomes at least the ninth nation to ease policy this month, as officials from Europe to Canada and India contend with escalating disinflation and faltering global growth.

This Bloomberg article, filed from Singapore, appeared on their Internet site at 5:28 p.m. Tuesday afternoon Denver time---and it's a story I found on the Internet site.


Petrobras Stock Plummets After Releasing Unaudited Third-Quarter Financial Results

Shares of Brazilian state-run energy company Petrobras plunged 11.26% to $6.97 in morning trading Wednesday after it published its unaudited third-quarter results after a more than two-month delay but failed to include a dollar amount for a write-down tied to its ongoing and wide-reaching corruption scandal.

Petrobras reported net profit of 3.09 billion reais, or $1.18 billion, down from 3.39 billion reais in the same quarter last year. Revenue totaled 88.37 billion reais in the quarter, up from 77.7 billion reais. EBITDA fell 10% year-over-year to 11.7 billion reais.

"The company understands that it will be necessary to make adjustments at the financial statements to correct the values of fixed assets," said Petrobras, which added it would be "impracticable to correctly quantify these "improperly recognized values" related to the scandal "since the payments were made by external suppliers and cannot be traced back to the company's accounting records."

This news item appeared on website at 9:48 a.m. yesterday morning EST---and I thank Dan Lazicki for bringing it to our attention.


Lawrence Williams: Goldman Sachs stays ultra-bearish on gold long term

Given that gold ended 2014 nearly $200 higher than Goldman Sachs’ extremely bearish forecasts in 2014 – a forecast repeated several times during the year – and has since risen by nearly a further $100 since, the investment bank’s analysts have been forced to revise upwards their predictions for gold’s performance this year. But far from seeing much of an upturn, they have revised nearer term forecasts to take account of the current level as a matter of reality, but see gold turning down in Q3 – and falling back to $1,000/oz by end 2016. Thus its revised forecasts are for 3-, 6- and 12-month average gold prices at $1,290/oz, $1,270/oz and $1,175/oz but with a continuing downturn throughout 2016 down to the predicted $1,000 level by the end of that year. That’s even lower than the $1,050 year-end price initially predicted for 2014. Gold investors will surely hope the bank is way out yet again, but as we have pointed out before such forecasts from the world’s top investment bank tend to colour big money investor views accordingly.

Goldman’s reasoning is that their expectation of a continuing improvement in the U.S. economy will thus support general equities and make gold less attractive to investors as a result – indeed this is very much a continuation of the bank’s reasoning behind its bearish forecast for last year. The bank also notes that it expects cost of production to fall for the major miners as a result of lower oil prices across the board and local currency weakness against the U.S. dollar, in which gold sales are priced, along with deflationary wage pressures, all of which should improve margins. This, the analysts feel, should arrest the anticipated decline in gold production which may thus now even rise going forward.

This commentary by Lawrie, filed from London, showed up on the Internet site at 2:14 p.m. yesterday afternoon---and it's definitely worth reading.


N.Y. Fed's auxiliary gold vault may be JPMorgan's...and a device of foreign policy

In the second installment of his series about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly compiles documentation indicating that the bank's auxiliary vault is operated jointly with JPMorgan Chase, whose own gold-vaulting facilities, regulated by the Commodity Futures Trading Commission, are adjacent and apparently being exempted from ordinary disclosure under federal freedom-of-information law because they implicate national defense or foreign policy.

Manly's analysis is headlined "The Keys to the Gold Vaults at the New York Fed -- Part 2: The Auxiliary Vault" and it was posted at the Singapore website yesterday.  I found this gold-related news item in another GATA release and, after having read it, it certainly falls into the absolute must read category.



¤ The Funnies

First Majestic is a mining company focused on silver production in México and is aggressively pursuing the development of its existing mineral property assets. The Company presently owns and operates five producing silver mines; the La Parrilla Silver Mine, the San Martin Silver Mine, the La Encantada Silver Mine, the La Guitarra Silver Mine, and the Del Toro Silver Mine. Production from these five mines is anticipated to be between 11.8 to 13.2 million ounces of pure silver or 15.3 to 17.1 million ounces of silver equivalents in 2015.


¤ The Wrap

In SLV, there has been a big net reduction in metal holdings in the reporting period ending on January 15---also before and after---and the most plausible explanation is that shares are being shorted because physical metal is not freely available (along with the avoidance of a big buyer from crossing the SEC’s 5% share ownership reporting requirement). If there is one thing absolutely rotten about SLV (and GLD) it is the ability of short sellers, most likely Authorized Participants (AP’s) and including JPMorgan, to fraudulently and manipulatively short shares instead of depositing metal when net new buying occurs and as the prospectus demands. Actually, “rotten” is too mild of a term, unless preceded by the expletive of your choice.

Shorting shares in a hard metal ETF, like SLV, instead of securing and depositing actual metal, is cheating in its purest form, a Wall Street end around gimmick that hurts all silver investors, not just those in SLV. As such, silver (and gold) investors should be united against it. How does it hurt all silver investors and not just SLV investors? By not having to bid up silver prices by securing metal when it is not freely available, the free market forces of supply and demand are circumvented to the short sellers’ advantage and to all silver investors’ detriment. This is the reason shares are shorted – so actual metal prices can be kept low.

I’m not suggesting that the shorting of SLV shares is at the heart of the silver manipulation, as Manipulation Central is still firmly ensconced on the COMEX. After all, the eight big shorts on the COMEX are short 310 million oz, while total SLV shorts are in the 20 million oz range. But the shorting of SLV shares is an important additional means of control for crooks like JPMorgan and a way to short circuit free market supply and demand. - Silver analyst Ted Butler: 28 January 2015

With the big traders heading for the exits out of the February futures yesterday, particularly in gold, nothing should be read into yesterday's price action in any of the four precious metals.  But I must admit that I was far from amused about the price action of their associated equities---and I'm wondering out loud as to what would motivate sellers to dump their positions in such a manner, particularly on such small price movements in the underlying metals.

But as I said further up, this counterintuitive price action in the equities is becoming more frequent all the time---but that still doesn't explain it.

Here are the 6-month charts for both gold and silver updated with yesterday's price/volume data.

To further expand on what Ted had to say in the quote above, I was just looking at the deposits into GLD since since its low on January 15.  On that date, GLD held 22.75 million troy ounces---and as of the last deposit on January 27, GLD now holds 24.20 million troy ounces.  That's 1.45 million ounces in just twelve days.  Even if there are no deposits for the remainder of the month, that's still a lot of gold.

With China, India and Russia already buying more gold that is currently being mined, the logical question to ask at this point is not only where is the gold that the rest of the world is using, coming from---but where is the gold going to come from to feed GLD and every other gold ETF on Planet Earth if prices continue to rise throughout the year?

As logical as that question is, an even larger issue is where will the silver come from to feed the world's ETFs if silver's rally continues?  JPMorgan, the custodian of SLV---and also an authorized participant---doesn't even have the silver to deposit that the prospectus says they must, even with this piddling little rally in silver that we have now.  And as Ted Butler keeps pointing out, they're obviously shorting the shares in lieu of depositing real metal.

How long this can go on is anyone's guess, but I thought I'd draw your attention to it at this time.

Of course, with a Commitment of Traders Report structure as ugly as we have currently, it's entirely possible that JPMorgan et al will engineer a vicious sell-off in both metals in order to retrieve the gold that's just been deposited in GLD---and also allow them to cover their short positions in SLV while they're at it.  This makes the problem go away temporarily, but it does---as Ted noted---totally "short circuit" the underlying supply/demand fundamentals that would ordinarily drive silver [and gold] prices higher.

And as Lawrence Williams pointed out in his essay further up, with Goldman Sachs and Barclays bearish long term in gold, theirs may be an attempt to talk the market down and discourage the big money on Planet Earth from buying the metal, thus ameliorating the physical demand woes that currently face the central banks, because that has to be only source of all the extra gold that's being consumed in the world at the moment.

It smacks of desperation by the "powers that be"---and with the way events are unfolding in the world today, this could all blow up in their faces without warning.

So we wait.

And as I type this paragraph, the London open is just under 15 minutes away.  There's not much happening in any of the precious metals, although gold, silver and platinum are all down a tad from yesterday's close in New York---and palladium is up a buck.

With today being the last day for traders to exit the February contract in the COMEX futures market [except those standing for delivery] it should be another busy day for roll-overs, but not as frantic volume-wise as Wednesday, as only the smaller traders are involved today.  At the moment, net gold volume is around 19,000 contracts, with almost all of it now trading in the new front month which is April.  Net volume in silver is already pretty hefty at 6,500 contracts.

The dollar index, which had been up about 15 basis points in early afternoon trading in the Far East, is now down 2 basis points.

Two hours have passed since I wrote the above paragraphs---and as I fire this out the door at 4:56 a.m. EST, all four precious metals are under renewed selling pressure---and it should come as no surprise that silver is getting hit the hardest.  Gold is down over ten bucks now---and silver is down more than 40 cents---and here's the chart.

Platinum is now down ten bucks as well---and palladium is down six dollars.

Net gold volume is now 29,000 contracts---and silver's net volume is now 9,000 contracts.  Because of the 15 minute delay in reporting on the CME's website, the volumes have probably blown out more than that.

The dollar index is basically unchanged, so what you're looking at is all paper trading on the Globex---and it's hard to tell whether this is the start of something more serious.  By the time I check in later this morning, we should have more clarity.

That's all I have for today---and I'll see here tomorrow

Ed Steer