Gold & Silver Daily
"Nothing has changed in the 'locked and loaded' situation since yesterday...and it's just a matter of waiting until gold and silver are allowed to rally a decent amount."
 

¤ Yesterday In Gold & Silver

As I mentioned in 'The Wrap' in this column yesterday, the gold price rallied in the Hong Kong afternoon on Thursday...and then got sold off the moment that London began to trade at 8:00 a.m. GMT.  This sell-off intensified once the Comex opened at 8:20 a.m. Eastern time...and the low tick of the day came at precisely 9:30 a.m....an hour and ten minutes later.

From there, gold rallied back to its London high...and then traded sideways into the close of electronic trading in New York at 5:15 p.m.

The gold price closed at $1,621.40 spot...up $8.90 on the day.  Volume net of roll-overs was a very healthy 151,000 contracts...or thereabouts.

The silver price more or less followed the same pattern as gold...rally in the Hong Kong afternoon...sold off as soon as London opened...sold off some more at the Comex open...and then hit its low price tick of the day about two minutes after 10:00 a.m. in New York.

The subsequent rally didn't get far...and the silver price basically traded sideways from about 12:25 p.m. in New York until the close of trading in the New York Access Market at 5:15 p.m. Eastern.

Silver did manage to close up a bit on the day at $29.37 spot...up 21 cents.  Net volume was in the neighbourhood of 36,000 contracts.

The dollar opened about 80.10...and more or less stayed at that level until precisely 3:00 a.m. Eastern time...the open of the London markets.  From there, the dollar moved sharply higher, reaching its high tick about 11:15 a.m. in New York...and then did nothing for the rest of the Thursday trading day.  The dollar closed up about 80 basis points...almost a full percent.

It's interesting to note that the gold price began to rally in New York almost the moment that the dollar rally ended.

The gold stocks hit their nadir about 9:45 a.m...and then climbed back into positive territory.  After the gold rally in New York ended in the early afternoon, the stocks got sold off a bit going into the close...but still managed to finish in the black, with the HUI closing up 0.23%.

As a group, the silver stocks fared somewhat better...and Nick Laird's Silver Sentiment Index, which is comprised of the seven silver stocks shown on the chart below, closed up 0.75%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 24 gold and only 2 silver contracts were posted for delivery on Monday.  As I've mentioned several times before, January is not a traditional delivery month for either metal...and unless a big delivery is added during the month, most of the deliveries for January have already occurred.

There were no changes in GLD again yesterday...and despite the engineered price decline between Christmas and New Years...not an ounce has been withdrawn from the GLD ETF since December 22nd.

However, that's not the case in SLV...as another chunk was withdrawn again yesterday.  This time it was 972,210 troy ounces.  So far this week, a total of 2.9 million ounces has been withdrawn.

The U.S. Mint did not have a sales report yesterday.

But it was another big day over at the Comex-approved depositories on Wednesday, as they reported receiving another large amount of silver.  This time it was 2,019,191 troy ounces...with the lion's share going into HSBC USA.  They didn't ship any out the door.  The link to that action is here.

Here's a chart that Washington state reader S.A. sent me yesterday.  I have a feeling that I've posted it before, but I just can't remember for sure.  And even if I have, it's worth a second look.

I have the usual number of stories today...and I hope you're able to at least skim all of them.  But there are some important must reads as well.

 

¤ Critical Reads

MF Global Inquiry Turns to Its Primary Regulator...the CME

Federal authorities investigating the collapse of MF Global have expanded their inquiry to include the actions of the CME Group, the operator of the main exchange where the commodities brokerage firm conducted business, according to people briefed on the matter.

CME, which also served as MF Global’s primary regulator, has come under heavy criticism after $1.2 billion in customer money disappeared from MF Global. The Commodity Futures Trading Commission, the government agency leading the case, is now scrutinizing CME’s conduct in the days before MF Global filed for bankruptcy on Oct. 31st.

In particular, the commission is reviewing whether CME’s efforts to verify the safety of customer funds were sufficient, the people said.

It's nice to see one of the real culprits in this fiasco finally floating into the crosshairs of the investigators.  This story was posted late last night in The New York Times...and I thank reader Phil Barlett for sending it along.  The link is here.

Read more...

Here We Go Again: US $25 Million Away From Debt Ceiling Breach

It's simply amazing how quickly the US managed to hit its debt target, pardon, debt ceiling all over again...And now the Social Security Fund pillaging begins anew until Congress signs off on the latest interim debt ceiling increase.

You just read the entire text of this tiny zerohedge.com piece.  The rest of the article is a table of numbers.  It's a very short read courtesy of Wesley Legrand...and the link is here.

Read more...

Volume is lagging the price action in the US dollar index futures BIG TIME

First let me just say that I do not rely on technical indicators to make trading decisions.  All my trades are based on Auction Market Principles.  The futures markets trade in an auction and price is determined by supply and demand.  However, I do like to glance at volume indicators.  This is the most glaring bearish negative divergence in comparison to the price action in a futures contract I have seen since I don't know when.  Divergence is when an indicator and the price of an asset are moving in different directions.  It is a lack of confirmation.

I'm looking forward to today's COT report, and what will happen if the Dollar makes a new 52-week high...and one thing is for sure, any reversal pattern that forms in the Dollar index will have me trading to the short side.

This is an excellent Scott Pluschau article on the dollar which I consider a must read, because [for the most part] as goes the dollar, so goes the price of the precious metals.  It's posted over at scottpluschau.blogspot.com website...and the link is here.  The charts alone are worth the trip.

Read more...

Your humble scribe interviewed by Kerry Lutz at Financial Survival Network

I had the good fortune to be interviewed by Kerry on Wednesday...and he provided the link to the mp3 file yesterday afternoon.  The audio interview runs about twenty minutes or so...and it's posted over at the kerrylutz.com website.  The link is here.

Read more...

Ponzi Planet: The Danger Debt Poses to the Western World

Countries around the world, particularly in the West, are hopelessly in the red, with debt rising every day. Even worse, politicians seem paralyzed, unable -- or unwilling -- to do anything about it. It is a global disaster that threatens the immediate future.

It's the classic pyramid, or snowball scheme, practiced by thousands of con artists after Ponzi. The most spectacular case was that of New York financier Bernard Madoff, who was responsible for losses of about $20 billion by 2008. Snowballs are set into motion, becoming bigger and bigger as they roll along. In the worst case, they end in an avalanche that takes everything else with it.

Western economies have not acted much differently than the fraudster Madoff. In 2011, they were virtually inundated with bad news and old sins. Almost everyone -- in Europe and in the United States -- has been living beyond their means, from consumers to politicians to entire countries. Governments have become servants to the markets upon which they have become dependent.

The fact that nations are continually spending more than they take in cannot turn out well in the long run. The word "credit" comes from the Latin "credere"...which means "to believe." The system will only function as long as lenders believe in borrowers. Once the belief in the creditworthiness of borrowers is destroyed, hardly anyone will be willing to buy their securities.

When that happens, the system is finished.

This very long must read was posted on the German website spiegel.de yesterday.  I was amazed to see such a frank article show up in the main-stream press...but Europe is different from the U.S.  This is Roy Stephens first offering of the day...and it's a barn-burner.  The link is here.

Read more...

Eurozone bank shares battered for a second day

The scale of the problems facing the eurozone banking system were highlighted on Wednesday as shares in Italian financial group UniCredit crashed with the launch of a deeply-discounted €7.5bn (£6.2bn) cash call.

After falling 15pc on Wednesday, shares were down 12pc in mid-afternoon trade at €4.766, after being suspended at least twice amid volatile trade.

Italian bank shares filled eight of the top ten fallers in the FTSE Mib index in Milan, with Banco Popolare falling 8.3pc and Intesa Sanpaolo down 5.7pc. The index as a whole fell 3.2pc to 14,837.59.

French and German banks also led the fallers in their respective indices. Société Générale fell 3.2pc, while Commerzbank and Deutsche Bank in Germany both fell 3.9pc.

This story was posted in The Telegraph yesterday afternoon...and is another Roy Stephens offering.  The link is here.

Read more...

Hungary faces crisis as traders fear bond debt default

Hungary was forced to cancel a bond swap auction amid an escalating financial and political crisis that investors fear could trigger another dangerous shockwave in Europe.

The Budapest government saw borrowing costs soar and the currency plunge as traders bet that international authorities may abandon Hungary, letting it become the first European Union country to default on its debts.

The florint fell more than 1pc to a record low against the euro and bond yields soared over 10pc. The Hungarian government, which has defied Brussels by introducing a raft of radical constitutional reforms, called off its plans to swap old debt for new because it would be too expensive.

Traders, already rattled by the advancing eurozone debt crisis, including a drastically discounted rights issue by UniCredit, were unnerved by the emergence of a new front in central Europe. France's CAC index fell 1.6pc, while Germany's Dax and the FTSE 100 dropped 0.6pc each.

This story is also from The Telegraph...and I borrowed it from yesterday's edition of the King Report.  The link is here.

Read more...

EU transaction tax ‘in law by year end’

Jean Leonetti, France’s minister for European affairs, yesterday gave the clearest indication yet that the tax will be brought into law, saying the French and German governments were agreed that it should be implemented.

“This is on the programme for the next European summit [on January 30]. Nicolas Sarkozy and Angela Merkel have decided on this and it will be put in place before the end of 2012,” Mr. Leonetti said in a television interview.

Britain and Sweden are alone among the EU’s 27 member countries in opposing the tax, which has gained iconic status among finance industry critics.

In the UK, the Robin Hood Tax Campaign has been set up to lobby for the imposition of a financial transaction tax, which it says would see the banking sector pay for the damage the campaign says it caused in the financial crisis.

The bowler hat/bumbershoot crowd in the City of London will not be amused.

This was also posted in The Telegraph late Wednesday night...and I lifted this one from yesterday's King Report as well.  The link is here.

Read more...

EU, US reach preliminary deal on Iranian oil embargo

The European Union and the United States on Wednesday tightened the sanctions noose around Iran, with diplomats in Brussels saying a preliminary agreement had been reached on an EU embargo of Iranian oil. French Foreign Minister Alain Juppé said a final decision could be taken by the end of the month.

Washington hailed the agreement, saying it was "the result of lots of consultations" with its EU allies. It announced that US Treasury Secretary Timothy Geithner was to go to China next week to discuss "coordination" over new US sanctions against Iran's central bank.

The West's double squeeze on Iran adds to existing sanctions imposed over Tehran's nuclear programme that is increasingly destabilising the Islamic republic oil-dependent economy.

Iran's fury at the moves being made against it was apparent in threats this week it made against the US navy.

This AFP story was posted over at the france24.com website yesterday...and is another Roy Stephens offering.  The link is here.

Read more...

China Seeks to Boost Consumption, Chen Says

China will roll out measures to boost consumption this year as it strives to meet challenges posed by a global slowdown, Commerce Minister Chen Deming said.

The government is studying policies to encourage spending on energy-saving products, and will take other measures including the promotion of online shopping and tourism, Chen told the ministry’s annual works conference, according to a statement posted on its website yesterday.

Policy makers have cut taxes to spur consumption and help sustain growth in the world’s second-largest economy as Europe's debt crisis clouds the outlook for exports and a property crackdown damps investment at home. Premier Wen Jiabao said Jan. 3rd that business conditions may be “relatively difficult” this quarter.

Well, no shades of grey there...the Chinese economy is definitely heading south.  This Bloomberg story from yesterday morning was sent to me by West Virginia reader Elliot Simon...and the link is here.

Read more...

Stephen Leeb - Sense of Desperation, But Gold Ready to Stampede

Eric King sent me this blog yesterday afternoon...and here's a paragraph of what Stephen had to say...

“The year started with the dollar down the first day and gold had a very big up-move.  The last two days the euro has been clobbered and the dollar has been very strong and (yet) gold has continued to rise.  That, to me, is a very, very good sign.  Historically, when gold breaks away from other things, when it starts acting on its own, that tends to be a very positive sign."

The rest is worth the read as well...and it's posted over at the King World News website...and the link is here.

Read more...

Subtle Fleecing of the U.S. Currency

The changes have been subtle and even span generations, which accounts for few people even noticing. Yet, looking back over the history of the US currency, one immediately sees that the citizens have been fleeced!

In 1929, all newly issued US currency was standardized in size and general appearance. For example, the $10 bill would now always be printed with Alexander Hamilton’s portrait. At this time, it’s interesting to note that bills were issued in different series...Federal Reserve Note, Gold Certificate and Silver Certificate.

All these issues had the same general appearance, but differed primarily in their obligation to the bearer of the bill.

This is a very interesting read, with some great photos of what a precious metal-backed currency used to look like in the United States...and I thank reader 'JK from California' for sharing this with us.  It's posted over at the ounceofsilver.info website...and the link is here.

Read more...

Silver Eagle & Maple Leaf Sales Up As Supply Slips

The demand for American Silver Eagles and Canadian Maple Leaf coins has increased tremendously over the past several years.  2011 will be the first year in which official coin sales will surpass domestic silver production in both countries.

Even though each country has seen declines in their domestic silver production over the past decade, U.S. silver production declined a whopping 30% year-over-year in October.  According to the USGS in their most recent Silver Mineral Industry Survey, silver production fell to 81,400 kilograms in October— compared to 117,000 kilograms the same time last year.

This fascinating must read article is posted over at the marketoracle.co.uk website...and I thank reader Bob Fitzwilson for sending it along.  The link is here.

Read more...

Gold is Great, but Silver will be the next Apple, Turk tells King World News

GoldMoney founder and GATA consultant James Turk told King World News yesterday that gold's bottom is in...and that silver will be the next Apple...and soon.

Eric sent me this James Turk blog yesterday afternoon.  It's a must read, of course...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

It's not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. - Charles Darwin

Thursday's price action in both gold and silver was almost a carbon copy of what happened on Wednesday, with gold hitting its Far East high at the London open...and then getting sold off until sometime in the New York trading day...and then rallying from there.

The preliminary open interest numbers for yesterday showed very tiny increases in both metals...and I doubt that the final numbers published on the CME's website later this morning will show much change from what's already posted.

The final open interest numbers for Wednesday's trading day showed a small decline in gold...along with a decent decline in silver.  What this translates into in real terms won't be known until the COT report on January 13th.

Today we get three important reports.  Two of them are the job numbers at 8:30 a.m. Eastern time...and the anxiously-awaited Commitment of Traders Report at 3:30 p.m.  As has been the case for many years, there's always a spike up in gold and silver the moment the job numbers are released...followed by the usual smack-down within half an hour or so.  Let's see if that holds true again today.

The third one is the January Bank Participation Report which uses data extracted from tomorrow's Commitment of Traders Report...for positions held at the close of Comex trading on Tuesday, January 3rd.  Both Ted Butler and myself are hoping/expecting a big drop in silver's short position held by the two largest U.S. bullion banks...JPMorgan and HSBC USA.

Not much happened in Far East trading during their Friday.  Silver is down about a dime...and gold is basically unchanged as I await the London open in less than ten minutes.  The dollar has been as quiet as a church mouse...and the chart is as flat as a pancake...and has been since noon in New York yesterday.  Gold volume is about average...and silver volume is pretty light.  And as I hit the 'send' button, at 4:54 a.m. Eastern time, trading has been going on in London for about two hours...and not much of anything is happening.  

And nothing has changed in the 'locked and loaded' situation since yesterday...and it's just a matter of waiting until gold and silver are allowed to rally a decent amount.  Then we'll find out in a real hurry whether the bullion banks are going to show up as sellers of last resort again.  I don't think they will, especially in silver...but you can never say 'never'.

And as I said in this space a week ago, you should carefully note that JPMorgan et al still have gold and silver bullion marked down to fire-sale prices, so there's still time to either re-adjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well.  And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Enjoy your weekend...and I'll see you here on Saturday morning.

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