It was quiet in the gold markets on Planet Earth yesterday. Gold traded pretty flat but, once again, it was not allowed over the $1,725 spot price mark. The price developed a slight negative bias around 1:00 p.m. Hong Kong time...and then declined very slowly to its low of the day, which was fairly early in the morning in New York.
Once the London p.m. fix was in, gold popped a few dollars, but that was pretty much it for Friday. Gold closed at $1,711.00 spot...down $6.70 on the day. Net volume was down substantially from Wednesday and Thursday, but still a quite high 132,000 contracts. I would guess that a lot of that volume would have been of the HFT variety.
Silver was under quiet selling pressure right from the New York open on Thursday night...and Kitco recorded the low of the day as $34.25 spot...which came just minutes before the Comex close at 1:30 p.m. in New York.
Silver's high of the day in New York [according to Kitco] was at the Comex open...at $35.16 spot. Between then and the Comex close, silver 'declined' 91 cents, with sixty cents of that decline occurring in the last half hour of Comex trading.
From that low, the silver price gained back almost fifty cents during the electronic trading session that followed, closing at $34.73 spot...down 78 cents from Thursday. Net volume was around 37,000 contracts.
Here's the New York Spot Silver [Bid] chart which shows their trading session in much greater detail...but even it doesn't show the spike low to $34.25...because it happened so quickly. I'm sure that a lot more speculative long positions got taken out on the spike down.
As I mentioned in 'The Wrap' yesterday, the dollar index began a rally at precisely 10:00 a.m. Hong Kong time in their Friday morning...which was 9:00 p.m. Thursday night in New York...and 99.9 percent of the rally was in by precisely 10:00 a.m. in New York. After that, the index pretty much traded sideways into the close at 5:15 p.m. Eastern time.
Despite the fact that the gold price did very little during the New York trading session, the gold stocks were under selling pressure for most of the day. The low came shortly before 1:30 p.m...which was the low price tick for the Dow as well. The gold stocks basically traded sideways from there...and the HUI finished down 1.98%.
With the silver price down about 2 percent during most of the New York trading session, the stocks didn't do particularly well either...and Nick Laird's Silver Sentiment Index closed down 2.42%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 25 gold and 216 silver contracts were posted for delivery on Tuesday. In silver, the biggest short/issuers were Jefferies and HSBC, with 135 contracts and 80 contracts respectively. The long/stopper was JPMorgan with 187 contracts in its proprietary [in-house] trading account. The link to the Issuers and Stoppers Report is here.
There were no reported changes in GLD yesterday...but over at SLV a smallish 120,573 ounces were withdrawn, which I'd guess was a fee payment of some kind.
There was an equally smallish sales report from the U.S. Mint. They sold another 75,000 silver eagles on Friday...and that was all.
It was a little busier over at the Comex-approved depositories on Thursday. They received 597,553 troy ounces of silver...and shipped 575,795 ounces out the door. The link to that action is here.
I was prepared for the worst in yesterday's Commitment of Traders report...and JPMorgan et al didn't disappoint. After Tuesday's big rally, the Commercial short position in silver jumped by a very large 5,405 Comex contracts...an increase of 27.0 million ounces of paper silver in one reporting week.
The total Commercial net short position...which was down to a decade-low of around 71 million ounces in late December, has now blown out to 223.0 million ounces...a 200% increase in just over two months. As of Tuesday's cut-off, the four largest Commercial traders are now short 206.2 million ounces of Comex silver...and the '5 through 8' largest traders are short 44.6 million ounces of the stuff. On a net basis, once all the market-neutral spread trades in the Non-Commercial category are removed, the 'big 4' are short a hair under 43% of the entire Comex silver market...and about 26 percentage points of that is held by JPMorgan.
In gold, during the reporting week, 'da boyz' increased their short position by 16,049 contracts, or 1.60 million ounces. The total net Commercial short position is now up to 24.5 million ounces of gold. The 'big 4' Commercial traders are short 15.4 million ounces...and the '5 through 8' largest commercial traders add another 5.6 million ounces to the total.
In silver, the eight largest traders are short 112% of the Commercial net short position...and in gold, the 'big 8' are only short 86% of the Commercial net short position.
Tuesday's COT report is now a historic snapshot of conditions before the crash, as everything changed the moment that JPMorgan et al engineered that horrific price decline on Wednesday morning. You can throw all those above numbers from Tuesday out the proverbial window, as it's a whole new ball game.
Ted Butler and I aren't really sure just how much of the huge short position that 'da boyz' have been accumulating since late December, has actually been covered up to this point. Yes, the volume numbers have been way up there, but how much of it was leveraged long positions being liquidated...and how much was high-frequency trading volume?
The other question that we both want answered is...are we done to the downside or do 'da boyz' have more pain in store for us? Don't know, but I expect that we won't be kept in the dark for too much longer.
Of course we'd know more if we knew what the COT looked like at the close of trading yesterday....but we won't know until next Friday...a lifetime away. There's a reason they did the dirty on Wednesday, as they have nine days to do as they wish...and no one can see what they're up to.
Here's are two nifty co-related charts that Washington state reader S.A. sent my way yesterday. They're pretty well marked, so require no further embellishment from me. You'll need to use the 'click to enlarge' feature to see the fine detail.
And here's another neat chart...this one courtesy of reader William Gebhardt. This is a graph that Warren Buffett should see...and he certainly doesn't want his stockholders to know about. It's too bad that Warren is now a bought and paid for shill of the dark side of The Force. His dad would disown him if he knew how badly his son had sold out to the very evil he himself fought against while he was alive.
Since it's the weekend, I have a lot of stories for you today...and I hope you have time to wade through them all during the next couple of days.
Michael Lewis' scathing, aphoristic, uber-sarcastic style needs no introduction. As such we will leave this brief clip from Slate, in which The Big Short author is asked how to avoid a new financial crisis.
This 3:45 video clip was posted over at zerohedge.com yesterday...and it's definitely a must watch. I thank Australian reader Wesley Legrand for sending it along...and the link is here.
Forget the modest 3.1 percent rise in the Consumer Price Index, the government's widely used measure of inflation. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.
The not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don't look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans' typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.
The institute contends that to get a good read on inflation's "sticker shock" effect, you must look at the cost of goods that the average household buys at least once a month and factor in only the kinds of expenses that are subject to change.
This story was posted over at the cbsnews.com website on Wednesday...and I dug it out of a GATA release from yesterday. The link is here.
Spend time with him and you discover this former wunderkind of the Reagan revolution is many other things now - an advocate for higher taxes, a critic of the work that made him rich and a scared investor who doesn't own a single stock for fear of another financial crisis.
Stockman suggests you'd be a fool to hold anything but cash now, and maybe a few bars of gold. He thinks the Federal Reserve's efforts to ease the pain from the collapse of our "national leveraged buyout" - his term for decades of reckless, debt-fueled spending by government, families and companies - is pumping stock and bond markets to dangerous heights.
This is another story that was posted over at the cbsnews.com website yesterday...and I thank reader Lance Gilason for sharing it with us. The link is here.
Wall Street's biggest banks are locked in an increasingly frantic struggle with the Federal Reserve over the right to retain the jewels of their commodity trading empires: warehouses, storage tanks and other hard assets worth billions of dollars.
While the battle over proprietary trading and new derivatives regulations has taken place largely in public view since the 2008 financial crisis, the fight by JPMorgan Chase, Morgan Stanley and Goldman Sachs to retain or expand their prized physical commodity operations - most acquired in only the past six years - has remained hidden.
The debate is nearing an inflection point: Within 18 months, the Fed will likely either allow banks more freedom to invest in the physical commodity world than ever; or force them to sell off the assets that many banks are counting on to buttress their trading books at a time when they are already vulnerable because of intensifying competition and new trading curbs.
This Reuters piece from yesterday falls into the must read category for sure...and I thank reader Rick Swayne for bringing it to our attention. The link is here.
The dollar in question is that of Canada. According to the Globe and Mail, tiny Iceland "is looking longingly to the loonie as the salvation from wild economic gyrations and suffocating capital controls...and for the first time, the Canadian government says it’s open to discussing idea.
There’s a compelling economic case why Iceland would want to adopt the Canadian dollar. It offers the tantalizing prospect of a stable, liquid currency that roughly tracks global commodity prices, nicely matching Iceland’s own economy, which is dependent on fish and aluminum exports."
This zerohedge.com piece was sent to me by 'David in California'...and as a Canadian, this is first I've heard of it. The link is here.
When something looks dangerous, it generally is. And few things look quite so high-wire right now as the European Central Bank’s efforts to hold the euro together by flooding the banking system with free money.
This week, the ECB injected a further 529.5 billion euros via “long-term refinancing operations”, or LTROs, bringing the tally to more than 1 trillion euros.
When Mario Draghi, the new ECB president, embarked on the programme shortly before Christmas, it was hailed as a masterstroke which had saved the eurozone from financial and economic calamity. Even the Jeremiahs of Germany’s Bundesbank, proud keepers of the sacred flame of monetary conservatism, were stunned into grudging acquiescence by the evident seriousness of the crisis. But now the doubts are beginning to set in, and with good reason.
This story was posted late on Thursday evening in The Telegraph. It's worth the read...and I thank Roy Stephens for sending it along. The link is here.
Details and timing will vary, Hinde Capital CEO Ben Davies told market analyst Chris Martenson in an interview earlier this week, but most of the rest of the West isn't any more able to service its debt than Greece is, and so credit and currency crackups won't end with that little country.
The interview runs for almost an hour...and I thank Wesley Legrand for sending it to me...and I thank Chris Powell for the headline and the introduction. You can listen to the interview at the Martenson's Internet site here.
Market analyst and gold mining entrepreneur Jim Sinclair argues that the decision of the International Swaps and Derivatives Association not to recognize the Greek government bond write-down as a default triggering bond insurance will require "quantitative easing" to infinity to protect bond-holding banks against losses. Sinclair adds that "QE to infinity" puts a floor under the gold price.
Jim's commentary was posted on his website jsmineset.com yesterday...and the link is here.
By deciding to pump yet billions more into Greece, the EU is merely continuing a strategy that could have fateful consequences. Europe needs a radical change of course. Enough with bailouts! It's time to reinstate national autonomy -- and responsibility -- for determining financial policies and honoring treaties.
Today, we know that a political union marked by a centralized European government is nothing but an illusory dream. Indeed, there won't be a United States of Europe comparable to that across Atlantic any time soon -- if ever. Nor will there be a centralized economic government like the one generating so much talk these days. "I don't perceive any willingness to cede significant sovereignty in matters of financial policies," Jens Weidmann, the president of Germany's central bank, recently said.
This kind of level-headed realism is welcome during an era in which European bailout funds are being stretched further and further. Not to mention a time when politicians are pushing through a second gigantic bailout package for bankrupt Greece, with which Germany is gambling with its own long-term viability by making itself jointly liable for unimaginably huge sums of money.
This op-ed piece showed up on the German website spiegel.de yesterday...and is Roy Stephens second offering of the day. The link is here.
Vladimir Putin plans to win a third term as Russian president in Sunday's election. But he has been weakened by the anti-government protests that have broken out in recent months, and many Russians believe he lacks a vision for the country. Is Russia on the brink of radical change?
It is becoming clear that a rift runs through Russian society. The country is divided. On the one side are those who support Putin because they fear a new period of turmoil, like in the 1990s after Gorbachev's resignation, or in 1917, after the abdication of Czar Nicholas II. On the other are those who are now marching through Moscow's streets, shouting: "We are not the opposition, we are your employers. Putin, get out!" Neither of the two camps is pulling any punches.
Moscow is the "last bulwark against a new global empire of evil," pro-Kremlin speakers tell their audiences, as they accuse the Americans of trying to subjugate Russia after supposedly having done the same to Afghanistan, Iraq and Libya. The protesters, they say, are Washington's henchmen. [There's a lot of truth to what is said in this paragraph. - Ed]
This is 'Part 1' of a 2-part story. Roy Stephens sent me this article out of spiegel.de on Thursday. It, along with the second part, is well worth your time if you have it. The link to 'Part 1' is here. The link to 'Part 2' is at the top of the first page of 'Part 1'.
Economist Marc Faber, publisher of the Gloom, Boom and Doom report, says the government will seize privately held gold, even as he continues to buy physical gold himself.
“I prefer to play the commodity space by owning physical gold,” Faber tells Chiefsworld. “If I were an American, I would store it outside the U.S., because in the U.S., it is not completely unlikely that they will eventually take it away.”
“Like in 1933, gold will be purchased back by the government” because eventually the financial mess will be so bad that gold prices “will go ballistic, and the government will take away something from a minority, and not many people own gold."
This story was posted on the moneynews.com website yesterday...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
GATA's Chris Powell had this comment about it yesterday..."Dennis Gartman's letter for Friday which, on Page 4, makes what is, for him, an extraordinary concession that central bank intervention most likely was the cause of this week's plunge in the gold price. If even Gartman, a long-time disparager of GATA, is coming around, the struggle for market opinion may be nearly settled, except in the [public] press."
You can read what Dennis had to say posted in the clear in this GATA release...and the link is here.
London silver market rigging whistleblower Andrew Maguire told King World News yesterday that manipulation of the gold market this week "couldn't have been more blatant" and that a New York financial institution with influence in China has succeeded in killing plans for the Pan-Asia Gold Exchange there.
But, Maguire adds, the originators of that exchange are engineering another one whose development will be announced soon. Maguire's interview is posted at the KWN website...and the link is here. I thank Chris Powell for providing the above introduction.
Ned Naylor-Leyland, investment director at Cheviot Asset Management in London and an organizer of the Pan-Asia Gold Exchange, today distributed a commentary explaining the interruption in the exchange's planning and the departure of some of its organizers to form another exchange, which will begin with a silver contract, silver seeming to be the most vulnerable spot of the market manipulators.
Naylor-Leyland's commentary is titled "PAGE Squashed...and Now for Something Completely Different" and it's posted at GATA's Internet site. It, too, is a must read...and the link to the 2-page pdf file is here.
Bank of China Ltd, one of China's "big four" State-owned lenders, formed a tie-up with the world's largest futures exchange operator on Wednesday, through which the two parties will explore yuan settlement and clearing opportunities for commodities.
The cooperation agreement provides for trading in contracts related to oil, interest rates, grains and gold.
The pact includes a settlement and clearance membership in the derivatives marketplace CME Inc, and an application from Bank of China (Hong Kong) Ltd to become an offshore yuan settlement bank for CME, which is almost complete, said Si Xinchun, deputy general manager of the bank's corporate banking unit.
This story was posted on the chinadaily.com.cn website on Thursday. I ran it past Ted Butler as soon as I saw the world gold mentioned. He says it's not a big deal. Please excuse me if I remain unconvinced. I thank reader Eric Gould for sending me this story yesterday...and it's worth skimming. The link is here.
Singapore is seeking to lure bullion refiners by scrapping taxes on gold, an action that could also attract trading houses to open storage facilities and transform the country into a key Asian pricing hub, industry sources said on Monday.
Singapore will exempt investment-grade gold and other precious metals from a 7% goods and services tax to spur the development of gold trading, Finance Minister Tharman Shanmugaratnam said on Friday.
The change takes effect in October and may lift demand for gold bars and coins in the fourth quarter and into 2012. Singapore's investment gold demand nearly tripled to 3.5 tonnes in 2011, according to consultancy firm GFMS.
This story was filed from Singapore on February 20th...but showed up posted on the indianexpress.com website earlier today. It's certainly worth reading...and I thank Washington state reader S.A. for bringing it to my attention. The link is here.
Interviewed by King World News yesterday, Sprott Asset Management CEO Eric Sprott shakes his head at this week's counterintuitive action in the paper gold and silver markets. Sprott says, "The authorities don't want a linkage between monetary irresponsibility and the price of precious metals going up."
That is indeed, the truth. The link to this must read KWN blog headlined "What Happened in Gold and Silver is Stunning" is here.
The pictorial below came out of a French newspaper...and it's a put-down of French President Nicolas Sarkozy...and I thank reader Mike Buxton for sending it along.
(Click on image to enlarge)
Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization
Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.
Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.”
Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained.
Please visit our website for more information about the project.
This week’s LTRO [in Europe] provides an exclamation point on the latest round of unprecedented global policy market interventions. As I explained last week, policymakers were, once again, able to incite the reversal of bearish positions and risk hedges. And as much as this creates the perception that central banks have things all under control, a strong case can be made that such actions only ensure that unwieldy markets just move further from their control.
The interventions have become monstrous, increasing the odds of unintended consequences: speculative equities and global risk markets; surging oil prices; and only more dangerous global imbalances - quickly come to mind. And, if they’re not careful, one of these days policymakers may even unknowingly pierce the U.S. bond Bubble. - Doug Noland, Credit Bubble Bulletin, 02 March 2012
Casey Research's own Doug Hornig made today's 'blast from the past' a no-brainer. In a short e-mail to me on Wednesday, he said that "Davy Jones...and another tiny piece of our youth...is gone." One his best-known compositions is linked here. May he rest in peace.
Well, the events in the precious metal markets on Wednesday are still reverberating around the Internet...and beyond. Another comment came from Grand Private Equities fund manager, Wesley Legrand, out of Adelaide in Australia.
Along with the Kitco gold chart from my Friday column, Wesley had this to say..."In no free market on Earth does something trade flat for one day (blue), then trade flat for half the next day before getting virtually instantly smashed (red), and then follow up the very next day with flat trading again (green)… it just does not happen. It is inconceivable in a free market for there to be no prior lead-in OR follow-up trend changes."
As I mentioned in my discussion of the Commitment of Traders Report further up in this blog, we don't know if JPMorgan et al are done with this price correction or not. There's just no way of knowing for sure...and I doubt very much that they will telegraph their intentions in advance.
If they are going to continue engineering the price lower, I would bet that they would start up again in the thinly traded Far East market when that begins on Sunday night. One thing is for sure, though...their days of operating without being noticed are done. Everyone has now been publicly alerted to their presence...and market watchers will have much more sensitivity to extreme price changes going forward.
And as I said yesterday, it's entirely possible that their co-ordinated actions on Wednesday may have been a 'bridge too far'...and they may not act so blatantly again. I wouldn't bet on it myself, but it certainly makes the action of 'da boyz' much more conspicuous...and much easier to point fingers at in the future.
With the precious metals and their shares still on sale...for a limited time only...there's still the opportunity 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.
That's it for Saturday...and the week.
I'll see you here on Tuesday.