Gold & Silver Daily
"Gold made a rally attempt to $1,750...and silver tried to blast above the $34 price ceiling...but both were turned back by the usual suspects in the usual way."

¤ Yesterday In Gold & Silver

Well, here's my column for Tuesday...such as it is.

With the U.S. markets closed for President's Day, the gold market was but a shadow of what it normally is.  Volume and price action was non-existent.

The gold price did jump up about twelve bucks right at the open, but that appeared to be mostly dollar the dollar gapped down at the open on Sunday night...and both gold and silver responded as one would expect.

Gold finished the Monday trading day at $1,734.10 spot...up $10.30.  Net volume was around 35,000 contracts.

The silver price also gapped up at the open...and the high of the day was in around 9:00 a.m. Hong Kong time.  From there, the price got sold off about 30 cents..with its low coming minutes before 11:00 a.m. in London.  From that low, silver crawled back almost to its high of the day by the close of trading at 1:15 p.m. Eastern time.

Silver closed at $33.61 spot...up 33 cents from Friday's close.  Net volume was only around 4,000 contracts.

As I mentioned in the first paragraph, the dollar index gapped down about 35 basis points right at the open in New York at 6:00 p.m. on Sunday night...and then dropped another 30 basis points starting shortly after 10:00 a.m. in London.

Ninety minutes later, the dollar had pretty much bottomed out...and then began to rise shortly before 11:00 a.m. Eastern time...and closed within an eyelash of 79.00...which was down about 40 basis points from Friday's close.

With the New York and Toronto equity markets both closed yesterday, there were was no HUI or SSI yesterday.

To go along with that, there was no Daily Delivery Report, changes in GLD and SLV, U.S. Mint sales, nor report from the Comex-approved depositories.

Silver analyst Ted Butler had a few things to say in his weekend commentary to paying subscribers...and here are three free paragraphs...

"Conditions in the wholesale physical silver market still appear tight, although retail demand may be cooling off. There is still unusually high turnover or movement of metal into and out from the COMEX approved silver warehouses, as the total level of inventory was mostly unchanged for the week. Although there is little sign of widespread attention to this silver movement, it still resonates with me. That’s because, up until a year or so ago, such consistent turnover didn’t exist."

"The vision of daily large truck deliveries, being loaded and unloaded in and around New York City (not the most traffic-friendly environment) is one I often think about. Having some familiarity with that NYC traffic, I can’t help but ask - who would subject themselves to that experience unnecessarily? What's so important about moving metal so feverishly in those traffic conditions and congestion? The most plausible explanation to me is that most of the near 130 million oz already there is unavailable and new stuff must be brought in to satisfy consistent withdrawal demands. Again, this turnover pattern didn’t exist over the past quarter century."

"Sure, there were times over the past 25 years when many tens of millions and even a hundred million ounces came into and out from the COMEX silver warehouses over varying periods of time. But I don’t ever remember this daily in and out on the COMEX. Also adding to the signs of physical tightness was the withdrawal of 3.5 million oz from the big silver ETF, SLV, this week. Price patterns and trading volume did not suggest that the withdrawal was due to plain-vanilla investor liquidation. The most plausible explanation was that SLV shares were converted to metal and that metal was removed because it was needed somewhere more urgently than in the London warehouse of the custodian. This tends to confirm the tightness scenario, as does the 600 thousand oz withdrawal from the big Swiss silver ETF, ZKB."

The Central Bank of the Russian Federation updated their website with January's data yesterday...and it showed that, officially, they never purchased any gold during the month.  They didn't purchase any gold in January of 2010, either.  Here's Nick's most excellent graph.

Here's a chart that Washington state reader S.A. sent me last night.  It shows all the housing busts of note back to the Great Depression...and compares them to the one going on today.

The only reason that I have a column today is to post the long list of stories that I've accumulated over the weekend.


¤ Critical Reads

SEC Surrender Continues With Bear Bankers Deal

Once again, the Securities and Exchange Commission has embarrassed itself. Last week it let off the hook two hotshot former Wall Street hedge-fund managers who lost a bundle for the investors trusting them to manage their money responsibly.

Instead of going to court on Feb. 13 and laying bare the sordid facts for a jury, at the last minute the SEC settled a civil suit against Ralph Cioffi and Matthew Tannin of the now defunct Bear Stearns Co. These were the hedge-fund managers who five years ago loaded up their two funds with $1.6 billion dollars of lousy mortgage-backed securities and collateralized debt obligations, leveraged them to the hilt and, when the market for the securities soured in July 2007, liquidated the funds.

The price the SEC extracted from Cioffi and Tannin as part of a settlement -- after previously telling the court it intended to go to trial -- was a mere pittance, “chump change,” according to the federal judge in Brooklyn overseeing the case. Cioffi, who made $22 million in 2005 and 2006 at Bear Stearns, will pay just $800,000 and agree to a three-year ban from the securities industry. Tannin, who was paid $4.4 million in his last two years at Bear, will pay $250,000 and agree to a two-year ban. Neither has to admit to wrongdoing. The agreement will deter absolutely no one from trying to pull off a similar stunt.

Crime definitely pays.  This story appeared on the Bloomberg website yesterday morning...and I thank Washington state reader S.A. for sending it along.  The link is here.


In Alabama, a County That Fell Off the Financial Cliff

One county jail here is so crowded that some inmates sleep on the floor, while the other county jail, a few miles down the road, sits there is no money to run the second one anymore.

There is no money for a lot of things around here, not since Jefferson County, population 658,000, went bankrupt last fall. There is no money for holiday D.U.I. checkpoints, litter patrols or overtime pay at the courthouse. None for crews to pull weeds or pick up road kill — not even when, as happened recently, an unlucky cow was hit near the town of Wylam.

This is life today in Jefferson County — Bankrupt, U.S.A. For all the talk in Washington about taxes and deficits, here is a place where government finances, and government itself, have simply broken down. The county, which includes the city of Birmingham, is drowning under $4 billion in debt, the legacy of a big sewer project and corrupt financial dealings that sent 17 people to prison.

This very interesting, but very depressing 3-page essay, appeared in the Saturday edition of The New York Times...and I thank reader Phil Barlett for sharing it with us.  The link is here.


Corporatocracy: Ron Paul says US ‘slipping into fascism’

Republican presidential candidate Ron Paul slammed America's system of governance at a rally in Kansas City, saying businesses and government are pushing the country into twenty-first century fascism.

­But before you start picturing fair-skinned, blue-eyed CEOs and bureaucrats running amok and with their right arms held high, calm down. What the outspoken Texas Republican meant was fascist corporatism – an economic model most prominently seen in Mussolini’s Italy of the 1920s to the 1940s. Fascist economic corporatism involved government and private management of full sectors of the economy – which Paul says is par for the course in today's America.

“We’ve slipped away from a true republic,” Paul told thousands of his supporters at the rally. “Now we’re slipping into a fascist system where it’s a combination of government, big business and authoritarian rule, and the suppression of the individual rights of each and every American citizen.”

The presidential hopeful echoed words already once delivered to the American people – by their president. Dwight Eisenhower said, in his farewell address to the nation, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

It's beyond strange to read these paragraphs, because they were posted over at the Russia Today website...and that's where Roy Stephens found this story on Sunday.  It's worth skimming...and the link is here.


Drones Set Sights on U.S. Skies

A new federal law, signed by the president last Tuesday, compels the Federal Aviation Administration to allow drones to be used for all sorts of commercial endeavors — from selling real estate and dusting crops, to monitoring oil spills and wildlife, even shooting Hollywood films. Local police and emergency services will also be freer to send up their own drones.

But while businesses, and drone manufacturers especially, are celebrating the opening of the skies to these unmanned aerial vehicles, the law raises new worries about how much detail the drones will capture about lives down below — and what will be done with that information. Safety concerns like midair collisions and property damage on the ground are also an issue.

American courts have generally permitted surveillance of private property from public airspace. But scholars of privacy law expect that the likely proliferation of drones will force Americans to re-examine how much surveillance they are comfortable with.

This story appeared in The New York Times on Friday...and is another Phil Barlett offering.  The link is here.


Nomura's Bob Janjuah: Markets now so rigged by govt. that there's little to say

Yesterday, Zero Hedge published the latest market letter written by Nomura International's investment strategist Bob Janjuah, who sounds quite a lot like GATA: "Bond and currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears." Maybe in another century or two observations about market rigging by government will become actual news stories in the mainstream financial news media. But for the time being market reality is confined to a few obscure Internet sites.

The original story was posted over at the website yesterday...and I thank reader George Findlay for bringing it to my attention...and Chris Powell for writing the above introduction.  The link is here.


Alasdair Macleod: The destruction of savings by inflation

Writing for GoldMoney, economist and former banker Alasdair Macleod explains today how interest on savings in the modern fiat money system is more than wiped out by inflation, that the resulting impoverishment of pensioners will impose far greater welfare costs on government than are understood now, and that savers would do far better under a "sound money" system.

I borrowed the story...and the above introduction...from a GATA release yesterday.  The story is posted over at the website...and the link is here.


Libor Manipulation: Another Black Eye for UBS

For Switzerland’s largest bank, the hits just keep coming. After years of being whacked with millions of dollars of fines for all sorts of infractions, UBS now appears to be at the center of the financial world’s latest scandal: an alleged conspiracy by traders and brokers to rig the price of derivatives around the world by manipulating a key interest rate.

The Wall Street Journal reports that UBS has admitted to Canadian regulators that between 2007 and 2010, some of its traders and cash brokers conspired to manipulate the London interbank offered rate, also known as Libor. This is the rate that banks use to lend to each other, and it is essentially the backbone of half the world’s fixed-income market, because it’s also used to calculate the price of trillions of dollars of floating-rate securities every day, from car loans to corporate bonds and derivatives.

By allegedly conspiring to set Libor rates, traders and cash brokers appear to have been able to profit off of derivatives linked to it. Bloomberg News reports that UBS recently suspended a number of senior executives and traders in conjunction with the investigation.

Nothing surprises or shocks me any more...and this is just another brick in the wall.  I thank reader Brad Robertson for sending along this story from Friday...and the link is here.


Germany drawing up plans for Greece to leave the euro

The German finance ministry is actively pushing for Greece to declare itself bankrupt and to agree a "haircut" on the bulk of its debts held by banks, a move that would be classed as a default by financial markets.

Eurozone finance ministers meet on Monday to approve the next tranche of loans from the EU and the International Monetary Fund, designed to stave off national bankruptcy while the new Greek government puts the country's finances in order.

But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.

Schäuble has a keen grasp of the obvious.  This story appeared in The Telegraph on Saturday...and is Roy Stephens second offering of the day.  The link is here.


Stop the Second Bailout Package! - EU Should Admit Greece is Bankrupt

Greece is bankrupt and will need a 100 percent debt cut to get back on its feet. The bailout package about to be agreed by the euro finance ministers will help Greece's creditors more than the country itself. EU leaders should channel the aid into rebuilding the economy rather than rewarding financial speculators for their high-risk deals.

Around a quarter of the package won't even arrive in Athens but will flow directly to the country's international creditors. The holders of Greek government bonds are to get some €30 billion as an incentive to convert their old paper into new bonds. The aim is to keep alive the illusion that Greece isn't bankrupt -- after all, the creditors are voluntarily forgiving part of the debt. The financial sector is cleverly manipulating the fear that a Greek bankruptcy would trigger a fatal chain reaction.

That leaves €100 billion. But that too isn't geared to what Greece needs in order to get back on its feet. It's linked to an estimate of how much debt the Greek economy can bear without collapsing. International technocrats agree that with debts amounting to 120 percent of gross domestic product, the country can just about go on servicing its debt. That's the level at which the cow can go on supplying milk without dying of exhaustion. So 120 percent became the goal.

This story was posted on the German website yesterday...and is Roy's second offering in a row.  The link is here.


Britons in Greece told to prepare to leave the country as fears of default mount

Britons in Greece were warned on Sunday that they may have to be evacuated.

It comes as eurozone ministers prepare to sign off another £108billion rescue package for the crippled economy.

Foreign Secretary William Hague revealed Britons were being urged to register with the consulate as officials are updating plans to evacuate citizens ‘on a daily basis’ in case Greece goes under.

This story was posted in the Daily Mail yesterday...and is Roy Stephens third offering in a row.  The link is here.


Three Stories from the Tehran Times

The first is headlined "Why Iran can withstand the sanctions".  The second bears the title "Export bank will hike oil price to $150, Iran says".  The last story is headlined "EU pays price for oil sanction on Iran".  I thank Roy Stephens for all three of these stories.


Another March to War? - Matt Taibbi

As a journalist, there’s a buzz you can detect once the normal restraints in your business have been loosened, a smell of fresh chum in the waters, urging us down the road to war. Many years removed from the Iraq disaster, that smell is back, this time with Iran.

You can just feel it: many of the same newspapers and TV stations we saw leading the charge in the Bush years have gone back to the attic and are dusting off their war pom-poms.

Once upon a time, way back in the stone ages, when Noam Chomsky was first writing about these propaganda techniques in Manufacturing Consent, our leaders felt the need to conceal – or at least  sugar-coat – these Orwellian principles. It was assumed that the American people genuinely needed to feel like they were on the right side of things, and so the foreign powers we clashed with were always depicted as being the instigators and aggressors, while our role in provoking those responses was always disguised or at least played down.

But now the public openly embraces circular thinking like, “Any country that squawks when we threaten to bomb it is a threat that needs to be wiped out.” Maybe I’m mistaken, but I have to believe that there was a time when ideas like that sounded weird to the American ear. Now they seem to make sense to almost everyone here at home, and that to me is just as a scary as Ahmadinejad.

This Matt Taibbi blog posted in Rolling Stone magazine last Friday is well worth the read...and I thank reader U.D. for being the first one through the door with it.  The link is here.


US, Iran inching toward talks

The foreplay is nearing completion on the Iran situation. The surest sign is that there were no serious takers in Western capitals for the Israeli smear campaign this week that Tehran's agents had been going about placing bombs in New Delhi, Tbilisi and Bangkok. Simply put, there is growing impatience that it is way past the time for histrionics.

Several indicators are available that matters are moving towards a substantive plane. One cluster of events this week consists of the Iranian reply to the letter from the European Union foreign policy chief, Catherine Ashton, penned by Tehran's chief negotiator, Saeed Jalili. Simultaneously, Tehran announced it was developing a new generation of centrifuges and augmenting its number of centrifuges from 6,000 to 9,000 as well as loading a research reactor with Iran's first batch of domestically produced fuel.

While Tehran's announcement of new nuclear "achievements" might have appeared as a belligerent move - Washington derided it as "hype" meant for the domestic audience in Iran - the contents of Jalili's letter, and, more important, the initial responses of cautious optimism it generated within hours in Western capitals convey that there are positive stirrings in the air.
The reaction in Washington is particularly noteworthy. A White House official was quoted as saying, "It [Jalili's letter] could lead to further diplomacy, provided that they [Iranians] are serious about it. We have made clear that this has to be a dialogue about their nuclear program specifically."

The author of this piece, that was posted in the Asia Times on Saturday, is M. K. Bhadrakumar.  He was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and I'd say he knows a thing or two about what's happening.  This is a must read in my opinion...and it's Roy Stephens final offering of the day.  The link is here.


A new kind of hyperinflation: Zimbabwe hikes mining fees by as much as 8,000%

The Zimbabwe Chamber of Mines says the government’s hike of pre-exploration fees for the majority of minerals – by as much as 8,000% – will cripple the industry.

According to Reuters a raft of other charges include “registration of platinum and diamond claims going up to $2.5 million and $5 million” and “annual ground rentals ranging from $500 per hectare for chrome to $3,000 per hectare for diamonds.”

NewsDay reports the industry estimates the hikes in fees could cost the mining sector up The country’s 2012 budget also calls for royalty increases of 7.5% for gold and 10% for platinum.

This very short read, posted over at the website yesterday, is well worth your time...and I thank Australian reader Wesley Legrand for sending it along.  The link is here.


John Embry: Audio interview posted at King World News

I posted the blog of this interview in the middle of last week.  Eric sent me the complete audio interview yesterday afternoon.  I'd say it's worth listening to...and the link is here.


Simplicity: Grant Williams

Grant Williams is Portfolio and Strategy Advisor for Vulpes Investment Management in Singapore − a hedge fund running $200 million of largely partners' capital across multiple strategies. Grant has 26 years of experience in finance on the Asian, Australian, European and US markets and has held senior positions at several international investment houses.

Grant made this presentation at the Cambridge House California Investment Conference in Indian Well, California on February 12th.  The 30-minute video is posted in two parts...and I thank an anonymous reader from Zurich for bringing it to our attention.  I've viewed the entire presentation...and it's a must watch.  The link to Part 1 is here...and Part 2, here.


Gold Speaks Up: Casey Daily Dispatch

Yesterday's edition of the above dispatch was all about gold.  Louis James provided the introduction...and BIG GOLD editor Jeff Clark did the rest.  It's certainly worth your time...and it's posted at the Casey Research website.  The link is here.

By the way, if you're not receiving this free daily service, you can sign up for it while you're on the site.


Eric Sprott: Silver Will Become a Currency Again

This most excellent interview showed up posted over at the website yesterday...and is a must read as well.  I thank West Virginia reader Elliot Simon for sending it to me...and the link is here.


Rising gold price got you down? Call the BIS at 1-800-RIG-MKTS

In a 24-page brochure prepared by the Bank for International Settlements to introduce itself to prospective members at a seminar at BIS headquarters in Basel, Switzerland in June 2008. The brochure includes an advertisement for the gold market-rigging services provided by the BIS to its 50 or so member central banks. Page 17 of the brochure touts "Our Products," including "Gold & Forex Services -- Interventions."

No surprises here, dear reader.  This showed up in a GATA release yesterday...and needless to say, it's a must read...and the link is here.



¤ The Funnies

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¤ The Wrap

In our age there is no such thing as ‘keeping out of politics.’ All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia. The very concept of objective truth is fading out of the world. Lies will pass into history.   George Orwell

Well, there's certainly nothing to talk about regarding yesterday's markets in gold and silver, so I'll just post this chart that Nick Laird thought you should see.  I'm also going to post the comments [verbatim] he had in the accompanying e-mail...and here they are.

It's an Elliott Wave projection of the future price of gold. The blue plot is gold so far, with the first two up-legs shown. The red line is the future price of gold based on the first two up-legs.

It shows the roadmap of gold behind us & where gold is going in front of us.

Ed, you might not understand it but a lot of your readers will...and they will love it. Please post it in your blog and see the reaction you get from it.  I think you will be surprised!!!

To me this chart porn - the best chart I've ever done on gold. This to me as a T/A (technical analyst) is a Picasso or Rembrandt - it is a work of art.

What's more, watch this chart every month for the next 16 months and we should hit W4(B) (see position on chart) by June 2013. If that happens then watch out.  Here's the link to the chart, which is posted in the clear.

Cheers, Nick

P.S. Elliott Wave is not infallible - this is only a roadmap & directions might well change. So consider it a rough road map of where gold is going.

(Click on image to enlarge)

The 'click to enlarge' feature will be useful here, as it's a big chart.  Any and all comments about this graph should be directed to

In overnight activity I note that neither gold nor silver did much until shortly before 2:00 p.m. Hong Kong time during their Tuesday afternoon trading session.  Gold made a rally attempt to $1,750...and silver tried to blast above the $34 price ceiling...but both were turned back by the usual suspects in the usual way.  Normally JPMorgan et al drop the hammer shortly before the London open...but the way that the metal prices were acting, they would have blown through both these price levels long before that time arrived, so they had to step in sooner.

As of 5:05 a.m. Eastern time, gold is now only up six bucks...and silver is well off its high.  One wonders just how many Comex futures contracts on the short side they had to sell to stop these breakouts in their respective tracks?

The CME's volume figures are already very high in both metals, even after Monday's trading volume is subtracted.  It's obvious that there's a big fight going on...and 'da boyz' are really throwing everything at the gold and silver price at the moment.  The dollar index has been all over the place within a tight trading range centered around the 79.00 cent mark.

It could be an eventful day in the precious metals pits in New York this morning and, as is almost always the case, I await the Comex open with great interest.

See you tomorrow.