I was expecting another leg down in the precious metals sometime between Christmas and New Years...but it began yesterday. Ted Butler had been expecting since the Sunday night open in New York.
Gold rose gently in early Far East trading, with the 'high' tick...around $1,702 spot...coming shortly after 1:00 p.m. in Hong Kong...and by the Comex open it was back to unchanged from Monday's close.
The first of many engineered price declines began shortly before 10:00 a.m. in New York...which may have been an early London p.m. gold fix. It was sold down in stair-step fashion from there, with the final down-leg coming shortly after the 1:30 p.m. Comex close. That was gold's low price tick of the day...recorded by Kitco as $1,660.10 spot.
From there the gold price recovered somewhat...but that smallish rally only lasted until 4:00 p.m. Eastern...and then it traded sideways into the 5:15 p.m. electronic close.
Gold finished the Tuesday session at $1,670.90 spot...down $27.20 for the day. Net volume was a very chunky 195,000 contracts.
Of course it was silver that JPMorgan et al were really after...and they certainly did a number on it. The sell-off was much more severe, but the price pattern was the same, so I'll spare you the play-by-play.
Silver's high tick...around $32.55 spot...came shortly before noon Hong Kong time. The low price tick, like gold's, came ten minutes after the Comex close...and Kitco reported that as $31.25 spot.
The subsequent rally pared the losses by a bit...and silver finished the day at $31.64 spot...down 64 cents on the day. Once again silver had an intraday price move of well over a dollar. Net, volume was pretty decent at around 46,000 contracts...but with a price decline of that magnitude, I was hoping for more.
The dollar index started the Tuesday trading session at 79.56...then rallied a hair until shortly after the London open before starting to weaken...with the biggest decline coming between 10:00 a.m. and 11:15 a.m. in New York. The index nadir [79.27] occurred at that point...and the dollar index closed at 79.36...down about 20 basis points from Monday's close.
Only Jon Nadler could find a co-relation between the precious metal price activity and the dollar index on a day like yesterday...as any sane and rational person would see no relationship at all. But if you do see some, I'd love to hear your explanation.
The gold stocks held up surprisingly well in the early going, but it was the engineered price decline between 11:20 a.m. and precisely 12 o'clock noon in New York that did the most damage to the shares. But once the low was in at 1:40 p.m....the gold stocks recovered...and the HUI only finished down 1.43%.
Not surprisingly, the silver stocks got hit harder...and Nick Laird's Intraday Silver Sentiment Index closed down 2.10%.
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Considering the bear raid by "da boyz" yesterday, the shares held up remarkably well...and don't forget about what I [and others] have said about buying "while blood is running in the streets". That expression fits the circumstance before you, perfectly.
The CME's Daily Delivery Report showed that 154 silver contracts were posted for delivery tomorrow. Jefferies was the short/issuer on all of them...and the Bank of Nova Scotia and JPMorgan were the biggest long/stoppers with 116 and 27 contracts respectively. Even with the year starting to wind down, I'm still expecting a reasonable amount of delivery activity between now and then, as the CME reported that there are 325 gold and 636 silver contracts still left open for the December delivery month...from which you have to subtract the 154 silver contracts mentioned above. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in either GLD or SLV yesterday.
Switzerland's Zürcher Kantonalbank updated their gold and silver ETFs as of December 17th. Their gold ETF showed an increase of 28,964 troy ounces...but their silver ETF showed a decline of 498,112 troy ounces.
The U.S. Mint had a smallish sales report yesterday. They sold 7,500 ounces of gold eagles...and that was all.
The Comex-approved depositories reported receiving 218,678 troy ounces of silver...and shipped 301,002 ounces out the door on Monday. The link to that activity is here.
Well, I received an 'answer' from the ombudsman over at Scotiabank on Monday, but it sat unopened in my in-box until yesterday, as I didn't want what I said in my Tuesday column to be influenced by what was in the reply.
I didn't need to worry, as he weaseled his way out of answering it in almost the same manner as the first time. He could have easily have found the answer to my question, as it would certainly be at hand if he'd been allowed to give it to me.
Here are the entire contents of his e-mail...
Dear Mr. Steer,
I am responding to your attached follow-up e-mail, I wish to begin by assuring you that I am not trying to increase your frustration level but I must say that, as I have stated earlier, I find Scotiabank's earlier response to you to be perfectly reasonable.
In fact, I find it completely logical that any clarification about information in an article published by the Commodity Futures Trading Commission should come directly from the Commodity Futures Trading Commission.
In the end, it was another "non-denial denial". They just chose to get out of it by answering a question that I never asked...and avoided the direct question that I did ask. I don't think they're being obtuse...I just think that they don't want to tell the truth. It's for this very reason that I suspect Scotiabank/Scotia Mocatta of being the "new non-U.S. bank" that suddenly got outed by the CFTC in the November Bank Participation Report. Scotiabank could have ended it all by just telling me...no, it wasn't them. But they didn't say that...and I'm suspecting that the reason is because they didn't want to get caught in a lie later. I guess that's the lesser of two evils than being caught telling the truth at this point in the game.
If you didn't read it, or don't remember the question I presented to the ombudsman, the link to yesterday's GSD column is here.
The Queen and The Gold
I stole this photo from Eric King's website...and it's posted in one of his blogs with James Turk further down in this column. I'm still thunderstruck that Her Majesty [and Prince Philip] were trotted out. There is obviously big trouble in River City that we just aren't privy to.
Here are a couple of charts that Nick Laird sent my way yesterday...and both are show-stoppers. The first shows how many ounces of gold can be bought for $1,000 going back to 1718.
(Click on image to enlarge)
This second chart shows the lost purchasing power of the U.S. dollar in percentage terms over the same 300-year period. One chart is actually a 'derivative' of the other.
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They don't teach this stuff in school...and as you're probably already beginning to suspect, there's a good reason for that. They don't want the sheeple to know how badly their being fleeced...and by whom...and why.
Here's a cute photo that my sister sent me yesterday...and you though squirrels on your roof were a problem.
I have a more reasonable number of news items for you today...and I hope you can find time to wade through them the ones that interest you during the busy holiday season that we all face.
The Associated Press is reporting that President Barack Obama has made a new budget offer to House Speaker, including a significant shift from a previous sticking point in their negotiations to avert the so-called fiscal cliff.
Obama's latest counteroffer raises the threshold for tax increases up to incomes above $400,000. That's an increase from previous demands dating all the way back to the presidential campaign, in which Obama had called for taxes on incomes above $250,000 to return to Clinton-era rates.
Reuters reported on Twitter that Obama's plan includes $1.2 trillion in increased revenue and $1.22 trillion in reduced spending. Boehner's office, however, pegged the numbers at $1.3 trillion in new revenue and only $930 billion in spending cuts.
Well, dear reader, it doesn't matter what they agree to. This is all for show. The U.S. is bankrupt...and they're going to run the printing presses white hot to prevent a deflationary collapse in the economy. But somewhere along the way, the U.S. dollar will implode...and as Jim Rickards said in his RT interview in this space yesterday...that's part of the plan. It will work too well.
This businessinsider.com story from Monday was something I found in yesterday's edition of the King Report...and the link is here.
Uncertainty around the fiscal cliff continues to be at elevated levels as Washington has yet to hammer out a deal.
However, stocks are up and according to a new survey from Morgan Stanley, business confidence is rebounding.
The new consensus appears to be that an agreeable deal will eventually get done. If not by the end of the year, it'll certainly get done early next year.
This idea has put portfolio managers at ease, writes Goldman Sachs' David Kostin
As reflected by the sinking VIX, the stock market appears to be full-blown complacent about the fiscal cliff. Hopefully they won't be disappointed.
Amen to that, bro'... This is another businessinsider.com story from Monday...and also one I borrowed from yesterday's King Report. The link is here.
As if Wal-Mart wasn't already having a rough day in the media, The New York Times just published a devastating piece on the company's alleged habit of paying off Mexican officials to get what it wants.
We're not talking a few bucks here to get out of an inspection or a couple hundred pesos there to speed up the permit process.
We're talking about millions of dollars worth of bribes that gave Wal-Mart de Mexico, the company's branch south of the border, the power to pretty much do what it wanted. In one instance, it even allegedly paid an official to adjust a map designed to create a protective zone around the region's priceless pyramids.
World heritage be damned. If Wal-Mart wants its store in a convenient location, Wal-Mart will get its store in a convenient location...and the details really do make Wal-Mart look pretty bad.
I have never set foot in a Wal-mart store...and have no intentions of ever doing so. This is the third story in a row from the businessinsider.com Internet site...and this one is courtesy of Roy Stephens. The link is here.
U.S. regulators and exchanges are getting closer to a framework for a "kill switch" that could be used to shut down trading before software glitches get out of control and wreak havoc on markets, a top exchange official said on Tuesday.
"We have all engaged in a much more detailed assessment of how a kill switch could work," Joe Mecane, an executive vice president at the New York Stock Exchange, said in testimony before a U.S. Senate Banking panel on Tuesday.
"I think we are hopeful to have something to report in the first quarter of next year," he said.
Exchanges, brokerages and the U.S. Securities and Exchange Commission have been trying to come up with the right regulatory response after a series of high-profile glitches this year shook markets, from Nasdaq's botched handling of the Facebook initial public offering to Knight Capital's $440 million in losses due to a software error.
A good place to start would be to outlaw high-frequency trading...but I'm not holding my breath. This Reuters piece was filed from Washington early yesterday afternoon local time...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
The Federal Reserve Bank of New York was warned as early as mid-2008 that banks may have been misreporting their Libor borrowing rate to aid their own trading positions, much earlier than previously known.
Tim Geithner, then president of the New York Fed and now US Treasury secretary, was told by a senior colleague in a May 2008 email of her concerns about banks' deliberate misreporting.
The email was part of an internal push among some at the New York Fed to press the Bank of England and the British Bankers Association to reform the benchmark lending gauge, known as the London Interbank Offered Rate.
It is the first indication that officials at the New York Fed had grown suspicious that banks may have been misreporting Libor to improve their trading results. Officials already had suspected banks were under-reporting their borrowing costs to mask the state of their financial health.
This story showed up in the Financial Times of London yesterday...and it's posted in the clear in this GATA release...and it's worth skimming. The link is here.
The Obama administration has expressed concern at what US officials see as Britain's slide towards the European exit door.
Washington firmly believes that the departure of its strongest partner in Europe would also reduce American influence on the continent, as Britain so often shares American views.
An EU without Britain would be seen as weaker on free trade and less reliable on defence and foreign policy issues.
With David Cameron now saying a Britain out of Europe was now "imaginable", US agitation has reached a new high.
This story showed up in The Telegraph around 9:00 p.m. GMT last night...and I found it all by myself. The link is here.
Politicians have criticized the co-CEO of Deutsche Bank, Jürgen Fitschen, for telephoning the Hesse state governor to complain about a police raid on the bank last week. His behavior has fuelled doubts about whether the bank, which faces a number of lawsuits stemming from past deals, has the right management to reform its aggressive business culture.
Fitschen had told the governor, Volker Bouffier, that the images and news reports of hundreds of armed police officers in the bank would have a disastrous impact on the bank's image and wouldn't make it any easier for it to hire the best people abroad, SPIEGEL reports in its latest edition published on Monday.
Bouffier responded that it was up to the state prosecutor's office to determine the scale and the details of such police operations and that he couldn't interfere with that process.
Deutsche Bank has an "aggressive business culture"? No...really? Who would have thought that. I'm amazed this guy still has a job! This story was posted on the German website spiegel.de yesterday...and it's Roy Stephens' second offering in today's column. The link is here.
Former prime minister Silvio Berlusconi said on Tuesday Italy would be forced to leave the euro zone unless the European Central Bank gets more powers to ensure lower borrowing costs.
Berlusconi, who announced this month he will again lead his People of Freedom party (PDL) in a national election expected in February, said on a talk-show on state broadcaster RAI that the ECB should become a lender of last resort for the currency bloc.
"If Germany doesn't accept that the ECB must be a real central bank, if interest rates don't come down, we will be forced to leave the euro and return to our own currency in order to be competitive," Berlusconi said in comments reported by Italian news agencies Ansa and Agi.
I'm sure if he got serious about this idea, his body would never be found. The New World Order crowd would not take kindly to it if Berlusconi finally decided to do what was right for his country. This Reuters story was picked up by the news.yahoo.com Internet site yesterday afternoon Eastern time...and I thank Brian Farmer for sending it along. It's worth the read...and the link is here.
"Ed Steer is well known in the precious metals community. He publishes the enormously popular Casey Research newsletter, Gold and Silver Daily. He’s been covering the metals for many years, trying to get the truth out about price suppression, manipulation and the inevitable collapse."
"Right now he sees prices in a lockdown range, although there could be an end of the year price slam, bringing metal prices down to even lower levels. Either way, Ed believes the final result has never been in doubt and that 2013 will be an extremely active year for gold and silver markets."
Well, dear reader...I didn't write that myself. Kerry Lutz wrote that as an introduction to an interview we did on Monday afternoon. It runs for about fifteen minutes...and if you're interested in what I have to say, it's posted on the financialsurvivalnetwork.com Internet site. I thank Bron Suchecki over at The Perth Mint for sending it along, as I'd forgotten about it. The link is here.
All three blogs are from James Turk. The first one is headlined "The West Can't Stop the Flow of Gold Into India & China". The next one bears the title "Anti-Gold Propaganda Won't Stop Monetary Destruction". The last one is entitled "Why Did They Send in the Queen Instead of Auditors?". Why indeed!!! When we know the answer to that, we'll know what's really going on behind the scenes in the gold market. Whatever it is, it reeks of desperation.
Becoming today the first British monarch to attend a Cabinet meeting since George III in 1781, Queen Elizabeth remarked on her visit last week to the Bank of England's gold vault, which was greatly publicized in the United Kingdom.
In a receiving line at 10 Downing St., addressing the chancellor of the exchequer, the UK treasury secretary, George Osborne, the queen said, "I saw all the gold bars. Regrettably not all of them belong to us."
Osborne replied that Britain still has some gold left, and apparently that was that -- nothing about swaps and leases and the purposes thereof, particularly secret currency market intervention to sustain the Anglo-American financial establishment that is bankrupting much of the Western world.
The Queen and gold again!!! When will it end? This GATA release has an extensive preamble by Chris Powell, who is at the top of his game here...and it falls into the absolute must read category. The link is here.
A new political party in Ireland, Direct Democracy Ireland, is raising the gold issue, asking Ireland's finance minister, Michael Noonan, about the country's gold vaulted at the Bank of England, such as whether the gold is held in allocated form with a bar list available and whether the gold is leased or otherwise used for surreptitious market intervention. We hope Direct Democracy Ireland gets answers and shares them with us for publication.
I thank Chris Powell for the headline and the above paragraph of introduction. The party's questions, which are worth reading, are posted on their website...directdemocracyireland.ie...and the link is here.
A small number of pension funds in Japan have started to invest in gold for the first time, largely to mitigate the damage from possible market shocks.
Japanese pension funds invest mainly in domestic stocks and bonds. Until recently none have looked to gold or other physical assets.
For example, Japan's Government Pension Investment Fund, the world's largest public pension, held 64% of its assets in domestic bonds, 11% in domestic stocks, 9.0% in international bonds, and 12% in international stocks, as of end-September. The remainder were in short-term assets.
This story showed up in The Wall Street Journal yesterday...and it's posted in the clear in this GATA release. The link is here.
The afternoon metals market roundup by Jim Wyckoff at Kitco News yesterday took note of growing suspicion of manipulation in the gold market. Wyckoff writes:
"Tuesday's major selloff in the gold market, amid no major, fresh fundamental news to move prices so sharply, once again has many market watchers scratching their heads. The past few weeks have seen similar unexpected, and seemingly inexplicable quick downside price moves in gold and silver. Many traders and investors are wondering (and many are frustrated) regarding the role of 'manipulators' in the gold and silver markets.
"Regarding any longer-term conspiracy to manipulate the price of gold or silver (lower), I cannot say for sure if that is the case or not because I have never had the time to completely research the matter. However, I do know that by looking at the longer-term monthly chart for gold I see that prices are in a solid 11-year-old uptrend and that gold has been one of the best upside market performers of any asset class for the past 11 years. If some big outfit has been trying to manipulate gold to the downside, it has not worked very well for them the past 11 years."
Any precious metals commentator who has not researched the bullion bank's price management scheme with an open mind, should not be airing their opinions on the Internet...as they are grossly under-informed. This is a disease that's well entrenched over at Kitco, as everyone working there has it. However, it is encouraging to see that at least one person has tiptoed up to the truth and sort of hinted that there might be something to it. This is another must read GATA release from yesterday...and the link is here.
China has become the world's biggest silver market, according to an industry report, both as a physical investment and in paper trading of silver futures and other similar products.
The Washington-based Silver Institute said total silver demand in China increased by more than 100 million ounces, or Moz, in the past 10 years, to a record of 170.7 Moz in 2011.
China has been liberalizing its silver market since the start of 2000, creating more investment channels for buyers and sellers of silver.
In 2009, the country started offering investors the chance to buy silver bullion bars, and within two years the net demand for silver bars and coins soared to 17 million Moz, equivalent to some $600 million, making up 8 percent of global net purchases, said the report, compiled by Thomson Reuters GFMS.
This article was posted on the chinadaily.com.cn Internet site yesterday...and I thank Phil Barlett for digging it up for us. The link is here.
The host of this interview spoke with Keith Neumeyer, President and CEO of First Majestic Silver just days before his company announced the friendly acquisition of Orko Silver. They talked about milestones in the company for 2012...and his view for the next year. Keith explained as well why he trades silver futures from time to time on the Comex...and what his personal views are regarding the current world financial system. Last but not least he tells us some private views, why he is so convinced in his belief in silver...and in building up a senior silver mining company.
The interview runs for a bit over twenty minutes...and is posted on the metallwoche.de Internet site. The link is here.
MineWeb's Lawrence Williams muses on the gold price's "defying all logic," failing to rise when everything about the world economy suggests that it should be soaring. Searching for an explanation, Williams quotes the recent commentary of market analyst Chris Martenson calling attention to manipulation of the gold market . Williams cites GATA as well.
His commentary is headlined "What on Earth's Going on in the Gold Market?" and Lawrie is getting awfully close to getting his own tinfoil hat...and will soon, if he's not more careful...especially after he saw what happened in New York soon after he wrote the piece. This must read article was posted over that mineweb.com Internet site yesterday...and the link is here.
Video of yesterday's appearance by GATA Chairman Bill Murphy and secretary/treasurer Chris Powell on Russia Today's "Capital Account" with Lauren Lyster, has been posted at GoldSeek's companion Internet site, silverseek.com. Of course it's a must watch...and the link is here.
Aben Resources (TSX.V: ABN) is a Canadian gold and silver exploration company with a focus on developing properties in the Yukon and Northwest Territories. The Company owns a 100% interest in the 18,314 acre Justin Gold Project located in SE Yukon. A 2,020 metre diamond drill program was carried out in 2011 to test never before drilled zones. Aben made a significant new greenfields gold discovery when it intercepted 60m of 1.19 g/t Au in hole JN11009 at the POW Zone. Additionally, a new high grade silver-copper zone was discovered at the Kangas Zone with hole JN11003 returning 1.07m of 7320 g/t Ag (234 oz/ton) and 3.52% Cu. Aben carried out an aggressive exploration and drill program in 2012 to follow up on the initial discoveries. The first drill hole in 2012, JN12011, returned 46.4m of 1.49 g/t Au and extended the gold mineralization at the discovery zone 85 metres laterally. The Company has four other prospective Yukon and NWT projects in its portfolio along with a seasoned management and geological team. Aben’s chairman, Ron Netolitzky, is credited with exploration success on numerous properties including three Western Canadian gold and silver projects which became producing mines. Please visit our website to learn more about the company and request information.
It is one thing for an exchange to rush to the aid of important members when an outsider may be doing something wrong and against the insider members’ interests; but it’s a very different story if there was no outside wrongdoing and the insiders were the guilty party. That’s exactly what happened in 2011 on separate occasions...and is still happening to this day in COMEX silver. It is a circumstance without precedent, namely, an exchange working against the public’s interest when there is nothing that the public is doing that is wrong. The thought that the New York Stock Exchange would diligently work to lower overall stock prices is too absurd to contemplate, as it would be shooting itself in the foot. But that’s exactly what the COMEX is doing in silver. The exchange should care less about price levels, but because the most important member of the COMEX (JPMorgan) is up to its eyeballs on the short side, that forces the exchange to be an active partner in attempting to bring about lower silver prices. This is so bad, it is almost inconceivable. Yet the evidence is right in front of us. - Silver analyst Ted Butler...15 December 2012
Well, yesterday's price action in New York should leave no doubt in anyone's mind that JPMorgan Chase and the rest of their Merry Men showed up in New York yesterday. Using my Ovaltine secret decoder ring...and holding the Kitco chart up at a 33 degree angle in polarized light, it was easy to spot the secret message inscribed in the silver chart. It said "Season's Greetings to all. Up yours. Jamie...et al"
The only question to be answered is...how much more is left to go to the downside. The gold price took out its 200-day moving average by a whisker yesterday...but did not close below it. Silver still has a ways to go yet. But can they, or will they do more to the downside? I don't know for sure, but suspect that the answer is yes.
If they are clearing the decks for a major price rise in the New Year to correspond with the Fed's attempt to raise the velocity of money by increasing the inflation rate...by a U.S. dollar devaluation, or other means...sending a message to the markets by running up the precious metal prices by a very noticeable amount would be one of the tools they would certainly contemplate using.
In order to do that, I'm sure that "da boyz" would like to cover as many short positions as they can in the interim...and that means further price pain to the downside until they get the last possible speculative long position holders to sell. Once they get to that point...whatever prices that takes...no further price reduction is possible, as it's the very act of technical fund selling [or buying] that ultimately drives the spot price.
Here are the 1-year charts for both gold and silver. It's hard to tell how much more damage they can do to the downside as far as price is concerned, but Ted Butler says it could be considerable...especially in silver.
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In the meantime, the CME Group and the CFTC will continue to protect the largest Commercial short holders in all four precious metals...and CFTC Commissioner Bart Chilton will continue to reassure us that nothing is amiss...and the evidence provided by the weekly Commitment of Traders Report is just a figment of our collective imaginations.
JPMorgan Chase is the ringleader, of course...but I'm also getting the impression that Canada's own Scotiabank/Scotia Mocatta is a major player in this short-side price management scheme as well...along with a handful of others, including the raptors.
With what's been happening over in the gold vaults at the Bank of England these days...maybe Her Majesty will spill the beans. Maybe the pope will be next to go on the tour. Where are John Cleese and Michael Palin when you really need them? Too bad Monty Python's Flying Circus got cancelled, as I'm sure that they would have had a field day with this story.
I mentioned the COT Report just a few paragraphs back...and yesterday was the cut-off for the one that comes out on Friday. I certainly hope that all of yesterday's price and volume action is reported to the CFTC in a timely manner. Since the cut-off was at the 1:30 p.m. close of Comex trading, I very much doubt that the volume associated with the absolute low of the day, which came after the Comex close, will be in it.
Not much happened during the Far East trading day on their Wednesday...and now that London has been open a few hours, both gold and silver are trending a bit higher. Of course, that doesn't mean much if you use yesterday's New York price action as a template. Instead of hitting the precious metals during the thinly-traded Far East market like they've been doing for the past month or so, they smacked it hard in the most liquid market of all...New York...with no news associated with it. The dollar index actually fell as all this was going on.
As I hit the 'send' button at 5:15 a.m. Eastern time, gold's volume is sneaking up there...and silver's volume is about average. The dollar index is down about 10 basis points.
All eyes will be on the Comex when trading begins at 8:20 a.m. Eastern time. With JPMorgan Chase putting everyone on notice that they're back in town, it's a given that the price action in the precious metals for the balance of 2012 will not be smooth sailing.
See you on Thursday.