Gold & Silver Daily

¤ Yesterday In Gold & Silver

With the U.S. markets closed for President's Day on Monday, there wasn't much activity in the precious metal market anywhere on Planet Earth---and the only reason for my column today is the plethora of stories that I've been accumulating all weekend.

The gold price rallied in fits and starts right from the open of trading at 6:00 p.m. EST on Sunday evening---and the rally ended, as it usually does, shortly before London opened on their Monday morning.  From there the price chopped lower, with trading ending minutes after 5:00 p.m. GMT in London.

The low and high ticks were reported as $1,227.00 and $1,236.70 in the April contract.

The gold price closed at $1,230.80 spot, up $2.90 from Friday's close.  Net volume was basically nonexistent at 35,000 contracts.

The silver price wasn't allowed to get far---and its tiny gain vanished in London trading---and it was closed down on the day.  The highs and lows aren't worth the effort to look up.

Silver finished the Monday session at $17.30 spot, down 2 cents from Friday.  Volume, net of roll-overs out of March, was only 7,600 contracts, the lowest net number I can recall.

Platinum and palladium's tiny rallies in early Far East trading on their Monday morning also went the way of the Dodo bird once Zurich opened.  Platinum was closed unchanged---and palladium was closed down a buck.  Here are the charts.

The dollar index closed in New York late on Friday afternoon at 94.16---and after bouncing off the 93.91 level a couple of times in the last hour or so before the London open, the index began to crawl slowly higher---and about 5:10 p.m. GMT--11:10 a.m. EST---the index really began to sail to the upside---and hit its 94.53 high tick around 1:25 p.m. EST, shortly after the precious metals were through trading for the day.  From there the index gave up a bit of those gains, closing at 94.43---which was up 27 basis points from Friday's close.

With the U.S. shut tight for the holiday, there were no reports from the CME Group, GLD, the U.S. Mint or the COMEX-approved depositories.  And as of 8:29 p.m. EST yesterday evening, there were no reported changes in SLV.

I have a very decent number of stories---and some of the ones I do have certainly fall into the absolute must read category.  I know that if I don't post them today, I'll be buried in stories in tomorrow's column.


¤ Critical Reads

Dangers, Frustrations and Snow Keep Piling Up in New England

Leaden skies tested the patience and sanity of winter-weary New Englanders once again over the weekend, unleashing more than two feet of new snow on parts of the region. It was the latest installment in a relentless string of storms that have blended, one into the next, enveloping every car and every home so that nothing has a distinct shape anymore; the landscape is just one seamless blanket of white.

It is hard to remember when the snows began, and even harder to imagine when they might end. There are almost no humans to be seen outdoors, just the blowing, drifting sheets of whiteness, punctuated by an occasional beeping yellow plow pushing its catch up against mounds already eight feet high, 10 feet high, even 15 feet high, further burying long-submerged cars that now seem lost forever in a frosty version of Pompeii.

A television news show flickered with images sent in by viewers, taken inside homes where the snow had piled up above windows and entombed the occupants.

“It reminds me of ‘Little House on the Prairie,’ when Pa walked to the barn from his second-story window,” chirped the anchorwoman.

This very interesting article appeared on The New York Times website on Sunday sometime---and it's the first offering of the day from Roy Stephens.


"I Live In Constant Fear" Kyle Bass Explains How We Got Here

How do you find trades? "I wish I could tell you there was some magical screen but in fact "it's an art - there is no science to it"

For example...

"How did I get involved in Japan? When the bad assets were moving from private balance sheets to public balance sheets, I decided to look around the world to try to understand what the public balance sheets looked like (this is in late 2008)... and found them right at what I believe is an inflection point - when their population began to decline."

Bass also explains how he deals with the ubiquitous negativity that comes with being wrong on occasion as a fund manager...

"I think, as you know, the people who are really really good at this are ... how do I put it? They're not tremendous social people, right. They all have these crazy quirks and interesting lifestyles. They're generally all good people, the ones I've met ... I live in constant fear. Again, I live with this constant feeling of inadequacy that drives me so hard to succeed and be a proven fiduciary ... And that's what's always driven me. There are these two forces in life — positive reinforcement and negative reinforcement."

Humility appears to be key... Something we suspect more than a few other managers - guru-ised in this one-way street of a market - have yet to learn.

Yes, dear reader, we all know "market gurus" that believe "humility" doesn't have to apply to them.

This long, but absolute must watch video interview showed up on the Zero Hedge website at 10:15 p.m. on Sunday evening EST.  I had this video a week ago from another website, but every time I clicked on the link, it wouldn't let me view it, so here it is now in this ZH iteration.  I thank Casey Research's own Bud Conrad for passing it around Monday morning EST.


Russian Researchers Expose Breakthrough U.S. Spying Program

The U.S. National Security Agency has figured out how to hide spying software deep within hard drives made by Western Digital, Seagate, Toshiba, and other top manufacturers, giving the agency the means to eavesdrop on the majority of the world's computers, according to cyber researchers and former operatives.

That long-sought and closely guarded ability was part of a cluster of spying programs discovered by Kaspersky Lab, the Moscow-based security software maker that has exposed a series of Western cyber-espionage operations.

Kaspersky said it found personal computers in 30 countries infected with one or more of the spying programs, with the most infections seen in Iran, followed by Russia, Pakistan, Afghanistan, China, Mali, Syria, Yemen, and Algeria. The targets included government and military institutions, telecommunication companies, banks, energy companies, nuclear researchers, media, and Islamic activists, Kaspersky said.

The firm declined to name the country behind the spying campaign but said it was closely linked to Stuxnet, the NSA-led cyberweapon that was used to attack Iran's uranium enrichment facility. The NSA is the agency responsible for gathering electronic intelligence on behalf of the United States.

Wow, wow, wow!!!  This is huge!  Can you spell Blowback, dear reader???  This must read Reuters article, appeared on their Internet site yesterday sometime, but was updated late Sunday afternoon EST.  I found it in a GATA release.  The Zero Hedge spin on this is headlined "Moscow-Based Security Firm Reveals What May Be The Biggest NSA "Backdoor Exploit" Ever"---and I thank reader M.A. for sending it our way.


London Mayor Boris Johnson to give up U.S. citizenship

The mayor of London, Boris Johnson, is set to renounce his American citizenship in a bid to become a candidate for U.K. prime minister.

“The reason I’m thinking I probably will want to make a change is that my commitment is, and always has been, to Britain,” Johnson told the Sunday Times during a trip to the U.S.

Boris Johnson has dual nationality because he was born in New York.

“It’s an accident of birth that has left me with this thing. I’ve got to find a way of sorting it out,” he said.

Johnson, who is running for parliament in Uxbridge and South Ruislip, said he would visit the U.S. ambassador Matthew Barzun to inquire about the issue.

Isn't this precious!  This very worthwhile article appeared on the Russia Today website at 11:19 a.m. Moscow time on their Sunday morning, which was was 3:19 a.m. in New York---and 8:19 a.m. in London.  It's the second offering of the day from Roy Stephens.


Negative Rates to Shake Up Financial System, Experts Say

Falls in European interest rates into negative territory could profoundly affect the workings of the financial system and there is little chance of benchmark borrowing costs rising in the year ahead, top investment managers and strategists have warned.

Yields, which move inversely with prices, have this year dropped below zero on a rapidly expanding range of European governments' bonds -- and even some corporate bonds. The declines, which are driven by the European Central Bank's "quantitative easing," mean historically low borrowing costs. But senior finance experts interviewed by the Financial Times saw worrying side-effects.

"This could be the makings of a completely new environment for global bond markets," said Andrew Milligan, head of global strategy at Standard Life Investments, at the FT's debt capital markets conference in London. "If it actually becomes permanent ... there could be some very significant capital flows." ...

Negative interest rates mean investors, in effect, pay to lend their money. Jerome Booth, former head of research at Ashmore Group, said: "It is perfectly acceptable for a government to try to get a negative yield -- it sounds a good deal. The problem is: Why would investors do it?"

This news item appeared on the Financial Times website on Monday---and I found it posted in the clear over at the Internet site.  Chris Powell gave it the headline "The more central banks suppress interest rates, the more they'll suppress gold".


Banks dismantle ‘strings of pearls’ as they turn to dust

Since the financial crisis, many large international banks have reduced the scope of their activities.

The most visible retreats have been in areas such as trading and investment banking. Under pressure from investors and regulators, many banks have dismantled costly operations built or bought in the boom years before 2007. But the securities business is not the only part of these behemoths facing the axe.

Alongside the highly paid brokers and traders, other less brightly plumed operatives have been quietly departing. They have done so as dwindling profitability and multiplying compliance headaches have forced banks to dump ever more of their international consumer networks.

A strategy once likened to assembling a “string of pearls” has too often yielded little more than a handful of dust, and the biggest global players are now more wary of the charms of these dubious gems.

This commentary showed up on the website at 11:12 a.m. Europe time on their Monday morning---and I thank South African reader B.V. for sending it along.


Justin Raimondo: Must Europe Be an American Colony?

Francis Fukuyama’s famous essay "The End of History?" contains a phrase that aptly describes the common conception of Europe today: positing that the ideological battle for liberal democracy has already been won, Fukuyama describes what he calls the "post-historical period" – not without a note of sadness – as "the perpetual caretaking of the museum of human history." This is the popular image of Old Europe: a place for tourists to marvel at the wonders of a civilization that long ago reached its apogee, but otherwise basking in its own stagnation. And surely Fukuyama prefigured the European predicament as he went on to write:

"I can feel in myself, and see in others around me, a powerful nostalgia for the time when history existed. Such nostalgia, in fact, will continue to fuel competition and conflict even in the post-historical world for some time to come."

One needn’t endorse Fukuyama’s Hegelian determinism to see Europe’s current condition in this passage. As that vast sterility which is the European Union tries to absorb national particularities, ancient national personas defiantly reassert themselves. The transnationalist idealism of Europe’s political class is increasingly challenged by populist movements surging up from the grassroots – a continent-wide insurgency that threatens to upend the E.U.

This longish, but very important commentary by Justin, appeared on the Internet site yesterday sometime---and I thank Roy Stephens for finding it for us.


France should recognize Crimea as part of Russia – Le Pen

The leader of the French National Front Party, Marine Le Pen has urged the French government to recognize Crimea as part of Russia’s territory and to restore ties with Moscow, a “natural ally of Europe.”

There is no alternative, but to recognize the legality of Crimea’s ascension into the Russian Federation, Le Pen told the Polish Do Rzeczy in an interview. The French politician says that Paris must accept Crimea’s choice, as it became part of Russia in the time of lawlessness following an orchestrated “coup” last year, when “Neo-Nazi militants organized a revolution in Ukraine.”

Le Pen says the Peninsula had no other choice as “power in Kiev was illegal,” at that time. “The authorities [in Kiev] started to make decisions that would lead to civil war,” she added.

The leader of the French National Front emphasized that “Russia is a natural ally of Europe.”

It's nice to hear some honesty out of a European political leader for a change.  This news item appeared on the Russia Today website at 3:00 a.m. Moscow time on their Tuesday morning, which was 7:00 p.m. in Washington.  I thank Roy Stephens for finding it for us.


Greek Euro exit is 'inevitable', former U.K. Chancellor Ken Clarke warns

A Greek exit from the eurozone appears inevitable and Britain must insulate itself from the effects, former Chancellor Ken Clarke has warned.

The Conservative MP branded the new government in Athens “latter day Trotskyites”, and said there was no way their demands could be met.

“I can’t see how you can sensibly avoid the Greeks defaulting and the Greeks having to leave the eurozone.

“It’s not anything to do with just the Germans, I can’t see why any other states should take a huge multi-billion pound hit again for the Greeks so they can hire more civil servants, raise their minimum wage (and) scrap all their labour market laws.”

This news item put in an appearance on the Internet site at 4:40 p.m. GMT on their Sunday afternoon---and it's the fourth offering of the day from Roy Stephens, for which I thank him.


No deal: Greece-E.U. bailout talks break down, Athens given 1 week ultimatum

The eurozone has given Greece an ultimatum of one week to request an extension of its bailout deal, as Athens turned down the offer dubbing it “absurd” and “unreasonable”. Greece’s finance minister said they were ready to sign - but something different.

But despite not reaching a deal, Greece Finance Minister Varoufakis insisted Athens is "ready and willing" to reach a deal and that he is confident of reaching one in 2 days, he said in statement after the talks.

"We were offering to refrain effectively from implementing our own program for a period of six months and all we were getting back was a nebulous promise of some flexibility that was never specified," Varoufakis said.

This news item appeared on the Russia Today Internet site at 8:07 p.m. Moscow time on their Monday evening---and it's another contribution from Roy Stephens.  There was also a story in The Telegraph about this as well---and it's headlined "Greece rejects eurozone's 'absurd' bailout offer as time runs out on talks".  I found it in today's edition of the King Report.


Serbia rejects sanctions against Russia — ambassador

Serbia is developing political relations with Russia at a high level and rejects any prospect of joining current international sanctions, ambassador Slavenko Terzic told a news conference on Friday ahead of Serbia's National Day on February 15.

"Relations between the two countries are based on deep friendship between our nations and are developing in a spirit of cooperation and mutual trust," he said, while noting that the level of economic cooperation "could be even higher".

"Trade turnover between the countries has reached $3.4 billion," the diplomat said. "This is not enough. We hope that Russian investments in Serbia will increase. Besides, Russia could buy one of Serbia’s radio or television channels."

Two-way trade could be raised to $5-6 billion, he said, noting last year’s 66% increase in Serbian exports of vegetables, fruit and meat products to Russia.

This short article appeared on the Internet site at 3:25 p.m. Moscow time on their Friday afternoon---and it's another story that's courtesy of Roy Stephens.


The wise men, please step forward

The guns in Ukraine have not cooled down yet but the Minsk 2 peace accord is already being predictably assailed in Washington by liberal and conservative hawks alike.

Headlines like “Vlad Putin Wins Again,” “The new Ukrainian peace deal may be worse than no deal at all,” or “Why Is Putin Smiling About Ukraine?” and the likes are all over the US media.

Never mind that the Minsk Agreement offers at least a brief, fragile window of opportunity for the world to step back from the brink of a nuclear confrontation that would destroy the entire northern hemisphere of the earth. If nothing else, at least it could save some Ukrainian lives. But who cares?

Such negative reactions from U.S. policymakers and media are understandable since the whole Ukrainian mess was concocted to fulfill the ultimate goal of Russia’s geopolitical weakening and Putin’s regime change under the noble banner of spreading freedom and democracy. So far this goal is far from an achievement so why give peace a chance?

This worthwhile commentary appeared on the Russia Today Internet site at 3:13 p.m. Moscow time on their Monday afternoon---and once again I thank Roy Stephens for sharing it with us.


LNG Tankers Lie Unused Around Singapore as Gas Downturn Turns to Crisis

Over a dozen liquefied natural gas (LNG) tankers are parked, many idle, in and around Singapore – one of the world’s biggest trading hubs for the fuel – in a sign that the slowdown engulfing world gas markets may be worsening into a crisis.

With Asian spot LNG prices down by almost two-thirds since February 2014 as slowing demand combines with rising output, shippers are parking their tankers close to ports like Singapore where unused ships can be easily maintained and serviced until new orders come in.

Leading ship brokers estimate over one-tenth of the global fleet of 400 LNG tankers is currently unused because of slowing growth in Asia’s biggest economies. The impact just in Singapore suggests the problem could be worse.

“There are currently 30 to 40 (oil and gas) tankers sitting in Singapore, many without anything to do,” said Javier Moret, head of LNG origination at Germany’s biggest power producer RWE during a conference in Singapore this week.

This Reuters article, co-filed from Singapore and Milan on Friday sometime, was picked up by the Internet site---and I thank Rob Miller for bringing it to our attention.


China's One Trillion Reasons to Prevent Yuan Tumbling

China, like much of the world, is beefing up monetary stimulus to boost its economy. Yet, unlike its peers, it probably won’t let its currency depreciate to help.

Sustained weakness in the yuan would make it more expensive to repay the $1.1 trillion of debt the Bank for International Settlements estimates is owed by Chinese companies. As a result, China has to offset interest-rate cuts and other easing measures with steps to curb the yuan’s 3 percent slide from its peak about a year ago.

The quandary has made the yuan one of only two major currencies that forecasters surveyed by Bloomberg expect to strengthen versus the dollar this year, the other being Mexico’s peso. Any gains would risk blunting China’s stimulus and hurt an economy that’s already slowing by making exports less competitive just after they suffered a surprise drop.

“It’s a dilemma,” Claudia Calich, a money manager in London at M&G Ltd., which oversees about $1 billion of emerging-market assets, said Friday by phone. “They can’t afford to let the yuan depreciate quickly because of the concerns about dollar debt. The authorities will perhaps slowly guide the yuan lower, but not in one go. It’s quite a delicate balance.”

This Bloomberg article was picked up by the Internet site early on Monday morning EST---and I thank Bill Busser for finding it for us.


Behind the Great Western Firewall Is the Ugly Truth

A truth untold is a lie. A fact hidden is censorship. – The Author

When I recently signed off of Reflections in Sinoland, saying I was not going to do any more columns for the time being, so as to write my third book, Red Letters – The Diaries of Xi Jinping, I really meant it. But an interesting and thought provoking series of events happened over the last couple of weeks, which has inspired me to write a non-fiction piece again.

This is a plea to everyone reading, that we Westerners had better wake up before it’s too late. If we don’t, we are going to continue to have many repetitions of Ukraine, Serbia, Georgia, Venezuela, Bolivia, Iraq, Iran, Syria, Afghanistan, Sudan, Libya, Mali and the list goes on, non-stop, since the Bolshevik Revolution in 1917. That was when the West’s elites perceived a genuine global threat to the status quo of capitalism and their dominion over Earth’s resources. Now with the world being more multipolar than ever, we come to China and Russia. As Western Empire’s decline accelerates, in desperation, America is trying to take down these two colossal civilizations. This, even as Russia and China work openly and secretly to interlock their cooperation and resistance. It is clear they are creating a unified front in the face of Western bellicosity. Yes, the United States is delusional and megalomaniac, but it’s frightening to know that if carried to its logical conclusion, it will mean the end of humanity as we know it.

A big part of this plea to my readers is for Westerners to quit using the mainstream media and to start seeking out alternative news sources, as frustratingly fractured as they are, and to invest a modicum of time to do some research and investigation along the way. A good place to start would be all the hyperlinks below and then take advantage of the list of resources at the end of this article. The other plea is to come to terms with just how evil and corrupt our Western governments and capital are, in spite of what we learned in school text books. All of our lives and future absolutely depend on it.

This is your most important absolute must read of the day, especially if you're a serious student of the New Great Game.  It's on the longish side, but well worth your time.   It was posted on the Internet site on Sunday---and I thank "Wojtek in Warsaw" for bringing it to my attention, and now to yours.


The U.S. versus China: A Study in Opposites

In the first photo, taken in 1972, U.S. President Richard Nixon made what was then considered a bold move, visiting Mao Zedong in Communist China. Literally, as well as figuratively, Chairman Mao is on the left and Mr. Nixon is on the right.

In the second photo, taken over forty years later, we have U.S. President Barrack Obama making a similar visit to China. This time, again literally as well as figuratively, Mr. Obama is on the left and Chinese President Xi Jinping is on the right.

Over the ensuing four decades, both countries have been changing dramatically. The U.S. has become increasingly socialistic, more focused on Big Government and more of a totalitarian state. In 1972, it was the world’s foremost creditor nation; it is now the world’s foremost debtor nation. By contrast, China, since the death of Chairman Mao, has opened up considerably, with billions of people becoming upwardly mobile, in response to China becoming increasingly capitalistic.

To be sure, both countries retain some of their historical features, but increasingly, the U.S. is acting like a country in decline, whilst China is acting like a country on the rise.

This commentary appeared on the Internet site yesterday---and I thank their senior editor Nick Giambruno for sending it our way.  If you haven't read it already, you should.


Marc Faber: The year people lose confidence in central banks

Global demand for gold has hit a four-year low, but thanks to eurozone turmoil, gold has bounced back more than 3 percent this year after falling 28 percent the previous two years. Erin weighs in.

Marc Faber, editor and publisher of the Gloom, Boom & Doom Report, tell us why he believes this is the year that people will lose confidence in central banks.

This edition of BoomBust appeared on the Russia Today website at 3:30 a.m. Moscow time on their Friday morning---and the Faber portion of this video, which was mostly about gold, interview lasts until the 10:50 minute mark.  I thank Ken Hurt for digging it up for us on Sunday.


Dear Harry Dent: Wanna Bet?

Some of you may be aware that investment guru Harry Dent has publicly stated that gold will fall to $250-$400. He specifically predicted:

Around $700/ounce is a certainty in gold by 2015 to 2016, and $250 is a possibility well down the line by 2020–2023.

His forecast is largely based on his belief that deflation will prevail.

Governments are fighting deflation. If government stimulus fails, we will have deflation, not inflation.

And he claims that gold bugs are wrong about gold’s future price because they don’t understand how markets work.

Harry Dent---another ego with legs.  This commentary by Jeff Clark appeared in yesterday's edition of Casey's Daily Dispatch.


In the EPA's expected 'veto' of Pebble Mine in Alaska, foes see a vein of overreach

Just north of Iliamna Lake in southwestern Alaska is an empty expanse of marsh and shrub that conceals one of the world's great buried fortunes: A mile-thick layer of virgin ore said to contain at least 6.7 million pounds -- or $120 billion worth -- of gold.

As fate would have it, a second treasure sits precisely atop the first: the spawning ground for the planet's biggest runs of sockeye salmon, the lifeline of a fishery that generates $500 million a year.

Between the two is the Obama administration, which has all but decided that only one of the treasures can be brought to market. How the White House came to side with fish over gold is a complex tale that involves millionaire activists, Alaska Natives, lawsuits, and one politically explosive question: Can the federal government say no to a property owner before he has a chance to explain what he wants to do?

This very long gold-relate article was showed up on The Washington Post's website on Sunday sometime---and I found it embedded in a GATA release.  The actual headline reads "Pebble Mine debate in Alaska: EPA becomes target by planning for rare ‘veto’".


Russian oil executive sneaks gold market rigging into the Financial Times

Look at the market fundamentals and it seems prices should soon rebound to the $60 or $80 a barrel levels that would make it worth building the wells that the world needs. But if markets are distorted, and the rebound takes longer than it should, many current production projects will be mothballed -- and the price will eventually climb to $90 to $110 a barrel, or higher.

In today's distorted oil markets, prices do not reflect reality. They are driven instead by financial speculation, which outweighs the real-life factors of supply and demand. Financial markets tend to produce economic bubbles, and those bubbles tend to burst. Remember the dotcom bust and the subprime mortgage crisis? Furthermore, prices are prone to manipulation. We have not forgotten the rigging of the Libor interest rate benchmark and the gold price.

The answer might seem to lie in more regulation. In fact, regulation is already excessive and makes things worse. The U.S. has banned the export of oil for more than four decades, giving American oil refineries an unfair advantage over their European peers. The excise regime in the E.U., which imposes levies on petroleum-based products, distorts oil consumption markets. Sanctions against Iran affect oil supplies and trade balances---and in the long term, sanctions against Russia endanger Europe's security of supply. The fact that oil is taxed differently in different places further distorts the terms of trade and explains why oil markets in Europe and the U.S. have been structured differently.

Financial bubbles, market manipulations, excessive regulation, regional disparities -- so grotesque are these distortions that you might question whether there is any such thing as an oil "market" at all. There is the semblance of a market: buyers and sellers and prices. But they are performing a charade.

This commentary by Igor Sechin, the head of Russian energy giant Rosneft, appeared on the Financial Times Internet site on Sunday---and it's posted in the clear in this GATA release.  It's certainly worth reading.  This article also showed up on The Telegraph's website under the headline "Rigged, Manipulated, and Opaque: The $3 trillion Oil Market Needs Reform".  I found that on the Internet site as well.  It also got the Zero Hedge treatment---and it's entitled "CEO of Rosneft Compares Oil Market Manipulation Which "Doesn't Reflect Reality" to Gold Price Rigging"---and I thank International Man editor Nick Giambruno for forwarding it to us.


Gold lures Turkish savers looking for security

From the outside, it looks like any other automatic bank machine on the streets of Istanbul. But rather than notes, this one distributes small pieces of gold.

Gold is hugely prized in Turkey not just for ornamentation or investment by banks but as a secure way for private individuals to hold their savings.

Many people in Turkey -- which has one of the lowest private savings rates among major economies -- keep gold as security for a "rainy day" rather than products offered by banks.

According to estimates, Turks hold some 3,500 tonnes of gold. Banks have sought to capitalise on the tradition by offering accounts denominated in gold.

This AFP story, filed from Istanbul, appeared on the website on Sunday sometime---and it's another gold-related story I found on the Internet site.


Lawrence Williams: 2015 global gold supply deficit could be substantial

Thus Chinese and Indian demand alone is probably exceeding total gold supply at the moment as sales out of gold ETFs so far this year are around zero to negative.  Meanwhile, of course, these two Asian nations are not the only global gold consumers as they account between them for around 56% of global total demand according to the WGC statistics (although as we’ve noted above they seem to ignore the gold being taken in by Chinese banks which would make the percentage rather larger, but still leave the rest of world consuming around another 35 tonnes a week!)

That all suggests a substantial total global gold supply deficit.  Indeed on this basis gold supply may have actually been in deficit over the past couple of years too, although this will have been mitigated by the big sales out of the gold ETFs.  If demand continues at current levels throughout the current year (which it most probably won’t) that would suggest a very large global gold supply deficit of somewhere around 1,800 tonnes.  But with the normal fall-off in Chinese and Indian demand through the middle months of the year that kind of deficit is unlikely, but the overall deficit figure would still likely be large – perhaps in the region of 1,000 tonnes of physical gold or more given ETF liquidations will likely be much lower this year unless there is a big further fall in the gold price.

With gold disappearing from the supply chain at this kind of rate one wonders how long the gold price can be held down at current levels, dependent as it is largely on financial dealings on the Western commodity markets.  New such markets are now springing up in the East – notably in Shanghai, Hong Kong and Singapore.  If they eventually succeed in wresting precious metals price control away from the West we could see a sea change occurring in gold and silver market valuations.  This is perhaps an inevitable process over time, but we don’t yet have a handle on how long this will take – but surely by the end of the decade, if not earlier?

This must read commentary by Lawrie appeared on his website on Valentine's Day---and I thank him for sending it our way on Sunday.


Lawrence Williams: Is China hiding its central bank gold in its commercial banks?

Examining the huge off-take from the Shanghai Gold Exchange, Mineweb's Lawrence Williams today speculates that the government of China may be holding massive amounts of gold on the books of the country's government-owned commercial banks to avoid reporting them officially to the International Monetary Fund.

If so, Williams writes, China's gold reserves could have reached four or five times the 1,054 tonnes the country claimed in its last report to the IMF in 2009.

Williams' commentary is headlined "Is China Hiding Its Central Bank Gold in Its Commercial Banks?"---and it was posted on the Internet site at 7:42 p.m. GMT on Sunday evening---and I found it, along with the above paragraphs of introduction, in another GATA release.


The Gold Chronicles: February 9, 2015 Interview with Jim Rickards

*Huge volatility in markets and FX

*Gold is now trading like money

*World has woken up to threat of U.S. confiscation of sovereign gold and are repatriating

*The scramble for gold by central banks proves gold is now moving back towards the core of the monetary system

This long audio interview with Jim runs for 59:13 minutes---and was posted on the Internet site on February 16.  I haven't had the time to listen to it yet, but will be doing exactly that in the next day or so.  I thank Harold Jacobsen sending it our way.


Ted Butler: A Remarkable Proposition

A remarkable new paper by a Cornell law professor and CFTC staff counsel suggests that many aspects of high frequency computer trading (HFT) may be, in fact, illegal under various provisions of basic commodity law. Heretofore, it was generally assumed that HFT was legal, but disabused and impacted markets in disruptive manner on occasion. Many, like myself, never looked on HFT favorably, but few have tried to make the legal case against it. The author, Gregory Scopino, writes in his personal capacity and not on behalf of the CFTC. Not a short or easy read (at 90 pages), I feel Scopino makes a well-researched case and even offers answers to questions asked of me by readers, such as definitions for commodity terms and the like. Please take the time to scan the document.

There are many points to draw from this paper and I’ll offer my most salient takeaway. By looking at what is accepted by “everyone” as legally appropriate activity with a different perspective, the activity can instead look highly inappropriate and even illegal. Scopino looked at HFT not through the universal perspective of something that’s here to stay and that we must get used to; to looking at it through an interpretation that it might violate existing law. His conclusion appears to be that much of HFT is not properly aligned with existing commodity law. Not being a lawyer, I can only agree with him by what I’ve observed firsthand about the disruptive and manipulative effect of HFT. Not explicitly stated in the paper is my suggestion that only the one percent of market participants actively engaged in HFT seem to be for it, while the 99% of market participants not engaged in HFT wish it didn’t exist.

About the only difference I hold with Prof. Scopino is that he suggests that certain aspects of HFT may be manipulative on their face, where I consider HFT to be a manipulative price tool employed to extend the larger ongoing price manipulation in silver. He suggests HFT may be the manipulation; I claim the commercials first rig the price of silver (up or down) through HFT in order to force the technical funds and other price momentum speculators to buy or sell so that the commercials can take counterparty positions. I’ve alleged that the manipulation in silver existed long before HFT arrived on the scene some years ago, although I fully admit that HFT has made it easier for the silver commercial manipulators.

This commentary by Ted appeared in his weekly review to his paying subscribers on Saturday---and it was posted in the clear on the Internet site yesterday---and it's definitely worth reading.



¤ The Funnies

As I said in my Saturday column, I'd have some more petrified forest photos today---and here they are.  The first one is cropped a bit, but the other three are straight out of the camera untouched.  The 225 million year old bark on the logs in photos 2 and 4 are solid rock, but it looks like you could peel it off with your bare hands, which you can't of course.  The colours are intense because the sun is low in the sky as it's winter for one thing---and getting very close to sunset as well.  Don't forget the "click to enlarge" feature.

Time Magazine cover---April 14, 1986

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.


¤ The Wrap

Sales of Silver Eagles from the U.S. Mint are still very strong relative to sales of Gold Eagles or Buffaloes, but may be abating a bit. Sales of Silver Eagles on a daily basis have dropped below 110,000 coins on a calendar day basis this month, suggesting the Mint has caught up with pent up demand and no longer has to ration coins. It’s too soon to know if we are entering a period of softer relative demand for Silver Eagles, but it has been months since the Mint has not been forced to sell at maximum production/blank supply capacity. More pronounced is the sharp drop off this month in gold coin sales compared to January.

While sales of coins from the U.S. Mint are followed and reported on widely, such sales don’t appear to have any obvious impact on price. For instance, the last four years have seen absolutely phenomenal sales of Silver Eagles by any objective measure, by far the most in history, and yet those same four years were the worst in history for silver pricewise. I would contend that the only rational explanation lies in the manipulation premise, but whatever the reason, the disconnect between record sales of Silver Eagles and rotten price performance is plain to see. - Silver analyst Ted Butler: 14 February 2015

Because of the U.S. holiday, there's not much to talk about regarding Monday's price "action" in any of the precious metals.  Like I said, this column is mainly about the number of stories I had for you---and as you've already noted, there were quite a few, with a lot of time consuming ones as well.

I was amazed to see the CEO of Rosneft mention the rigging of the gold market in his comments in the Financial Times article on Monday.  But as I've said on countless occasions, the Russian government has known all about the precious metal price management scheme---and GATA---for over a decade when they mentioned it and us at an LBMA meeting in Moscow a long time ago.

And as I've also said they, along with China, could play the gold card any time they wish if it suits them---and if push really becomes shove, it wouldn't surprise me in the slightest if they did.  Jim Rickard's "Currency Wars" could easily end up being a war in the precious metal market as well, as gold is still money---and Greenspan reminded all and sundry of that fact in New Orleans last October, which is certainly something that hasn't been forgotten by the financial powers-that-be everywhere on Planet Earth.

And as I type this paragraph, the London open is about twenty-five minutes away.  All four precious metals rallied weakly once trading began at 6 p.m. in New York on Monday evening, but all got sold down a bit as trading in the Far East moved along on their Tuesday---and all are down from Monday's close, for what that's worth considering the volumes involved.

At the moment, gold's net volume is only 17,000 contracts---and silver's net volume is only 4,000 contracts, so nothing much should be read into the current price action, either down or up.  The dollar index is currently down 10 basis points.

And I fire this off to Stowe, Vermont at 4:50 a.m. EST---it looks like "da boyz" and their HFT algorithms are back at it, especially in silver.  But, having said that, gold's net volume is only up to 27,500 contracts---and silver's net volume is a surprising 8,700 contracts---and that's with Monday's volume stripped out as well.  With that kind of price pressure, particularly in silver, I was expecting more---a  lot more.  The dollar index is now down 22 basis points.

Here's the Kitco silver chart as I hit the 'send' button.  All of silver's paper gains after the noon silver fix in London on Friday, vanished in two hours in the thinly-traded overseas market on Monday---and silver is back at its 50-day moving average once again.  I just love those free markets, don't you?

As Ted Butler said in a quote I used from his February 7 commentary in this column last week---

"Let me make it easy for those who refuse to acknowledge the silver manipulation. Simply explain why 8 traders, mostly domestic and foreign banks, would hold short the equivalent of 40% of the world's annual production---and a third of all the silver bullion that exists---at prices below the average primary cost of production and nearly 70% below the price levels of four years ago."

"How could such a concentrated short position be explained in legitimate terms and what would be its purpose? What effect would such a large short position have on the price of any commodity---and how do you see it being resolved if it wasn’t permanent?"

"I don’t expect any serious answers to such questions, as it appears to be easier to malign the questioner as a conspiracy theorist instead, but I know these questions have never been addressed in a straightforward manner by anyone who denies the silver manipulation."

Today, at the close of COMEX trading, is the cut-off for Friday's Commitment of Traders Report.  As far as what should be expected as the Tuesday trading session unfolds in New York, I haven't a clue.  However, I'm not overly happy to see the current price action, but it comes as no surprise to me, nor should it you.

See you tomorrow.

Ed Steer