Casey Research Publication
Gold & Silver Daily
"Strong indications of gold and silver shortages: Adrian Douglas. Dollar system is 'product of the past'...Chinese president says. Deposed Tunisian President Ben Ali Said To Have Fled Country With 1.5 Tonnes Of Gold...and much more."
 

¤ Yesterday In Gold & Silver

With the Martin Luther King holiday in the U.S. yesterday...there wasn't much price excitement in gold...and the Comex closed early at 1:15 p.m. Eastern.

Gold rose a few bucks in early Far East trading, but soon rolled over and headed lower...with Monday's low price coming at the London a.m. gold fix at 10:30 a.m. GMT.  After that, it gained a couple of bucks...and closed basically unchanged from Friday.  Volume was non-existent.

Of course, the silver price was more 'volatile'...and the bullion banks took the opportunity of setting a new low price for this move down...which flushed out more technical longs.  The low of the day [a hair below $28.00 spot] came at the same time as gold's...the London a.m. gold fix at 5:30 a.m. Eastern time.  The silver price recovered from that point somewhat...but came nowhere near finishing in positive territory like the gold price did.  There wasn't big volume but, compared to gold's volume, it was immense.

From the Far East open...right up until it's high of the day at 4:30 a.m. Eastern time...the world's reserve currency tacked on about 50 basis points.  Then, in less than three hours from that high, the dollar gave back virtually all of those gains.  Then it jumped 30 points from it's 7:20 a.m. Eastern time low...and from that point traded sideways for what was left of the New York session.

Judging from the graph below, I'd say that the dollar's machinations made little difference in the price of the precious metals yesterday.

  

With no trading in the equity markets in New York yesterday, there was no HUI.  However, the TSX Gold index in Toronto was up a small fraction...and most of the silver shares were down on the day.

There was a CME Delivery Report yesterday...but it was exactly [to the contract] the same numbers that I reported in my column on Saturday morning.  Obviously an error in their system somewhere...and I'm not going to add to it by repeating what I said on Saturday.

Because of the holiday, there were no reports from either ETF, the U.S. Mint, or the Comex-approved depositories.

But it wasn't a holiday in Europe...and the good folks over at Zürcher Kantonalbank in Switzerland reported that their gold ETF added 13,853 ounces last week...while their silver ETF reported a decline of 273,507 troy ounces during the week that was.  As always, I thank Carl Loeb for those numbers.

 

¤ Critical Reads

JP Morgan Told Judge To Stop Paying Mortgage To Become Eligible For Loan Modification

Because it's Tuesday, I have a fair number of stories today...and I'm going to start off with this one that's right out of the "You Can't Make This Stuff Up' department.  It was sent to me by reader Steve Pierce...and it's a zerohedge.com posting that's headlined "JP Morgan Told Judge To Stop Paying Mortgage To Become Eligible For Loan Modification".  The judge acknowledged it doesn't look good for a juvenile court judge to become delinquent on property taxes, which are used to support schools and the children who appear in his court. But he said the bank is responsible for paying the taxes out of the escrow account.  Like I said, you can't make this stuff up.  Tyler Durden has a field day with it...and the link is here.

Read more...

Not Only Commodities are Signaling Hyperinflation

Here's a short offering from James Turk over at the Free Gold Money Report.  It's only a couple of paragraphs...and an excellent graph...and it's worth running through.  The headline reads "Not Only Commodities are Signaling Hyperinflation".  It's posted over at the fgmr.com website...and the link is here.

Read more...

Dry Bulk Ship-Use to Drop to Decade-Low, Pareto Says

Despite the fact that commodity prices are heading north at speed...the cost of shipping them by sea is falling like a rock.  Reader 'David in California' sent me this very short Bloomberg piece headlined "Dry Bulk Ship-Use to Drop to Decade-Low, Pareto Says".  A surplus of ships has been created by vessel orders placed in 2007 and 2008 when owners could charge as much as $233,988 a day for cape-size ships, a record for the coal and iron ore transporters.  Of course these record prices have gone the way of the Passenger Pigeon, as these new ships are now being delivered...and now there are too many of them.  The link to the story is here.

Read more...

Baltic Dry Index Graph

To visually capture this problem...here is the "Baltic Dry Index Graph" mentioned in that Bloomberg story.  This is the logarithmic chart...and it doesn't look very pretty, does it?  I thank reader Ken Metcalfe for sending it along.

Read more...

Dollar system is 'product of the past,' Chinese president says

Here's an interesting Bloomberg story that the 'thought police' have given the once-over.  The original headline read "Hu Highlights Need for U.S.-China Cooperation, Questions Dollar".  Now it reads "Obama Gives Hu First State Dinner Showing Dual Views of China".  But I prefer the headline that Chris Powell gave it...and that reads "Dollar system is 'product of the past,' Chinese president says".  The link to the story is here.

Read more...

Spain Cancels Market Auction, As It, Portugal And Belgium Go Syndicate, Spook Bond Investors (Again)

Here's another offering from reader 'David in California'.  This was a posting from zerohedge.com yesterday.  The headline is a real eye-opener..."Spain Cancels Market Auction, As It, Portugal And Belgium Go Syndicate, Spook Bond Investors (Again)".  For those unclear with what this means, Spain is essentially saying the market pricing mechanism on its debt is too "transparent" and adds "volatility" and therefore the country would rather have banks underwrite the whole issue i.e., take the issuance risk on their books, thus spare Spain the embarrassment of a failed bond auction. And Spain is just the start: Portugal and Belgium have followed suit.  If this doesn't make you run screaming to your local bullion dealer, then nothing will.  It's a longish piece...and the link is here.

Read more...

Tunisia riots: Fears mount over violent power struggle

A couple of stories on the woes over in Tunisia.  The first is from the Saturday edition of The Telegraph...and is courtesy of reader Roy Stephens.  The headline reads "Tunisia riots: Fears mount over violent power struggle".  Around 1,800 Britons were being flown home on Saturday night, with many describing scenes akin to a war zone on the journey between the coastal resorts and Monastir Airport. Petrol stations were set on fire, shop windows smashed and gangs of looters and armed soldiers patrolled the streets.  The link to the story is here.

Read more...

The World from Berlin: 'Arab Autocrats Have Been Warned' by Tunisia

While still on the subject of Tunisia, here's a posting on this from yesterday over at the German website spiegel.de...and it, too, is courtesy of Roy Stephens.  The headline reads "The World from Berlin: 'Arab Autocrats Have Been Warned' by Tunisia".  Of the four stories on Tunisia that I've posted to date...this is by far the best...and I consider it a must read.  It's not very long...and the link is here.

Read more...

Deposed Tunisian President Ben Ali Said To Have Fled Country With 1.5 Tons Of Gold

As was alluded to in the spiegel.de story in the last paragraph...it was rumoured that the deposed president fled the country with 1.5 tonnes of gold.  I note that he didn't take U.S. dollars or euros.  'David in California' sent me the story on that.  It's a zerohedge.com offering that's headlined "Deposed Tunisian President Ben Ali Said To Have Fled Country With 1.5 Tons Of Gold".  It's not overly long...and I feel it's worth running through...and the link is here.

Read more...

European Silver Shortage Spreads To UK

The next story is silver related...and is courtesy of reader Phil Barlett.  Silver is becoming hard to come by in Britain, as bullionvault.com is back in the news, now saying that most sizes of silver bullion bars won't be available until sometime in February.  The last time they mentioned a shortage problem in England was about two weeks...and they were supposed to get silver on January 9th.  That obviously didn't work out as planned.  The zerohedge.com headline reads "European Silver Shortage Spreads To UK".  It's a short story...and the link is here.

Read more...

Tocqueville Gold 2010 Year-End Investor Letter

Today's next precious metals offering is this piece by John Hathaway, the Grand Poobah over at Tocqueville Asset Management L.P.  We exchange e-mails on the odd occasion...and he's one of the handful of people that I have all the time in the world for.  This is a short 3-page tome that's headlined "Tocqueville Gold 2010 Year-End Investor Letter".  Australian reader Wesley Legrand dug this one up for us...and I consider it a must read.  The link is here.

Read more...

Murray Pollitt: Gold will lead, not lag commodities in 2011

Here's a GATA release from Saturday that Chris Powell has headlined "Murray Pollitt: Gold will lead, not lag commodities in 2011".  Murray is to the Canadian gold industry what Richard Russell is to the U.S. stock market.  Murray's own title to his latest commentary is "Hyperbolic".  I feel that this story is worth your time as well...and the link is here.

Read more...

Tokyo Gold Vending Machine Vies With Drinks, Lingerie

And this story just in...moments before I hit the 'send' button.  It's a Bloomberg piece filed from Tokyo earlier today, with a headline that reads "Tokyo Gold Vending Machine Vies With Drinks, Lingerie".  It's an interesting read...and I thank 'David in California' for sending it along in the wee hours of this morning.  It's posted over at businessweek.com...and the link is here.

Read more...

Adrian Douglas: Strong indications of gold and silver shortages

Here's another GATA release that's a must read.  As I have already spoken of many times in this column...the last time being on Saturday...the bullion banks have been covering short positions on rising prices since last August.  As a matter of fact, it's partly their short covering that has led to the rise in the silver price leading up to year end.  Ted Butler pointed this out when the December bank participation report was issued.

But what gives this GATA release real punch, is the graphic display of this process.  The chart in this report is absolutely amazing.  Print yourself out a copy and pin it up where you can look at it every day.  The study, done by GATA board member Adrian Douglas, is a must read...and I might suggest that you run through it a couple of times to ensure that you grasp the chart's significance.  Chris Powell has headlined Adrian's work as follows..."Adrian Douglas: Strong indications of gold and silver shortages"...and the link is here.  Chris Powell's preamble is worth your time as well.

Read more...

Sell Gold, Buy Silver

My last offering for you today is courtesy of silver analyst Ted Butler...and is a story that was posted over at finance.yahoo.com last Friday.  The topic is near and dear to my heart...as it is to Ted's...which is probably the reason why he sent it to me.  The headline reads "Sell Gold, Buy Silver".  As you know dear reader, I take my own advice...and that's exactly what I have done with my own portfolio.  This piece is more than worth your time...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

The only function of economic forecasting is to make astrology look respectable.- John Kenneth Galbraith

With New York closed for the holiday, I wouldn't read a thing into yesterday's gold price action...but it's obvious that the bullion banks were active in silver during the London session, as a new low price for this move down was made at the London a.m. gold fix.

In his weekly review for clients on Saturday, Ted Butler had this to say about the current 'correction' that's going on in silver..."Can the commercials rig prices lower still at this time?  That is always possible, given how corrupt they are and how negligent the regulators have been.  The precise price bottom is always defined at the point at which the commercials can't induce any more speculative selling.  It's not a matter of how many Comex silver contracts the commercials would like to buy; it's strictly a matter of how many contracts the commercials can trick the speculators into selling.  Considering the low level of potential speculative selling remaining, my guess is still that we are close to an important bottom.  While I may be wrong in the short term by a bit, I don't think I will be wrong that the inevitable rally, whenever it commences, is very likely to be explosive in nature." [From your lips, to God's ears, Ted! - Ed]

Because New York wasn't open yesterday, all of today's [and Monday's] trading activity won't be posted until tomorrow morning.  What we'll get this morning when the CME posts them, are the final open interest figures from Friday's trading day.  Friday was another big down day for both silver and gold.  It wasn't a new low for gold...but it certainly was a new low for silver...and hopefully that will be apparent when the final numbers are posted later this morning.  But, as you know, the bullion banks are masters at hiding what they're doing by using spread trades to cover their tracks...so we may not really find out anything until Friday's Commitment of Traders report.

Today is the cut-off for that report.  I would like to think that everything that happened on Monday will be included...and hopefully all of today's action as well.  However, we also know that 'da boyz' can be very tardy about what numbers they chose to report on the cut-off day...and this may hold true here...but we won't know for sure until Friday, either.

As of 4:26 a.m. Eastern time, the London gold market has now been open for trading for about an hour...and gold has spiked up about 10 bucks...and silver is up about 50 cents.  The dollar is down about 60 basis points from its high in Far East trading earlier in their morning.  Gold volume is just under 50,000 contracts net of all roll-overs...and silver volume is around 18,000 contracts net.  This is pretty high volume for this time of day, but it also includes all of yesterday's trading volume in both metals.

It looks promising...but I'm sure that the real excitement in both metals will commence once the New York bullion banks begin trading on the Comex in New York at 8:20 a.m.

Nothing has changed in my investment portfolio.  Although bloodied...I'm still 'all in'.  I was never much of a trader...and a lot of my attempts ended in disasters of one kind or another, as I was mostly on the losing end of my market-timing endeavours.  But, as Richard Russell always says..."find the primary trend...and stick with it".  If that advice is good enough for the 'R' man...it's good enough for me.

See you tomorrow.