Gold & Silver Daily
"When will JPMorgan et al allow the precious metals to rally...and how far will they be allowed to run?"
 

¤ Yesterday In Gold & Silver

Gold trading in both price and volume was virtually dead yesterday.  The high, such as it was, came shortly after the London open...and the low, such as it was, came at 2:00 p.m. in electronic trading in New York.  All in all, there was about a twelve dollar price spread between the Wednesday high and low price ticks.

Gold closed at $1,606.70 spot...down $6.10 on the day.  Once roll-over were subtracted out of the gross volume, net volume was only around 88,000...which falls into the 'fumes and vapours' category.  Nothing to see here.

It was pretty much the same story in silver...and any differences were minor.  Silver's one attempt to break through the $29 spot price mark occurred just before, or at, the London silver fix.  From that high, the price dipped about twenty cents by 11:00 a.m. in New York before trading more or less sideways in the 5:15 p.m. electronic close.

Silver closed the Wednesday trading session at $28.82 spot...down 9 cents from Tuesday.  Gross volume was only 28,500 contracts.  Nothing to see here, either.

As for platinum and palladium yesterday, both gained back almost every dollar they 'lost' on Tuesday.  Beats me what's going on there.

The dollar index opened in the Far East at 83.04...and more or less traded sideways until 10:00 a.m. in London.  It was all downhill until shortly after the London p.m. gold fix...and the low price print at that point was 82.58.  From there the dollar rallied into the New York close...and finished the day at 82.87...down 17 basis points on the day.

Once again there was no correlation between the dollar index move and the goings-on in the precious metal markets.

The gold stocks opened in slightly negative territory and chopped around either side of unchanged in a very tight range all day.  The HUI finished the trading day just about where it started...down a tiny 0.10%.

The silver stocks finished mixed as well, but most of the ones that make up Nick Laird's Silver Sentiment Index didn't do particularly well...and it closed down 0.73%.

(Click on image to enlarge)

The CME Daily Delivery Report was a yawner, as only 2 gold and 14 silver contracts were posted for delivery on Friday.

There were no reported changes in either GLD or SLV yesterday...and the U.S. Mint had nothing to say for itself, either.

Over at the Comex-approved depositories on Tuesday, they reported receiving 300,318 troy ounces of silver and shipped 881,541 troy ounces of the stuff out the door.  The link to that activity is here.

Since yesterday was the 20th of the month...and it fell on a week day...The Central Bank of the Russian Federation updated its Internet site with February's data.  That data showed that they purchased another 200,000 ounces of gold for their official reserves...and here is Nick Laird's most excellent chart showing the change. Officially reported Russian gold reserves are now 31.4 million troy ounces.

(Click on image to enlarge)

Well, the Cyprus issue hasn't gone away...and if the situation wasn't so serious, one could almost relegate it to farce...as you just couldn't make this scenario up if you tried.  I think the situation was pretty much summed up in these three paragraphs below from a piece out of The Guardian on Tuesday evening GMT...

"There are really only two plausible scenarios: somebody – be it Europe or the IMF – gives Cyprus more money, in which case there is a chance that the crisis can be contained. Or Germany and the other hard-line eurozone countries can insist that the deal is non-negotiable. In which case, the banks in Cyprus will go bust, risking widespread turmoil."

"Given the precarious eurozone economy and the enfeebled state of European banks, cutting Cyprus a better deal looks like the safer option. The package could be restructured so that only deposits in excess of €100,000 (£85,000) are taxed, the preferred option of Christine Lagarde at the IMF. Sparing those with savings of less than €100,000 from any pain would require the bigger depositors to pay a 15.5% tax to find the €5.8bn demanded of Cyprus. Alternatively, Europe could easily find the extra €5.8bn itself."

"The problem is that both options will cause political problems. Putin will bridle at suggestions that Russian citizens – who make up a large proportion of the €100,000 depositors – should be singled out. And Merkel could expect an almighty domestic backlash if she backtracked from the tough stance she adopted at the weekend."

"But the alternative is to let the banks in Cyprus go bust as soon as they are reopened after the extended bank holiday and hope that it really is a "special case". That looks like an awfully big gamble."

Yes, it's a monstrous gamble, dear reader...so place your bets.

I have slightly fewer stories for your reading 'pleasure' today...and I hope you can find the time to spend on the ones that most interest you.

 

¤ Critical Reads

Fed Keeps Easing, Not Worried About Stock Bubble

Cyprus does not pose a threat to the U.S. economy or financial system and there are no signs of stock market bubble, Fed Chairman Ben Bernanke said on Tuesday.

And while the cheap money supplied by the Fed has pushed up stock prices, Bernanke said the central bank isn't measuring the success of its policies against moves in stocks.

He also said the recent advance was not out of line with historical patterns. "I don't think it's all that surprising that the stock market would rise given that there has been increased optimism about the economy and... profit increases have been substantial," he said.

Bernanke must have gonads the size of church bells to say something like that with a straight face.  This CNBC item was posted on their website early yesterday afternoon Eastern time...and I thank West Virginia reader Elliot Simon for today's first story.

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Americans Cut Restaurant Spending as Taxes Bite: EcoPulse

Restaurants are reeling from their worst three months since 2010, as American diners spooked by higher payroll taxes cut back on eating out.

Sales at casual-dining establishments fell 5.4 percent last month, after declining 0.6 percent in January and 1.6 percent in December, according to the Knapp-Track Index of monthly restaurant sales. This was the first three months of consecutive declines in almost three years, with consumers caught in a “very emotional moment,” said Malcolm Knapp, a New York-based consultant who created the index and has monitored the industry since 1970.

“February was pretty ugly” for many chains -- and probably will be the worst month of the year -- after January delivered an “initial blow” while Americans grappled with increased payroll taxes and health-care premiums, rising gasoline prices and budget debates in Washington, Knapp said. “It’s important to keep in mind that companies also are facing unusually tough comparable sales because of favorable weather in 2012,” so the result is an industry that’s been “a lot softer so far this year.”

This Bloomberg story was posted on their website late on Tuesday evening...and I thank reader "David in California" for sharing it with us.

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American retirement crisis: Impoverished seniors on horizon

The Employee Benefit Research Institute has published its annual Retirement Confidence Survey, which confirms what virtually all such surveys have concluded: that Americans are living longer and that they do not have anywhere near enough saved for retirement.

The sad truth is that Americans do almost no thinking about what kind of retirement they want. They mistakenly assume that Social Security is a retirement program, when in fact it is a supplemental retirement program. The three legs of the retirement "stool" -- Social Security, a pension, and private savings -- have all seen some shrinkage in the past few years.

For Social Security, all baby boomers know the truth: We are going to be working longer, into our 70s, paying more and getting less. Pensions are going away: IBM stopped providing pensions to new employees a couple years ago, and many are facing reductions in their benefits.

If you're on the leading edge of the baby boomers like I am, this is worth reading...and was posted on the money.msn.com Internet site late on Tuesday morning...and my thanks to Matthew Nel for sending it.

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Bailout Clash: Why Europe Must Play Hardball with Cyprus

The Cypriot rejection on Tuesday night of the euro-zone bailout package for the country's ailing banks has triggered a power struggle between the island nation and the European Union. If Brussels gives in, future efforts to save the euro will be made more difficult. All hopes are now on Russia.

President Nikos Anastasiades, of course, didn't exert much effort to find a majority for the deal, even though he had agreed to it in Brussels. On the contrary, even before the parliamentary debate began, he said the package was unlikely to pass -- a virtual invitation to lawmakers to reject it. The move could even be a tactical one. Anastasiades can now return to Brussels in the hopes of leveraging better conditions out of Cyprus' euro-zone partners by highlighting his country's rebellious parliament.

It could also be useful as a lever in Moscow. On Wednesday morning, all eyes were on Russia in the hopes that the country might jump in to provide Nicosia emergency aid. Russian investors have parked billions of euros in Cypriot bank accounts -- indeed the presence of Russian money is one reason why Cyprus' banking sector holds assets worth more than seven times the country's annual gross domestic product. According to media reports, Anastasiades spoke with Russian President Vladimir Putin immediately following the failed parliamentary vote and the Cypriot finance minister flew to Moscow on Tuesday night.

The original headline to this article read "Cyprus 'no' to bailout deal is a danger to the eurozone".  I guess it sounded too inflammatory...which it was...however it is the truth.  This article appeared on the spiegel.de Internet site early yesterday morning Europe time...and I thank Roy Stephens for his first contribution to today's column.

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Cyprus Turns to Moscow: Scenarios for a Russian Role in the Bailout

Cyprus on Tuesday rejected the terms of a bailout package offered by Brussels and is now turning to Moscow for help. Russian President Vladimir Putin may charge a very high price in exchange for aid for the nearly bankrupt euro-zone country.

The inhabitants of Limassol, Cyprus, sometimes like to call their city "Little Moscow" because of the number of Russian businesspeople residing there. Southern Cyprus is home to the holding companies of numerous Russian oligarchs. Now, because the parliament in Nicosia rejected the terms of the European Union's bailout package for the country, Cyprus' government is looking for assistance in Russia, a country from which countless billions have flowed into the Mediterranean island nation over the years.

Cypriot President Nicos Anastasiades spoke with Russian President Vladimir Putin on the phone on Tuesday evening. And Finance Minister Michalis Sarris arrived on Tuesday night in Moscow and began meetings on Wednesday. Sarris is negotiating with the Kremlin over possible Russian support, though the talks have produced little so far. The leaders of a state that is a member of both the EU and the euro zone is now turning to Russia for help. It would be hard to imagine a more uncomfortable situation for the Kremlin.

This article was posted on the spiegel.de Internet site yesterday...and it's original headline read as follows..."Russia likely to exploit its interests in providing aid to Cyprus".  It's another article courtesy of Roy Stephens, for which I thank him.

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Cyprus warned over parliament's bailout rejection

Germany's finance minister has warned Cyprus that its crisis-stricken banks may never be able to reopen if it rejects the terms of a bailout.

Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds".

He was speaking after the Cypriot parliament rejected an international bailout deal that would have imposed a one-off tax on bank deposits.

Frantic talks are under way to try to agree an alternative plan.

This article appeared on the bbc.co.uk Internet site just before midnight on Tuesday...and I thank reader Bill Busser for bringing it to my attention...and now to yours.

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Cyprus blamed for decision to tax small savers

Yesterday the European Commission said Cyprus itself was responsible for the most unpopular detail of its bailout.

Following the Cypriot parliament's rejection of the €10 billion bailout, the commission said it was Nicosia that wanted to apply a levy on all savers - including the least well off - when the terms of the deal were being discussed.

"The commission made it clear...that an alternative solution respecting the financing parameters would be acceptable, preferably without a levy on deposits below €100.000. The Cypriot authorities did not accept such an alternative scenario."

It said it is now up to Cyprus to find "alternative solutions” to raise the €5.8 billion that its creditors want from Cypriot tax payers.

This story, filed from Brussels and Berlin around 4:30 p.m. yesterday afternoon Europe time, was posted on the euobserver.com Internet site...and it's courtesy of Roy Stephens.

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The fatal flaw in the eurozone's not-so-cunning plan for Cyprus

It must have seemed so simple for the politicians and officials who pieced together the bailout plan for Cyprus announced last weekend.

One of the smaller eurozone countries, Cyprus had become the money-laundering centre of choice for Russian oligarchs and there was no way Angela Merkel was going to agree to a blueprint that would see German taxpayers subsidising Moscow billionaires, especially with an election looming this autumn.

So bank depositors in Cyprus would be obliged to pony up one euro for every two provided by the European Union and the International Monetary Fund, with the levy imposed across the board. Cyprus was a special case, it was insisted, and therefore there would be no knock-on effects to the rest of the eurozone.

This is the commentary in The Guardian that I quoted from before jumping into the Critical Reads section of the day...and if you want to read the rest, here it is.  It's an item I borrowed out of yesterday's edition of the King Report.

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Busted Cyprus considers confiscating pension funds next

Cyprus considered nationalizing pension funds and ordered banks to stay shut till next week to avert financial chaos after it rejected the terms of a European Union bailout and turned to Russia for aid.

Crisis talks among the political leadership in Nicosia are set to resume on Thursday after late-night meetings to discuss a "Plan B" broke up on Wednesday without result.

EU officials voiced frustration but little sympathy for an ambitious but now bust banking system that extended itself well beyond the island. Russia, whose citizens have billions to lose in those Cypriot banks, called the EU a "bull in a china shop."

This Reuters story was filed from Nicosia earlier this morning...and is the freshest news that's available.  I plucked it from a GATA release that Chris Powell filed from Hong Kong late on their Thursday afternoon. The actual title reads "Cyprus scrambles to avert meltdown, EU threatens cutoff"

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In Just a Few Days a Modern Economy Has Been Set Back 50 Years, and it May Never Be the Same Again

In a matter of days, a modern functioning Western economy has been transformed into a cash economy, if not quite a barter one yet. Coinage is being hoarded, stores are refusing credit cards, commercial credit has ceased.

True, that can all be quickly reversed if a compromise is conjured up now. What will never be reversed so easily is the threat of capital controls in a supposed monetary union. The Republic of Cyprus may still avoid such a draconian measure. But that’s not the point. If the Cyprus economy can be sent backwards 50 years so easily, we now know the same can happen to other euro area members. And in a matter of a few days, as we’ve just seen. And the next crisis (surely there will be more) is likely to hit a member with a large and functioning bond market. Investors will be quicker next time round to remember he precedents set by the Cypriot Republic.

This rather short article showed up on the businessinsider.com Internet site early yesterday evening Eastern time...and I consider it a must read.  I thank Roy Stephens for his last offering in today's column.

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Is Spain Preparing For Its Own Deposit "Levy"?

While Spain's economy minister Luis De Guindos proclaimed in the Senate today that bank deposits under €100,000 are "sacred"and that "Spanish savers should stay calm," Spain, it would appear, has changed constitutional rules to enable a so-called 'moderate' levy on deposits - as under previous Spanish law this was prohibited. For now, they claim the 'levy' will be "not much higher than 0%" and is mainly aimed at regions in Spain that have "made no effort to collect taxes" based on new revenue expectations.

As El Pais reports, the minister of finance and public administration, Cristobal Montoro, defends the need for such a 'levy' in their constitution on the basis of standardizing taxes across regions (and is preparing a proposal on the amounts to be paid) and although it would appear that while the European Commission could previously argue that such a 'tax' would violate the free movement of capital in Europe, it now leaves the door open to eventually effectively taxing the deposits.

This Zero Hedge posting from Tuesday evening is worth skimming...and I thank reader Bill Busser for sending it along.

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IMF Chief Lagarde’s Home Searched by French Police

French police searched the Paris home of International Monetary Fund Managing Director Christine Lagarde as part of an inquiry into an arbitration that awarded US$500 million to a supporter of former President Nicolas Sarkozy.

The Cour de justice de la République, which investigates ministers’ actions in office, is looking into whether Lagarde, a onetime finance minister under Sarkozy, erred in agreeing to an arbitration to end a dispute involving business tycoon Bernard Tapie. The raid, which took place yesterday, was confirmed by the Paris prosecutor’s office and Lagarde’s lawyer.

Tapie, who has also dabbled in politics and acting, in 2008 won a €385 million euro ($498 million) arbitration award to settle a dispute over his company’s sale of German sportswear brand Adidas AG. He contended that Credit Lyonnais mishandled the 1993 sale and pursued a claim against the formerly state-owned bank’s liquidator.

This Bloomberg item was posted on their website late yesterday afternoon Mountain Daylight Time...and I thank Elliot Simon for digging it up for us.

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Three King World News Blogs

The first blog is with Dr. Stephen Leeb...and it's headlined "Investors Shocked and Frightened in Aftermath of Cyprus Scare".  Next comes this interview with Rick Rule.  It's entitled "Is the United States the Next Cyprus?"  And lastly is this commentary from Richard Russell...and it bears the headline "Stocks, Fed and Gold Shorts to Get Squeezed".

Read more...

Grandich discusses manipulation, GATA...and Sprott's address in Hong Kong

Interviewed by Kevin Michael Grace for Resources Wire, market analyst and mining company consultant Peter Grandich discusses gold market manipulation and GATA's work to expose it.

This 3-page interview entitled "Gold Has Not Peaked: Peter Grandich on Manipulation and the Way Ahead" was posted on the resourceswire.com Internet site yesterday...and I found this offering in a GATA release.

Read more...

Swiss petition succeeds for referendum to ban gold sales, require repatriation

The right-wing Swiss People's Party has gathered enough signatures to force a referendum on a proposal to ban the country's central bank from selling any of its gold reserves.

The proposal, dubbed "Save our Swiss Gold," would prohibit the Swiss National Bank (SNB) from offloading its gold reserves as well as force it to hold at least 20 percent of its assets in gold, the committee behind the plan said on Wednesday.

"Gold reserves aren't speculative objects for the SNB or politicians. They belong to the people," SVP politician Luzi Stamm, whose party began its push for a referendum more than two years ago, said in a statement.

This Reuters story, filed from Zurich, was posted on their website early yesterday afternoon Eastern time...and it's another story that I extracted from a GATA release.

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Arizona could soon approve gold, silver as legal tender

Arizona could soon become the second U.S. state to recognize gold and silver as legal tender if the Arizona House approves SB 1439.

The bill has already won the approval of Arizona’s State Senate and the Arizona House Financial Institutions Committee which voted the legislation out of committee on a 4-2 vote Monday. The measure now goes to a vote of the Arizona House.

Thus far, only the State of Utah has officially recognized gold and silver as legal tender, although the issue has been under consideration this year in four states including Arizona. The Arizona bill defines legal tender as a mode of paying debts and taxes.

This very interesting story was posted on the mineweb.com Internet site yesterday...and is definitely worth reading.

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CFTC’s Chilton to call for review on commodities ‘wash trades’

U.S. Commodity Futures Trading Commission member Bart Chilton took on the so-called “wash sales” during a speech prepared for the National Grain & Feed Association Conference on Monday in San Francisco.

The Wall Street Journal reported Sunday that the CFTC is also investigating alleged wash trades by high-speed firms in future contracts tied to precious metals, oil, agriculture and the Standard & Poor’s 500.

A "wash sale" occurs when an investor sells a security at a loss but then purchases the same or a substantially similar security within 30 days of the original sale.

Wash trades are banned in the United State because they can feed false information in the market and be used to manipulate prices. The Commodity Act prohibits wash sales, as does the Securities Exchange Act of 1934.

The kiddies at the CFTC are terrific at identifying problems...but a little short on doing anything about them...as is the case here.  In commentary to his paying subscribers yesterday, silver analyst Ted Butler said that "What Chilton didn't say was that phony HFT is more prevalent in Comex silver than in any other market."  This must read story was posted on the mineweb.com Internet site on Monday

Read more...

 

¤ The Funnies

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Canada’s Golden Tollbooths

There is a special tollbooth located 8 hours north of Toronto near a gold mine. And every time a mining truck passes by, it must pay a toll: For each 100 ounces of gold carried, 4 of these must be paid to the tollbooth. Over $6,600. Every single time.

What’s better, there’s another one of these “golden tollbooths” located 20 miles east … and still another one 100 miles farther. All told, about seventy of these special tollbooths exist in the world today.

And one company owns over half of them.

Now this company—who has already banked $600 million on a single one of these tollbooth deals—is willing to split the profits with us…

Click here to read the full story.


 

¤ The Wrap

That it is JPMorgan as the likely concentrated short candidate in all four [precious metals] is deeply troubling. Why is any U.S. bank so heavily involved on the short side of any metals market, to say nothing of why is our most systemically important bank probably the one big precious metals short? It’s hard not to reach the conclusion that JPMorgan has been anointed by some entity within the U.S. Government to tamp down any price rally in any precious metal market. This also explains why the CFTC has stood by in allowing the silver manipulation to spread to other markets, violating its most important mission of preventing manipulation. Instead, it appears the CFTC is sanctioning an ever-expanding price manipulation scheme. As such, they appear as crooked as JPMorgan. - Silver analyst Ted Butler...20 March 2013

So...here we sit...waiting for the next shoe to drop.  How bad will the Cyprus resolution be when it's finally decided upon?  When will JPMorgan et al allow the precious metals to rally...and how far will they be allowed to run?  Questions with no answers...and as I said in yesterday's column...the situation remains "fluid".

Tomorrow we get the all-important Commitment of Traders Report for positions held at the close of trading on Tuesday.  There may be a slight improvement in silver's Commercial net short position, as "da boyz" have been keeping silver under the $29 mark for about the last month.  Gold has rallied a bit over it's 20-day moving average, so I'd guess that JPMorgan et al were gong short, or selling long positions into this rally in order to cap it...especially on Sunday night on the Cyprus news.  That situation may also apply to silver, but it's not as visible on the chart.

Here are the 6-month charts for both metals, so you can see where the current situation stands as of the close of trading yesterday.

(Click on image to enlarge)

(Click on image to enlarge)

Don't ever forget that these charts are courtesy of a paint job by JPMorgan et al...as there's nothing free-market about them.

Like Wednesday, Far East and early London trading were quiet in both price and volume...and the dollar index is flat...but jumped back above the 83.00 mark shortly after 9:00 a.m. GMT.  The calm before the storm perhaps?  Beats me...but we are certainly 'locked and loaded' for a big move to the upside from a Commitment of Traders standpoint...and it all depends on what JPMorgan is allowed to do.

See you here tomorrow.