Gold & Silver Daily
"The gold and silver markets are very illiquid...and it doesn't take much to move them"

¤ Yesterday In Gold & Silver

It was another sleepy day in the gold world during Far East...and the first half of London trading yesterday.  But moments after the 8:30 a.m. Comex open in New York, a rally of some substance appeared...and I can tell by looking at the chart that it ran into a not-for-profit seller almost right away.

The rally got successfully capped shortly before 9:00 a.m...and every tiny rally attempt after that wasn't allowed to get far.  The gold price traded sideways for the rest of the day.  The high tick was reported at $1,618.50 spot.

Gold closed at $1,614.80 spot...up $8.10 on the day.  Net volume was very light at only 84,000 contracts, give or it wasn't hard to influence prices in either direction.  Ted Butler mentioned to me that the market appeared illiquid, as very little real trading was going on...and most of it was of the high-frequency trading variety.  The same could be said for silver as well, I'm sure.

Here's the New York Spot [Bid] chart on its own...and it's obvious, at least to me, that the first few hours of trading showed that a not-for-profit seller was acting as a dead weight on this rally.

It was much the same story in silver...and the chart looks almost identical to gold's.  And, like gold, the rally got smacked shortly before 9:00 a.m. Eastern time...and didn't do much after that.  It's hard to say whether this was a new long position being placed, or whether it was a short covering rally...and the same thought applies to the rally in gold as well.

Kitco reported the high tick at $29.46 spot.

Silver closed at $29.18 spot...well off its high, of course...and up only 36 cents.  Volume was much higher on Wednesday than on Tuesday...38,000 contracts vs. 28,500 contracts.

The dollar index opened at 82.87 in early morning trading in the Far East...and then spent all of Thursday chopping sideways in a 25 basis point range, closing at 82.86....unchanged from the open.  Nothing so see here.

The gold stocks opened in the green...dipped briefly...and then away they went.  The rally topped out around 1:15 p.m. Eastern time...and slid just a bit as the trading day wore on.  The HUI finished up 2.43% on the day.

Virtually all the silver stocks finished in positive territory...and some of them did very well for themselves, including a bunch that make up Nick Laird's now-revived Intraday Silver Sentiment Index...and it finished the Thursday trading session up 2.36%...rallying almost into the close.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 7 gold and 92 silver contracts were posted for delivery on Monday.  In silver, the only short/issuer of note was Credit Suisse with 91 of those contracts...and Canada's Bank of Nova Scotia and JPMorgan Chase were the long/stoppers on all but three of those 92 contracts.  The link to yesterday's Issuers and Stoppers Report is here.

There was a small decline in GLD yesterday.  This time an authorized participant withdrew 29,026 troy ounces.  It was a different story over at SLV, as an authorized participant deposited a chunky 1,691,182 troy ounces.

The U.S. Mint had a sales report yesterday.  They sold 8,500 ounces of gold eagles...2,000 one-ounce 24K gold buffaloes...and a smallish 34,500 silver eagles.

Over at the Comex-approved depositories on Wednesday, they reported receiving 701,636 troy ounces...and shipped 37,149 troy ounces out the door.  The link to that activity is here.

Yesterday I posted the 5-Year Rolling Intraday Average Price Movements chart for gold...and here it is for silver.  It's the same in some ways, but different in others.  As usual...and just like gold...note the inflections at the 9:00 a.m. London high for silver...the a.m. gold fix, the noon London silver fix, the Comex open, the 9:30 a.m. Eastern opening of the equity markets in New York..and the London p.m. gold fix.  All stand out like the proverbial sore thumbs that they are.

(Click on image to enlarge)

I have the usual number of stories, so I hope you have the time to read the ones that you find of interest.


¤ Critical Reads

JPMorgan Silent Partner Revealed in Whale Fiasco

One of the best parts about last week’s Senate hearing on JPMorgan Chase & Co.’s London Whale trades is that we finally got a clear picture of whose side the regulators were on during the early days while the bank’s executives tried to contain the unfolding debacle.

Even when officials at the U.S. Office of the Comptroller of the Currency knew that JPMorgan had misled the public, they did nothing to make the company set the record straight. The regulators didn’t merely keep quiet while JPMorgan spread falsehoods. Their silence made them complicit.

This must read op-ed piece by columnist Jonathan Weil showed up on the Bloomberg website shortly after the markets closed in New York yesterday...and I thank Washington state reader S.A. for today's first story.


Bernanke Saying He’s Dispensable Suggests Tenure Ending

Federal Reserve Chairman Ben S. Bernanke said he’s “spoken to the president a bit” about his future and that he feels no personal responsibility to stay at the helm until the Fed winds down its unprecedented policies to stimulate the economy.

“I don’t think that I’m the only person in the world who can manage the exit,” Bernanke said when asked at a news conference in Washington if he’s discussed his plans with President Barack Obama. His term expires at the end of January.

Bernanke’s comments yesterday meshed with the views of some of Obama’s economic and political advisers who said Bernanke, 59, after spending most of his seven years on the job battling a financial crisis and its aftermath, is exhausted and wants to return to private life. The current and former administration officials asked to not be identified to describe the private conversations.

This is the second Bloomberg story in a row.  This one was posted on their website late yesterday morning Eastern time...and I thank West Virginia reader Elliot Simon for sending it.


Jim Rickards Double Header: Forget Cyprus, Nobody is Stealing from Depositors More than Bernanke/Texas May Start Hoarding Gold

After the Federal Reserve reaffirmed its easy money policy Wednesday, Chairman Ben Bernanke was asked whether the U.S. would ever think of taxing bank depositors as Cyprus has done. He said that was very unlikely but Jim Rickards, senior managing director of Tangent Capital Partners, says the Fed already has its hands in depositors’ pockets.

“Nobody is stealing more money from bank depositors than Ben Bernanke,” Rickards tells The Daily Ticker. Bernanke's doing that, Rickards says, by maintaining interest rates near zero.

“At this stage of a recovery normalized interest rates should be around 2-3%,” says Rickards. “Apply that 2-3% to the entire multi-trillion-dollar deposit base of the United States of America and that’s a $400-billion per year wealth transfer from savers to bankers so they can pay themselves bigger bonuses or make crazy bets.” Over time, Rickards says, that wealth transfer could reach $1 trillion.

These TWO back-to-back interviews are with the lovely and super smart Lauren Lyster.  Both run just under five minutes...and both are definitely worth watching...especially the second one that has to do with the proposed Texas gold depository.  I have a separate story about this further down.  I thank Casey Research's own 'Nick G' for sharing them with us.


What British 'austerity' would look like if we were in the eurozone

One thing that constantly amazes me reading the often self contradictory drivel which is written about the economic crisis is the way many commentators seem to apply one set of rules to the Eurozone and another to the UK.

Thus it is that the eurozone is criticised for applying too much austerity to fiscally challenged member nations but Britain is lambasted for not doing nearly enough.

The numbers outlined in Wednesday's UK Budget show that the Brits are complete wimps compared to the eurozone on fiscal austerity. Under the "Fiscal Compact", signed by all members of the European Union other than the Czech Republic and the UK, countries are obliged to adopt a "balanced budget rule" which stipulates that the annual structural deficit cannot exceed 0.5 per cent of GDP.

How does the UK measure up against these fiscal disciplines? Back of the class, I fear. By a very long way, we are the most unruly nation in Europe, worse, on the new forecasts produced on Wednesday, even than Greece.

This short blog by columnist Jeremy Warner appeared on The Telegraph's website yesterday...and I thank Roy Stephens for the first of many articles today.


Sarkozy charged with ‘exploiting’ L’Oréal heiress

Former French president Nicolas Sarkozy has been formally charged by a Bordeaux court with “exploiting the weakness” of the world’s richest woman, L’Oréal heiress Liliane Bettencourt, allegedly to illegally finance his 2007 election campaign.

Former French president Nicolas Sarkozy has been charged by a Bordeaux court with “exploiting the weakness” of the world’s richest woman, L’Oréal heiress Liliane Bettencourt, in a long-running scandal linked to illegal political donations.

The move came after Sarkozy was unexpectedly summoned for a face-to-face encounter with members of Bettencourt’s staff over claims he accepted envelopes stuffed with cash from Bettencourt, which were illegally used to finance his 2007 election campaign.

This news item was posted on the Internet site sometime yesterday...and it's Roy Stephens second offering in a row.


Pictures From a Cyprus ATM Line

For a few days, the people of Cyprus were calm, quietly and orderly accepting the unreality of the levy being imposed upon them - incredulous that it was even possible. As we reach the 4th day of bank closures, amid rolling rumors and ECB threats, it appears the people have reached a tipping point as this series of images from Cyprus ATM lines indicates - the bank-jog has arrived. When will it become a full blown sprint?

There are some great pictures embedded in this very short Zero Hedge posting from yesterday...and I thank reader David in California for sending it along.


Search for 'Plan B': ECB Sets Ultimatum as Cyprus Moves toward Deal

Saying it cannot guarantee emergency liquidity funding to Cypriot banks beyond Monday, the European Central Bank is pressuring Nicosia to find the 5.8 billion euros needed to ward off insolvency. Leading politicians on Thursday agreed to establish a "solidarity fund" and rejected any kind of bank levy.

That lack of foresight was on full display on Wednesday and again on Thursday morning as Cypriot President Nicos Anastasiades sought to find funding to replace the almost €6 billion that the levy was to raise. Negotiations with Moscow are continuing, with Cypriot Finance Minister Michalis Sarris telling reporters on Thursday that his country is not seeking additional loans, preferring instead to target investments in the banking and natural gas sectors.

The noose draws ever tighter.  This article appeared on the Internet site at noon Europe time yesterday...and it's courtesy of Roy Stephens.  The original title read "ECB delivers ultimatum to Cyprus as bailout talks continue".


End of an Era: Cypriot Financial Sector Faces Collapse

The disastrous financial situation in Cyprus is largely a result of the country's crumbling banks. For years, the island nation profited from its bloated financial sector, but now it will likely have to liquidate its two largest banks. In Nicosia, government leaders fear that could decimate the economy.

If Cyprus doesn't receive billions in foreign aid within a few weeks, the country will default by June at the very latest. But insolvency could come even sooner for the country's two largest banks. The Bank of Cyprus and Laiki Bank are only able to survive at the moment through emergency aid from the European Central Bank, which on Thursday threatened to cut off all liquidity on Monday if terms of a European Union bailout deal aren't finalized with the government in Nicosia.

The banks are actually the very core of Cyprus' problems at the moment. They are bloated, pumped full of Greek sovereign bonds and more or less already bankrupt. Without these banks, Cyprus wouldn't need to seek aid from the permanent euro bailout fund, the European Stability Mechanism (ESM). The banks' difficulties have destroyed Cyprus' reputation on the international financial markets and investors are no longer willing to lend to the country.

This is another story...this one from early yesterday afternoon Europe time.  It, too, had a headline it used to read "Leading Cypriot Banks Likely to face Insolvency".


Eurogroup boss: Cyprus levy is 'inevitable'

Eurogroup boss Jeroen Dijsselbloem told MEPs on Thursday (21 March) that Cypriot savers will have to lose money no matter what the final shape of the bailout deal.

"It is inevitable that there will be some kind of levy in the final deal," he said.

He described the proposed levy as "a tax measure, like a wealth tax."

He also said that Cypriot banks - which hold assets and liabilities worth eight times the country's GDP - will "have to be downsized and rebuilt on a healthy and sustainable business model."

This story, filed from Brussels early yesterday afternoon Europe time, was posted on the Internet site...and it's another offering from Roy Stephens.


Bank of Japan vows 'all means available' to smash deflation

"I will make an all-out effort to pull Japan's economy out of deflation," he said on his first day in office, promising to push through the revolutionary agenda of premier Shinzo Abe, which has that have set off a blistering 40pc rally on the Tokyo bourse since November.

"The BoJ must expand monetary stimulus both in terms of volume of assets it buys and type of assets it targets, and push down yields across the curve," he said.

Mr Kuroda is the spearhead of "Abenomics", a double-barrelled blast of monetary and fiscal stimulus modelled on the reflation policies that lifted Japan out of the Great Depression in the early 1930s.

He brushed aside criticism last week by his predecessor Masaaki Shirazawa that the extra money would leak into a financial bubble, saying the "spill-over effects" on assets were worth the risk to break out of fatalistic perma-slump.

This Ambrose Evans-Pritchard commentary was posted on the Internet site early yesterday afternoon GMT...and it's Roy's final offering in today's column, for which I thank him.


Five King World News Blogs/Audio Interviews

The first interview is with James Turk...and it's titled "Cyprus Crisis Escalates - Banks May Remain Closed For Weeks".  In second spot is this interview with Jim Sinclair...and it's entitled "Lagarde's IMF Disaster Forces Bernanke Out of Fed".  Next is Gerald Celente...and his interview is headlined "The Financial System is Collapsing Before Our Eyes".  The fourth blog is with Michael Pento.  It bears the title "Expect Stunning Global Expansion of Government Theft".  The audio interview is with Michael Pento...and they talk about gold quite a bit.


Rick Rule: Dollar's Decline and Low Current Prices Should Aid Commodities

This commentary by Rick was posted on the "Sprott's Thoughts" website at yesterday...and is well worth your time.


Meeting with Jim Sinclair: March 20, 2013...New York City

On Wednesday, Jim Sinclair spent over 5 hours in a question and answer session in New York City. He covered the implications of Cyprus proposing to confiscate as much as 10% of depositor wealth directly from bank accounts, as well as his views on a wide variety of subjects related to gold.

Mr. Sinclair is a 50 year veteran of the gold markets, and one of the most respected voices in the gold community. While we do not always agree 100% with Mr. Sinclair’s views, my personal observation is that he is genuinely concerned for the well-being of others when it comes to wealth preservation through gold.

What follows is a summary of what Mr. Sinclair had to say on these issues. Please bear in mind that this is being re-constructed from hand notes. If a phrase appears in quotes, it is verbatim, otherwise I am paraphrasing.

This information was posted on the Internet site yesterday...and is definitely worth reading.  I thank reader Eldon Johnson for sharing it with us.


India Gold intake seen near 1,000 tons this year

After an arid 2012, gold consumption in India, world's largest gold consumer, may climb near 1,000 tons this year, according to a top WGC official.

India's recent efforts to discourage gold consumption will not affect gold's cause, said Somasundaram P.R., managing director of the World Gold Council for India.

Consumption may total 865 metric tons to 960 tons this year, compared with 864.2 tons in 2012, he said.

“Imports should be higher this year according to initial estimates based on the trend in the fourth quarter of last year and as the economy grows,” Somasundaram said.

This article was filed from Mumbai...and posted on the Internet site late Thursday afternoon India Standard Time...and I thank Marshall Angeles for finding it for us.


You can stop worrying about ETF outflows now. Indian gold imports have surged 41%

A steep hike in gold import duties did nothing to curb demand and Indians bought 51% more bars and coins and 35% more gold jewelry in the quarter ended December than a year before.

India's finance ministry raised import duties from 2% to 6% to curb a crippling current account deficit, but overall consumption in India nevertheless surged 41% to 262 tonnes in the fourth quarter.

While market watchers in the West have been focusing on record-setting outflows from gold-backed ETFs (and India has not been immune to the phenomenon) the subcontinent's appetite for physical gold were not even diminished by record high prices above R32,000 for the precious metal inside the country.

This story has some similarities to the previous story filed from Mumbai...but there are differences as well...and that makes it worth reading.  It's the second offering in a row from Marshall Angeles, for which I thank him.  This one was posted on the Internet site yesterday.


Gold Giants Shrink to Fit as Paulson Pushes Breakup

The 10 biggest gold companies led by Barrick Gold Corp. spent more than $100 billion in the past 20 years buying new mines and projects around the globe. Now they’re feeling pressure to throw the strategy into reverse.

Gold Fields Ltd. spun off most of its South African assets in February. Billionaire hedge-fund investor John Paulson is calling for a breakup of Johannesburg-based AngloGold Ashanti Ltd. Barrick, which has 27 mines, is selling assets after an acquisition and cost overruns helped erase $27 billion of the Canadian company’s market value.

A Bloomberg Index of 14 large gold miners has lost 26 percent in the past year, worse than the 6.8 percent drop in a similar gauge of global oil companies. The gold industry, which underperformed the metal for five of the last seven years, has tried to stop the slide by ending gold-price hedges, raising dividends, building new mines and, most recently, pledging spending discipline. Spinning off or selling assets may be its next option.

This is all absolute b.s. of course.  It has nothing to do with the size of the mining company...and everything to do with the price of the metals they dig out of the ground.  As long as JPMorgan et al are allowed to control the price of the precious metals on the Comex futures market, it matters not what the size of the company is...small, medium or large.  It's hard to believe that none of these mining company executives will step up the plate and say what has to be said.  As I said in this column a while back...the precious metal mining executives must be required to check their testicles at the door when they show up for work every day.

This story, filed from Toronto, was posted on the Bloomberg website very early yesterday morning...and I thank Washington state reader S.A. for his second story in today's column.


Tarrant County lawmaker seeks to create Texas Bullion Depository

Call it the Rick Perry gold rush: The governor wants to bring the state's gold reserves back from a New York vault to Texas.

And he may have legislative support to do it. Freshman Rep. Giovanni Capriglione, R-Southlake, is carrying a bill that would establish the Texas Bullion Depository, a secure state-based bank to house $1 billion worth of gold bars owned by the University of Texas Investment Management Co., or UTIMCO, and stored by the Federal Reserve.

The idea isn't entirely new. Some Republicans worked on a gold bill last session that was never filed. And gold-standard-backing Ron Paul, the former Lake Jackson congressman, has raised repeated concerns about the safety of states' gold supplies.

"If you think gold is a hedge, or a protection, you always want it as close to the individual and the entity as possible," Paul told The Texas Tribune on Thursday. "Texas is better served if it knows exactly where the gold is rather than depending on the security of the Federal Reserve."

This must read story was originally posted in The Texas Tribune yesterday...but this link is from the Internet site out of Fort Worth.  The second of the two Jim Rickards interviews posted further up in the 'Critical Reads' section refers to this story...and that's why it deserves your undivided attention.  As Jim said, if this passes, it's most likely a game-changer.



¤ The Funnies

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¤ The Wrap

The big take away [from the civil lawsuit against JPMorgan] is that the filing of the civil case was unprecedented in that no government case preceded it. The main reason why this occurred was because the CFTC refuses to acknowledge the obvious, namely, that it is growing common knowledge that silver is manipulated in price by JPMorgan and the agency is in some sort of cahoots with JPM to allow the manipulation to continue. The ongoing CFTC silver investigation was initiated two years before the civil case was brought in November 2010. The civil case should have been patterned after the same issue of concentration that the CFTC still can’t address, namely, how can a U.S. bank holding 30% of a market not be manipulative to the price? - Silver analyst Ted Butler...20 March 2013

With volume so low again yesterday, I wouldn't read too much into yesterday's price action, because as Ted Butler pointed out, the gold and silver markets are very illiquid...and it doesn't take much to move them when that's the case.

I thought I'd take this opportunity to stick in the five most important paragraphs from Bill Buckler's  What he has to say was true back when he first wrote these words...and are equally true, if not more so, now...and he hasn't change a single word of it in almost fifteen years.

"In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a political metal. In the true meaning of the word, its price is "governed".

"This is so for the very simple reason that Gold in its historical role as a currency is fundamentally incompatible with the modern worldwide financial system.

"Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is no escape because no paper currency has any link to Gold.

"All of the economic, monetary, and financial upheaval of the past 42 years is a direct result of this fact.

"The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold.

Today we get the latest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday...and I'll have all the details in Saturday's column.

There was little action in Far East and early London trading on their respective Fridays.  Volumes are light once again...and the dollar index isn't doing much, either.  Both metals are down a hair, but I wouldn't read much into that based on the volume.

As for what might happen during the New York session today, I haven't a clue.  It's a Friday, so I'll pretty much be prepared for any eventuality when I switch on my computer later this a.m.

Have a good weekend...or what's left of it if you live west of the International Date Line...and I'll see you here tomorrow.