Gold & Silver Daily

¤ Yesterday In Gold & Silver

It was pretty quiet in the gold market on Monday---and by the time the London a.m. gold fix was in at 10:30 a.m. GMT, the gold price was up about eight bucks or so, which was its high of the day---and from there gave back a bit of that 'gain' going into the 5:15 p.m. close of electronic trading in New York.  Not much to see here---and the low and high ticks certainly aren't worth the effort to look up.

Gold closed in New York on Monday at $1,238.70 spot, up $5.40 from Friday.  Net volume was very light at only 85,000 contracts.

The price activity in silver had far more structure to it.  After trading more or less flat until early afternoon in Far East trading, the silver price developed a positive bias which became far more pronounced starting just before 9 a.m. in London.  The high tick, just over $17 spot, came at the London a.m. gold fix---and from there it got sold down until 9 a.m. EST in New York.  Then away it went to the upside once again, hitting its high tick of the day just minutes after 10:30 a.m. EST.  From there it got sold back down below $17 spot for the second time.

The low and high ticks were reported by the CME Group as $16.685 and $17.145 in the March contract.

Silver finished the Monday trading session at $16.97 spot, up 28.5 cents from Friday's close.  Net volume was only 27,500 contracts.

Platinum made several rally attempts that got nowhere in early morning trading in the Far East on their Monday morning---and the high tick came about an hour after Zurich opened, with the low coming minutes after 2 p.m. Zurich time---and about twenty-five minutes or so before the COMEX open in New York.  It recovered a few dollars off that low in the first few hours of trading in New York---and then did nothing for the remainder of the day.  Platinum was closed at $1,216 spot, down 4 bucks from Friday.

Palladium followed a very similar patter to platinum, except its low came at noon in New York.  Palladium closed at $777 spot, down 5 bucks on the day.

The dollar index closed late on Friday afternoon in New York at 94.67---and with the exception of an almost 50-basis point up/down move in the 3-hour period between 10:00 a.m. GMT and 10:00 a.m. EST, the index chopped quietly lower all day long on Monday.  It finished the session at 99.51---down 16 basis points from Friday's close.

The gold stocks opened up a bit---and continued to rally until about 10:35 a.m., which was gold's high tick in New York.  After that they got sold off a bit---and then chopped sideways into the close.  The HUI finished the Monday trading session up 1.34 percent.

The silver equities followed a similar path---and their highs came at the same time as the highs in the gold stocks---and the silver price as well. After that they chopped sideways, but in a much larger range than their golden brethren.  Nick Laird's Intraday Silver Sentiment Index closed up 1.81 percent.

The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

The CME Preliminary Report for the Monday trading session showed that 111 gold contracts disappeared from February's open interest number, leaving 675 contracts still open.  Silver's February o.i. dropped 5 contracts to 20 contracts.

There were no reported changes in GLD yesterday---and as of 10:04 p.m. EST yesterday evening, there were no reported changes in SLV, either.

I was expecting the folks over at the Internet site to update the short positions in both GLD and SLV for the last two weeks of January, but as of 4:20 a.m. EST this morning, nothing had been posted on their website.  Maybe later today.

There was a decent sales report from the U.S. Mint yesterday.  They sold 2,500 troy ounces of gold eagles---1,500 one-ounce 24K gold buffaloes---and 395,000 silver eagles.

There was a decent amount of gold movement at the COMEX-approved depositories on Friday.  All of it was at Scotiabank's vault, as 5,281 troy ounces were received---and a chunky 99,864 troy ounces were shipped out.  The link to that activity is here.

And it as another big day in silver movement, the second one in a row.  Only 7,124 troy ounces were reported received, but 1,352,494 troy ounces were shipped off for parts unknown.  The link to that action is here.

Here's a chart that Dan Lazicki sent our way early Monday morning EST.  It shows how gold has performed against the S&P from 07 November 2014 up until 30 January 2015.

So far it's no contest, but the graphs doesn't include last Friday's engineered price decline.  And I suspect there are more to follow.  But for the moment, this graph is still accurate.

Since this is my Tuesday column, I have more than the usual number of stories that I've accumulated over the weekend---and I hope you have the time to read the ones that interest you.  I should also point out that I have a decent number that fall into the must read category as well.


¤ Critical Reads

Stunning Chart of the Day: For the First Time Ever, Central Banks Will Monetize More Than 100% of Global Sovereign Debt

Over the past two years we explained how in a time of ubiquitous central bank debt monetization, the amount of global sovereign bonds available for purchase - when taking into account CB purchases - has been declining at an ever faster pace, leading to a collapse in liquidity (something the TBAC warned about in the summer of 2013, leading to the Fed's taper and subsequent temporary halt of QE3), and - naturally - to soaring bond prices (and plunging yields). The latter has reached epic proportions recently, and resulted in $3.6 trillion in global government debt, 16% of total, that is now trading at negative yields.

But not even we had any idea just how bad it really would get.

One look at the Morgan Stanley chart shows the net issuance of government debt in 2015, which will not only be the lowest in history, but - for the first time ever - be negative, explains all one needs to know.

For the first time ever, "developed" central banks are now monetizing more than 100% of global sovereign debt issuance!

This brief Zero Hedge piece from 10:38 a.m. EST on Monday morning contains a chart that's definitely worth looking at---and I thank Dan Lazicki for today's first news item.


The World's Best Known Global Shipping Index has Crashed to Its Lowest Level Ever

Having fallen for 47 of the last 51 days, The Baltic Dry Index (tracking the cost of shipping dry bulk from iron ore to grains) has been collapsing in a well-documented manner by Zero Hedge (though not the mainstream media). With Cramer having told investors of its importance previously, it will be hard to ignore the fact that, as of this morning, the index of global shipping costs has never (ever) been lower at 554. We leave it to readers to decide what they think this means (but we already know what it means for shippers and ship-building companies).

Recovery? "Crisis has passed?" You decide...

This is another tiny Zero Hedge piece with is also worth reading---and it's also courtesy of Dan Lazicki.


U.S. scrutiny of Barclays and UBS widens forex trading probe

The U.S. Department of Justice is scrutinising currency-linked investments marketed by Barclays and UBS in an indication that the sprawling global probe into the foreign exchange market may become more troubling for banks.

The department is examining whether the two banks sold so-called structured products without disclosing the profit they were making from currency trades used to generate the products' returns, said people familiar with the investigation. These products were sold to sophisticated investors, including several Swiss hedge funds.

The above two paragraphs are all there is that's posted in the clear in this Financial Times story from London on Sunday---and I found it embedded in a GATA release.


New alarm bells over household debt in Canada

As Canada’s economy begins to slow, the country’s growing household debt burden is raising new concerns as it outpaces that of most developed countries.

In fact, Canada had the second-biggest jump in household debt-to-income ratios of any country other than Greece between 2007 and the second quarter of 2014, a new study says.

Canada and Australia along with a number of countries in northern Europe “now have larger household debt burdens than existed in the U.S. or the U.K. at the peak of the credit bubble,” according to a new analysis.

The McKinsey Global Institute looked at 47 countries and identified seven with “potential vulnerabilities” in household debt that could lead to financial instability and a consumer spending slowdown: the Netherlands, South Korea, Sweden, Australia, Malaysia, Thailand – and Canada.

This news item appeared on the Globe and Mail website last Thursday---and I thank reader Ken Metcalfe for bringing it to our attention.


The Canadian Housing Market in 6 Simple Charts

The Canadian housing market is very expensive.

Median house price to median household income is higher in Vancouver than it is in Sydney, London, and New York.

Canadian households – unlike their US counterparts – never deleveraged after the financial crisis.

Credit is growing a lot faster than income is---and there’s a lot of supply coming onto the market.

I know from painful personal experience on several occasions during my 27 years in residential real estate that a big rise in listings is always a harbinger of collapse in the real estate market---both in sales volume and price.  This is another Zero Hedge article.  This one showed up on their Internet site at 4:15 p.m. EST on Saturday---and it's worth a minute of your time because the first two charts show real estate statistics for a whole list of counties.  I thank reader U.D. for sending it our way.


Britain faces £200 billion oil loss

In a stark warning to the Government over the future of the North Sea, one of the oil industry’s leading figures, has warned that 6bn barrels of oil reserves – a third of what remains under the seabed – worth £200bn may be abandoned unless radical steps are taken to reform the tax regime for offshore drilling.

In an exclusive interview with The Sunday Telegraph in Aberdeen, Sir Ian Wood, a billionaire Scottish oil expert, said: “The danger is that if we lose momentum now and lose recourses and assets, and don’t get the fiscal regime fit for a quite highly mature area, we will come down to 10-11bn (oil reserves). That’s a huge economic loss and jobs loss for the UK.”

In a report for the Government published last year on how to maximise recovery of oil from the North Sea, Sir Ian said that the estimated reserves that could still be produced from the province were in excess of 16bn barrels of crude. However, Sir Ian – founder of Wood Group, one of the UK’s largest oil and gas engineering companies – now believes there is a danger that $50 oil prices could lead to the early decommissioning of North Sea facilities and the loss of 6bn barrels of oil. The move would mean a potential £200bn loss to the British economy in revenue and investment.

This very interesting oil-related story appeared on The Telegraph's website at 8:05 p.m. GMT on Saturday evening---and it's the first contribution of the day from Roy Stephens.


Head of Largest Swiss Cantonal Bank Says Swiss Capital Controls Are "Certainly Possible"

On Saturday, when we reported that the SNB had hinted at that most dreaded of possibilities for central planners, one which always implies full loss of central bank credibility, namely capital control, for some inexplicable reason various readers and even contributors ("Another misleading headline by the Tylers. What yellow journalism") got offended that we dared to point out that the central bank which two days before it crushed FX traders by ending its CHF cap had sworn that "we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy."

Turns out "yellow journalism" as some call it - usually those who have conflicts of interest and/or put trades in the opposite direction - was spot on once again. Because if Saturday, the SNB's Jordan merely hinted at capital controls when as he was quoted by Bloomberg (not Reuters), as saying that capital controls "was not a measure that is at the forefront at the moment",which as we explained "the best way to admit the possibility of capital controls is to not explicitly, and unequivocally reject them. That there is even a possibility of capital controls in a  central bank's arsenal, and everyone suddenly begins to pay attention" then today the head of the largest Swiss cantonal bank, and the fourth largest Swiss Bank, the Zurich Cantonal Bank or ZCB, came out and explicitly said what so many fear (and which warning they would ascribe to as the case may be "yellow journalism"), namely that "lowering Swiss National Bank’s already negative interest rate further or implementing capital controls would be "dramatic" but "certainly possible."

This Zero Hedge article put in an appearance on their website at 9:31 a.m. EST on Sunday morning---and once again I thank South African reader B.V. for sending it along.


HSBC files show how Swiss bank helped clients dodge taxes and hide millions

HSBC’s Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities, according to a huge cache of leaked secret bank account files.

The files – obtained through an international collaboration of news outlets, including The Guardian, the French daily Le Monde, BBC Panorama and the Washington-based International Consortium of Investigative Journalists – reveal that HSBC’s Swiss private bank:

• Routinely allowed clients to withdraw bricks of cash, often in foreign currencies of little use in Switzerland.

• Aggressively marketed schemes likely to enable wealthy clients to avoid European taxes.

• Colluded with some clients to conceal undeclared “black” accounts from their domestic tax authorities.

• Provided accounts to international criminals, corrupt businessmen and other high-risk individuals.

Wow!  And as ugly as this 2-part story from The Guardian is that showed up on their website at 9 p.m. GMT yesterday evening---which I thank Dan Lazicki for sending along---the Zero Hedge spin on this is even more sensational.  The headline over there reads "If Your Name Is On This List, Prepare To Be Audited (Or Worse)".  And what a list it is!  I thank Dan for sending us that story as well---and both are worth your time.


Greece's leaders stun Europe with escalating defiance

Greece’s finance minister Yanis Varoufakis has spelled out the negotiating strategy of the Syriza government with crystal clarity.

“Exit from the euro does not even enter into our plans, quite simply because the euro is fragile. It is like a house of cards. If you pull away the Greek card, they all come down,” he said.

“Do we really want Europe to break apart? Anybody who is tempted to think it possible to amputate Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us? Portugal? What would happen to Italy when it discovers that it is impossible to stay within the austerity straight-jacket?”

“There are Italian officials – I won’t say from which institution - who have approached me to say they support us, but they can’t say the truth because Italy is at risk of bankruptcy and they fear the consequence from Germany. A cloud of fear has been hanging over Europe over recent years. We are becoming worse than the Soviet Union,” he told the Italian TV station RAI.

This commentary by Ambrose Evans-Pritchard showed up on the Internet site at 4:39 p.m. GMT Monday afternoon---and it's courtesy of Roy Stephens.


Greece: Greenspan predicts exit from euro inevitable

Greece wants to re-negotiate its bailout, but Mr Greenspan said "I don't think it will be resolved without Greece leaving the eurozone".

Earlier, U.K. Chancellor George Osborne said a Greek exit would cause "deep ructions" for Britain.

Mr Greenspan, chairman of the Federal Reserve from 1987 to 2006, said: "I believe [Greece] will eventually leave. I don't think it helps them or the rest of the eurozone - it is just a matter of time before everyone recognises that parting is the best strategy.

"The problem is that there there is no way that I can conceive of the euro of continuing, unless and until all of the members of eurozone become politically integrated - actually even just fiscally integrated won't do it."

This news item was posted on the Internet site at 1:50 p.m. EST on Sunday afternoon---and it's courtesy of South African reader B.V. once again.  There was also the Zero Hedge spin on this---and it's headlined "Alan Greenspan: "Greece Will Leave The Eurozone" And "There Is No Way That I Can Conceive Of The Euro Continuing"".  I thank Dan Lazicki for sharing it with us. 


U.K. planning for possible Greece exit from the eurozone

The prime minister this morning chaired a meeting of senior officials to discuss the impact on the UK of possible Greek exit from the eurozone - and to take steps to ensure British banks and companies would not be excessively damaged.

Attended by the head of the Treasury, Nick Macpherson, the Treasury's director of financial stability, Lowrie Kahn, and the Bank of England's international director Phil Evans, David Cameron asked for information on the impact on Greece and the rest of the eurozone of Greece leaving the eurozone.

The chancellor did not attend, because he is on his way to the G20 meeting in Istanbul - though he has been kept in the loop on discussions.

There was agreement that the probability of Greece adopting a new currency had increased, as per my column of this morning. However those attending still believe that some kind of compromise between Athens and other eurozone governments can be reached to keep Greece in the euro.

This commentary appeared on the Internet site at 5:48 a.m. EST yesterday morning---and I thank reader B.V. for finding it for us.


The New York Sun: Return of the drachma?

A Greek exit from the euro is looking more likely to the economist David Malpass, according to the latest cable from the sage of Encima Global---

We can't wait---

Greece may present us for the first time since the introduction of the euro a crisis of legal tender---

The drachma apparently started as iron and moved, at its apogee, to gold and silver, much like the dollar at its apogee. We understand what a long-shot it is, but our own view is that the exit of Greece from the euro represents an opportunity to re-establish the glory of Greece on the back of an honest drachma.

This introduction to the editorial in yesterday's edition of The New York Sun was written by Chris Powell---and the editorial itself falls into the must read category.  It almost goes without saying that it's a story I found on the Internet site.


Russia sanctions have cost E.U. €21 billion, says Spain

The E.U. has suffered €21 billion in lost exports as a result of sanctions against Russia over Ukraine, Spain's foreign minister said Monday as he met his counterparts to discuss further measures.

"Sanctions have had a heavy cost for us all, the E.U. has so far lost €21 billion (US$23.7 billion). In Spain we have been badly hit in terms of agriculture and tourism," said Jose Manuel Garcia-Margallo, giving the first figure of its kind for the E.U.

That's all there is to this tiny AFP story that appeared on the Internet site at 11:45 a.m. Europe time yesterday morning, which was 5:45 a.m. EST.


Europe Fractures: France Pivots to Putin, Cyprus Offers Moscow Military Base, Germany-U.S. Splinter on Ukraine

Following Saturday's summary of the utter farce that the Minsk Summit/Ukraine "peace" deal talks have become, the various parties involved appear to be fracturing even faster today. The headlines are coming thick and fast but most prescient appears to be: Despite John Kerry's denial of any split between Germany and US over arms deliveries to Ukraine, German Foreign Minister Steinmeier slammed Washington's strategy for being "not just risky but counterproductive."

But perhaps most significantly is France's continued apparent pivot towards Russia... Following Francois Hollande's calls for greater autonomy for Eastern Ukraine, former French President Nicolas Sarkozy has come out in apparent support of Russia (and specifically against the US), "we are part of a common civilization with Russia,” adding, "the interests of the Americans with the Russians are not the interests of Europe and Russia."

Even NATO appears to have given up hope of peace as Stoltenberg's statements show little optimism and the decision by Cyprus to allow Russia to use its soil for military facilities suggests all is not at all well in the European 'union'.

German Foreign Minister Frank-Walter Steinmeier doubled down on Germany's rejection of weapons deliveries to Ukraine in a speech here Sunday.

This Zero Hedge story was posted on their website at 9:30 p.m. EST on Sunday evening---and it's another contribution from Roy Stephens.  It's certainly worth skimming.


Lavrov: U.S. escalated Ukraine crisis at every stage, blamed Russia

Sergey Lavrov has lashed out at the U.S. for their double standards over Ukraine and taking steps that “only promoted further aggravation” of the conflict. He added Russia is ready to guarantee agreements between Kiev and the self-proclaimed republics.

One of the major sticking points of the crisis so far has been the failure of Kiev to engage in talks with militia leaders in the East of the country. Lavrov is staggered the U.S., who talked with the Taliban during their invasion of Afghanistan, through channels in Doha, Qatar, is unable to put pressure on Kiev to engage in discussions.

“In the case of Libya, Afghanistan, Iraq, Yemen and Sudan our partners actively asked governments to enter into dialogue with the opposition, even if they were extremists. However, during the Ukrainian crisis, they act differently, making up excuses and try to justify the use of cluster bombs,” the Russian Foreign Minister said, who was speaking at a security conference in Munich on Saturday.

This longish commentary, including the 44-minute speech by Sergey Lavrov, appeared in this Russia Today article posted on their website at 11:19 a.m. Moscow time on their Saturday morning, which was 3:19 a.m. in New York.  I thank reader M.A. for sending it.  A transcript of Lavrov's speech, along with the Q&A that followed, was posted on the Internet site on Saturday as well.  It's headlined " Lavrov's Munich speech (full transcript): "There is a strong irritant in the Euro-Atlantic, which we will have to get rid of"---and it's courtesy of Roy Stephens.


That Didn't Take Long: The First Lie about Moscow Meeting

Not much has filtered out of the Medusa Merkel/General Hollande/Vlad tense threesome in Moscow. And yet John Kerry, as usual, is already lying through his teeth about their trip to the Kremlin. 

He said Putin had sent “a couple of ideas” to France and Germany, and Merkel/Hollande were responding. Nonsense: Merkel/Hollande – in desperation – went to Moscow to talk to Putin because Putin has the ONLY possible plan to stabilize Ukraine - and that has been the case for months now.

Otherwise, there WILL be war, which is exactly what Empire of Chaos masterminds in D.C. want.

Kerry lied the extra mile when he said the US wanted a diplomatic solution. BUT then came the usual talk of “reviewing all options”, including “the possibility of providing defensive systems to Ukraine”.

This 'right on' Pepe Escobar article appeared on the Internet site on Saturday---and it's definitely worth reading.  I thank South African reader B.V. for sending it our way.


Ukraine deal 'a last chance’ to avoid war, Hollande says

A day after French President François Hollande and German Chancellor Angela Merkel presented a new peace plan to Russia's Vladimir Putin in Moscow, Hollande on Saturday called the proposal "one of the last chances" to avoid war in east Ukraine.

“I think this is one of the last chances, that’s why we took this initiative,” Hollande said, speaking of talks held in conjunction with Putin and German Chancellor Angela Merkel.

Speaking on France 2 television on Saturday, Hollande said the plan under negotiation would see a 50- to 70-kilometre (31- to 44-mile) demilitarised zone established.

He also called for "rather strong" autonomy in parts of east Ukraine.

This story appeared on the Internet site on Saturday sometime---and it's another offering from Roy Stephens.


Officials Step Out Against U.S. Arms to Ukraine, Warn of Escalation

Foreign Ministry officials from across the European Union spoke out against Washington's proposed provision of weaponry to Kiev on Monday.

The officials' statements echoed those of Germany and France, the union's political and economic power brokers, whose officials noted over the weekend that the provision of arms would exacerbate the situation and provoke Russia.

Speaking at the Munich Security Conference on Saturday, German Chancellor Angela Merkel noted that "the progress Ukraine needs won’t be achieved with more weapons.” She noted that in her view, "there is no way to win this militarily  – that’s the bitter truth," and that "the international community has to think of a different approach."

In meetings with the Ukrainian and Russian leadership last week, Merkel and French President Francois Hollande presented a plan for peace in Eastern Ukraine, involving a 50-70 kilometer demilitarized zone, along with autonomy for the area, Hollande told French television on Saturday.

This news story put in an appearance on the website at 4:25 p.m. Moscow time on their Monday afternoon---and I thank reader B.V. for sharing it with us.


Obama, Merkel display ‘tactical disagreements’ over Ukraine

The option of supplying Kiev with “lethal defensive weapons” is on the table, Barack Obama said in a joint press conference with Angela Merkel. However, the German chancellor reiterated there is no “military solution” to the conflict in eastern Ukraine.

“The possibility of lethal defensive weapons is one of those options that’s being examined,” the US president said during a joint press conference with Merkel in Washington.

“I want to emphasize that a decision has not yet been made,” Obama said when questioned about weapons a second time. “It is true that if, in fact, diplomacy fails, what I’ve asked my team to do is to look at all options. What other means can we put in place to change Mr. Putin’s calculus?”

Merkel – who conducted direct negotiations with Vladimir Putin in Moscow last week, alongside French President Francois Hollande – struck a less antagonistic, if equally firm, tone.

“We continue to pursue a diplomatic solution, although we have suffered a lot of setbacks. But, I've always said I don't see a military solution in this conflict,” she said through a translator.

This Russia Today story turned up on their Internet site at 12:01 a.m. Moscow time on their Tuesday morning---which was 4:01 p.m. yesterday afternoon in New York.  Roy Stephens slid it into my in-box late yesterday evening Denver time.


50,000 casualties in Ukraine? German intelligence service calls Kiev’s 6,000 toll ‘not credible’

The German intelligence service estimates the real losses in the Ukrainian civil war at 50,000 dead (civilians and servicemen), which is nearly 10 times higher than reported by the Kiev authorities, German media report.

The information comes from a source in German intelligence, who spoke to the Frankfurter Allgemeine Sonntagszeitung (FAZ) newspaper.

“Germany’s special services estimate the probable number of deceased Ukrainian servicemen and civilians at up to 50,000 people. This figure is about 10 times higher than official data. Official figures are clearly too low and not credible,” the newspaper reported on Sunday, citing its source.

This very interesting story appeared on the Russia Today website at 1:53 p.m. Moscow time on their Sunday afternoon, which was 5:53 a.m. in New York.  The story is courtesy of Roy Stephens.


Lavrov: Russia ready to restore NATO contacts as soon as bloc is

Russia is ready to restore contacts with the NATO, when the alliance itself is ready to do the same, Russian Foreign Minister Sergey Lavrov said before leaving the Munich Security Conference.

World leaders gathered in Munich this weekend to discuss the most pressing security issues. During the conference NATO members expressed interest in continuing dialogue with Russia, Lavrov told reporters on Sunday, adding that their interest included military contacts and air space coordination.

However, the most pressing topic of the conference was the Ukrainian crisis in the eastern regions, which has escalated since January. Regarding Kiev’s aspirations to join NATO, Lavrov expressed hope that the US-led bloc's ardent support would not do the Ukrainian government a disservice.

This is another article from the Russia Today website.  This one was posted there at 5:38 p.m. Moscow time on their Sunday afternoon---and it's another story from Roy Stephens.


Pepe Escobar: The Dirtiest Secret of the War on Terror

Out of the bowels of a U.S. maximum-security prison in Florence, Colorado, al-Qaeda operative Zacarias Moussaui, currently serving a life sentence, providentially has shed light on what amounts to the dirtiest secret of the “war on terror”.

In over 100 pages of testimony, filed in a federal court in New York earlier this week, Moussaui drops several House of Saud-related bombs. Not least that among leading al-Qaeda donors prior to 9/11 we find former Saudi intel chief Prince Turki al-Faisal (also a former great buddy of Osama bin Laden); notorious former ambassador to the US and failed sponsor of hardcore jihadis in Syria, Prince Bandar bin Sultan, aka Bandar Bush; darling of Western markets (and Rupert Murdoch) Prince al-Waleed bin Talal; and a who’s who of Saudi Arabia’s top Wahhabi clerics. 

None of this is any novelty for those among us who since Afghanistan in the 1980s have been following the extraordinarily murky adventures of Wahhabi-sponsored/derived jihadism.

The information is even more relevant when compared to an upcoming book by Michael Springmann — the former head of the U.S. visa section in Jeddah, Saudi Arabia. In Visas for al-Qaeda: CIA Handouts that Rocked the World, Springmann essentially details how, “during the 1980s, the CIA recruited and trained Muslim operatives to fight the Soviet invasion of Afghanistan. Later, the CIA would move those operatives from Afghanistan to the Balkans, and then to Iraq, Libya, and Syria, traveling on illegal U.S. visas. These U.S.-backed and trained fighters would morph into an organization that is synonymous with jihadist terrorism: al-Qaeda.”

This short commentary by Pepe easily falls into the absolute must read category---and it showed up on the Internet site early Friday afternoon Moscow time---and U.K. reader Tariq Khan sent it our way on Sunday.


Michael Greenberger: Setting the Stage for the Next Financial Crisis

Proprietary trading by Wall Street banks precipitated the 2008 financial crisis that resulted in a near 13 trillion dollar bailout by American taxpayers of Too Big To Fail financial institutions.  As early as 2007, Morgan Stanley lost $9 billion dollars due to bullish bets on complex derivatives related to mortgages and in 2008 American International Group famously lost billions of dollars betting on complex derivatives. Similarly, toward the end of 2008, Merrill Lynch lost nearly $16 billion and Deutsche Bank lost nearly $2 billion due to complex bets on risky securities. Additionally, JPMorgan's $9 billion loss on a giant derivatives trade made by its London trading desk known colloquially as the London Whale is a stark reminder that proprietary trading by Too Big To Fail financial institutions poses an acute risk to U.S. financial markets and exposes U.S. taxpayers to the risk of future bank bailouts.

The whole rationale for what ultimately became known as the “Dodd-Frank” bill was to prevent a recurrence of the 2008 crisis.  Has it served its purpose?  No, according to Michael Greenberger, a Professor at the University of Maryland Francis King Carey School of Law, and a former top official with the Division of Trading and Markets at the Commodity Futures Trading Commission (CFTC) working directly for then-Chairperson Brooksley Born. He focused on issues relating to financial regulation and derivatives.

In the interview below, Professor Greenberger discusses the current state of play of regulatory reform and gives a barely passing grade. He argues that investors have little confidence in banks because they’ve grown since the financial crisis and have managed to delay or water down much of the most robust regulatory proposals initially outlined in the wake of the crisis.

Wow!  If you want to really find out what happened to Gary Gensler and Bart Chilton at the CFTC as they began to pick away at the silver price suppression scheme by JPMorgan et al---here's all you need to know.  Even Ted Butler was amazed by it. This 17-minute video interview with Michael Greenberger, as conducted by Marshall Auerback, falls into the absolute must watch category---and I thank Ken Metcalfe for his second offering in today's column.


The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank

Apart from melted coins from Europe, there is another significant source of coin bars, namely the coin bars produced from U.S. gold coins that were melted down during the U.S. gold confiscation period circa 1933-1934.

Some of the U.S. Treasury’s coin bars originated from this gold coin confiscation and melting period, and these coin bars were then shipped to the U.S. Mint’s Fort Knox facility in Kentucky when it opened in 1937.

The authoritative source for information on the different producers of gold bars worldwide is a company called Grendon International who have a web site called This web site produces guides explaining the whole spectrum of gold bar varieties.

In its U.S. Assay Office gold bar guide, Grendon states:

“It is understood that the bars (produced by the US Mint / AssayOffices) had a minimum purity of 995+ parts gold in 1,000 parts, with the exception of those 400 oz bars that contained “Coin Gold”.

“Coin Gold” 400 oz bars were manufactured by melting down and then casting into bars gold coins that had been withdrawn from public circulation, mainly as a result of the prohibition in 1933 of private gold ownership in the United States. The gold purity of these bars reflected the purity of U.S. gold coins, usually 900 or 916 parts gold in a 1,000 parts.

I hate to do it to you again, dear reader, but this impressive piece of investigative reporting by commentator Ronan Manly falls into the absolute must read category as well.  It was posted on their Internet site on Monday---and I than Dan Lazicki for bringing it to my attention---and now to yours.


Koos Jansen: Second Thoughts on U.S. Official Gold Reserves Audits

What is not often covered in the media or blogosphere are the audits of the U.S. official gold reserves stored at the U.S. Mint, which is the custodian for 95 % (7716 tonnes) of the stash – also referred to as deep storage, and at the Federal Reserve Bank Of New York that safeguards the remaining 5 % (418 tonnes). The lawful owner of the U.S. official gold reserves is the U.S. Treasury. Part one covered the most recent records I could find published by the US government, in this post we’ll examine more historical records and approach this matter from a more critical angle. Because of the amount of information I found this post is split in multiple parts.

Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment, which is communicated through his audit report.

Due to constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits.

To be sure, I’ve asked several bullion dealers about how their audits are being conducted. They all agreed an audit involves three parties: the owner of the gold, the custodian and an external (independent) auditor. The external auditor examines the gold, compares its findings with the statements of the custodian and then reports on the accuracy of the statements of the custodian to the owner of the gold.

This longish commentary by Koos, also falls into the must read category---and should be considered a companion piece to the previous one by Ronan Manly.


Greek investors buying more gold coins from U.K. Royal Mint

Greek demand for gold coins is rising as investors search for a safe haven from the country’s political turmoil, according to the U.K. Royal Mint.

“There has been a noticeable increase in demand in this last quarter,” Lisa Elward, head of bullion sales at the Royal Mint, said in an e-mail to Bloomberg News. “We tend to see an upsurge in sales at times of political and financial uncertainty.”

Greek investors are turning to gold with the nation heading toward a standoff with creditors over its international bailout program, fueling speculation that it may break its membership with the euro. The Royal Mint declined to provide exact sales figures for the gold coins, known as Sovereigns.

This short Bloomberg story, filed from London, appeared on their website at 8:12 a.m. Denver time on Monday morning---and I found it embedded in a GATA release.


Greek Goldmine Workers Want to Continue Mining

The 1,900 miners who work in the goldmines of Hellas Gold in Skouries in Chalkidiki, northern Greece, want to continue their work, despite the new government’s pre-election promises to shut down the mines.

According to Greek newspaper “Kathimerini,” the Skouries goldmines will be a crash test for the new leftist government. Prime Minister Alexis Tsipras had promised during his campaign that the mines in Skouries will shut down if SYRIZA becomes government.

Now, mine workers organize a series of protest rallies starting this Sunday in the village of Panagia. Some even said that they will stay inside the galleries if anyone tries to pull them out.

On the flip side, people of the wider Lerissos area who protest against mining in Skouries are organizing a counter-demonstration rally on February 15. They will ask from the new government to fulfill the promise to shut down the mines.

You couldn't make this stuff up!  I thank our man in Greece, Harry Grant for sending us this gold-related news story that appeared on the Internet site last Friday.


Is Russia planning a gold-based currency? -- Marcia Christoff-Kurapovna

The "perfect storm" of geopolitical instability, diplomatic isolation, severe currency depreciation, and economic decline now confronting Russia has profoundly damaged Moscow's international standing, and possibly for the long term. Yet it is precisely such conditions that may push the country's leadership into taking the radical step that will secure its world-player status once and for all: the adoption of a gold-exchange standard.

Though a far-fetched idea at first glance, many factors suggest that remonetization in gold may be a logical next step for Moscow.

First, for years Moscow has been expressing its unwillingness to remain at the monetary mercy of the United States and its NATO allies, and this view has been most vehemently expressed by President Putin's long-time economic adviser, Sergei Glazyev. Russia is prepared to play strategic hardball with the West on the issue: The governor of Russia's central bank took the unusual step last November of presenting to the international media details of the bank's zealous gold-buying spree.

The announcement, in sharp contrast to that institution's more taciturn traditions, underscores Moscow's outspoken dismay with dollar hegemony. Its timing suggests coordination with the top rungs of government to present gold as a possible currency-war weapon.

This commentary, which is definitely worth reading, put in an appearance on the Internet site last Friday---and it's something else I plucked from a GATA release.


Lawrence Williams: How much gold is now going directly to mainland China? 36%?

Latest precious metals export data out of Switzerland for the full 2014 year suggest that in that year, taking gold specific exports only, around 36% of the gold exported to Hong Kong and China  combined actually went directly into China rather than via the former British Crown Colony.  As various reports in the media have suggested, India was the biggest recipient of Swiss gold at 471.2 tonnes, but China and Hong Kong, which after all is a special administrative region of China, together took in 590.4 tonnes, further suggesting China, contrary to some reports, remained the world’s biggest gold consumer last year..

Totals Swiss gold exports for the year were some 1,746 tonnes and the top 10 importers of Swiss gold in 2014 are set out in the table below.  Between them they account for over almost 90% of all Swiss gold exports.  The next three most significant importers of Swiss re-refined gold were France with 37 tonnes, the U.K. with 29.8 tonnes and Malaysia with 22.6 tonnes.

So what is the significance of this?  For many years very little gold was imported directly to mainland China.  Nearly all came in via Hong Kong.  So Hong Kong (which published its gold import/export data) was widely seen as a proxy for total Chinese gold imports.  China itself didn’t publish such data so what might have been coming in directly was widely disregarded by Western analysts as of no consequence.

This commentary appeared on Lawrie's website on Saturday and is a must read.



¤ The Funnies

All three of the photos below were taken in a four hour period on the morning of January 8---and it wasn't the nicest of days. The first photo is another one in the Sonoran Desert---and in the west suburbs of Tuscon---and on the road to Saguaro National Park.  The Saguaro Cactus is one of the defining plants of this desert. There are lots of them in the areas where they're native---and they're not endangered by any stretch of the imagination, but they are protected.  The 'click to enlarge' feature really helps on all these photos.

The next photo was taken on State highway 82 [looking east] an hour's drive southeast of the above photo---and up in the higher elevations and very close to the U.S./Mexico border.  As you can tell, it's almost all grass, as there's much more precipitation---and there isn't a cactus in sight.  After three days of living in a desert environment, this was a surreal experience---and the transformation from one landscape to another was amazing to watch.

This last photo was taken less than two hours later in Tombstone, Arizona.  It was cold, rainy, windy---and just plain miserable.  I took the photo on one knee so that they would be looking down on me---and appear slightly larger than life---and somewhat more ominous.  I also desaturated it to black and white---and increased the brightness, because they were back-lit.  Nick took out a slightly visible sign on a Coca-Cola truck parked on a side street in the far right background---and except for the asphalt, you could be easily fooled into thinking it was taken over 100 years ago just before the famous gunfight began.  "Virgil Earp" is the one with the badge---and that's probably "Doc Holliday" on his immediate left.  The other two are Morgan and Wyatt---Virgil's brothers.

The sight of these guys walking down the street on the way to the OK Corral took me back to when I was ten years old in about five seconds flat, as that scene from movie is forever burned in my mind.

Alexandria Minerals Corporation (TSX VENTURE:AZX) and Murgor Resources Inc. (TSX VENTURE:MGR) are pleased to announce that they have entered into an arrangement whereby Alexandria will acquire all of the outstanding common shares of Murgor.

Here are some of the benefits for Alexandria's shareholders:

  • Substantial increase in Alexandria's mineral resources
  • Alexandria’s cost of discovering gold is already low, at approximately $15.00/oz. The cost of acquiring Murgor’s gold assets is even lower, at approximately $3.00/oz.;
  • Alexandria will have larger strategic land packages in the well-known and prolific mining camps of Val d’Or and Chibougamau in Québec; Red Lake and Matachewan in Ontario; and Flin Flon-Snow Lake in Manitoba;
  • Alexandria management knows how to capitalize on its strategic assets, as evidenced by Alexandria’s successful track record in discovering its West Zone Au-Cu deposit and then monetizing this exploration project in the sale to Agnico-Eagle  (Alexandria Press Release January 14, 2014);

On January 30 Alexandria closed a non-brokered private placement of $500,000 at a price of 10 cents.  There are neither Finder’s Fees nor Commissions associated with this financing.  Proceeds from the sale of the shares will be used for exploration on its Cadillac Break property group in Val d'Or, Québec and general corporate purposes. Call or email Mary Vorvis, 416-305-4999/, for more information on Alexandria Minerals.  


¤ The Wrap

Given that silver is the most manipulated commodity in the world and in history, I fully expect that it can fall further both absolutely and relative to gold in the short term due to the only negative price factor in play, namely, positioning on the COMEX. However, the reciprocal readjustment to decades of price manipulation does not appear to be that far away and, in the long term, silver still looks like a lock for long term outperformance, both on its own and relative to gold.

I hope no one was terribly surprised at the price weakness Friday, or for the past two weeks, or thought for a moment that it had anything to do with the employment report or anything else in the world away from COMEX positioning. Judging by the increasing numbers of commentators and observers now including the developments in futures trading on the COMEX as the prime price influence on gold and silver, I am greatly encouraged. I firmly believe that we are much closer than ever to the point where enough see the COMEX price manipulation to render it ineffective. We are not there yet, but that day will come. - Silver analyst Ted Butler: 07 February 2015

It was a nothing sort of day in the precious metals yesterday---and as I said at the top of this column, nothing should be read into Monday's price action.

Here are the 6-month charts for both gold and silver updated with yesterday's data.

What sort of price action we may see in the days ahead, is unknown, but if I had to bet ten bucks, I'd say that JPMorgan et al aren't done to the downside---and it's just a matter of when they pull the trigger.

So we wait.

And as I write this paragraph, the London open is about thirty minutes away.  All four precious metals are up a bit in very choppy price action.  Net gold volume is microscopic at just over 12,000 contracts---and silver's net volume is 2,100 contracts.  Nothing to see here---and nothing should be read into this price action, either.  The dollar index isn't doing a lot---and is currently down 4 basis points.

Today at the close of COMEX trading is the cut-off for this Friday's Commitment of Traders Report---and unless there's big price/volume today [in either direction] we should get a very clear idea of how successful the HFT boyz and their algorithms were in the minutes or so surrounding the release of the job numbers on Friday.

And as I hit the 'send' button on today's column at 5:15 a.m. EST, I see that all four precious metals have come under selling pressure since around 2 p.m. Hong Kong time on their Tuesday afternoon.  All four are now back under their Monday afternoon closing prices in New York.

Net gold volume is just under 20,000 contracts---and silver's net volume is around 3,800 contracts.  This is not big volume by any stretch of the imagination, particularly in silver---so not much should be read into the current price action---although I'm not at all happy with the current negative biases.

The dollar index, which was down 4 basis points thirty minutes before the London open, is now up 28 basis points, so I would guess that the precious metal prices are "reacting" to the dollar move. But as we've seen very recently, what the dollar index does, has had no impact on precious metal prices in either direction lately, so why should it make any difference now?

As I said before, I'm not sure what to expect during the Tuesday trading session.  "Up" is what I'm hoping for, but "in your ear" wouldn't surprise me in the slightest.

See you tomorrow.

Ed Steer