Casey Research Publication
Gold & Silver Daily
"It was apparent, at least to me, that not-for-profit sellers were about in both the metals and their respective shares again yesterday."
 

¤ Yesterday In Gold & Silver

The gold price was up about twelve bucks or so just a few minutes before 9:00 a.m. in London yesterday morning...and that was the high tick of the day.  From there, the price swooned five dollars or so before almost regaining its old high shortly before 1:00 p.m. GMT...about twenty-five minutes before the Comex opened at 8:20 a.m. in New York.

From that secondary high, the gold price got sold off about a percent, with the low of the day [$1,714.90 spot] coming at 9:45 a.m. Eastern time.  The subsequent rally ran into a not-for-profit seller at precisely 11:00 a.m...and from that point, the gold price got sold off about five bucks into the close of electronic trading at 5:15 p.m.

The gold price closed at $1,721.90 spot...down 20 cents from Friday.  Net volume was very light at 94,000 contracts, give or take a thousand or so.

In fits and starts between the Sunday night open...and its high of the day a few minutes before 9:00 a.m. in London...the silver price rose about 45 cents.  But, once again, the moment that it broke through the $34 spot price level, a not-for-profit seller showed up and sold it down about two bits.

The price more or less stayed at that level until precisely 1:00 p.m. in London [twenty minutes before the Comex opened]...and then selling began anew, with the low of the day coming at 10:15 a.m. in New York.

And, like gold, the subsequent rally in silver ran into a not-for-profit seller at precisely 11:00 a.m. Eastern as well.  The subsequent rally ended shortly after the Comex closed for the day...and silver traded sideways for the rest of the Monday trading session.

Silver closed the Monday trading day at $33.72 spot...up the magnificent sum of 13 cents.  Net volume was a rather small 25,000 contracts.

The dollar index gapped down about thirty basis points right at the open on Sunday night in New York...recovered most of that within an hour...and then rolled over...hitting its low of the day [78.62] at 8:45 a.m. in London [3:45 a.m. Eastern]...which happened about ten minutes before the high tick of the day in both metals.

From that low, the dollar index steadily gained back about 40 basis points of its loses by the close of trading late in the New York afternoon...and the index closed a few basis points above the 79.00 mark...and is still heading higher as of this writing, which is 11:04 p.m. Eastern.

The dollar index finished unchanged from its Friday afternoon close in New York.

A cursory glance at the Kitco gold chart above shows that the gold price was rather reluctant to head south as the dollar headed north...and the last two sell offs of the day [7 and 11 a.m. Eastern time] look like the handiwork of not-for-profit sellers, as every time they stopped selling, the price rose.  Ditto for silver...and platinum.

The gold stocks gapped up at the open, but one or more not-for-profit sellers used the opportunity to beat the stocks into the red by 10:15 a.m. Eastern...and the moment that the subsequent rally made back into positive territory, there was someone waiting to sell it off once again.

It's as plain as day that the gold stocks would have finished in the black if it wasn't for this indiscriminate selling.  Sprott Asset Management's John Embry and I [plus many others] are in full agreement on this one...that 'da boyz' are not only dicking with metal prices themselves, they are managing share prices as well.

The HUI closed down 0.47% yesterday.

The silver shares were a mixed bag yesterday...and Nick Laird's Silver Sentiment Index actually close up 0.04%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that only 10 gold contracts...but a rather large 127 silver contracts...were posted for delivery tomorrow.  In silver it was, as usual, Jefferies as the short/issuer...and the Bank of Nova Scotia and JPMorgan as the big long/stoppers...receiving 108 of those issued contracts.  UBS stopped 14 contracts.

We're about half way through February...and 585 silver contracts have already been delivered so far this month.  This goes along with the 1,600 of so that were delivered in January.  These are amazing amounts for these two months which, as I've said before, are not normal delivery months for silver.

Both Ted Butler and myself would love to be flies on the wall over at Jefferies these days, as they've been the short/issuer on just about every one of these 2,200+ contracts delivered since the beginning of the year.  That's 11 million ounces dear reader...over five days of world silver production in total...and that ain't chopped liver.

The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday...but over at SLV, authorized participants withdrew 1,360,461 troy ounces of silver.

There was a small sales report from the U.S. Mint yesterday.  They sold 1,500 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 25,000 silver eagles.  The month-to-date totals aren't worth mentioning...and the mint isn't even close to selling a million silver eagles yet this month.

Friday was pretty slow over at the Comex-approved depositories, as they didn't receive a bar of silver...and only shipped 46,522 ounces of the stuff out the door.  The link to this little bit of activity, is here.

On Friday I forgot to check the short interest in silver over at the shortsqueeze.com website.  I normally check it every day, but with the Commitment of Traders Report...and the Bank Participation Report to write about in Saturday's column as well, it just never crossed my mind.  However, silver analyst Ted Butler didn't forget...and this is what he had to say about what he saw...

"The first big development this week is one that caught me by surprise, although perhaps I shouldn’t have been completely surprised. I’m speaking of the new report on the short position in shares of SLV, as of the close of business January 31st. Where I was girding for an increase in the short SLV position (since we climbed nearly $4 in price for the two week reporting period), instead there was a very big decline in the short position of more than 35%. The short position in SLV declined by 9.4 million shares (ounces), from 26.6 million to under 17.2 million shares. This is the biggest two-week reduction in the SLV short position in my memory...and the first I can recall when silver prices were advancing. The decline in the SLV short position brought it down almost 50% from the high-water mark of over 36 million shares in the spring of 2011. Here's the link to SLV's short position over at shortsqueeze.com."

"I admit to doing a double-take when I first glanced at the numbers. As I previously reported, towards the end of December, I received a very threatening letter from lawyers representing BlackRock, the sponsor of the SLV, demanding that I cease defaming their client on the shorting SLV issue. By coincidence, on the same day I received the letter, I got a call from a fellow subscriber and friend (who is a European money manager) and when I told him about the letter, he told me that it probably meant that BlackRock was taking this very seriously and would move to get the SLV short position reduced, despite the threatening tone of the letter to me. I told my friend that I thought (and hoped) that he was correct and we would see if we were correct in future short reports as they were released."

"I can’t help but feel that the most plausible explanation for the dramatic reduction in the SLV short position (especially on rising prices) is as my European friend predicted, namely, that BlackRock came to realize that the shorting of SLV was fraudulent and manipulative and they were working to eliminate it. Of course, I don’t want to be overly optimistic...and if we witness future big increases in the short position of SLV, that would indicate [that] we were back to the old fraud and manipulation in the shorting of those shares. But let’s take it one day at a time and reserve judgment on whether we go back to the bad old ways of short selling in SLV."

Before heading into the stories I have for you today, here's the chart of the U.S. M3 money supply updated as of Friday's close.  It's a pretty sick looking puppy...and if this continues for any length of time, we'll see the Fed begin QE3 pretty quick, as deflation is not on their play list.  I thank Nick Laird for sending it to me.

(Click on image to enlarge)

Being a typical Tuesday column, I have a lot of stories for you today.  I hope you have time to skim them all.

 

¤ Critical Reads

The [Mortgage] Deal Is Done, but Hold the Applause: Gretchen Morgenson

There’s no doubt that the banks are happy with this deal. You would be, too, if your bill for lying to courts and end-running the law came to less than $2,000 per loan file.

As for the supposed benefits to the economy, skeptics abound. One of them is Paul Diggle, property economist at Capital Economics in London. In a report last week, he rejected the notion — espoused by both banks and government authorities — that this deal would help turn around the American housing market.

For most homeowners, it will barely move the needle. Forgiving $17 billion in principal “is a drop in the ocean,” Mr. Diggle said, “given that close to 11 million borrowers are underwater on their loans to the tune of $700 billion in total.” Doing the math, $17 billion in write-downs would be about 2.4 percent of the total negative equity weighing down borrowers across the nation now.

This Gretchen Morgenson piece was in the Saturday edition of The New York Times...and it's one I borrowed out of yesterday's King Report.  The link is here.

Read more...

The Silent Victims of the U.S.-China Currency War: Jim Rickards

The Federal Reserve set about trying to cheapen the dollar through policies such as quantitative easing—the printing of money—and zero interest rates. The idea was to make the U.S. dollar unattractive to foreign investors and import inflation from abroad through higher import prices. The prospect of inflation would encourage Americans to borrow and spend, and ultimately get the U.S. economy growing. Inflation was being encouraged for the first time in 40 years because it was the key to reducing the real value of America's debt.

This U.S. policy of devaluation and inflation would hurt not only foreign investors but also U.S. savers who held bank accounts, insurance policies, retirement plans, annuities, and other fixed-income investments. All savers and investors, both American and foreign, would be deprived of the value of their savings through U.S. dollar devaluation in order to benefit banks, hedge funds, speculators, and other leveraged investors.

Yet the currency war with China is really a red herring. China may generate an enormous dollar volume of exports to the United States but it is far from the greatest source of value added. Indeed, it is the policy of the United States to devalue against all trading partners, not just China.

I thanks reader Randall Reinwasser for sending me this story that was posted over at the usnews.com website yesterday...and the link is here.

Read more...

Charting The Federal Reserve's Assets - 1915-2012

The Fed has degenerated from a by and large passive institution (dealing only in high-quality self-liquidating commercial paper and gold) to an active pursuant of junk, an enabler of wars, a ‘benevolent’ combatant of the depressions of its own creation, a central planner of employment & prices and of course a forgiving friend to inconvenient market follies.

This graphical presentation deserves a few minutes of your time.  Washington state reader S.A. sent me this zerohedge.com piece on Sunday...and the link is here.

Read more...

Judge Napolitano: How to get fired from Fox Business in under 5 minutes

Slowly but surely, all the voices that speak the truth are disappearing from the main stream media...and Judge Napolitano is the latest in a list of high-profile and very outspoken TV personalities that have been shown the door.

I suspect that the linked youtube.com video was his commentary from last Friday.  I've been told that his last commentary on Fox News was yesterday.  I thank Casey Research's own Doug Hornig for bringing this video clip to our attention...and the link is here.

Read more...

At Volcker Rule Deadline, a Strong Pushback From Wall Street

Wall Street made its broadest assault yet against new regulation on Monday, taking aim at a rule that has come to define the battle over how to police banks in the aftermath of the financial crisis.

Regulators in charge of writing the Volcker Rule, which would ban banks from trading with their own money, were inundated with complaints and suggestions on Monday, the deadline to comment on a draft proposal. More than 200 letters were expected to be filed by the midnight deadline on the rule, which regulators outlined in October.

Commenters included the rule’s namesake, Paul A. Volcker, the former Federal Reserve chairman, who submitted a strongly worded defense of the rule’s intent in a letter on Monday. Others, like consumer advocates and lawmakers, criticized the draft rule for not being tough enough.

This story was posted on The New York Times website last night...and I thank reader Phil Barlett for being the first through the door with this piece.  It's worth the read...and the link is here.

Read more...

Dr. Dave Janda interviews your humble scribe

The good doctor was kind enough to interview me again on Sunday over at all-talk radio WAAM 1600 in Ann Arbor, Michigan.  The interview runs for about twenty-five minutes...and is posted over at the davejanda.com website. The link is here.

Read more...

Moody's warns UK, France, Austria over AAA rating

Rating agency Moody's warned on Monday it may cut the triple-A ratings of France, the United Kingdom and Austria, and it downgraded six other European nations including Italy, Spain and Portugal, citing growing risks from Europe's debt crisis.

Moving less aggressively than rival agency Standard & Poor's last month but putting the United Kingdom's rating in jeopardy for the first time, Moody's said it was worried about Europe's ability to undertake the kind of reforms needed to address the crisis and the amount of funds available to fight it.

It also said the region's weak economy could undermine austerity drives by governments to fix their finances.

This Reuters story was posted last night...and I thank Roy Stephens for this must read story.  The link is here.

Read more...

Greece passes crucial bailout vote as country burns

The 199-74 vote was passed amid some of the most serious violence seen on the streets Athens and spread to other Greek towns and cities, including the holiday islands of Corfu and Crete.

More than 45,000 protesters, many facing steep cuts in pensions, wages and a bigger fall in living standards besieged the Greek Parliament in two demonstrations. A minority were met with tear gas by the 4,000 policemen after throwing fire bombs.

The controversial loan and austerity package sets out €3.3bn in wage, pension and job cuts for this year alone, adding to the pain of years of recession, high employment, lower wages and high unemployment.

This story was posted in The Telegraph yesterday morning...and is Roy Stephens second offering of the day.  The link is here.

Read more...

Germany's Carthaginian terms for Greece

It is clear that Germany’s finance minister Wolfgang Schäuble wishes to expel Greece from the euro, calculating that Euroland is now strong enough to withstand contagion, and that the European Central Bank’s `Draghi bazooka’ for lenders has eliminated the risk of a financial collapse.

“We can’t keep sinking billions into a bottomless pit,” he said on Friday.

Any slippage by Greece will be seized upon as a pretext to withhold the EU loans.

It is certainly arguable Greece has no hope of clawing back viability within monetary union and should therefore return to the Drachma.

This Ambrose Evans-Pritchard story appeared in The Telegraph on Sunday night...and is Roy's third offering of the day.  The link is here.

Read more...

Greece faces death by a thousand cuts unless it leaves the euro

Lucas Papademos was suitably apocalyptic. If the terms of the second Greek bailout were not approved, the Greek prime minister warned over the weekend, there would be a "disorderly bankruptcy that would create conditions of economic chaos and social explosion.

"The savings of the citizens would be at risk. The state would be unable to pay salaries, pensions, and cover basic functions, such as hospitals and schools, and … the country - public and private sector alike - would lose all access to borrowing and liquidity would shrink.

"The living standards of Greeks would collapse. The country would drift into a long spiral of recession, instability, unemployment and prolonged misery. These developments would lead, sooner or later, to exit from the euro."

Up to a point, these warnings are of course all true. Much less clear is whether the enforced penury of continued euro membership which Greek MPs eventually voted for on Sunday night amounts to a better alternative. Any analysis of the economics suggests powerfully that it does not.

This is another story from yesterday's edition of The Telegraph...and is Roy Stephens' fourth offering of this column.  The link is here.

Read more...

Iran presses ahead with attack on dollar

Last week the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad's vision of economic war with the West.

"The dispute over Iran's nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the 'reserve currency' status of the dollar," the newspaper, which calls itself the voice of the Islamic Revolution, said.

"Recall that Saddam [Hussein] announced that Iraq would no longer accept dollars for oil purchases in November 2000 and the US-Anglo invasion occurred in March 2003," the Times continued. "Similarly, Iran opened its oil bourse in 2008, so it is a credit to Iranian negotiating ability that the 'crisis' has not come to a head long before now."

This story was posted on The Telegraph's website late on Sunday night...and I plucked it from a GATA release.  It's a must read...and the link is here.

Read more...

Gunfights in Saudi Oil-Rich Province Show Spread of Iran Political Tension

Armored anti-riot vehicles cluster outside the police station in Awwamiya in Saudi Arabia’s oil- producing eastern region, where unrest is turning violent.

“We have enough police force to deal with any criminal or prohibited situation,” says Brigadier-General Yousef al-Qahtani as he drives through the town. In nearby al-Qatif, graffiti scrawled on a cemetery wall criticizes the Al Saud family, founders of the kingdom eight decades ago, and calls for the removal of their fellow Sunni Muslim monarchs in Bahrain. Black Shiite flags adorn religious centers in the back-alleys.

Clashes between police and armed Shiite protesters in the two towns have intensified since October, when 11 police were injured in an attack. Since then, seven Shiites have been killed by security forces, according to figures provided by Saudi Arabia’s Human Rights First Society.

It’s in such places that tensions between the Gulf’s Sunni nations and Shiite-led Iran may spark violence inside Saudi Arabia, the world’s biggest oil exporter. Shiites here have cultural and family ties with Iran, and also with Bahrain, where Saudi troops helped crush Shiite-led protests that broke out a year ago today. Saudi authorities accuse Iran, which is under growing western pressure to back down over its nuclear program, of stirring up unrest in both cases.

This Bloomberg story was sent to me by West Virginia reader Elliot Simon yesterday...and the link is here.

Read more...

Japan's economy shrinks more than expected

GDP data out today showed economic output fell 0.6pc in the fourth quarter, twice as big a drop as analysts' forecast.

The fourth-quarter drop also marked the fourth contraction in the last five quarters, ending a year when Japan was hit by an earthquake, tsunami and the worst nuclear power accident since Chernobyl in 1986.

Economic output for all of 2011 fell 0.9pc, the first full-year slide since the global financial crisis in 2009. That translated into heavy losses for some of Japan's biggest exporters, including Sony.

"This is a contraction driven by external demand. Exports have fallen a lot because of a triple shock from Europe, the strong yen and floods in Thailand," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management in Tokyo.

This Reuters story was posted in The Telegraph yesterday...and is Roy's fifth offering today.  The link is here.

Read more...

Bank of Japan Sprays World With Surprising ¥10 Trillion Gift In Valentine's Day Liquidity

The Bank of Japan surprised markets Tuesday by implementing new easing policies and moving closer to an explicit price target, the latest sign of growing worries around the world about the ripple effects of the European debt crisis on the global economy. With interest rates already close to zero, the BOJ has relied in recent months on asset purchases to stimulate the economy. In Tuesday's meeting, the central bank expanded that plan by ¥10 trillion, or about $130 billion. The facility, which includes low-cost loans, is now worth about ¥65 trillion, or $844 billion."

The rub however lies in the total Japanese GDP, which at last check was $6 trillion (give or take), and declining. Which means this announcement was the functional equivalent to a surprise $325 billion QE announced by the Fed.

This story broke in the wee hours of this morning...and I thank Australian reader Wesley Legrand for sending it along...and the link to the must read zerohedge.com article about this, is linked here.

Read more...

China Is Hoarding Copper. Why?

In January, China imported 413,964 tons of copper, up 13.6% from the same month in 2011.  The increase is even more impressive when you correct for the Lunar New Year.  Due to the holiday, there were four fewer working days in China last month as compared to January 2011.  Copper imports, in any event, exceeded consensus estimates.

December was also good for copper bulls.  That month, China imported a record high 508,942 tons, an astounding 47.7% increase from the previous year.

China is hoarding copper.  The country in Q4 added about 300,000 tons to its already impressive stockpile.

China’s purchases are far in excess of anticipated need.  Estimates for growth in refined copper consumption this year are generally in the 6.0-6.6% range, well below 2011’s 8.5% increase and the 11.5% jump in 2010.

Well, dear reader, it sure beat the hell out of holding soon-to-be-debased U.S. dollars.  I hope they're doing the same thing in gold and silver on the sly.

Casey Research's own David Galland brought this forbes.com story to my attention...and I'm more than pleased to pass it along to you.  The link is here.

Read more...

What's crazier than creationism and gold? It's in your wallet

Lawrence Summers, former U.S. treasury secretary and president of Harvard, is reported to have remarked the other day that "the gold standard is the creationism of economics":

Of course Summers meant the worst sort of disparagement, to liken gold standard advocates to religious crazies. And yet there are various creationisms and various gold standards.

This Chris Powell offering containing multiple links is posted over at the gata.org website...and is a must read.  The link is here.

Read more...

Vietnam has written the book on gold: The West should read it

HANOI, Vietnam -- Stashing gold at home rather than having cash in the bank is a generations-old habit in communist Vietnam, but a recent surge in prices has sparked government attempts to bring the yellow metal to heel.

Last year the country bought more gold per capita than India or China, according to the World Gold Council, and domestic prices soared by 18 percent -- far outstripping the global market's 11 percent increase.

And old habits are dying hard, according to 60-year-old retiree Truong Van Hue, even if an ounce of gold bullion can now cost up to $100 more in Hanoi than anywhere else in the world.

This AFP story was picked up by finance.yahoo.com on Sunday...and it, plus Chris Powell's opening remarks, are contained in this GATA release...and the link is here.  Reader Bob Richardson sent me this story many hours before it showed up in the GATA release...and it's a must read.

Read more...

Sudan central bank raises dollar supply after gold sale

Sudan's central bank is increasing dollar supplies to local banks to stop a slide of the Sudanese pound after it generated more than $300 million from gold sales, a central bank official said on Sunday.

The African country is undergoing a severe economic crisis after losing three-quarters of its oil production when South Sudan became independent in July under a 2005 peace deal. Oil is the lifeline of both economies.

Sudan has avoided an Arab spring like Egypt or Tunisia but the economic crisis has sparked small protests against high food price inflation.

This Reuters story was filed from Khartoum on Sunday...and I borrowed it from a GATA release. The link is here.

Read more...

Gold needn't fear rising rates: Alasdair Macleod

Economist and former banker Alasdair Macleod's new essay "Katastrophenhausse" anticipates from monetary debasement the "crack-up boom" the economist Ludwig von Mises warned against, and he adds that if interest rates finally are allowed to rise again, they "will only bankrupt insolvent governments and other borrowers, and the interest costs would end up being covered by the creation of yet more fiat money." Macleod concludes that "the important point for owners of gold and silver is that rising interest rates should drive prices higher, and not suppress them as commentators might expect."

His commentary is posted at the goldmoney.com website...and I thank Chris Powell for writing the introduction for me.  The link is here.

Read more...

Large move in the gold stocks imminent? - Adrian Douglas

The latest edition of the Market Force Analysis letter, published by GATA board member Adrian Douglas, finds very compelling the question: "Large Move in the Gold Stocks Imminent?" It's posted at GATA's Internet site...and the link is here.

Read more...

Gold has humbled smart men before: David Cottle

It takes a brave man to suggest that Warren Buffett has missed a point. After all, unless you are Carlos Slim or Bill Gates, a comparison of his bank balance and yours will show that he caught quite a few that you and I saw only when it was far too late.

However, as Mr. B rails against gold in an article for Fortune magazine -- it's tempting to think that he just might have it wrong when it comes to the oldest haven of all. He mounts all the attacks that exasperated non-gold-bugs often go for: The stuff has no inherent value, it underperforms stocks horribly over time, and has merely become a self-inflating bubble in its long climb to record highs.

Perhaps he's right, but, in its enduring relationship with mankind, the yellow metal has a history of humbling very smart people.

This blog was posted over at The Wall Street Journal yesterday afternoon...and it's another story that I found in a GATA release yesterday.  The link is here.

Read more...

Turk foresees 'buying panic' when gold hits $1,750

GoldMoney founder and GATA consultant James Turk tells King World News today that he's encouraged by gold's holding its big recent gains during a consolidation, and he predicts a "buying panic" when gold regains $1,750.

An excerpt from the interview is posted at the KWN website...and the link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

Life isn't about finding yourself...it's about creating yourself. - Author Unknown

It was apparent, at least to me, that not-for-profit sellers were about in both the metals and their respective shares again yesterday, as both gold and silver...and the shares...would have had a much better time of it they hadn't made an appearance.  There was nothing free market about Monday's price action.

But since volumes were pretty light, it wasn't difficult to shove the metal prices around...and as I noted further up, silver was not allowed to closed about $34 spot again.

In about ten days we have option expiry for the March contract...and I'm wondering whether or not JPMorgan et al will take the opportunity to lean on the metals as we head into that date.  We'll find out soon enough I would think.

Overnight, both metals declined as the dollar continued to rise...and the moment that London opened for business, both metals got sold off a bit more.  As of 5:04 a.m. Eastern time, gold is down a few dollars and silver is down about 30 cents.  The dollar index is up just a bit over 25 basis points...and appears to have topped out about an hour before London began trading.  Volume in both metals is starting to get up there...and it's obvious that the 'inflate, or die' news from the Bank of Japan had no impact on the gold price, at least not for moment.  Jim Rickards is right...currency wars it is...and it's only a matter of time before the precious metal prices begin to reflect that.

That's it for today.  I'll see you here tomorrow.