Gold & Silver Daily
"Ted Butler said that JP Morgan added to their short position in silver again last week...and he's guessing that they are now short about 18,000 Comex futures contracts. "
 

¤ Yesterday In Gold & Silver

The gold price didn't do much until about 2:00 p.m. Hong Kong time...and then a smallish rally began that lasted until minutes before London opened.

Then, for whatever, gold got sold down about twenty bucks, with the bottom coming at around 12:15 a.m. in London.  A rally then began that lasted until the gold price hit the $1,750 spot mark, which came shortly before 2:00 p.m. in the New York Access Market.  After that, the gold price got sold down about five bucks into the close at 5:15 p.m. Eastern.

The gold price closed at $1,744.90 spot...up an even $25.00 on the day.  Net volume was a very decent 149,000 contracts.

The trading pattern in silver followed an almost identical trajectory, except silver's high tick [$34.47 spot] came about fifteen minutes before gold's.  Then, like gold, silver got sold off as well, closing about 30 cents off its high.

Silver closed at $34.15 spot...up 47 cents...and net volume was 36,000 contracts.

The dollar index didn't do a lot until 8:00 a.m. Eastern time...and then it rolled over and hit rock bottom at precisely 11:00 a.m. Eastern time.  From zenith to nadir, the dollar index fell a bit over 70 basis points.  From there it traded sideways into the close.

I suppose that there was some co-relation between the dollar index and the precious metal prices...but the rallies in both metals started quite a bit before the dollar cratered ...and then continued until long after the bottom was in.

The only reason I can think of as to why the shares did so poorly, is that there was a not-for-profit seller about.  Gold and silver shares should have been on fire yesterday, but that wasn't allowed to happen...and got sold off about 2% the moment that the equity markets opened at 9:30 a.m. Eastern time.  Yes, the shares rallied from there, but they couldn't hold their gains.  Once the top was in around 2:00 p.m. Eastern time, the shares got sold off...and the HUI finished down 0.45% on the day.

The silver stocks didn't do well yesterday either...and probably for the same reason.  Nick Laird's Silver Sentiment Index closed down 0.23% on the day.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 35 gold and 17 silver contracts were posted for delivery tomorrow.  Jefferies delivered 15 of the 17 silver contracts.

There were no reported changes in either GLD or SLV yesterday.

The U.S. Mint had another smallish sales report.  They sold 1,000 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 200,000 silver eagles.  Month-to-date the mint has sold 6,500 ounces of gold eagles...1,000 one-ounce gold buffaloes...and 670,000 silver eagles.

The Comex-approved depositories reported receiving 6,900 ounces of silver on Monday...and the Scotia Mocatta warehouse shipped 1,932,668 troy ounces out the door.  The link to the action is here.

I have the usual number of stories for you today.

 

¤ Critical Reads

Presenting The "Rise Of The HFT Machine" - Visual Confirmation How SkyNet Broke The Stock Market On US Downgrade Day

I ran this story yesterday...but Tyler Durden over at Zero Hedge serves it up with a preamble that really does justice to it.

While the "rise of the HFT machine" over the past 5 years, following the adoption of Reg NMS, will hardly be a surprise to most, what is stunning is the first animated confirmation of the market terminally breaking on August 5, 2011, the day the US was downgraded, an observation that first was made right here on Zero Hedge. Which begs the question: what really happened in the stock market on August 5, 2011 when the US was downgraded to AA+, when everything literally broke, who is intervening constantly in the stock market, and why are they doing so via various HFT intermediary mechanisms?

If you didn't see this yesterday, it's a must to read/view...and if you did watch this yesterday, then reading T.D.'s preamble is worth the trip all by itself.

Australian reader Wesley Legrand sent it to me in the wee hours of this morning...and this is what he had to say about it: "Staggering time lapse evidence of the huge rise in HFT and Algorithmic Trading in US markets, now dominating daily volume there; i.e. it’s basically just the prop desks of the Wall Street banks trading amongst themselves, and painting whatever charts they want…"

That just about sums it up...and the link is here.

Read more...

Lowest Non-Holiday Market Volume In Past Decade

We are struggling for superlatives (or whatever the antonym for superlatives is). Monday's NYSE volume was as low as we could find on Bloomberg data. It is the lowest non-holiday trading day volume in over a decade. This is 26% below last year's post-Super Bowl trading day volume. ES, the e-mini S&P 500 future contract, which has tended to be the most liquid and heavily traded instrument reflective of the equity markets, traded around 1.19mm contracts versus a 50-day average of 1.83mm (down 35%) and also we were struggling to find a non-holiday trading day with lower volumes (lower even than on the Thanksgiving Friday of last year's volume).

In my Tuesday column I mentioned that it was a quiet trading day in gold and silver on Monday...and that obviously applied to all markets.  I borrowed this zerohedge.com story from yesterday's King Report.  It's a must read...and the two graphs are worth the trip all by themselves.  The link is here.

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Three-Year Note Auction Gets Weak Reception

Wall Street’s dealers swept up their biggest share of new 3-year notes in three years, as investors refused to bid aggressively for the $32 billion issuance.

Dealers took 63.8 percent of the 3-year auction, compared to an average of about 50 percent. That is the highest level since January 2009. Indirect bidders, which include foreign central took 27.7 percent, versus their auction average 39.6 percent. That was the lowest level since February 2011.

The 1 p.m. EST auction saw a near record low yield of 0.347 percent, and came shortly on the heels of more reassurances from Fed Chairman Ben Bernanke that interest rates would continue to be super low for several more years.

This cnbc.com story was posted on their website early yesterday afternoon...and I thank West Virginia reader Elliot Simon for sending it along.  The link is here.

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BofA Plaza Goes for $235M in Public Auction

Bank of America Plaza, the tallest tower in the U.S. Southeast, was sold at a public auction on the steps of the Fulton County Courthouse yesterday after landlord BentleyForbes missed mortgage payments.

The noteholder had a winning bid of $235 million, according to attorney Howard Walker of McGuire Woods LLP, who ran the auction. Holders of commercial mortgage bonds took ownership through a “credit bid” placed by LNR Partners, David Levin said in an e-mailed statement. Levin is vice chairman of Miami Beach, Florida-based LNR Property LLC, the parent company of LNR Partners, the tower’s special servicer.

BentleyForbes, based in Los Angeles, paid $436 million to acquire the 55-story Atlanta skyscraper in 2006 from Bank of America and Cousins Properties Inc. in the city’s biggest property deal. Since the property market peaked a year after the purchase, the 1.25 million-square-foot (116,000-square-meter) building’s value has tumbled with tenants, including namesake Bank of America, reducing space.

This Bloomberg story from yesterday afternoon is another Elliot Simon offering...and the link is here.

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It's Time To End the Greek Rescue Farce: Opinion

Whether it be an escrow account or a budget commissioner, the latest demands by Germany show just how absurd negotiations over Greece's future have become. It is high time to bring an end to this tragicomedy.

For the past two years, Greece has wrangled with the euro-zone states and the International Monetary Fund (IMF) over its so-called "rescue." Austerity measures have been agreed to, aid has been paid and private creditors have been forced to accept "voluntary" debt haircuts. Despite all this, Greece is in even worse shape today than it was then. Its economy is shrinking, the debt ratio is rising and the country and its banks have been cut off from capital markets. There isn't even the slightest sign that the situation might improve. Something has gone very wrong with this rescue.

But none of the protagonists seem to have grasped this. They continue to negotiate as if things are business as usual, they let one "final ultimatum" after the other pass and they persistently fail to realize that their discussions have started to verge on the absurd. It would be a lot better to end this farce.

Here's someone that calls it the way it really is.  It's a refreshing read...and it was posted over at the German website spiegel.de yesterday.  It's also Roy Stephens first offering of the day...and the link is here.

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'Euro can survive without Greece' claim ahead of key talks

The eurozone can survive even if Greece is forced out, according to European Commissioner Neelie Kroes, as Greek political leaders prepare for crucial crunch talks to avoid a debt default.

"When one member leaves it doesn't mean 'man overboard'," she said in an interview in Dutch newspaper Volkskrant.

"They always said if a country is let go or asks to get out, then the whole edifice will collapse. But that is simply not true."

While EC President Jose Manuel Barroso attempted to defuse her comments saying "we want Greece in the euro", Greek Prime Minister Lucas Papademos is preparing a report on the "consequences" of a Greek default and eurozone exit.

This story was posted in The Telegraph yesterday afternoon local time...and is Roy's second offering of the day.  The link is here.

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Greek crisis deepens as austerity talks falter

Greek prime minister Lucas Papademos was struggling to maintain international credibility on Tuesday night, after missing a third deadline in a week to deliver an austerity agreement needed to release a €130bn (£108bn) bail-out package for his country and avert a debt default.

However, international patience with Greece is fast running out.

This situation was exacerbated by the decision to postpone by one day a meeting due to start on Tuesday night, for the country's political leaders to approve a "final draft document" on austerity measures.

They will now meet on Wednesday night. Eurozone finance ministers have scheduled a meeting for Thursday to review the budgetary plans so the Greek parliament can vote on the measures at the weekend.

This story was posted at The Telegraph's website late last night...and is Roy's third offering of the day.  The link is here.

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China Bail Out Europe? Quite The Opposite Actually, As Chinese Banks Cut European Exposure

Hardly a week passes without some washed out, discredited legacy media outfit bringing up the "China will bail out Europe" rumor from the dead if only for a few minutes, just so the robots which have now shifted from stocks to the EURUSD, ramp the currency higher and stop out the weak housewife hands.

From Reuters which translates China's Financial News: "Chinese banks and companies in the northern port city of Tianjin have cut their exposure to Europe as the euro zone debt crisis festers. In a recent survey of 53 banks and 15 firms done by the local foreign exchange regulator, 11 banks said they had cut or stopped trade finance for European countries with high debt risk, suspended derivatives business with European banks, cut or stopped lending to foreign peers, particularly those from Europe, the newspaper said."

This zerohedge.com piece was sent to my by reader Phil Barlett yesterday...and is worth running through.  The link is here.

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An orderly EMU break-up, à la Française

Salut souverainistes. For those wanting more details on the euro break-up plan drafted by French economists, need only visit the L’Observatoire de L’Europe website.

A few extracts, loosely translated: "The obstinate determination of governments to take us by forced march deeper into the euro impasse can only lead to the general aggravation of the economic situation in Europe."

"Even though our American and Chinese competitors have an interest in the survival of the single currency, the euro is condemned to an uncontrollable explosion sooner or later."

This rather short Ambrose Evans-Pritchard offering posted at The Telegraph yesterday is worth the read...and is courtesy of Roy Stephens once again.  The link is here.

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Obama switches play on war with Iran

United States President Barack Obama has contradicted both his defense secretary and head of intelligence by laying a small though significant speed bump ahead of the express train of war on Iran fueled by pro-Israel pundits and politicians in the US.

Whereas Defense Secretary Leon Panetta tacitly conceded that Israel had finalized a plan to attack Iran within the next few months over its disputed nuclear program, Obama stated in a prime time television interview on Sunday that Israel had made no such decision, and simultaneously expressed his preference for a diplomatic solution to fractions with Iran.

Equally important in Obama's five-minute interview, meaningfully inserted in the pre-Super Bowl television coverage watched by hundreds of millions around the world, was his admission that he did not "see any evidence" that Iran had the "intentions or capabilities" to mount a terror attack on US soil, thus contradicting last week's congressional testimony by James Clapper, head of US intelligence community, who accused Iran of engaging in such terror plots.

This is an interesting turn of events...and is a story that was posted earlier this morning in the Asia Times.  I thank Roy Stephens for digging it up on our behalf...and, in my opinion, it's a must read.  The link is here.

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Iran vows to halt EU crude exports over new sanctions

Iranian lawmakers vowed Tuesday to ban crude oil exports to European nations, a day after US officials announced new sanctions aimed at disrupting financial transactions by Iran's central bank and other institutions.

Iran castigated its U.S. adversary on Tuesday over new financial measures to disrupt Iranian commerce, and a default on payment for rice purchases highlighted the encroachment of sanctions on the staples of everyday life.

Lawmakers in Tehran vowed to ban crude exports to European countries even before an EU oil embargo takes effect.

This Reuters story was posted at the france24.com website yesterday...and it's also courtesy of Roy Stephens.  This story is definitely worth the read...and the link is here.

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Iran, The Dollar...and Financial Warfare: Jim Rickards

As a global-macro analyst, I am frequently asked if war with Iran will come and, if so, when. My answer is that the war has already begun. It's not a shooting war - yet. What the U.S. and Israel are now waging with Iran is what experts call unrestricted warfare. This is warfare that consists of sabotage, assassination, special operations, psychological operations, attacks on critical infrastructure, cyber warfare and - the most recent addition to the arsenal - financial warfare.

The U.S. has applied financial and economic sanctions to Iran for over 30 years - sanctions are nothing new. But a few weeks ago President Obama moved to choke off Iran's oxygen supply by imposing sanctions on the central bank of Iran. International banks were told if they did business with Iran's central bank, they would be barred from doing business in the global dollar payments system controlled by the U.S. Of course, the banks complied.

The result was an immediate isolation of Iran from the dollar system and an acute shortage of dollars in Iran. The Iranian currency, the rial, crashed in value 40% against the dollar in a few days. Since many goods in Iran are imported, local prices doubled as merchants demanded more rials in order to acquire whatever dollars might be available on the black market to buy imported goods. Iranian banks responded by raising local interest rates to over 20% in order to keep rials from flooding out of the Iranian banking system.

This Jim Rickards commentary was posted over at the seekingalpha.com website yesterday...and is a must read.  I thank West Virginia reader Elliot Simon for bringing it to our attention...and the link is here.

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Peter Schiff Speaks to James Rickards, Author of Currency Wars

I've read this interview from start to finish.  It is, in some ways, the same as all the rest of the interviews he's done since his book was published...but Peter pushes Jim in some slightly different directions...and Jim has some new thoughts when he answers these questions.

It's worth the read if you have the time...and I thank Roy Stephens for sending it along.  It was posted over at the safehaven.com website yesterday...and the link is here.

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FBI warns of threat from anti-government extremists

Anti-government extremists opposed to taxes and regulations pose a growing threat to local law enforcement officers in the United States, the FBI warned on Monday.

These extremists, sometimes known as "sovereign citizens," believe they can live outside any type of government authority, FBI agents said at a news conference.

The extremists may refuse to pay taxes, defy government environmental regulations and believe the United States went bankrupt by going off the gold standard.

This Reuters story from Monday showed up in a zerohedge.com piece yesterday...and is a must read.  I thank Australian reader Wesley Legrand for sending it along...and the link is here.

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Gabelli Gold's Bryan expects another leg higher in King World News interview

Gabelli Gold Fund manager Caesar Bryan told King World News yesterday that the physical gold market is strong, even as the paper gold market is weak. "I think this is the quiet time before more central bank action," Bryan says. "We are in the eye of the storm and the storm is still raging. Gold has broken out of the downtrend and we expect money printing to light the fire of the next leg higher in gold."

I thank Chris Powell for writing the introduction on our behalf...and an excerpt from the interview is posted at the KWN website.  The link is here.

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Goldcorp, World Gold Council chairman Telfer implicated in insider scheme; he denies it

Ian Telfer -- one of Canada's most prominent mining executives...and chairman of Goldcorp Inc. [and chairman of the World Gold Council -- helped an old friend, the executive assistant of GMP Securities LP's chairman, disguise an illegal insider tipping and trading scheme, the Ontario Securities Commission claims in a statement of allegations released Tuesday.

The OSC alleges that in at least two cases Mr. Telfer advised Eda Marie Agueci to communicate using her BlackBerry's PIN-based messaging service to keep her activities secret from GMP. The securities regulator also alleges Mr. Telfer helped Ms. Agueci facilitate a secret trade in a company that eventually became Gold Wheaton Inc.

"His conduct was contrary to the public interest," the OSC alleges.

The allegations against Mr. Telfer are part of a larger OSC case that names Ms. Agueci, who worked at GMP Securities for about 20 years, as the "central figure" in a scheme in which she is alleged to have used her position to access non-public information on pending deals, then pass this information to eight other individuals.

This story was in Canada's National Post yesterday...and I borrowed it from a GATA release...and the link is here.

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UC Resources Invests in Sprott Silver Trust

"The company has also recently acquired for investment purposes $1,500,000 of the Sprott Physical Silver Trust representing a portion of its available free cash. The board of directors approved this investment for the following reasons: enhance return on present cash since presently holding cash vehicles provides negative returns when inflation adjusted; investing in the industry the company is involved in and seeks to grow in from both a production and exploration perspective; good liquidity; enhance shareholder value from further increases in the price of silver; our way of responding to the call to action of Eric Sprott for precious metal companies to retain some production as savings. It was felt the best course of action for UC was to invest in a true physical silver vehicle and the Sprott silver trust was selected."

Well, kudos to this company for sure.  Let's hope it catches on with others...and the sooner the better. I thank U.K. reader "John in Manchester" for sending me this story at 4:35 a.m. Eastern time this morning...and the link to the press release, posted over at kitco.com, is here.

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Hong Kong gold flow to China more than triples in 2011

Hong Kong's shipments of gold to mainland China in 2011 grew more than three times from a year earlier, confirming China's rapidly growing appetite for bullion, despite a sharp drop in December.

Total gold exports from Hong Kong to China were 427,877 kg in 2011, up from 118,904 kg in the previous year, the Hong Kong Census and Statistics Department said.

The gold flow from Hong Kong to China dropped about 62 percent in December on the month to 38,605 kilograms, its lowest level since July, the department said on its website.

This short Reuters story was posted from Singapore yesterday morning...and Roy Stephens dug this one up as well.  The link to this must read article, is here.

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Where a Nation's Gold and Your Gold Should be Held: Julian Phillips

In the last week we have heard the announcement that Iran has (according to them) 907 tonnes of gold. The developed world has just outlawed Iran dealing in gold and silver (there are other places, where if they wished to do so they will be able to trade). With their gold inside Iran, it is outside the reach of the developed world though. If they had held their gold in the world's main, developed world vaults that would have been frozen along with Iran's other overseas assets. We may not agree to Iran's politics and attitudes, but there is a lesson to be learned here.

Ownership implies the freedom to do what you want with an asset. In this case we are talking about a nation's assets. The handling of Iran's assets by freezing of their assets shows that other nations can interfere with that freedom. Governments feel free to impose restraints on other people's assets within their jurisdiction. It is this concept of a right to restrain the rights of ownership that will prove a growing issue.

With the world changing from an under-developed world with a developed world to an emerging world drawing down power and wealth from the developed world, there are many changes taking place which will lower the levels of international cooperation in the days ahead as political, religious, monetary and economic pressures rise.

This fairly short read was posted over at the safehaven.com website yesterday...and is Roy Stephens final offering in today's column.  The link is here.

Read more...

This will be gold's best year yet, Embry tells King World News

Sprott Asset Management's chief investment strategist, John Embry, scheduled to be the keynote speaker at the California Investment Conference in Indian Wells this weekend, predicts for King World News today that this year will be the best in gold's decade-long bull market.

I thank Chris Powell for writing the above introduction...and an excerpt from the interview is posted at the KWN website.  The link is here.

Read more...

 

¤ The Funnies

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¤ The Wrap

There are no markets anymore...only interventions. - Chris Powell, GATA

Well, London did its usual thing yesterday, with the highs coming just before the open...and then both metals got sold off into what looked like a late silver fix which came shortly after 12:00 o'clock noon in London yesterday.  Then both metals spent the entire New York trading session digging themselves out of the hole dug for them in London.

It's hard to tell whether Tuesday's price action was new long positions being placed...or was there short covering involved...or maybe a combination of both.  Hopefully all of yesterday's price action will be included in Friday's Commitment of Traders Report...as yesterday was the cut-off for it.

I was not amused by the share price action yesterday...and I thought the share price action was as crooked as a dog's leg.  As John Embry said in this KWN interview yesterday...“I think the same powers that be, which have diddled with the gold and silver markets, have been very active in the shares.  They are aware at which point the breakout occurs in the HUI (Gold Bugs Index), it’s 554.  It’s really funny because irrespective of what gold is doing, if the HUI approaches 554, it always bumps its head and gets pushed back down."  I couldn't agree more.

Greece looks pretty much done for...even if they get their bailout.  Then what?  It's pretty much boiled down to "Print, or die" with every central bank of Planet Earth...and the 'assets' that they're adding to their respective balance sheets are looking awful ugly.  The only possible way they can save themselves would be to re-price the one asset that has real value...and that's gold.  The health of the financial system would be restored [at least for a while] if gold was revalued to some rather large number...and ten times the current price would do nicely.

If not, then it's just a matter of time before we have deflationary collapse...or a hyperinflationary depression.  The central banks would obviously prefer the latter to the former.

In the Schiff/Rickards interview posted above, Peter asks Jim the following question:  "What, if any, silver lining do you see for us [the U.S.] in the future?"...and Jim replied: "I continue to have faith in the democratic process and the wisdom of the American people. Through elections, we might be able to change leadership and implement new policies before it's too late. Failing that, the worst outcomes are all but unavoidable."

That they are...and we may not even make it to the election.

In Far East and early London trading during their Wednesday, gold made three more attempts to break above the $1,750 spot price level...and all were turned back.  It will be interesting to see if that price barrier falls later today.  As of 5:11 a.m. Eastern time, the gold price is now back to unchanged from Tuesday's New York close.

In silver, the price dropped back to the $34.00 spot price level before rising into the London open.  At that point, the silver price popped a bit...but a not-for-profit seller showed up immediately.  It remains to be seen if JP Morgan et al will let the price run or not...or even remain above the $34 spot price level.  As of 5:16 a.m. Eastern time, silver is up about 20 cents.  Ted Butler said that JP Morgan added to their short position in silver again last week...and he's guessing that they are now short about 18,000 Comex futures contracts.  We get the monthly Bank Participation Report on Friday as well, so we'll find out soon enough.

Volumes in both metals, as of 5:12 a.m. Eastern time, are already starting to get up there, so even these tiny rallies are not going unopposed...although most of the volume is high-frequency trading.  The dollar index isn't doing much of anything.

That's all I have for today.  I hope your Wednesday goes well...and I'll see you here tomorrow.

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