http://www.caseyresearch.com/gsd/edition/eric-sprott-central-bankers-are-gaming-gold/
¤ YESTERDAY IN GOLD & SILVER
Gold rallied in early Far East trading on their Monday, but that didn't last long before it got sold back to unchanged from Friday's close. Selling pressure showed up at the Comex open once again...and the low price tick of the day [$1,568.70 spot] came at 2:45 p.m. in New York. From there it rallied a few dollars into the 5:15 p.m. Eastern time electronic close.
Gold ended the trading day at $1,574.60 spot...down $2.20. Net volume was pretty light...around 105,000 contracts or so.
Silver followed the same path as gold did yesterday, except for the fact that there was a smallish rally in the early going in London. From there it traded sideways before meeting the same fate as gold at the 8:20 a.m. Comex open in New York.
The low price tick [$28.35 spot] came fifteen minutes after the 1:30 p.m. Eastern time Comex close. From there it rallied a bit into the close of trading.
Silver finished the Monday session at $28.54 spot...down 4 cents. Volume was around 31,000 contracts.
The dollar index opened at the 82.27 mark on Sunday night in New York...and spiked up to its high of the day [82.47] around 9:30 a.m. in London. From there it declined slowly for the rest of Monday...finishing the day at 82.15...down 12 basis points from its close on Friday.
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The CME's Daily Delivery Report for 'Day 3' of the March delivery month showed that 39 gold and 21 silver contracts were posted for delivery tomorrow within the Comex-approved depositories. The link to that activity is here.
There was a small withdrawal from GLD again yesterday. This time it was only 19,354 troy ounces. An authorized participant also made a withdrawal from SLV yesterday to the tune of 140,983 troy ounces.
The U.S. Mint had a sales report yesterday. They sold 5,500 ounces of gold eagles...and a chunky 763,000 silver eagles.
Over at the Comex-approved depositories on Friday, they had a rare day where no silver was either shipped in or shipped out.
Nick Laird sent me a couple of charts over the weekend. They are the Intraday Average Gold/Silver Price Movement for the month of February. Starting around 2:20 p.m. Hong Kong time, the sell-off during February was relentless...with only slight differences in timing as to when the selling stopped. For both gold and silver, those time occurred during the electronic market in the New York afternoon, long after the Comex had closed for the day.
(Click on image to enlarge)
selected news and views.....
Jonathan Weil: Too-Big-to-Fail Crowd Turns on One of Their Own
There's a scandal brewing at the American Securitization Forum -- and sure to be a lot of schadenfreude to follow.
The trade association "fell into turmoil last week when most of the board resigned in a dispute with the group's executive director over governance and bonuses," Bloomberg News reported today, citing six unnamed people familiar with the matter. Members that quit include Bank of America Corp., JPMorgan Chase & Co., Deutsche Bank AG and Citigroup Inc.
The article said the resignations came after the board tried, but failed, to remove the forum's executive director, Tom Deutsch. Part of the dispute reportedly concerned bonuses he was paid. Deutsch didn't return phone calls. The forum lobbies and holds conferences for the securitization industry, which packages loans and other financial assets into securities.
This short op-ed piece by Bloomberg columnist Jonathan Weil was posted on their website during the Denver lunch hour yesterday...and I thank Manitoba reader Ulrike Marx for sending it along.
Gretchen Morgenson: Promises, Promises at the New York Fed
Two weeks ago, I wrote a column about a secret agreement struck in July 2012 by the Federal Reserve Bank of New York and Bank of America. The existence of the confidential deal was disclosed recently in court filings, which showed the New York Fed releasing Bank of America from all fraud claims on mortgage securities the Fed had bought as part of the government’s rescue of the American International Group in 2008.
The agreement spells out the terms of a deal in which the New York Fed received $43 million from Bank of America’s Countrywide unit. The money changed hands to settle a narrow dispute involving cash flows on several mortgage securities held by an investment vehicle, known as Maiden Lane II. That vehicle was created by the New York Fed as part of the rescue of A.I.G., which had held the Countrywide securities. The previously confidential agreement released Bank of America from all litigation claims on the securities held by Maiden Lane II.
But in exchange for that $43 million, the New York Fed did something else for Bank of America. It agreed to testify on behalf of the bank in its legal battle against A.I.G. over fraud claims.
This 2-page essay was posted on The New York Times website on Saturday...and it's courtesy of Phil Barlett.
Ambrose Evans-Pritchard: Brave Ireland is the poster-child of EMU cruelty and folly
It has endured a fiscal squeeze of 16pc of GDP. It has stabilized the colossal debts left from taking on the gambling losses of Anglo Irish Bank at EU behest, that is to say from shielding German, British, Dutch and Belgian lenders from systemic contagion at a critical moment.
It has clawed its way back to market credibility, issuing bonds at respectable rates. “Our last issue of routine 3-month treasury bills was at 0.26pc, not quite what Germany gets but very low,” said finance minister Michael Noonan.
It was spared serious contagion from last week’s anti-austerity revolt in Italy, evidence of sorts that the Celtic Tiger is off the sick list. Deo volente, it will be the first of the EMU victim states to regain its sovereignty by early next year and escape control of the EU-IMF Troika, though it will answer to inspectors for another 20 years and the yet unborn will be paying off the €67bn of Troika indenture until 2042.
Thirty years to get out from under a crushing debt load...paying back loans which were created out of thin air. What kind of deal is that? Ireland is not out of the woods yet...not by a long shot as Ambrose explains. This story was posted on The Telegraph's website early Sunday evening GMT...and I thank Roy Stephens for his first offering of the day.
Hundreds of thousands march against austerity in Portugal
Hundreds of thousands of people took to the streets of Lisbon and other Portuguese cities Saturday to protest against the government's austerity measures aimed at rescuing the debt-hit eurozone nation.
The rallies were organised by a non-political movement which claimed 500,000 marched in the country's capital and another 400,000 in the main northern city of Porto. There have been no official estimates of the crowds.
But the mood of the crowd was clearly political, calling for new elections with banners declaring "Portugal to the polls!" and "If you fall asleep in a democracy, you wake up in a dictatorship".
This AFP story appeared on the france24.com Internet site very late on Sunday night Europe time...and I borrowed it from yesterday's edition of the King Report.
Swiss Voters Approve a Plan to Severely Limit Executive Compensation
Swiss citizens voted Sunday to impose some of the world’s most severe restrictions on executive compensation, ignoring a warning from the business lobby that such curbs would undermine the country’s investor-friendly image.
The vote gives shareholders of companies listed in Switzerland a binding say on the overall pay packages for executives and directors. Pension funds holding shares in a company would be obligated to take part in votes on compensation packages.
In addition, companies would no longer be allowed to give bonuses to executives joining or leaving the business, or to executives when their company was taken over. Violations could result in fines equal to up to six years of salary and a prison sentence of up to three years.
Filed from Geneva, this very interesting read was posted on The New York Timeswebsite on Sunday...and I thank Phil Barlett for his second contribution to today's column.
Italian newcomer Grillo predicts collapse in six months
The new third power in Italian politics, former comedian and populist Beppe Grillo, has predicted financial and political meltdown within months. He said that Italy would have to renegotiate its debt repayments.
"I'd give the old parties another six months - then it will be all over here," Grillo said in excerpts of the interview released on Saturday ahead of Focus' publication. "Then they won't be able to cover pension payments or public sector salaries anymore."
"We are being crushed – not by the euro, but by our own debts. If the interest repayments constitute 100 billion euros ($130 billion) per year, then we're dead. There is no alternative," he told Focus. Any ripples on among banks or investors, Grillo said, would just have to be absorbed like in other areas of trading - likening government bonds to company shares. "If I buy shares in a company that then goes bankrupt, then that's my bad luck. I have taken a risk, and lost out."
This...and the two stories that follow...certainly indicate that it's not "business as usual" in Italy for the time being. This articled was posted on the dw.deInternet site on Saturday...and I thank reader Norbert Wangnick for bringing it to our attention.
Italy paralysed as Grillo plots exit route from euro
Italy plunged deeper into political chaos this weekend after Beppe Grillo, the quixotic former comedian who holds the balance of power in parliament, suggested that the country may have to abandon the euro and return to the lire.
The rebel comic's warning came amid a growing rebellion among grass-roots supporters of his Five Star Movement, with 150,000 signing a petition calling for him to open up dialogue with the centre-Left Democratic Party, the biggest force in parliament.
At 127 per cent of gross domestic product (GDP), it is the highest in the euro zone after Greece. "Right now we are being crushed, not by the euro, but by our debt," he told Focus, a weekly news magazine. "When the interest payments reach €100 billion a year, we're dead. There's no alternative."
This Italy-related story showed up in The Telegraph on Saturday...and it's courtesy of Marshall Angeles.
Cash Airlift Helped Avert Greek Bank Run During Debt Crisis
Greece's central bank had billions of euros of banknotes shipped in from other central banks to avert a bank run during the country's debt crisis as depositors withdrew their money, newspaper To Vima reported on Sunday.
Fears the debt-laden country might ditch the euro and return to the drachma led Greeks to pull out billions of euros of savings in the last three years, stashing their cash under mattresses or in safe deposit boxes.
"While many talked about a lack of liquidity in the economy, the cash circulating ... had no historical precedent," the paper said, citing central bank officials it did not name.
Cash in circulation jumped to 48 billion euros ($62.32 billion), about a quarter of gross domestic product (GDP), in June 2012, from 20 billion before the crisis erupted, way above normal ranges of 6 to 8 percent of GDP in developed economies, the paper said.
This Reuters piece, filed from Athens, ended up on The New York Times website on Sunday morning...and I thank Phil Barlett for his third offering in today's column.
Ten King World News Blogs/Audio Interviews
1. Gerald Celente: "Gold, Silver and the Frightening "Next Great Trend". 2.Chart: "China Can Now Buy World's Gold Reserves Twice Over". 3. Rob Fitzwilson: "Watch Gold and Silver as Central Planners Face Herculean Task". 4. Matthew Goetzke: "The 2 Gold Charts Which Crush Mainstream Media Propaganda". 5. Ron Rosen: "Charts That Tell You All You Need to Know About Gold and Stocks". 6. Michael Pento: "Why, if You Think About it, Were All Screwed". 7. James Turk: "The Single Most Important Chart For All of 2013". 8. Approximity: "The Roadmap to $4,866 Gold Within 2 Years". 9. The first audio interview is with Dr. Stephen Leeb...and the second audio interview is with Jim Sinclair.
Eric Sprott: Central Bankers Are Gaming Gold
I would hypothesize that the central bankers know their policy of printing money is the most irresponsible thing imaginable, and they are suppressing gold and silver prices to hide their irresponsibility. When one is printing that much money, gold and silver prices are the first things you would expect to rise. If we saw gold going to $2,000/oz, the price of oil would probably go to a new high and the price of agricultural commodities would go up. Then you would have a huge inflation problem on your hands.
Based on my research, I believe the Western central banks have been surreptitiously supplying gold to the market. I say this because the demands I see for physical gold are way beyond the supply of gold. The annual gold supply has not changed in 12 years, and demand just keeps increasing from China, India, the U.S. Mint and silver and gold coin sales; even the non-Western central banks are buying gold. Where is this gold coming from? I think the Western central banks are selling gold to keep the lid on the price so everyone thinks their monetary policies are benign. Nothing could be farther from the truth.
This interview was posted over on theaureport.com Internet site yesterday and it's a must read for sure.
Ted Butler: Highest Concentrated Position in Silver in History
In his latest market update, Ted Butler’s calculations show that we are witnessing a historic moment in time: the silver short position by one big player in the market has never been as concentrated as today. Please do not confuse relative concentration with the absolute volume. Unfortunately, regular investors and individuals feel the consequences of this situation as this too large concentrated position sets the short term direction of the silver price. This is exactly the long term premise from Ted Butler, and the core of his silver manipulation thesis. There is no other publicly traded asset or commodity that has such a concentration.
We were granted permission from Ted Butler to make the following excerpt public.
This short, but absolute must read commentary was posted on thegoldsilverworlds.com Internet site on Sunday.
¤ THE WRAP
Over the last three reporting weeks, the total commercial net short position in COMEX silver has declined by 21,000 contracts, or the equivalent of 105 million oz. Let's put that into perspective. During that time, the world mined less than 45 million oz, recycled an additional 15 million oz and consumed that 60 million oz of total silver production. Investors also added 15 million oz to holdings (SLV and COMEX alone) over that same time period...and the price dropped by $4...or 12%. How in the world could the commercials on the COMEX buy 105 million paper oz on a 12% decline in price with the background I just described in a market that wasn’t manipulated? I’m not kidding – if anyone has a legitimate explanation, please drop me a line. - Silver analyst Ted Butler...02 March 2013
With gold down a couple of bucks...and silver down a few pennies on Monday, it was a shock to everyone to see their associated equities get slammed once again. I would suggest that this sell-off had more to do with forced liquidation than panic liquidation. I'm sure that virtually every precious metal mutual fund that contains their equities are getting massive redemptions...and the funds are forced to sell whether they wish to or not.
It can end up being a vicious circle at times...and this is certainly one of those. Here's the 3-year HUIchart as 'for instance'.
As many pundits have stated, the XAU/GOLD Index is at an all-time record low...and here's the 3-year chart for that.
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I have no idea whether we'll go lower from here or not. But as I've been saying for years, the miners will never address the real issue...and that's the price management scheme in all four precious metals by JPMorgan et al. And as I said last week, they'd rather let their companies crash and burn than live up to their fiduciary responsibilities to their shareholders...and if you doubt me, just pick up the phone and talk to any precious metal mining company about this. Normally I'd tell you what the answer will be, but you should find out on your own. But I can tell you that they don't give a damn about you...and that's one of the things you'll find out pretty quick.
And don't expect anything from either the World Gold Council or The Silver Institute. The reason they are there is to make sure that this issue never sees the light of day within the gold and silver mining industry.
As Sprott Asset Management's John Embry said over a decade ago...the miners are either "ignorant, naïve...or complicit." Two of those three cop-outs existed ten years ago, when it was just us "conspiracy theorists" pounding at the gates. Well, conspiracy theory has now become conspiracy fact...and "ignorant and naïve" no longer apply...as everyone one of them knows what's going on, even if they won't publicly admit it. And the fact that they aren't doing anything means that they are all complicit now...silent co-conspirators along side JPMorgan et al. You couldn't make this stuff up.
In overnight trading, the gold price rallied until about 3:00 p.m. in Hong Kong...and has since rolled over, but is heading a bit higher in London as I hit the 'send' button. Silver rallied even more strongly, but got hammered as it tried to break above the $29 spot price mark going into the London open.
Gold volume, as of 5:15 a.m. Eastern time, is slightly higher than 'normal' for this time of day...and silver's volume is substantially higher, as I suspect that JPMorgan had to throw a lot of short contracts at that rally to prevent it from blowing sky high, which it would have done had they not shown up to put out the fire. The dollar index has been heading lower all night...and as of this writing is down about 23 basis points. As I hit the 'send' button at 3:20 a.m. Eastern time, gold is up about seven bucks...and silver is up 30 cents.
Today, at the close of Comex trading, is the cut-off for this Friday's Commitment of Traders Report. Last Tuesday we had a big rally in both metals, which really distorted the COT numbers in last Friday's report. But since then, JPMorgan et al have got prices back down again, so if things don't blow up again today, we might actually get a more realistic look at the short positions in both gold and silver on Friday. We'll just have to wait and see what happens in New York, as that's where all the trading activity that really matters, takes place.
See you tomorrow.
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