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- Top 5 Silver And Gold Miners In 2012
- Earnings, Housing Offer Reason For Stock Market Optimism
- 3 Homebuilders To Avoid, 1 To Consider Now
- SEC Plays Patty Cake With Big Banks
- Teck Resources: A Wager On Metallurgical Coal
- Precious Metals: The Only Alternative
- Warren Buffett Trashes Gold, But What About Silver?
- Permanent Gold Backwardation
- WATCH: Pollock on Metals and 1979 Redux
- Silver Update: “Socialism Fails”
- Feb 12, 1965 : De Gaulle v. the Dollar
- The three demands of silver
- Gold in permanent backwardation
- Jim Puplava: Gold & Silver Buying Basics
- Europe’s black cygnets
- Feb 12, 1851 : Edward Hargraves discovers Gold at Bathurst
- Gold, Silver, War, Systemic Collapse & Social Unrest: Gerald Celente
- Flagship EU gas pipeline project 'near collapse'
| Posted: 12 Feb 2012 04:46 AM PST I like keeping track now that I am buying silver bullion. A few rounds here and there. I try to record daily closing costs? but, i really don't understand it. Bid, ask, spot,, are any of these daily closing costs? Searched around and see meanings for these but, none mention whether they are closing cost of silver. Help... Thanks Joe | ||||||||||||||||||
| Top 5 Silver And Gold Miners In 2012 Posted: 12 Feb 2012 03:23 AM PST By Plan B Economics: So far, 2012 YTD has been a stellar start for equity markets. Not only are equities up across the board, so are precious metals. While the gold-miners-to-gold-bullion ratio remains unusually low, some mining stocks have tracked the broader gains. (Note: the gold-miners-to-gold-bullion ratio has been suppressed over the past few years with the growing popularity of ETFs exposed to the price of gold bullion.) Below, I highlight the 5 gold and silver mining stocks (with a market cap over $2b) that have performed best so far this year:
While momentum has been strong, that may not necessarily mean these are great investments. However, it does suggest these are higher beta stocks that may Complete Story » | ||||||||||||||||||
| Earnings, Housing Offer Reason For Stock Market Optimism Posted: 12 Feb 2012 02:27 AM PST By David Denniston: It's been over three years since our modern "Titanic" moment when Lehman Brothers, Washington Mutual, and AIG collapsed. Many companies have been shuttered permanently. Many clients and friends have lost jobs and are struggling financially in our current recession. Investors and pundits alike have been watching the turbulent, icy waters of global finance. Similar to the Titanic disaster, with public pressure, suddenly there has been more patrolling and monitoring of our financial ice floes. Where are the icebergs and what lurks beneath their surface? How deep do these icebergs go? Nobody fully grasps the situation and fear of the unknown had gripped the financial markets in 2011, creating more volatility and very little growth. We cannot discount the icebergs of the PIIGS and our own long-term sovereign debt problems. However, in 2012, there are reasons for hope. Maybe, just maybe - there are some silver linings ringing around those gloomy Complete Story » | ||||||||||||||||||
| 3 Homebuilders To Avoid, 1 To Consider Now Posted: 12 Feb 2012 01:43 AM PST By Mel Daris: Homebuilding has arguably been the worst hit industry of the Great Recession. New home sales fell from over 1,000,000 per year at the height of the housing bubble to approximately 300,000 in 2011. This equates to an over 70% drop in the industry's annualized volume. Add to this drop a fall in the median selling price, and the collapse in the share prices of the large publicly traded homebuilders is understandable. For equity investors looking past this calamitous change there is potentially a generational opportunity to buy into an essential industry of the United States economy. The most intriguing of the homebuilders are Toll Brothers (TOL), Pulte (PHM), Lennar (LEN) and KB Homes (KBH). Toll Brothers is a homebuilder that focuses on the luxury segment of homebuilding. This segment historically has allowed Toll Brothers to post stronger margins than its competitors with pre-2007 gross margins in excess of 25%. Like Complete Story » | ||||||||||||||||||
| SEC Plays Patty Cake With Big Banks Posted: 12 Feb 2012 01:19 AM PST By Jake Zamansky: We've been demanding for years now answers to a core question coming from the financial collapse of 2008. Why have the securities regulators, namely the Securities and Exchange Commission, failed to punish the Wall Street banks that fueled the mortgage crisis by underwriting toxic mortgages and selling them to the public? Well, now we know a part, perhaps a very large part, of the answer. The SEC's lack of fraud charges against virtually every big bank does not stem from a lack of will on the SEC's part. No, the answer is much worse. The SEC's soft-shoe approach to Wall Street's litany of sins is part of its legal strategy of dealing with these financial giants. The SEC, the purported "investor-protection" agency, has simply decided to go light on the banks, according to an extremely thorough analysis in last Friday's New York Times. And we believe that strategy to be Complete Story » | ||||||||||||||||||
| Teck Resources: A Wager On Metallurgical Coal Posted: 12 Feb 2012 12:38 AM PST By James Goodwin: Teck Resources (TCK) is a diversified miner with a heavy emphasis on coal, copper and zinc. It will need strong metallurgical coal prices to repeat its results. (All amounts are Canadian dollars, which is currently just about at par with the US dollar. Tonnes as well - 1 tonne to 1.1 tons.) Teck was hit hard by the credit crunch in 2009. Having used the proceeds of $9.8 billion raised through debt to buy the 60% it didn't already own of Fording Canadian Coal Trust in July 2008, Canada's largest metallurgical coal producer, the sudden fall in commodity prices meant Teck almost went bankrupt on the back of this enormous debt. However, Teck managed to cut costs and seek equity financing (in the form of a 17% stake for China Investment Corp) in 2009. Teck released its unaudited 2011 statement (full pdf of results) which gives us a good opportunity Complete Story » | ||||||||||||||||||
| Precious Metals: The Only Alternative Posted: 11 Feb 2012 10:39 PM PST by Jeff Nielson, Bullion Bulls Canada
The scenario is a familiar one for veteran investors in this sector. Gold and silver have again become temporarily imprisoned in a trading range. Meanwhile the anti-gold and silver propaganda machine is busy sowing doubt and creating uncertainty. Their goal is simple: play upon the fears of newer investors to the sector, or wear them out via ordinary impatience. This piece is especially aimed at those newer investors, because it delivers a simple yet irrefutable message: you have no choice other than to protect yourselves with precious metals. To illustrate how the bankers and their servant politicians have forced us into focusing our investments in precious metals requires visiting and understanding three concepts. Turn Back The Clock: Go back even 15 years in time, and the world of investing bears absolutely no resemblance to the Carnival of Fools which we see today. Back in that era, the vast majority of financial advisors preached a single mantra: "buy and hold". The premise is (was) simple: those people who place short-term bets in the market are not investors, they are gamblers – period. Investing by definition implies positioning one's self in a particular sector/company, and then allowing the time for that investment opportunity to mature/ripen. The principle factor which separates investing from gambling is time. Put another way, investors (as opposed to gamblers) provide themselves with the luxury of waiting for the optimal time to harvest their profits. They give their investment the necessary time for the fundamentals which support that investment to assert themselves. Conversely the gamblers who do nothing but make serial, short-term bets are merely momentum players. Time their bet perfectly (or nearly so) and they will make a profit. Fail to do so and they suffer inevitable losses. How did the world of investing devolve from the sober, careful allocation of funds into frantically flitting from one (short-term) bet to another like a swarm of rabid butterflies? Simple. The vast majority of financial advisors finally became aware of their own gross incompetence. Not having the slightest clue about where our economies have been headed, these "experts" eventually acknowledged (after being surprised by one market crash after another) that when it came to investing they were much better at destroying fortunes than creating them. At the same time, these highly-paid professionals(?) were not prepared to publicly acknowledge their own, massive deficiencies (and forgo the commissions which they parasitically rake-in). Thus instead of admitting that they were no longer capable of providing competent advice for investing, they absurdly announced that investing itself no longer existed. "Buy and hold is dead," they (nearly) unanimously proclaimed. Those members of the general public who had previously been investors suddenly discovered that their own financial advisors had given them all implicit ultimatums: change from investors into gamblers, or learn to invest on your own. Our website (and company) was formed for all those investors who don'twant to be gamblers, who do want to take control of their own financial futures, and who don't like ultimatums (from individuals who are supposed to be working for them). In fact, "buy and hold" is not dead when it comes to the precious metals sector. Returning to the era of investing, competent financial advisors would tell their clients that they need to provide (at least) three to five years in order to give a particular investment opportunity the time necessary to realize its potential. Pick any point in time throughout the 10+ year bull market for gold and silver, and one will see that anyone who gave that investment 3 – 5 years to "ripen" would have been well-rewarded for their time. It would be difficult to find a single other sector which boasts such a track record. However, when we also look at the future prospects of precious metals, it then becomes impossible to find a single other sector anywhere in our economies which demonstrates not only a long track-record of success but unparallelled fundamentals for the future. | ||||||||||||||||||
| Warren Buffett Trashes Gold, But What About Silver? Posted: 11 Feb 2012 10:33 PM PST Eric McWhinnie February 10, 2012 1:29pm
In a recent Fortune article, Warren Buffett provided a glimpse into his upcoming annual shareholder letter. Buffett used this opportunity to once again remind everyone how much he dislikes gold. He cites gold's limited industrial demand and places the precious metal in a category of assets that "will remain lifeless forever." However, there are two precious metals that are considered to be monetary safe-havens. Sometimes referred to as gold's little brother, silver has also acted as a hedge against uncertainty and fiat currencies. Furthermore, its industrial use is far from being lifeless. Buffett paints another analogy of the world's gold stock as a useless cube that would fit within a baseball infield. At $1,750 per ounce, this pile of gold would be worth $9.6 trillion. He then visualizes another pile where as an equal amount, you could buy all U.S. cropland, 16 Exxon Mobils and still have $1 trillion left over for "walking-around money." He wonders what investor with $9.6 trillion would select the gold pile over the latter. While Buffett's thinking about gold is somewhat understandable, he continues to omit silver from the conversation. Maybe Buffett is still sour from his past venture into the most conductive metal known to man? | ||||||||||||||||||
| Posted: 11 Feb 2012 10:29 PM PST By Keith Weiner, Casey Research The Root of the Problem Is Debt The time is now fast approaching when all debt will be defaulted on. In our perverse monetary system, one party's debt is another's "money." A debtor's default will impact the creditor (who is usually also a debtor to yet other creditors), causing him to default, and so on. When this begins in earnest, it will wipe out the banking system and thus everyone's "money." The paper currencies will not survive this. We are seeing the early edges of it now in the euro, and it's anyone's guess when it will happen in Japan, though it seems long overdue already. Last of all, it will come to the USA. The purpose of this article is to present the early-warning signal and explain the actual mechanism to these events. Contrary to popular belief, it will not happen because the central banks increase thequantity of money to infinity. The money supply may even be contracting (which is what I expect). To understand the terminal stages of the monetary system's fatal disease, we must understand gold.
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| WATCH: Pollock on Metals and 1979 Redux Posted: 11 Feb 2012 09:13 PM PST from wepollock: I outline this chronology which includes warnings from Kennedy regarding the loss of gold reserve, the Military Industrial Complex, Steel Price Controls, and the process of the Giant Sucking Sound. I also talk about the current scarcity of jobs against the future potential for the US to be a major energy producer in 2030. 1936 Roosevelt Second New Deal Kennedy Steel Crisis- In this serious hour in our nation's history, when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking Reservists to leave their homes and families for months on end, and servicemen to risk their lives — and four were killed in the last two days in Viet Nam — and asking union members to hold down their wage requests, at a time when restraint and sacrifice are being asked of every citizen, the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans. | ||||||||||||||||||
| Silver Update: “Socialism Fails” Posted: 11 Feb 2012 09:01 PM PST from BrotherJohnF: ~TVR | ||||||||||||||||||
| Feb 12, 1965 : De Gaulle v. the Dollar Posted: 11 Feb 2012 04:30 PM PST Time | ||||||||||||||||||
| Posted: 11 Feb 2012 02:33 PM PST Let the projectile throwing begin..... | ||||||||||||||||||
| Gold in permanent backwardation Posted: 11 Feb 2012 02:20 PM PST Permanent Gold Backwardation By Keith Weiner http://www.caseyresearch.com/cdd/per...-backwardation The Root of the Problem Is Debt Worldwide, an incredible tower of debt has been under construction since President Nixon's 1971 default on the gold obligations of the US government. His decree severed the redeemability of the dollar for gold and thus eliminated the extinguisher of debt. Debt has been growing exponentially everywhere since then. Debt is backed with debt, based on debt, dependent on debt and leveraged with yet more debt. For example, today it is possible to buy a bond (i.e., lend money) on margin (i.e., with borrowed money). The time is now fast approaching when all debt will be defaulted on. In our perverse monetary system, one party's debt is another's "money." A debtor's default will impact the creditor (who is usually also a debtor to yet other creditors), causing him to default, and so on. When this begins in earnest, it will wipe out the banking system and thus everyone's "money." The paper currencies will not survive this. We are seeing the early edges of it now in the euro, and it's anyone's guess when it will happen in Japan, though it seems long overdue already. Last of all, it will come to the USA. The purpose of this article is to present the early-warning signal and explain the actual mechanism to these events. Contrary to popular belief, it will not happen because the central banks increase the quantity of money to infinity. The money supply may even be contracting (which is what I expect). To understand the terminal stages of the monetary system's fatal disease, we must understand gold. Defining Backwardation First, let me introduce a key concept. Most traders define "backwardation" for a commodity as when the price of a futures contract is lower than the price of the same good in the spot market. In every market, there are always two prices for a good: the bid and the ask. To sell a good, one must take the bid. And likewise, to buy the good, one must pay the ask. In backwardation, one can sell a physical good for cash and simultaneously buy a futures contract, and make a profit on the arbitrage. Note that in doing this trade, one's position does not change in the end. One begins with a certain amount of the good and ends (upon maturity of the contract) with that same amount of the good. Backwardation is when the bid in the spot market is greater than the ask in the futures market. Many commodities, like wheat, are produced seasonally. But consumption is much more evenly spread around the year. Immediately prior to the harvest, the spot price of wheat is normally at its highest in relation to wheat futures. This is because wheat inventories in the warehouses are very low. People will have to pay a higher price for immediate delivery. At the same time, everyone in the market knows that the harvest is coming in one month. So the price, if a buyer can wait one month for delivery, is lower. This is a case of backwardation. Backwardation is typically a signal of a shortage in a commodity. Anyone holding the commodity could make a risk-free profit by delivering it and getting it back later. If others put on this trade, and others, and so on, this would push down the bid in the spot market and lift up the ask in the futures market until the backwardation disappeared. The process of profiting from arbitrage compresses the spread one is arbitraging. Actionable backwardations typically do not last long enough for the small trader to even see on the screen, much less trade. This is another way of saying that markets do not normally offer risk-free profits. In the case of wheat backwardation, for example, the backwardation may persist for weeks or longer. But there is no opportunity to profit for anyone, because no one has any wheat to spare. There is a genuine shortage of wheat before the harvest. Why Gold Backwardation Is Important Could backwardation happen with gold? Gold is not in shortage. One just has to measure abundance using the right metric. If you look at the inventories divided by annual mine production, the World Gold Council estimates this number to be around 80 years. In all other commodities (except silver), inventories represent a few months of production. Other commodities can even have "gluts," which usually lead to a price collapse. As an aside, this fact makes gold good for money. The price of gold does not decline, no matter how much of the stuff is produced. Production will certainly not lead to a "glut" in the gold market pulling prices downward. So, what would a lower price on gold for future delivery mean compared to a higher price of gold in the spot market? By definition, it means that gold delivered to the market is in short supply. The meaning of gold backwardation is that trust in future delivery is scarce. In an ordinary commodity, scarcity of the physical good available for delivery today is resolved by higher prices. At a high enough price, demand for wheat falls until existing stocks are sufficient to meet the reduced demand. But how is scarcity of trust resolved? Thus far, the answer has been: via higher prices. Higher prices do coax some gold out of various hoards, jewelry, etc. Gold went into backwardation for the first time in December 2008. One could have earned a 2.5% (annualized) profit by selling physical gold and simultaneously buying a February 2009 future. Gold was $750 on December 5, but it rocketed to $920 – a gain of 23% – by the end of January. But when backwardation becomes permanent, then trust in the gold futures market will have collapsed. Unlike with wheat, millions of people and many institutions have plenty of gold they can sell in the physical market and buy back via futures contracts. When they choose not to, that is the beginning of the end of the current financial system. Why? Think about the similarities between the following three statements: "My paper gold future contract will be honored by delivery of gold." "If I trade my gold for paper now, I will be able to get gold back in the future." "I will be able to exchange paper money for gold in the future." The reason why there was a significant backwardation (smaller backwardations have occurred intermittently since then) is that people did not believe the first statement. They did not trust that the gold future would be honored in gold. And if they don't believe that paper futures will be honored in gold, then they have no reason to believe that they can get gold in the future at all. If some gold owners still trust the system at that point, then they can sell their gold (at much higher prices, probably). But sooner or later, there will not be any sellers of gold in the physical market. Higher Prices Can't Cure Permanent Gold Backwardation With an ordinary commodity, there is a limit to what buyers are willing to pay based on the need satisfied by that commodity, the availability of substitutes and the buyers' other needs that also must be satisfied within the same budget. The higher the price, the more holders and producers are motivated to sell, and the less consumers are motivated (or able) to buy. The cure for high prices is high prices. But gold is different. Unlike wheat, gold is not bought for consumption. While some people hold it to speculate on increases in its paper price, these speculators will be replaced by others who hold it because it is money. Once the gold owners have lost confidence, no amount of price change will bring back trust in paper currencies. Gold will not have a "high enough" price that will discourage buying or encourage selling. Thus gold backwardation will not only recur, but at some point, it will stay in its backwardated state. In looking at the bid and ask, one other observation is germane to this discussion. In times of crisis, it is always the bid that is withdrawn – there is never a lack of asks. Permanent gold backwardation can be seen as the withdrawal of bids denominated in gold for irredeemable government debt paper (e.g., dollar bills). Backwardation should not be able to happen at all as gold is so abundant. However, the fact that it has happened and keeps happening means that it is inevitable and that, at some point, backwardation will become permanent. The erosion of faith in paper money is a one-way process (with some zigs and zags). But eventually, backwardation will become deeper and deeper (while the dollar price of gold is rising, probably exponentially). The final step is when gold completely withdraws its bid on paper. At that point, paper's bid on gold will be unlimited, and this is why paper will inevitably collapse without gold. Conclusion Permanent gold backwardation leading to the withdrawal of the gold bid on the dollar is the inevitable result of the debt collapse. Governments and other borrowers have long since passed the point where they can amortize their debts. Now they merely "roll" the debt and the interest as they come due. This leaves them vulnerable to the market demand for their bonds. When they have an auction that fails to attract bids, the game will be over. Whether they formally default or whether they just print the currency to pay, it won't matter. Gold owners, like everyone else, will watch this happen. If government bond holders sell their securities in response to this crisis, they will only receive paper backed by that same government and its bonds. But the gold owner has the power to withdraw his bid on paper altogether. When that happens, there will be an irreconcilable schism between gold and paper, with real goods and services taking the side of gold. And in a process that should play out within a few months once it gets started, paper money will no longer have any value. Gold is not officially recognized as the foundation of the financial system. Yet it is still a necessary component. When it is withdrawn, the worldwide regime of irredeemable paper money will collapse. | ||||||||||||||||||
| Jim Puplava: Gold & Silver Buying Basics Posted: 11 Feb 2012 11:48 AM PST
In this key Big Picture topic, Jim explains in depth how to both own and buy gold. Jim also answers more of your Q-Calls in this segment. Much More @ FinancialSense.com
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| Posted: 11 Feb 2012 10:54 AM PST By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness. Although the Greece default is the very obvious European black swan at the moment I thought it would be prudent to point out two other things happenning in Europe over the next 12 months that certainly have the potential for evolving from a cygnet into something bigger. Elections There a number of elections occurring across Europe over the next 12 months that have the potential to de-rail the current European status quo. Greece itself is supposed to be having a national election in April which is adding to the current debacle. Greek party leaders have more than one eye on their electorates at the moment which means the bailout negotiations have politicking on top of all the other issues. The consensus appears to be that Greek politicians are playing to their electorates, but will fold at the last minute. The idea being that they will be able to say to their voters that they put up a strong fight, but will ultimately do what is demand by the rest of Europe. This is obviously a bet on a politician's behaviour, so there is obvious downside risk. Greece elections, however, are not the greatest concern in my mind. Greece will be defaulting in some form or another this year, the elections influence is simply a question of how 'messy' that default becomes. Germany also has two state elections this year which are a chance for Merkel's Christian Democrats to regain the national majority they lost last year. It is believed that the worry about these election result was the source of the recent hamstringing of Angela Merkel by Volker Kauder, the floor leader of her party. Latest polls have Merkel's popularity at a two year high, however the results of the next state election in Saarland , to be held on March 25, are anything but predictable given recent history.
Following the Saarland election is another election on May 6 in the state of Schleswig-Holstein leading onto national elections in Autumn 2013. If Merkel's party is unsuccessful in the Saarland election then their will be significant pressure on her to re-assess her approach to European policy. Although both the Greek and German elections do add to the already unpredictable outcomes in the EuroZone they are not the major political risk. That place is left to France with presidential elections to be held on April 22 (first round) and May 6 (second round). These elections are very quickly becoming Franco-German.
The cross-border campaigning has already begun with a number of German politicians claiming political interference and one going as far as to call a recent Merkozy interview a "rather embarrassing" affair. Given that, at this point, European nations are still supposed to be political separate one has to wonder exactly what is going on. But that answer is easy to find as soon as you hear the man who is currently Mr Sarkozy's presidential front runner speak. François Hollande has said that although he is supportive of reducing the French budget deficit, he opposes constitutional limited on government budgets. He also wants to lower the rate at which fiscal cutbacks are made and he wants additional commitments from the EU around promoting economic growth and jobs. As you can see from the video Mr Hollande has been actively attacking Merkozy on the handling of the crisis and given that Angela Merkel has been returning fire during interviews it is very difficult to see how a win by Mr Hollande isn't going to lead to some serious complications for the current Franco-German centric Europe. Something to watch. Spain Although a default in Greece is likely to be disruptive, with direct contagion into Cyprus and market contagion in Portugal, the event is well known. Portugal itself is also a problem, but again this event it known and bond yields are reflective of the situation. In the scheme of things Portugal and Greece are relatively small and, although I think the market is underestimating the fallout, Europe is working on mechanisms that could potentially deal with the two countries along with Ireland. Italy is also a problem, but as I have explained previously Italy's issue is growth more than debt so the country already has the potential to right itself. That leaves Spain which I consider to be the major unrecognised problem. The country has seen its yields tumble since December on the back of the ECB's 3-year LTRO but there hasn't been anything in the economic metrics of the country to support such action. Spain has 23% unemployment and still rising, the banking system is under-capitalised and still has unknown exposure to the country's housing market collapse. On top of that the rising unemployment rates is pushing up bad loans in the banking system to 7.4%, a 17-year high, and is still rising. The country is also showing the same well known signs of what happens when you attempt government austerity when the private sector is attempting to deleverage without surplus in the external sector. Unemployment has sky-rocketed since 2007
Industrial production is falling
Internal demand is falling as unemployment and a private sector credit demand collapses
which ultimately leads to falling government revenues even as they are attempting austerity budgeting.
The Spanish government has already injected 30 billion euros into the banking system, but more is required and the government has suggested the banks need additional provisions of 50 billion Euros. As the data shows, this is is not a country that is on a sustainable path to recovery as the economy appears to be rapidly deflating. However, as I noted back in November, the new government of Mariano Rajoy doesn't seem to have any plans outside of continuing austerity based policy. There is no back-up mechanism in Europe big enough to save Spain which is why it is a concern to me that the financial markets don't appear to have fully recognised the risk associated with the country.
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| Feb 12, 1851 : Edward Hargraves discovers Gold at Bathurst Posted: 11 Feb 2012 10:00 AM PST culture. Gov. Au | ||||||||||||||||||
| Gold, Silver, War, Systemic Collapse & Social Unrest: Gerald Celente Posted: 11 Feb 2012 01:28 AM PST Yesterday in Gold and SilverAs I mentioned in 'The Wrap' section of yesterday's column, the gold price didn't do much in the Far East on Friday until about fifteen minutes before the London open...and then a not-for-profit seller showed up on the Globex trading system...and had gold down about fifteen bucks in short order. From there it traded sideways to up until about 11:30 a.m. local time in London. Then another seller showed up...and the gold price declined to its low of the day...$1,703.40 spot...with the low occurring about five minutes after the Comex opened in New York. The subsequent $20 rally lasted until about 11:10 a.m. Eastern...with the price topping out around the $1,724 spot mark. After that, the gold price traded more or less sideways for the rest of the New York trading session...although it did get sold off a bit once the Comex closed at 1:30 p.m...and the trading in the New York Access Market began. Gold closed at $1,722.10 spot...down $7.00 on the day. Net volume was pretty brisk at around 159,000 contracts...most of it of the meaningless HFT variety.
The silver price mirrored the gold price pretty much all day on Friday. Like gold, the low tick of the day in silver came at 7:25 a.m. Eastern...five minutes after Comex trading began in New York. From that low tick, $33.09 spot, silver also rallied, but ran into the same not-for-profit seller at 11:10 a.m. just as it was about to take out Thursday's closing price and penetrate the $34.00 spot price level once again. After the high was in, silver got sold off until well into the electronic trading session...and then proceeded to recover about half that loss going into the 5:15 p.m. close. Silver closed at $33.59 spot...down 31 cents on the day. Net volume was pretty decent at 37,000 contracts.
Here's the 30-day silver chart. Note how the $34.00 spot price level is being defended. One has to wonder why...and by whom? I think I know the answer to both.
(Click on image to enlarge) The dollar index chopped around between 78.6 and 78.8 until precisely 7:00 a.m. New York time, before a rally of some substance put in an appearance...and by 8:45 a.m. the dollar index had risen 40 basis points to 79.20. It could not hold that price level...and slid back to the 79 cent mark right at the close of trading in New York at 5:15 p.m. If you can match the precious metals price action to the dollar index movements, you've got a better eye than I do.
Like the rest of the U.S. equity markets, the gold shares gapped down...and then more or less followed the gold price from there. The HUI closed down 1.72% for the day...and 3.23% on the week.
The silver shares finished mixed on the day...and Nick Laird's Silver Sentiment Index closed down 1.05%.
(Click on image to enlarge) The CME's Daily Delivery Report showed that only 27 gold contracts and zero silver contracts were posted for delivery on Tuesday. The authorized participants deposited a very tiny 9,718 troy ounces of gold into GLD yesterday...and there were no reported changes in SLV. For the second day in a row there was no sales report from the U.S. Mint. Over at the Comex-approved depositories on Thursday, they reported receiving 681,699 ounces of silver...and shipped 832,769 ounces of the stuff out the door. The link to that activity is here. Well, the Commitment of Traders Report lived up to my worst fears. In silver, the Commercial traders were the not-for-profit sellers once again...as they increased their short position by a monstrous 5,921 contracts, or 29.6 million ounces. The total Commercial net short position in silver is now up to 34,650 contracts, or 173.3 million ounces. Back at the end of December, when silver hit $26 the ounce, the Commercial net short position in silver was all the way down at 14,100 contracts, or only about 71.0 million ounces. So, in the space of less than six weeks, the Commercial traders have added a bit over 20,000 contracts to their short positions...or 100 million ounces. If these commercial traders, who neither produce nor consume the metal, were not there to go short against all the new long positions being placed, then the price of silver would be well north of $100 the ounce right now. Readers ask me what I mean by 'not-for-profit' sellers...well, here they are. The Commercial traders are only there for one reason and one reason only...and that's to prevent the price from exploding to the outer edges of the known universe. Their rewards for doing this dirty work, besides making big profits on their engineered price declines, is protection from prosecution by the CME and the CFTC. It is also obvious to me that JPMorgan and the other large Commercial traders are in no rush to cover their obscene short positions. I'll have more on that when I discuss the Bank Participation Report further down. In gold, the not-for-profit Commercial traders added 11,210 contracts to their short positions, as the large and small speculators added to their long positions. The Commercial net short position is back up to 22.1 million ounces, which I'm sure Ted Butler isn't happy about either. I haven't posted this "Days of World Production to Cover Short Positions" graph for quite a while. Ted Butler asked Nick Laird to make it up for him many years ago. It's obvious from the chart that the four precious metals are the center of attention for the bullion banks...with silver being the most controlled...and that the '4 or less' traders [mostly JPMorgan in all four metals] are totally dominant in each, as the '5-8' traders [the difference between the green and red bars] are a very small portion of the total 'Days to Cover'.
(Click on image to enlarge) In silver, as of Tuesday, the '4 or less' traders were short 176.5 million ounces of the stuff, which is 3 million ounces more than the entire Commercial net short position. The '5 through 8' Commercial traders are short 38.2 million ounces of silver on top of that. When you remove the market-neutral spread trades from the Non-Commercial category, these eight traders hold more than 50% of the entire short position in the Comex futures market in silver. That's called a 'concentrated short position'...and the reason why silver is at $34/ounce, instead of $134/ounce...or more. The February Bank Participation Report, for positions held at the close of trading on Tuesday, February 7th, did not make for happy reading either. This data comes directly from the same data that the COT report is derived from, so for this one day per month, it's possible to see where the U.S. bullion banks fit into the grand scheme of things in the weekly COT report. In silver, four U.S. bullion banks are net short 20,840 Comex futures contracts. That's a 5,000 contract increase from the January report...and exactly what Ted Butler said it would be. I'd bet a lot of money that well north of 90% of this short position is held by JPMorgan and HSBC. When you remove the market-neutral spread trades from the Non-Commercial category, these four U.S. bullion banks are short 24.2% [minimum] of the Comex futures market in silver all by themselves. In February, the twelve non-U.S. banks that hold Comex future contracts were net short 1,195 between them...about 100 contracts each. In the January report, these same twelve banks were net long 100 contracts each! As you can tell, the price fixing operation in silver is strictly a U.S. bullion bank affair. In gold, the February Bank Participation Report showed that five U.S. bullion banks were net short 104,717 Comex futures contracts...which was an increase in their net short position of 24,791 Comex in one month. As of Tuesday, these five U.S. bullion banks were net short 25.4% of the Comex futures market in gold. In February, the nineteen non-U.S. banks were net short 35,747 Comex futures contract, which is an increase of about 4,100 contracts since the January report. On average, each non-U.S. bank is short less than 2,000 Comex contracts...but it's my guess that the short positions in gold are not equally distributed between banks, as some would be carrying larger short positions than others. Too bad they don't list the names of the banks as well...LOL! These nineteen non-U.S. banks hold a net short position of about 8.3% of the net open interest in gold. Once again it's obvious that the gold price fixing scheme is mostly 'Made in the U.S.A.' as well. Here's a chart that I dug up the other day. I have the website bookmarked, but rarely check it. However a story I read on Friday sort of jogged my memory. This is the Baltic Dry Index...and it's just set a new 10-year low. It's a combination of lousy international economic conditions...and the fact that a lot of shipping that was ordered in the boom times is now being delivered, further depressing the price.
The graph below is courtesy of Washington state reader S.A....and requires no further explanation from me.
Lastly is this Global Indices chart that Nick Laird sent me just after midnight. This last rally in the world's equity markets was on very narrow [and declining] volume...and as Nick said in his covering e-mail..."Appears to have topped out here. Soon we'll find out if the fiat-drenched rally is genuine or not." I agree.
(Click on image to enlarge) I have a lot of stories for your reading pleasure this weekend...and some of them are pretty big reads that I've been saving for today's column. So I hope you have time to read them all, as they are certainly worth it. It's obvious that the CFTC and the CME Group will do nothing to reign in the crooks in the Comex futures market. Permanent Gold Backwardation. Gold advocate Pollitt 'cared more about being right than being rich'. Withholding Consent from the Khan. Critical ReadsMF Global Trustee Sees $1.6 Billion Customer ShortfallMF Global commodity customers whose cash vanished when the firm collapsed last year are owed $1.6 billion — up significantly from previous estimates — the trustee tasked with recovering the money said on Friday. The revised figure reflects growing concerns that the trustee will not be able to claw back $700 million in customer money trapped overseas. Until now, the trustee did not include the $700 million when projecting the shortfall, hoping to avoid a battle with MF Global's British arm, which is holding the customer money. But now the trustee, James W. Giddens, has acknowledged that he is making little headway in recovering the money from KPMG, the court-appointed administrator for MF Global's British subsidiary. That money, Mr. Giddens said, was held for American clients who traded on foreign exchanges. This story was posted on The New York Times website late yesterday afternoon...and I thank reader Phil Barlett for sending it to me in the wee hours of this morning. The link is here. Pimco: Foreclosure Deal Cheaper Than PensionsThe government's deal with banks over their foreclosure practices after 16 months of investigations is cheap for the loan servicers while costly for bond investors including pension funds, according to Pacific Investment Management Co.'s Scott Simon. In what the U.S. called the largest federal-state civil settlement in the nation's history, five banks including Bank of America Corp. and JPMorgan Chase & Co. committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments yesterday. "This was a relatively cheap resolution for the banks," said Simon, the mortgage head at Pimco, which runs the world's largest bond fund. "A lot of the principal reductions would have happened on their loans anyway, and they're using other people's money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load." This Bloomberg story was posted yesterday afternoon...and I thank West Virginia reader Elliot Simon for providing it...and the link is here. Office & Retail Delinquencies Hit New Highs as Overall CMBS Late-Pays DropDelinquencies for office and retail loans have hit their highest-ever levels while overall U.S. CMBS delinquencies fell for the sixth straight month, according to the latest index results from Fitch Ratings. This story was posted on the fitchratings.com website...and I thank reader "Ryan" for sending it my way. The link is here. | ||||||||||||||||||
| Flagship EU gas pipeline project 'near collapse' Posted: 11 Feb 2012 01:28 AM PST  Europe's flagship project to bolster its energy security by building a major gas pipeline to the Caspian that skirts Russia is near collapse, analysts say, with a newly confident Turkey playing a key role. Recent developments, including decisions by Ankara, have undercut the viability of the Nabucco pipeline, a project to ship more than 30 billion cubic meters of gas per year from the Caspian and beyond to Europe. Repeated disputes between Russia and Ukraine over transit tariffs that led to supply cuts pushed the EU in 2009 to launch its Southern Gas Corridor initiative, of which Nabucco is the biggest project, to reduce its dependence on Russian gas supplies. |
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