A Conspiracy with a Silver Lining

The gold price trading action on Wednesday was pretty quiet. The low came during the lunch hour in Hong Kong...and from that point, didn't do much until just after the London a.m. gold fix. Then the gold price began to rise slowly but steadily...hitting its zenith [$1,441.30 spot] just minutes before lunchtime in New York. From there it got sold off, but recovered a bit going into the close...and finished up about three bucks from Tuesday.

Silver's trading pattern was virtually a carbon copy of gold's...except that silver's low price print occurred around the London open at 8:00 a.m. GMT. Silver's high tick [$35.02 spot] was at the same time as gold's...and the post-high price action in silver was identical to gold's...except that silver closed down a few pennies from Tuesday.

The world's reserve currency rose about fifteen basis points beginning at the Far East open...with the high price of the day [around 77.17 cents] coming shortly after 3:00 p.m. Hong Kong time...7:00 a.m. in London. Then, for the next eight hours, the dollar fell about sixty-five basis points, with its low coming shortly after 10:30 a.m. Eastern. From there it recovered about ten basis points going into the New York close.

To say that the dollar's fall precipitated the gold rally is more than a bit of stretch...as the gold rally began after the dollar began its decline...and ended about ninety minutes after the dollar's low price was in.

In a word, I'd say that the gold and silver stocks traded nervously yesterday. The HUI was all over the place on both sides of unchanged...and closed a hair in the black, up 0.17%.

The CME's Daily Delivery Report was a big surprise again yesterday...as the thought of zero deliveries in both gold and silver was not a scenario that ever entered my mind...but that's what the report showed. I don't remember a delivery report like this...ever. What is going on under the hood of the silver and gold market is starting to make me nervous. Here's the link to yesterday's report so you can see it for yourself.

The GLD ETF reported no change for the second day in a row...but over at the SLV ETF, it was a different story entirely as 2,277,591 troy ounces of silver were added. That's a fairly large chunk...and Ted says that they're owed many millions more.

The U.S. Mint also had their first sales report of the new month...and they reported selling 6,000 one-ounce gold eagles...but no silver eagles.

While on the subject of silver eagles...here's a chart that Washington state reader S.A. sent my way yesterday. One of these days even $37 silver eagles are going to seem cheap. I hope you have your share.

One more thing about silver bullion coins before I move on. I forgot to mention in this column yesterday that the Royal Canadian Mint is no longer taking orders for silver Maple Leafs at the moment. This development shouldn't surprise anyone. And the news is out that the U.S. Mint has now reduced its delivery schedule for silver eagle coins. The story on that is in the 'Critical Reads' a bit further down.

Over at the Comex-approved warehouses, it was a busy day for them on March 1st...as 1,217,844 ounces of silver were taken in at Brink's, Inc...and 262,616 ounces were shipped out of HSBC USA...for a net addition of 954,266 troy ounces. Ted Butler figures that they're getting ready to deliver a big shipment off the exchange...and had to bring in the silver to do it, as none of current owners were prepared to sell at these low prices. The link to the action is here.

¤ Critical Reads

JPMorgan Fighting 10,000 Lawsuits

I have a lot of stories today...even more than yesterday...and a lot of them are well worth your time. Yesterday I ran a short cnbc.com piece about the 10,000 lawsuits that had been filed against JPMorgan. Well, here's another story on this, but this one shines far more light on it.

The New York-based bank's legal woes range from individual actions against JPMorgan Chase to class actions with "potentially millions" of litigants to "regulatory/government investigations."The suits include common law tort and contract claims, statutory antitrust claims, securities claims and consumer protection claims, the bank said in its 10-K filing with the Securities and Exchange Commission.

Gee, I wonder what "regulatory/government investigations" and they may be referring to? Silver perhaps? It's a short read, which is well worth your time...and I thank GATA board member Adrian Douglas for sharing this with us...and the link to the story, posted over at thestreet.com, is here.

View full GSD edition

Fed Treasury Purchases `Monetizing Debt,' May Spur Inflation, Hoenig Says

This is no surprise, of course, but it's nice to hear it come from someone at the Fed. “Yes, we are monetizing debt,” Hoenig said in a speech to the Council on Foreign Relations in New York yesterday. “You buy bonds and you monetize debt. Right now, a lot of that is going into excess reserves so it is not having an immediate effect on inflation. It will initiate inflationary impulses. It takes time.”

They're out of time, as price inflation because of currency debasement is now rampant on the planet. I thank reader Scott Pluschau for sending this my way...and the link to the Bloomberg story is here.

View full GSD edition

Boise County files for bankruptcy

Here's Scott's second story of the day which was posted on the idahostateman.com website yesterday. In a move rare in the United States and perhaps unprecedented in Idaho, Boise County is filing for federal protection against a multimillion dollar judgment.

“This was not our first option. This was our last option,” said Jamie Anderson, chairwoman of the three-member Boise County Board of Commissioners. “This protects us so we can continue to operate.”

I'm sure they won't be the last county to hide behind Chapter 9 bankruptcy laws...and the link is here.

View full GSD edition

China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency Status

Reader Norbert Wangnick was the first one through the door with a Bloomberg story on this...but I'm going to use the zerohedge.com link for it that reader 'David in California' sent me...as TD's preamble is worth the read.

An announcement appeared shortly after midnight on the website of the People's Bank of China. Reuters provides a simple translation and summary of the announcement: "China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily."

This piece of news received a mere two paragraph blurb on Reuters...and not much more on Bloomberg...and was thoroughly ignored by the broader media. This is a longish read...but it's well worth your time, as this will pretty much drive a stake through the heart of the U.S. dollar in the long term...and maybe even in a shorter time frame than that. The link is here.

View full GSD edition

The Dollar Collapse Will Shock the World: James Turk

Interviewed yesterday by King World News, GoldMoney founder and GATA consultant James Turk remarked that since gold has been rising even as the dollar has been steady, the dollar's collapse likely would cause gold to soar -- and a dollar collapse looks imminent to Turk.

James gave that interview long before the previous story on China's attack on the dollar was in the public domain, so his dollar collapse may come sooner than even he expects. Time will tell. The link to this short blog is here...and it's a must read.

View full GSD edition

Saudi Arabia sends tanks to riot-hit Bahrain

My next story was one that I stole out of yesterday's King Report. Eyewitnesses reported seeing "15 tank carriers carrying two tanks each heading towards Bahrain" along the 25-km King Fahd causeway, which links the small island nation of Bahrain to Saudi Arabia. The story is posted over at the en.rain.ru website...and the link is here.

View full GSD edition

Paul jousts with Bernanke but presses no gold questions

That's the title from the GATA release on this story...but I'm going to use the zerohedge.com piece that was sent to me by reader George Findlay...as the TD's preamble is worth the read. The Zero Hedge title reads "Watch The Highlight Of Today's Congressional Hearing: Ron Paul vs. The Bernank"...and the link is here.

View full GSD edition

U.S. Mint reduces delivery of silver eagles

This was the story I mentioned further up in this column in the 'Yesterday in Gold and Silver' section. This is a GATA release...and I'm posting this in order to save myself the trouble of writing the preamble...as Chris Powell has already done the honours. The link is here.

View full GSD edition

The Silver Log [03.01.2011] - Silver in Two different markets

Here's an absolutely fascinating video clip from reader 'Don in Virginia'...and it's the SECOND video on the page...right below the one with Glenn Beck...at least that's where it was located when I posted it early this morning. It's amazing...and I've watched it a couple of times to see if I could pick any holes in his presentation...and I couldn't. It has to do with buying and selling the opening and closing prices of SLV over the years. This is a must watch...and you need to pay attention...plus watch it right to the end. The video is posted over at the crushthestreet.com website...and the link is here. I've sent it off to Nick Laird to see what he makes of it.

View full GSD edition

Despite rising gold price, Barrick won't hedge anymore, CEO says

I've ripped this Bloomberg story, along with Chris Powell's preamble, from a GATA release yesterday... Interviewed by Bloomberg Television's Adam Johnson at the BMO Capital Markets Global Metals and Mining Conference in Hollywood, Florida, Barrick Gold CEO Aaron Regent insisted that the company, once infamous for hedging its gold production to help central banks control the gold market, won't hedge anymore despite gold's rising price. The interview is six minutes long and you can find it linked here. It's probably worth listening to.

I would guess that this pretty much confirms that gold prices are destined to move higher from here.

View full GSD edition

Utah gold and silver money legislation advanced by committee

Here's another story that I stole from a GATA release yesterday...and this one is posted in yesterday's edition of The Salt Lake Tribune. A bill that recognizes U.S. gold and silver coins as legal tender and exempts their sale from the state capital gains tax passed the Utah House Government Operations Committee Wednesday.

Supporters say HB317, introduced by Rep. Brad Galvez, R-West Haven, is a first step to creating an "inflation-proof" alternative to the "paper dollar." The link is here.

View full GSD edition

A Conspiracy With a Silver Lining

Here's another story that showed up as a GATA release yesterday. This one was posted in the online edition of The New York Times yesterday. Chris Powell headlines it "Yikes! NYTimes (online) columnist finds silver price rigging plausible"...plus ads the comment that "Maybe the story will seep into the newspaper in another few decades." Somehow the author of this piece manages to write about the silver manipulation story without mentioning Ted Butler's [or GATA's] name. It's a longish read...but a must read...and the link is here.

View full GSD edition

Gold volume on Wednesday was almost the same as it was on Tuesday...and the preliminary open interest numbers show that gold's o.i. will increase once again when the final numbers are posted on the CME's website later this a.m.

Tuesday's final open interest increase for gold was pretty much as I expected. It rose 6,060 contracts.

Silver's volume on Wednesday was just under 50,000 contracts, which was similar to its volume on Tuesday as well. The preliminary open interest number is very tiny...and there doesn't appear that there was much deterioration in silver's open interest yesterday.

Tuesday's open interest did as I expected...it declined a small amount...down 412 contracts. This number won't be in tomorrow's Commitment of Traders report, but it doesn't matter.

March open interest continues to decline...and as of Thursday's preliminary report, is down to 2,005 contracts. That's less than half of what it was just a few days ago...and I would expect that this number will have declined even further by the time the final numbers are posted later this a.m.

Not that any of this matters at the moment, as only a few hundred contracts have been posted for delivery in the March contract so far this month...and as I mentioned above, no silver contracts were posted for delivery at all on Friday. This is very strange...like something out of the Twilight Zone.

The silver backwardation issue is just about the same as it was yesterday...basically flat [with a very minor contango] until you get past the September delivery month...and then down it goes. The spread from March 2011 to December 2015 currently sits at $1.075.

Last week I posted this new product that EverBank has just come out with...and I'll mention it again today...

EverBank is going to offer a new MarketSafe® CD starting February 17, 2011. It's called MarketSafe® Diversified Commodities...and is available for deposits starting February 17, 2011 – in the afternoon. The funding deadline is March 17, 2011.

The components are:

A 5-year term...and it's comprised of 10 commodities – equally weighted: WTI Crude Oil, Gold, Silver, Platinum, Soybeans, Corn, Sugar, Copper, Nickel and Lean Hogs. There will be 5-annual pricing dates...and the minimum to get is $1,500. There are no fees...and it's IRA eligible.

Just as a reminder, this product is 100% principle protected. There is no downside! So, no matter what the commodities do at the end of the term, investors will receive 100% deposited principle protection. Your maximum upside will be the sum of the average returns for years 1-5, based on the Spot Price as of each Pricing Date relative to the Spot Price on the Initial Value Date; subject to a 10% cap and -20% floor for each commodity.

As mentioned above, the funding deadline is March 17, 2011 – this date reflects when your account needs to be opened and deposit received. So, if you're interested...all you have to do is click here...and everything will be revealed to you.

Both gold and silver sold off for the first couple of hours of trading in the Far East earlier today...but by around 1:30 p.m. Hong Kong time, gold was back at its New York closing price...and silver was knocking on the $35 door once again. That happy situation came to a sudden end, as a not-for-profit seller showed up out of nowhere...knocking about 60 cents off the silver price and over $10 off gold. Volumes in both metals are much higher now than they were this time yesterday, which is understandable considering the price action. The dollar is flat.

But now that London has been open for a couple of hours, both metals are staging a bit of rally.

As for what might happen in New York later this morning...I don't have a clue. This is all uncharted territory...terra incognita...and what a ride it has been so far. The short term price action is always a question mark...but in the longer term, much higher prices for both metals are a certainty. However, I do expect a few potholes along the way, so I'm prepared for anything.

See you on Friday.