Beware the Ides of March

The gold price was in the red right from the open in the Far East on Tuesday morning. The New York bullion banks yanked the rug out from under the gold price on the Globex trading system starting around 11:15 a.m. Hong Kong time on Tuesday morning.

The price subsequently recovered some of those loses going into the London open, but about an hour in, the selling pressure renewed...and JPMorgan et al pulled their bids shortly after 12 o'clock noon in London and that was the end of it...as the tech funds had their sell stops hit. By the time JPMorgan placed a bid under the market, gold was down another $30 in less than seventy-five minutes of trading.

Gold's low of the day [$1,380.10 spot] was around 8:30 a.m. Eastern. From there, the price recovered about $23 of those losses...with the high N.Y. price of the day [$1,404.80 spot] coming just moments after the close of London trading at 4:00 p.m. GMT...11:00 a.m. Eastern.

From that high, gold got sold off about eight bucks...and then more or less traded sideways for the rest of the New York session.

Of course it was silver that JPMorgan et al were really after...and did they ever do a number on it. I'm not going to waste my time [or yours] describing the action...as it was almost the same as gold...except the price was more 'volatile'. The graph tells you all you need to know.

Silver opened Tuesday trading at $35.94 spot...hit its low [$33.56 spot] just after 8:30 a.m. in New York...a $2.40 spread. Silver recovered some of its loses after 8:30 a.m...but the subsequent rally ended at the close of London trading at 11:00 a.m. Eastern...the same as gold.

I'm sure the fact that the 'long knives' were out for silver on the Ides of March was only a coincidence.

The dollar opened in the Far East around 76.35...and hit its high of 77.04 at 11:00 a.m. in London right on the button. From there, the dollar rolled over and lost all it's gains...and closed the New York trading session pretty much where it started twenty-three hours prior.

Only at the very beginning of the trading day in the Far East was there any co-relation whatsoever between the dollar's price activity...and the price activity in the precious metals. As I've said before, it matters not what the other markets are doing when the bullion banks are on the hunt for tech long positions in the silver and gold markets.

The gold stocks got crushed on the open...recovered a bit...and then traded sideways until around 1:15 p.m. Eastern. From there a rally developed...and the HUI only finished down 2.25%...cutting its earlier losses by more than half. It was obvious that there were some bargain hunters about later in the trading session.

It would be an understatement to say that the silver stocks did poorly. But whoever was selling in a panic yesterday, was selling to strong hands. Please don't forget the expression that one should buy while there is "blood in the streets". Yesterday was a good day to do that.

The CME's Delivery Report showed that 3 gold, along with 57 silver contracts, were posted for delivery tomorrow. Ted Butler pointed out that there are only eleven more days left in the March delivery month...and only 847 silver contracts [less than half of the contracts that are standing for delivery] have actually been delivered. In the many decades that Ted has been involved in trading or observing the commodity markets, he's never seen a situation such as this develop in any delivery month for any commodity...ever! The link to yesterday's action is here.

The GLD ETF showed another small decline. This time it was 29,259 ounces. Over at the SLV...they reported a more substantial withdrawal...1,610,776 troy ounces. Considering the price action, that's not really a lot in the grand scheme of things...and it will be interesting to see what further withdrawals may be forthcoming during the rest of the week.

For the second day in a row, the U.S. Mint did not have a sales report...and over at the Comex-approved depositories, a very tiny 3,989 ounces of silver were withdrawn from their collective warehouses on Monday.

With the U.S bullion banks marking the silver price down yesterday, my bullion dealer did a roaring business right from the moment he opened the doors, as all the dip-buyers that were sitting in the bushes just waiting for such an event, turned up in force. I was one of them...and I want to take this opportunity to personally thank Jamie Dimon and Blythe Masters for this wonderful gift. Please pass my thanks along to your opposite numbers over at HSBC USA.

¤ Critical Reads

If Market Keeps Falling, Fed Will Keep Printing: 'Dr. Doom'

Today's first story is from reader Scott Pluschau...and is a posting from cnbc.com yesterday. Falling stock prices will be met only with more money injections from the Federal Reserve, Marc Faber, the so-called "Dr. Doom," told CNBC.

"We may drop 10 to 15 percent. Then QE 2 will come, [then] QE 4, QE 5, QE 6, QE 7—whatever you want. The money printer will continue to print, that I'm sure," said the author of the Gloom, Boom and Doom Report. Later in the interview, he added, "Actually I made a mistake. I meant to say QE 18." It's a short read that's worth your time...and the link is here.

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Big banks investigated over LIBOR rate manipulation

This is a Financial Times story from yesterday that I found posted in a GATA release. Regulators in the United States, Japan, and UK are investigating whether some of the biggest banks conspired to "manipulate" the benchmark interest rate used to calculate the cost of billions of dollars of debt.

The investigation centres on the panel of 16 banks that help the British Bankers' Association set the London interbank offered rate, or Libor -- the estimated cost of borrowing for banks between each other.

Well, every other market in the world is being propped up or held down...so why should LIBOR be any exception. I was horrified by the story, but in hindsight, I guess I shouldn't have been surprised, as the entire world's economic, financial and monetary system is now such as scam, it's only a matter of time before the whole thing collapses into a smouldering ruin.

This is definitely worth your time...and the link to the GATA release is here.

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The Great U.S. Collapse Nears: John Williams

Eric King sent me the link to this blog posted over at his website yesterday. With the dollar remaining weak, John Williams of shadowstats.com had this to say in a special report, “The U.S. economic and systemic-solvency crises of the last four years only have been precursors to the coming Great Collapse: a hyperinflationary great depression. Such will encompass a complete collapse in the purchasing power of the U.S. dollar; a collapse in the normal stream of U.S. commercial and economic activity; a collapse in the U.S. financial system as we know it; and a likely realignment of the U.S. political environment.”

I'm a huge John Williams fan...and if you have the time, this short blog is worth reading. The link is here.

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Commentary: Perfect Global Storm

Roy Stephens first offering of the day is this UPI story that was filed from Washington yesterday. If you were looking for one of Nassim Taleb's "Black Swan" events...then Japan's earthquake might just be one. UPI Editor at Large, Arnaud de Borchgrave, discusses that very scenario in this short piece...and it's worth the read. The link is here.

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Outside View: Japan: The economic consequences of disaster

Here's another UPI piece on the catastrophe in Japan. This piece was filed from College Park, Maryland yesterday...and Roy Stephens gets my thanks for sharing it with us.

The toll in human misery wrought by the tsunami and earthquakes in Japan test the imagination of economists but the effects on Japan's gross domestic product and wealth are a different matter.

As estimates of the damage emerge, those totals are real deadweight losses to wealth. To the extent Japan must run down financial assets and bring home foreign investment to rebuild, the net wealth of Japan is permanently reduced.

This short piece is also worth reading...and the link is here.

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Twin threats of Japan and Gulf stalk global recovery

Roy's next offering is this Ambrose Evans-Pritchard piece that was posted late last night over at The Telegraph. We are discovering once again that the country is the world's top creditor by far with nearly £2 trillion of net assets overseas. As catastrophe at home prompts Japan to repatriate chunks of its vast wealth, it is pulling the rug from under stock and bond markets thousands of miles away. This story is similar to the previous UPI story...but from a different perspective. For that reason alone, it's worth your time...and the link is here.

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Nikkei Surges As BOJ Injects Another ¥3.5 Trillion: Just Add It To The Existing ¥23 Trillion Plunge Protection Tab

Washington state reader, S.A. provides our last Japan-related story today. This is a posting over at zerohedge.com. The Bank of Japan on Wednesday pumped another 3.5 trillion yen ($43.3 bln) into the financial system, adding to the trillions spent Monday and Tuesday to soothe shaken markets. In the last three days, the BoJ has injected $325 billion worth of financial heroin into the veins of the Japanese banking system. This story will take less than one minute of your time...and is a must read. The link is here.

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Wall Street Conspirators Driving Spike in Silver

Here's a foxbusiness.com video that was in my in-box when I turned my computer on late yesterday morning...and I thank reader V.M. from the great state of Texas for sending it along. It also showed up in a GATA release shortly after. The person interviewed was William Cohan...and I believe he also wrote about this in either The New York Times or The Wall Street Journal within the last month or so...because I remember the name, plus I ran the story when it first came out.

There's nothing in here that you haven't heard before...and even though the author, along with the rest of the panelists, really butcher the story...it's important for the fact that it appears in such a prominent fashion in the public domain. It's just another brick in the wall for JPMorgan and the rest of the bullion banks. It's five minutes long...and a must watch/listen...and the link is here.

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Gold Standard Institute letter cites another stunning admission by Fed Governor Warsh

Here's a GATA release from yesterday that's definitely worth a read. This fits in nicely with the story about the LIBOR manipulation that I posted further up in this column. The commentary in question is headlined "False Belief No.2: Risk-Free Investments"... and is to be found on page 3 and 4 of the pdf file that contains the entire Gold Standard Institute report. The link to the GATA release is here.

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I don't have much to add to what I said earlier about yesterday's action in the gold and silver markets. I have no idea whether the bullion banks are all through, or are they going to keep bashing their respective prices until every speculative long holder that they can force to sell, has sold?

The CME's preliminary volume report shows that gold traded around 210,000 contracts yesterday...net of all roll-overs. The preliminary open interest numbers is pretty high...and I will be more than interested in what the final number is when it's posted later this morning. I suppose some traders may have taken the opportunity to short the gold market yesterday, but we won't have any indication of that until Friday's Commitment of Traders report.

Monday's final open interest numbers in gold showed a decline of 3,296 contracts. Considering the rather lackluster price action, this is a pretty good showing.

Silver's net volume on Tuesday was a hair over 100,000 contracts...which should come as no surprise considering the price action. With the new low price move, I'm sure that a lot of tech fund longs got blown out of their positions as the bullion banks covered...and the preliminary open interest number doesn't give much indication of what happened during yesterday's trading day.

Silver's open interest on Monday showed a decline as well...884 contracts.

March open interest in silver dropped a steep 230 contracts. This should not be a surprise, because the CME Delivery Report a couple of days ago showed that 188 contracts were posted for delivery today...and, without a doubt, this decline reflects those deliveries. There are still 1,079 March silver contracts left open.

The silver backwardation issue is basically unchanged from Monday. Ted Butler can't figure out why the near months aren't in backwardation along with the rest of the delivery months further out. The physical market is either tight...or it isn't...and if it is, it should be reflected in all months, not just the back months. Ted speculates that since it's easy for 'da boyz' to have their way with the silver price in the Comex futures market, it's probably a piece of cake for 'da boyz' in the spread trade business to rig this market any way they want it as well...so he's watching the spread market like a hawk for any hint of a change in either direction.

As I mentioned yesterday, the cut-off date for this Friday's COT report was at the close of business yesterday, so what the CME's final volume/open interest numbers are when they're posted this morning are crucial to what shows up in the report.

As I've mentioned many times in this column, JPMorgan et al are very good at managing the numbers that go into this report...especially when the cut-off day [yesterday] shows monstrous volume and price changes. So there's a very good chance that [for purposes that suit them] not all of yesterday's trading activity will be reported in a timely manner...so Friday's COT report may not tell all like I had hoped. We'll see.

Here's the 6-month silver chart. You can see that the RSI trace has gone from overbought to neutral in just one day. The 50-day moving average in silver is still a long way down...and it remains to be seen whether or not JPMorgan can force enough longs to sell, in order to get the price that low...and they have to get the silver price below yesterday's low [$33.56 spot] before they can get any more technical fund long liquidation, as every long down to that level has already been blown out.

Gold came very close to penetrating its 50-day moving average yesterday. There are still quite a few tech fund longs that could be liquidated, so they could be very successful at getting gold quite a bit lower than this if they really wanted to. In the process they could beat on the silver price as well. But can they...or will they? Don't know.

The April delivery month is coming up hard...and the roll-overs into future delivery months are increasing daily. April is a big delivery month for gold....and it remains to be seen whether the bullion banks will bash the gold price going into first notice day...which is eleven business days from today on Thursday, March 31st.

Neither gold nor silver did very much during Far East or early London trading...but both are up a bit as of 4:43 a.m. Eastern time. Volume is very light in both metals. All of this will change once the New York bullion banks get going...either on the Globex trading system in London...or during Comex trading in New York this morning.

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