Silver Review and Outlook: Ted Butler

The gold price really didn't do a whole heck of a lot during Far East and most of London trading yesterday...and opened in New York on Thursday morning within a dollar or two of its Wednesday afternoon close. Then, shortly after the London p.m. gold fix, gold rose about eight buck...and then flat-lined until around half-past lunchtime in New York...before a not-for-profit seller showed up...and in just a few hours, the gold price 'fell' about twenty-two dollars.

The seller disappeared at 3:30 p.m. right on the button...and the gold price subsequently recovered a few dollars going into the close of electronic trading at 5:15 p.m. Eastern.

The silver price drifted slowly lower all through Far East trading...and finally caught a bid just minutes before 9:00 a.m. London time. Silver got to $38.19 moments before 11:00 a.m. in New York before it, too, got the same treatment as gold...and probably from the same not-for-profit seller.

By the time this seller was through with the price, silver was down over a buck...but rose a little once the selling pressure disappeared around 3:45 p.m. Eastern.

The Comex announced a slight increase in margin requirements for silver yesterday...and that may [or may not] have contributed to silver's sell off. But it doesn't explain why gold sold off at the same time...as I don't remember gold selling off in sympathy with silver...ever! It always happened the other way around.

The U.S. dollar hit its high of the day around 8:00 a.m. in London, then spent the next eight hours falling to its low of the day, which occurred at precisely 11:00 a.m. in New York. From there, the dollar recovered about twenty basis points going into the close of trading at 5:15 p.m. Eastern.

The gold price sort of followed the dollar right up until its low at 11:00 a.m. in New York..but after that, the relationship totally fell apart when gold refused to follow the dollar's movement in the other direction...until that not-for-profit seller showed up.

The gold stocks pretty much followed the gold price...and what started off as another wonderful day, ended with the HUI down 0.33% once the mystery seller was through with the precious metal prices. Since silver was trashed even more, their associated stocks got hit a little harder as well...although there were a few green arrows here and there.

The CME Delivery Report was a surprise again yesterday, as 12 gold along with a very chunky 236 silver contracts were posted for delivery on Monday. The big issuer in silver was JPMorgan in both their house and proprietary trading account...and the big stopper [receiver] was Barclays. The action is definitely worth looking at...and the link is here.

There was activity in both GLD and SLV yesterday. The GLD ETF shed 29,257 ounces of gold...but the SLV ETF took in a monstrous 5,759,073 troy ounces of silver. That has to be one of the biggest chunks of silver they've ever brought in, in one day.

The U.S. Mint had another sales report. They sold another 3,000 ounces of gold eagles...along with 3,000 one-ounce 24-K gold buffaloes...and a smallish 47,500 silver eagles. Month-to-date they are up to 59,500 ounces of gold eagles...35,000 one-ounce 24-K gold buffaloes...and 2,117,000 silver eagles.

On Wednesday, the Comex-approved depositories reported receiving only 2,093 ounces of silver...and shipped 207,823 ounces out the door. The link to that action is here.

¤ Critical Reads

Readers Pick Doug Casey's Brain - Part 2

My first story out of the chute today is this week's edition of Conversations with Casey, which contains Part 2 of "Readers Pick Doug Casey's Brain"...with the International Speculator's editor Louis James doing the honours as moderator. It's a 23-minute video clip, which is well worth watching...and the link is here.

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The Creature From Jekyll Island

If I had to pick the number one life-changing book out of the many I've read over the last ten years, G. Edward Griffin's The Creature From Jekyll Island: A Second Look at the Federal Reserve would be it. I've recommended this book many time in this column...and I do so once again for the very simple reason that Ed Griffin will be on the Glenn Beck show today...and the entire program is dedicated to the contents of his book.

I don't watch TV...and have no idea whether this show is even available here in Canada...but it's obviously available in the U.S...and I urge all my U.S. readers to find the time to watch this particular show...and if you want to buy the book, it's on sale for the rest of March...and the link is here. I thank reader 'David in California' for bringing this information to our attention.

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Portugal debt crisis: David Cameron holds crisis talks with EU leaders

UK Prime Minister David Cameron has held crisis talks with European leaders amid warnings that Portugal must be bailed out to avert a fresh currency crisis spreading.

Portuguese sovereign bond yields soared to new highs in the wake of the country's parliamentary rejection of its latest austerity package, along with the Fitch downgrade of the country's credit rating. Jose Socrates, prime minister, was forced out on Wednesday night after failing to win support for the measures.

The story from The Telegraph late last night is courtesy of reader Roy Stephens...and the link is here.

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Syria 'ready to explode' as desperation grows

Here's a story from the Australian Broadcasting Corporation early in their Friday that was sent to me by Washington state reader S.A. in the wee hours of this morning.

Tens of thousands of Syrians have once again poured onto the streets of the city of Dara'a in protest after security forces were accused of storming and massacring people in the city's main mosque on Wednesday. The link to the story is here.

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Libya: Gaddafi compound attacked after air force 'destroyed'

Roy Stephens sent me this story from The Telegraph about twenty-four hours ago...and too late to make yesterday's column.

RAF Air Vice-Marshal Greg Bagwell disclosed that allied forces had all but wiped out the Libyan air force and were attacking ground troops wherever they threatened the civilian population. “We are now applying sustained and unrelenting pressure on the Libyan armed forces,” he said. “Effectively, their air force no longer exists as a fighting force and their integrated air defence system and command and control networks are severely degraded to the point that we can operate with near impunity across Libya.” The link to the story is here.

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Turkey reluctantly joins NATO operations against Libya

Here's Roy Stephens last offering of the day. It's an AFP story posted over at the france24.com website. Turkey's parliament Thursday approved sending a naval force off Libya as the Islamist-rooted government moved reluctantly to join military action in the conflict-torn country despite anger at Western-led air raids. The link is here.

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Gold to Catch Fire and the Public Will Notice - Richard Russell

Here's a blog that Eric King sent me a few hours ago. There's a big difference between the current precious metals bull market and the bull market of the 1970s. The 1970 bull market drew tremendous interest...today's huge precious metal bull market is greeted with yawns, that is, if it is greeted at all. This is definitely worth the read...and the link is here.

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Record High Silver: Where Do We Go From Here?

Reader 'Elliot' sent me this piece of drivel on silver that was posted over at cnbc.com yesterday. Journalism [if you wish to dignify this article with that name] is not a word that's taken seriously over there...and this piece definitely falls into that category. It's sad and funny at the same time...so don't take it seriously. The writer doesn't even mention one of the real reasons that silver is rising in price...and that's the short covering going on by the big bullion banks. The link is here.

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Michael Purves: Hi-Yo, Silver!

Reader Dave Mancini sent the following finance.yahoo.com interview about silver yesterday that isn't much better than the last one...but there are some grains of truth in it...and BGC Chief Market Strategist Michael Purves does his best.

Both these stories prove one thing, if you really want to know what's going on in the world [precious metals-related, or otherwise]...you won't find it in the mainstream media in the U.S. The link to the 5-minute video clip is here.

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Ted Butler's address to last month's Phoenix conference

Ted sent me the link to his speech [which I'd already read, as he sent me a copy the day before he left for Phoenix] yesterday morning...and Chris Powell posted it as a GATA release yesterday evening. I'm just going to steal part of his preamble...and post the link.

Silver market analyst Ted Butler, whose many years of tireless research and advocacy brought the silver price suppression scheme to light, doesn't make too many public appearances. So his address to Cambridge House's Phoenix Resource Investment Conference and Silver Summit last month may be of special interest. Butler describes his efforts to get the attention of the U.S. Commodity Futures Trading Commission and his initial hopes for the CFTC's new chairman, Gary Gensler.

Ted has forgotten more about silver than most people will ever know...and this is a must read from one end to the other...and the link is here.

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There is only one certainty regarding paper money -- the longer you hold it, the less it will buy in terms of real goods...or real money...gold.- Richard Russell

After yesterday's excellent start in the precious metals during New York trading, I must admit that it was a let-down to see that not-for-profit seller show up. This was the third day in a row for silver...and the second for gold...that a new high price was being set for this bull market in silver...and new record high for gold.

It was obvious that both metals were breaking out...and it's possible that the New York bullion banks decided to stick a pin in yesterday's trading action. I can't say for sure that it was them, but the price action appeared to have JPMorgan's boot prints all over it.

Gross volume in gold was around 238,000 contracts...but once the roll-overs are removed, the real trading volume fell to around 90,000 contracts net. The switches out of the April contract were huge yesterday...and will stay high until First Day Notice. The preliminary open interest number in gold is 8,953 contracts...and after yesterday's $22 hit to the gold price, I'll be really interested in what the net number is when the CME posts it on their website later this morning.

Wednesday's final open interest numbers in gold showed a decline of 4,203 contracts...which surprised both Ted and myself, as the preliminary number was pretty chunky...and we were both expecting an increase. Ted suggested that, considering the time of month, it might have been a spread trade being lifted. Of course this won't be known until next Friday's Commitment of Traders Report.

Silver's net volume yesterday was a monstrous 95,000 contracts...and the preliminary open interest number is a rather chunky 3,471 contracts...which should show a decline later this a.m...especially after the licking that was laid on the silver price yesterday.

Of course it's always a possibility that the bullion banks won't report all of yesterday's volume numbers in a timely manner...and some of this data may show up in the CME's Preliminary report on Monday. As I've said before, 'da boyz' are awfully good at hiding what they're doing on a day-to-day basis.

The final open interest change for Wednesday's trading day in silver showed an increase of 1,047 contracts. I was expecting better, but considering the big rally we had on that day, this is still a very impressive number.

The March contract in silver declined by 85...and is now down 632 contracts still open. The 236 contracts posted for delivery on Monday that I spoke of at the top of this column, still have to be subtracted from that number...and that will happen either today or Monday. It looks likely that the March contract will resolve itself without any problems, but the shorts [for whatever reason] have taken this delivery month right down to the wire.

Looking at yesterday's settlement prices in the silver futures market, there wasn't much change from Wednesday...with a tiny backwardation into May 2011...silver's next delivery month. From there the contango increases by three or four cents out to January 2012...before sliding slowly into backwardation once again. The backwardation from April 2011 out to December 2015 is still around eight-two cents...subject to change without notice!

Here's Nick Laird's "Silver Seven" graph updated as of yesterday's close. Thursday's pounding doesn't even show up. It's clear that the silver stocks want to roar now that the silver price is breaking out...but as I said before, that may be the reason that silver got hammered yesterday.

Both gold and silver are in positive territory as I put today's column to bed at 4:33 a.m. Eastern time. Volume in gold, net of roll-overs, is vanishingly small...and silver's volume is about average for this time of day.

After yesterday's surprise in late afternoon trading in New York, I'm not really sure what to expect when the Comex opens this morning, but you can rest assured that I will be paying close attention.

There's still time left to either readjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

I hope your Friday goes well...and that you have a good weekend...and I'll see you here on Saturday.