Good evening Ladies and Gentlemen:
Gold closed today at 1339.60 (comex closing time at 1:30) up $5.80. Silver had another stellar day rising by 36 cents to $28.53. In the access market right now at 5:30 pm est, gold is trading at $1341.90 and silver is trading at $28.60
Let us head over to the comex trading and see how things fared today.
The total gold comex open interest had a reading today of 463,700 contracts a huge fall from 478,913 yesterday. Gold was rather steady yesterday so the drop in OI is difficult to interpret. The front delivery month of February saw its OI drop from 17,067 to 4887 .
The next delivery month of April saw its OI climb a tiny bit from 309,239 to 310,079 so there were no switches of material interest here. The estimated volume today was rather good at 147,498. The confirmed volume yesterday was quite high at 187,862.
And now for silver:
The total comex silver OI fell by 963 contracts from 124,343 to 123,380. The front January month saw its OI rise from 15 to 35 contracts. The front delivery month of March was its OI drop by 1,300 contracts to 63,990. The estimated volume today was quite healthy at 598,973.
Here is a chart for February 1.2011 on deliveries and inventory changes at the comex:
Withdrawals from Dealers Inventory
Withdrawals from customer Inventory
Deposits to the dealer Inventory
Deposits to the customer Inventory
No of oz served (contracts 10
No of notices to be served 25
Withdrawals from Dealers Inventory
Withdrawals from customer Inventory
Deposits to the dealer Inventory
Deposits to the customer Inventory
No of oz served (contracts 1699
No of oz to be served 3188
OK. let us start with the less volatile gold. For the second straight day we have witnessed zero oz of gold enter as a deposit to a dealer or even a customer. We did witness a huge withdrawal by the customer of 91,5239 oz.
We had another adjustment but this is a very tiny repayment of 1 brick of gold for a lease done in prior days. The adjustment was 96 oz which is one brick. There were no adjustments.
The comex folk notified us that 1699 notices were sent down for servicing on day NO 2 for a sum of 16900 oz of gold. The total number of notices sent down so far total 8594 or 859400 oz of gold. We had a massive contraction in the OI and it did not show up in the deliveries. There were no switches into the April contract. So it looks like around 600,000 oz of gold were settled in cash at a handsome premium. To obtain what is left to be served, I take the OI for Jan at 4887 and subtract out today's deliveries at 1699 to give us 3188 contracts left to be served upon or 318800 oz of gold.
Thus the total number of gold oz standing in this delivery month of February is 859,300 oz (already served) + 318800 oz (to be served) = 1,178,200 oz. There is no question that scenario NO 1 was the correct interpretation from yesterday,
The scenario no 1 thought that 1.706 million oz would stand. The difference represents 1/2 million oz and these guys were there strictly to make fiat money by standing for metal and tendering for cash.
Let us see if silver gives us the same story:
Again we see no silver enter the silver comex dealer or the customer. In gold it is strange in that we already have had first day notice and also for the past several months I have highlighted to you that no gold has entered the dealer.
The silver comex however were extremely busy with both customer and dealer rapidly removing their silver metal from the registered vaults. There were 3 major withdrawals from 3 registered facilities:
1. 340,000 oz
3. 2034 oz
total no of oz removed by customers: 1,118,539
Not to be undone, the dealer also had a busy day with removals:
total amount of oz removed by the dealer : 45,480
None of these oz found their way into a registered comex vault.
In a nutshell: massive turmoil in the silver vaults today.
There were 10 notices served upon our longs today for options exercised for the silver metal or 50,000 oz. The total number of silver oz served thus far equates to 121 contracts or 605,000 oz. To obtain what is left to be served, I take the deliveries of today, 10 and subtract that total from the OI of today: 35, which gives me 25 notices left to be served upon or 125,000 oz.
Thus the total number of silver oz standing for far in this non delivery month of February is:
605,000 oz (already served) + 125,000 oz to be served= 730,000 oz of silver.
In scenario no 1 we thought that the amount standing would be 755,000 oz. So we are very close here.
It seems that only 25000 oz of silver settled for cash. The rest are staying on for the ride.
Let us see how are ETF's fared:
The GLD updated their website tonight:
Total Gold in Trust Feb 1.2011
Total Gold in Trust Jan 31.2011
The GLD boys did not let any of their gold go to other destinations tonight as it remained the same.
let us now head over to the SLV inventory. Here is today's totals:
Ounces of Silver in Trust
Tonnes of Silver in Trust
Here is yesterdays totals:
Ounces of Silver in Trust
Tonnes of Silver in Trust
The SLV boys did not follow in the same path as their GLD brethren. The total inventory of SLV declined by 683,000 oz of silver or 21.2 tonnes.
This silver is putting out fires in other jurisdictions as the LBMA are scrambling for metal.
Here is a Reuters story on the huge outflow of metal from the GLD and SLV:
Main gold, silver ETFs post major monthly outflows
LONDON/SINGAPORE, Feb 1 (Reuters) - The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust , posted for January the biggest monthly drop in its holdings since April 2008 and its second-largest outflow ever.
The main silver ETF, the iShares Silver Trust , also reported the largest ever one-month drop in its holdings in January. The amount of silver it holds fell 495 tonnes to 10,426.43 tonnes, its lowest since early November.
The SPDR Trust, which issues securities backed by physical stocks of precious metal, said its gold holdings edged up to 1,227.153 tonnes on Jan. 31 from 1,224.118 tonnes the previous day, the first rise since Jan. 21.
But they still fell 53.6 tonnes or just over 4 percent in the month as a whole. This accompanied a 6.2 percent drop in spot gold prices , their worst monthly performance since December 2009.
Philip Klapwijk, chairman of metals consultancy GFMS, said that while gold would retain support from low interest rates, concerns over the global economy and waning confidence in paper currencies, ETF outflows may weigh on prices in the short term.
"If there is selling out of ETFs, it will put downward pressure on the price," he told Reuters. "(Though) I don't see this as the big turning point in the market."
SPDR Gold Trust holdings hit a record at 1,320.436 tonnes on June 29. The ETF is still the world's sixth-largest holder of gold after the central banks of the United States, France, Germany and Italy, and the International Monetary Fund.
For details on the gold holdings of the ETF listed in New York and co-listed on other exchanges, click on:
Following are changes in SPDR holdings:
Jan 31 1,227.153
Jan 28 1,224.118
Jan 27 1,226.546
Jan 25 1,229.581
Jan 24 1,260.843
Jan 21 1,271.769
Jan 19 1,251.433
Jan 18 1,256.897
Jan 14 1,259.325
Jan 13 1,265.093
Jan 11 1,271.467
Jan 10 1,272.682
Jan 7 1,271.164
Jan 5 1,272.682
Jan 4 1,276.472
Dec 30 1,280.722
Dec 28 1,284.062
Dec 23 1,284.973
Dec 22 1,288.616
Dec 21 1,298.029
Dec 17 1,298.940
Dec 16 1,283.757
Dec 15 1,286.187
Dec 14 1,286.794
Dec 10 1,289.830
Dec 9 1,293.778
Let us see how are other ETF's fared tonight:
The Sprott silver fund rose again from 13.8% premium to NAV to 14.95%
The Sprott gold fund saw its positive to NAV rise to 4.62% premium to NAV., from 3.75%
The central fund of canada saw its positive to NAV rose a bit to 8.5% from 8.5%
Seems the world is very anxious to get their hands on as much silver as possible.
The premiums for gold in Viet Nam on Friday was a cool 63 dollars over the spot price. In Shanghai the premium was $7.77 per oz premium.
The ECB for the last several weeks has announced no change in their inventory of gold.
The USA Mint has finally released its data sales for last month and it is a dandy. The sold 6.4 million oz of silver eagles a record:
This is huge. If sales continue at this clip then the total no of silver eagles sold in a year would equate to 76.8 million oz. The usa only produces around 40 million oz, so for the first time they will need to import over 37 million oz of silver.
Remember that the mint gets first crack at the metal, then comes the comex and jewellers and then hoarders like you and me.
As I said to you earlier, silver is in great demand and it is showing up in the backwardation of silver pricing at the LBMA for the entire one year out.
It seems that the Indians are really getting back to the same stage they once occupied with respect to the importing of gold. Before the market crash in 2008, this nation imported close to 800 tonnes of gold annually. The weeding season is the time that a greater percentage of gold is imported. We haven't even got the wedding season and India already is importing 40 tonnes per month or 480 months on an annual basis. The fact that China and Russia are also vying for gold, you can visualize that the world will run out of gold/
Here is this story from Reuters
India's Jan gold imports at 40 tonnes - trade body
MUMBAI | Tue Feb 1, 2011 9:06am EST
MUMBAI (Reuters) - Gold imports in India, the world's largest consumer of the yellow metal, rose 18 percent in January to 40 tonnes provisionally, and next month's wedding season could further boost demand, head of a trade body said on Tuesday.
Imports were higher than a Reuters median forecast of 36.25 tonnes, though some of the forecasts were at or above 40 tonnes.
"Buying was good, though there were supply issues at the end of January, when prices touched a low of about $1,310 (an ounce)," Prithviraj Kothari, president of the Bombay Bullion Association, told Reuters.
International gold was at $1,336.64/1,337.20 an ounce on Tuesday, recovering from the lowest level in 8 weeks of $1,308 struck on Jan. 28.
There could be profit-booking by jewellery holders at higher prices, resulting in a discount of $1-2 to London prices, added Kothari.
Weddings in India, which accounts for 20 percent of the global demand for jewellery, will restart later in February.
The winter harvesting season is underway in India and is expected to leave more disposable income with rural households, which contribute significantly to gold demand.
In India, which accounts for 20 percent of global demand for jewellery, gold is widely given in religious celebrations and weddings.
In 2010, India's gold imports fell to 332.8 tonnes from 339.8 tonnes purchased a year earlier, provisional data from the Bombay Bullion Association shows. But higher imports were expected this year as consumers expect further price gains.
There is much turmoil in the Middle east due to the riots by citizens. Here is a summary of the turmoil in today's newspapers:
special thanks to Jim Sinclair for providing us with the articles:
IMF, warning of war, says ready to help Egypt
Feb 1 02:55 AM US/Eastern
The International Monetary Fund stands ready to help riot-torn Egypt rebuild its economy, the IMF chief said Tuesday as he warned governments to tackle unemployment and income inequality or risk war.
Dominique Strauss-Kahn also said rising food prices could have "potentially devastating consequences" for poorer nations, and warned that Asia’s fast-growing economies faced a risk of a "hard landing".
Overall, according to the IMF managing director, widening imbalances across and within countries were sparking tensions that threaten to derail the fragile global economic recovery — and could even spark armed conflict.
As Egyptian protesters gathered in their thousands demanding the departure of President Hosni Mubarak, Strauss-Kahn said: "The IMF is ready to help in defining the kind of economic policy that could be put in place."
In a speech in Singapore, he said rampant unemployment and a growing income gap was a "strong undercurrent of the political turmoil in Tunisia and of rising social strains in other countries".
then this story:
Jordan’s King Abdullah dismisses government in wake of protests
By Douglas Stanglin, USA TODAY
Jordan’s King Abdullah has dismissed his government and named a new prime minister to carry out "true political reforms," the palace says, according to AFP.
Earlier posting: Jordan’s King Abdullah has dismissed his government and appointed a new prime minister, AlJazeera reports.
The network says the Jordanian government resigned amid protests in the country.
Update at 8:24 a.m. ET: The Palestinian Cabinet in West Bank says it will hold municipal elections "as soon as possible," the Associated Press reports.
The Palestinian Authority has not held elections since 2006. Prime Minister Salam Fayyad’s Cabinet said Tuesday it will set dates for the vote next week.
Albania braces for fresh protests
January 29, 2011 12:00AM
THE mood of revolt has spread beyond the Arab world to the Balkans.
The Albanian opposition gearing up for another anti-government protest today and the police warning of a high risk of violence.
The opposition Socialist Party said the rally was aimed at honouring the three victims of violent clashes in last week’s anti-government demonstration. Protesters have been calling on the government to resign, claiming corruption and electoral fraud.
"I want to assure you it will be peaceful and quiet, there will be flowers and candles," Socialist leader Edi Rama said yesterday.
"Everything will be normal, not provoking anyone and not being provoked by anyone."
Police said the demonstration was a danger to national security, and warned that they could not guarantee the rally’s safety.
Mr Rama, who is Tirana’s Mayor, said he regretted the police statement.
and another story on Albania:
After Riots, Algeria Considers a Reshuffle
By BENOîT FAUCON
* JANUARY 28, 2011
Algeria’s President Abdelaziz Bouteflika is considering high-level cabinet changes in hope of showing a reformist bent after the country was shaken by riots, people familiar with the matter said.
There is no clear timing for the changes, but one scenario under consideration would include the promotion of Energy Minister Youcef Yousfi to be the new prime minister, replacing current Prime Minister Ahmed Ouyahia, they said. Such a move could be part of a broader reshuffle aimed at replacing officials with ties to political parties with technical experts whose reputations remain intact after the protests.
Mr. Yousfi, who became energy minister last year after a corruption probe shook Algeria’s oil industry, has had a long career in the hydrocarbons sector as well as in diplomacy.
Mr. Ouyahia is the secretary general of the National Rally for Democracy, a member of the ruling coalition.
A presidential spokeswoman said she had no information about any potential cabinet reshuffle. Spokesmen for the energy minister and the prime minister’s office couldn’t be reached.
Problems still surfacing in Ireland:
Ireland’s outgoing PM officially announces intention to dissolve parliament
DUBLIN, Feb. 1 (Xinhua) — Ireland’s outgoing Prime Minister Brian Cowen announced Tuesday afternoon that he will officially ask President Mary McAleese to dissolve the Dail (lower house of parliament), paving the way for the general election which will most likely take place on Feb. 25.
In a farewell speech to the Dail, Cowen said he will head Aras an Uachtarain (official residence of the Irish president) to advise the president to dissolve the Dail and to summon the incoming Dail to meet at midday on March 9.
He said his time as Taoiseach (prime minister) has been a period of great "trial and test."
The outgoing Irish prime minister said the common good was always at the forefront of his decisions.
Parliament officials expect the Dail’s final session to last up to one and half hours. Later, Cowen will be driven to Aras an Uachtarain, where he will ask President McAleese to formally dissolve the 30th Dail, which was formed after the 2007 general election.
Looks like NY state has big problems with the firing of a huge number of government workers:
Cuomo to Cut New York State Spending by $8.86 Billion, Fire 9,800 Workers
By Michael Quint – Feb 1, 2011 10:38 AM MT
New York Governor Andrew Cuomo proposed cutting local school funding by 7.3 percent and reducing Medicaid spending by almost $3 billion in a budget that seeks to close a $10 billion deficit.
As many as 9,800 workers may be fired under the spending plan for the third most-populous U.S. state, according to Cuomo’s budget documents released today. Aid to 700 school districts, the state’s largest expense, would be cut by $1.5 billion from last year to $19.4 billion in the fiscal year beginning April 1.
Cuomo, a 53-year old Democrat elected in November, said the state needs to break the cycle of “continually spending more money at levels you cannot afford,” as required by laws approved in past years. “More money does not equal better service” in Medicaid or education, he said yesterday.
Outlays for Medicaid would be reduced by $2.85 billion, with future growth in the health-care program for the poor tied to the medical-care-costs portion of the Consumer Price Index. The state’s existing rules and formulas would have required spending growth of 13 percent this year, Cuomo has said.
In other big news events, this is certainly eye catching, The lone dissenter Thomas Hoenig has gone on the record that there may be QEIII
special thanks to Zero Hedge for the article.
Here Comes QE3: Hoenig Says "More Quantitatve Easing May Be Discussed"
Submitted by Tyler Durden on 02/01/2011 15:32 -0500
We thought Jon Hilsenrath would break the news of QE3. To our shock, it comes from the only sensible man at the Fed, Kansas Fed's Tom Hoenig. Per Reuters: "The Federal Reserve could debate extending its bond-buying program beyond June if U.S. economic data prove weaker than policymakers expect, Kansas City Fed President Thomas Hoenig said. Another round of bond buying "may get discussed" if the numbers look "disappointing," Hoenig told Market News International in an interview published on Tuesday." May we suggest in that case that Joe LaVorgna stop blaming every herpes outbreak in the US on snow and instead indicate that shit is once again hitting the fan. Obviously, this is merely a scheme to keep the market well bid no matter how violent the revolutionary images on TV, brought upon precisely by this genocidal policy. Even more obviously, it means that oil is going to $200 on short notice.
As I promised you, we are heading for a massive hyperinflationary depression. Here is an article that summarizes the huge input costs that manufactures around the world are facing:(story courtesy of Reuters)
More manufacturers warn of rising input costs
CHICAGO/NEW YORK (Reuters) - The threat that rising input prices pose to corporate profit margins was highlighted again as a number of U.S. manufacturers, including Emerson Electric Co and Paccar Inc, reported quarterly earnings.
The prices of steel, copper and aluminum -- key components in many products -- have all crept higher over the past three months amid growing signs that North America and Europe are joining the emerging markets in putting the recent recession behind them.
Copper, which is used in cables, wires and all kinds of electrical products as well as in plumbing and heating applications, has risen the most, jumping more than 15 percent over the past three months.
Those increases are putting pressure on the margins of many manufacturers, who cannot always simply raise the price of their finished goods.
That was the issue in the most recent quarter for Emerson, which makes automation equipment for factories and network power systems for large data centers. The St. Louis-based company reported results that fell short of analysts' expectations, partly because of higher raw material costs.
Emerson CEO David Farr said inflation ran well ahead of the company's own projections, and the company was spending three times as much on materials as on labor.
"We'll have to significantly increase prices around the world because this is not a momentary blip," Farr told analysts on the company's conference call.
"In my opinion, I think net material inflation could run at higher levels for the next two or three years. That's a plus and a minus in many regards but in reality this is an issue we'll have to deal with. It's not going away."
Farr cited inflation in oil-based commodities and "anything metal," like steel and copper. Shares of Emerson, which raised its sales and profit forecast for the year, rose 0.8 percent in afternoon trading to $59.30.
Paccar, which makes commercial trucks and diesel engines, didn't disappoint Wall Street this quarter, reporting earnings in line with Wall Street's hopes. But the Bellevue, Washington-based company warned that increases in commodity prices would "moderate" its operating margins this year and partially offset what it predicted would be global rebound in demand for commercial vehicles.
Earlier this week, Illinois Tool Works, which makes a variety of products for the automotive, residential construction, and industrial marketplace, warned it might not be able to fully recoup all the raw material price increases it is seeing -- even though it expects to raise prices this year.
PENTAIR, CUMMINS BEAT
To be sure, not everyone is crying the rising raw material cost blues. Pentair Inc reported a 59 percent rise in quarterly earnings. The results, which beat Wall Street expectations, were lifted by sales of water filters in emerging markets.
Pentair said it now expects its materials costs to rise by 3.5 to 3.6 percent this year, ahead of the 2.5 percent material inflation rate it had presumed in December when it set its full-year profit forecast.
But the Minneapolis-based company told investors it expects to raise prices at its filtration and technical products units to match rising raw material costs -- a sign of its increased confidence in the economy's recovery, according to Chief Executive Randall Hogan.
"I wouldn't say people are welcoming them," Hogan said of the price increases, "but they are understanding them given the way material prices are ... The fact that inflation now looks a little bit stronger than, a little bit higher than, we might have thought two or three months ago, it's going to help us realize a higher percent of the price increases we implement."
Cummins Inc also reported a higher-than-expected quarterly profit as strong sales of its engines and other products in China, India and Brazil offset continued weakness in North America. Cummins stock rose 0.6 percent to $106.51.
The strength in those markets helped offset what the company characterized as "a significant decline" in the North American truck engine market, which continues to suffer as a result of the weak U.S. economic rebound and a change in emissions standards that has made engines more expensive.
And this Reuters story on the same subject:
Inflation dilemma deepens for Asian policymakers
*S.Korea inflation, manufacturing input prices both jump
* Indonesia CPI above forecast, fuels rate rise expectations
* Thai inflation edges up, rates to rise
BANGKOK, Feb 1 (Reuters) - Inflation accelerated more than forecast in Indonesia and South Korea in January, and quickened in Thailand, reinforcing expectations of increases in borrowing costs as policymakers struggle with rising food and oil prices.
Tuesday's data was the latest to raise questions over whether central banks and governments in emerging-market countries are doing enough to tame inflation fuelled by rising world commodity prices and a resurgence in domestic economies.
"We think it is time now for most central banks to really begin further tightening policy rates, and for the ones who haven't started yet to begin," said Leif Eskesen, chief economist for India and Southeast Asia at HSBC.
The head of the International Monetary Fund warned rising prices -- one of the factors behind anti-government protests in Egypt and Tunisia -- could cause social upheaval.
"Energy prices are rising swiftly, reflecting rapid growth in emerging economies," IMF chief Dominique Strauss-Kahn said.
"Food prices are rising too -- though here supply shocks are the main reason -- withpotentially devastating consequences for low-income countries," he told anaudience in Singapore.
South Korean consumer inflation in January spiked more than expected above the upper end of the central bank's target as prices rose across the board, data on Tuesday showed, lifting chances for a back-to-back interest rate increase next week.
In Indonesia, Southeast Asia's biggest economy, annual inflation hit a fresh 21-month high of 7.02 percent, topping both market forecasts and the central bank's end-2011 target range of 4-6 percent. That caused some economists to project the
benchmark reference rate will rise by 25 basis points on Friday.
Bank Indonesia has been trying to hold down its benchmark rate to avoid another wave of "hot money" capital flows and to support expected economic growth this year of 6.4 percent.
But that's been undermined by the rising cost of food, raw materials and supply shocks caused by erratic weather. Tim Condon, economist at ING, reckons some of those effects will pass after this week's Lunar New Year holidays in parts of Asia.
"We think the food price scare will dissipate in February when the Chinese new year effect passes," he said. "Typically month-over-month food price inflation peaks in January and February ahead of the main rice harvest in March and April."
After that, he added, prices retrace. "We expect the usual pattern to prevail this year," he said.
'EVERYTHING IS MORE EXPENSIVE'
The data deepens fears that higher world commodity prices and resurgent demand will keep inflation near or at the peak of official target ranges in Asia's emerging economies from Bangladesh to Indonesia and Thailand.
"Everything is more expensive -- cooking oil, vegetables, everything really," said Yupin Waiyarabut, a 38-year-old owner of a stall selling noodles on a busy sidewalk in Bangkok. "Food prices have increased a lot over 1-2 months."
Pressures from food prices may ease in coming months in Thailand, thanks in part to a bumper rice crop, but these could be replaced by the effects of rising oil prices, said Usara Wilaipich, an economist at Standard Chartered Bank in Bangkok.
"On balance, the Bank of Thailand is expected to raise rates by 25 basis points at its next Monetary Policy Committee meeting on March 9," she said after Thailand reported inflation quickening by 0.54 percent month-on-month from December.
"High energy prices will remain a key risk."
The Bank of Thailand has turned hawkish in recent months, raising its benchmark interest rate by a quarter of a point to 2.25 percent on Jan. 12 following a similar increase in December.
Thailand has other sources of nascent inflation on its hands. Prime Minister Abhisit Vejjajiva's government, for instance, has raised the daily minimum wage and will boost the salaries of civil servants ahead of an election expected this year.
'BLAME THE CHILLI'
In Indonesia, food sellers have seen the price for their favourite spice, green chillies, jump more than five-fold.
"What can I do? My boss keeps reminding me to not be so generous about the chillies," said Fendi, one of many Jakarta food stall owners grappling with rocketing prices.
"Blame the chilli," exclaimed another stall owner, Darwari, who uses one name like many Indonesians. "My profit has been cut in half because of chillies."
In Bangladesh, traders have started to hoard rice following an increase in the local price of the staple. That and other food price increases pushed annual inflation to 8.28 percent in December from 7.54 percent in November, data showed on Tuesday.
The trends bode poorly for Asia's emerging-market bond investors, with inflation eroding fixed-income returns. South Korean government bond futures prices fell on Tuesday after purchasing managers at manufacturing firms reported input prices rising by their fastest monthly pace in nearly two years in January, indicating inflation could rise further.
The consumer price index's annual rise of 4.1 percent in January and other South Korean indicators released separately prompted traders to boost their bets on a fourth-interest rate increase since the global crisis at the Feb. 11 policy meeting.
They're also a reminder of what's hurting pocketbooks.
"Restaurant meals have turned ridiculously expensive. Not just in certain locations, but everywhere," said Kim Sun-hyung, a 25-year-old who works at a Seoul film agency.
I think that about does it for today.
I will see you tomorrow