Saturday, January 14, 2012

Greece

Good morning Ladies and Gentlemen:

The bankers in their great wisdom, decided to delay by one day their raid on gold and silver.  On Thursday, the cartel saw the precious metals rise on a "great" auction in Europe. The rise provided extra juice for the bankers on Friday and they did not disappoint. Gold fell by $17.30 down to $1630.40.  Silver was hit for a loss of 36 cents to $29.75. Bourses were hit first in Europe with news of a possible S and P downgrade on France.  That brought the Dow down  initially quite hard to triple digit losses, but it rallied on the close down only 48 points. Gold rose with  the Dow advancing but not silver. France was finally downgraded at 4:30 pm Friday night. Here are the final closing prices:

 Gold:  $1639.70
silver: $29.77

The bankers have complete control of the paper price of gold and silver. I would like to report that again we had no USA bank failures Friday night.
Let us go to the comex and assess trading, amounts standing for delivery, inventory movements and the COT report for positions of the various players.

The total gold comex open interest rose by 4,383 contracts which provided the fodder for our bankers to whack on Friday.  Always remember that all OI figures are 24 hours back.  Thus the "real" OI Friday is officially the close of trading at the comex on Thursday. The front options expiry month of January saw the OI rise by 5 contracts from 30 to 35 despite 8 deliveries on Thursday.  We thus gained another 1300 oz of additional gold standing and lost nothing to cash settlements.  The next big delivery month is February and we are a little over 2 weeks to first day notice.  The February month saw a contraction from 182,125 to 174,222 as many are rolling to other future months namely April.  The estimated volume was quite high yesterday coming in at 230,480 and this was due to:

1. the high rollovers
2. the extra shorting by the bankers.

The total silver comex OI hardly budged in total contrast to gold.  Here the OI fell by only 5 contracts to 103,877.  There is no question that silver is trading in a different pattern to gold.  Judging from the comex movements it seems that the CME is getting ready for some serious deliveries in March.  The front options expiry month of January saw its OI fall from 185 to 122 for a loss of  63 contracts. We had 125 delivery notices filed on Friday for delivery on Tuesday so we again gained 62 contracts or  310,000 additional oz of silver standing for delivery and lost nothing to cash settlements.  The next front month which appears to be of considerable interest to investors is the March contract and here the OI lost only about 600 contracts to roll overs. The OI rests this weekend at 55,029. The estimated volume on Friday came in at a weak 38,682.  The confirmed volume on Thursday was also weak at 38,807  The entire silver comex longs appear to be in very strong hands as these guys do not seem to be bullied by the banker's antics.


Inventory Movements and Delivery Notices for Gold: Jan 14 2012:




Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
835 (HSBC,Manfra)
Deposits to the Dealer Inventory in oz

nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
13 (1300)
No of oz to be served (notices)
22  (2200)
Total monthly oz gold served (contracts) so far this month
1036  (103,600)
Total accumulative withdrawal of gold from the Dealers inventory this month
4297
Total accumulative withdrawal of gold from the Customer inventory this month

161,756


For a weekend, the gold comex activity was quite tame.  We had no gold deposits by the dealer.
We had no gold withdrawn by the dealer.

We only had two transactions involving customer withdrawals;

1.  Out of HSBC:  578 oz
2.  Out of Manfra:  257 oz

total customer withdrawal:  835oz.

Since we had no adjustments, the total registered gold inventory remains at 2.4997 tonnes or 77.75 tonnes of gold.

The CME reported on Friday that we had 13 delivery notices for 1300 oz of gold. This gold will somehow be used by the bankers in jurisdictions elsewhere to put out huge demand fires. The total number of gold notices for the month total 1036 for 103600 oz of gold.  To obtain what is left to be served upon, I take the OI standing (35) and subtract out Friday delivery notices (13) which leaves us with 22 notices or 2200 oz of gold.  The 22 notices are identical to Thursday, thus the bankers needed to pull these 1300 oz for use elsewhere.

Thus the total number of gold oz standing in this non delivery month of January is as follows:

103,600 oz (served)  +  2200 (oz left to be served upon)  =  105,800 oz or 3.29 tonnes of gold.
If we add the January and November  months (non delivery months) to the delivery month of December we have a total of 73. 97 tonnes of gold standing for delivery of metal.
This represents 73.97/77.75 or  95.13% of available dealer or registered gold.
Yet no gold enters the dealer as a deposit nor does any gold leave the dealer.  There is no question that shenanigans is quite prevalent  at the gold and silver comex.

 And now for silver 

 the chart: January 14 2012:

Month of January now commences:


Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals fromCustomer Inventory276,499 (Delaware,HSBC,Scotia,)
Deposits to theDealer Inventory597,014 (Brinks)
Deposits to the Customer Inventory891,247(Scotia, ,HSBC)
No of oz served (contracts)92 (460,000)
No of oz to be served (notices)30  (150,000)
Total monthly oz silver served (contracts)766  (3,830,000)
Total accumulative withdrawal of silver from the Dealersinventory this month268,115
Total accumulative withdrawal of silver from the Customer inventory this month 2,196,458


Again the silver comex vaults are quite active.

We had the following dealer deposit:  597,014 oz arrive at Brinks.
It may be a strange coincidence but on Thursday we had almost the same amount of silver arrive at the dealer Brinks: 596,741 oz.

The customer had the following deposit:

1.  Into HSBC  290,777 oz
2. Into Scotia 600,470 oz

total:  891,247 oz.

We had the following customer withdrawal:

1. Out of Delaware:  17,406 oz
2. Out of HSBC:  8319 oz
3. Out of Scotia: 250,774 oz.

total customer withdrawal:  276,499 oz

It is also interesting that on Thursday we had a withdrawal from Scotia
of an almost identical 250,123 oz.
We had no dealer withdrawal of silver.
We had two adjustments:

1  a lease of 2089 oz whereby the customer leased silver to a dealer at Brinks.
2. a 2 oz silver addition count at Scotia due to a counting error.
It seems that their counting of silver is all over the place.

The CME notified us that we had 92 delivery notices for  460,000 oz of silver.
The total number of silver notices filed so far this month total 766 for 3,830,000 oz.
To obtain what is left to be served upon, I take the OI standing for January (122) and subtract out Friday deliveries (92) which leaves us with 30 notices or 150,000 oz left to be served upon.

Thus the total number of silver oz standing for delivery again advances:

3,830,000 oz (served)  +  150,000 oz (to be served upon) =   3,980,000 oz.

Please note that this total is approaching the final totals for delivery in the normally big delivery month of December.  Also note that January is generally the weakest delivery month for both gold and silver.


Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:

Sprott and Central Fund of Canada.

The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.


Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.



Jan 14. 2012:


Total Gold in Trust

Tonnes:1,254.16

Ounces:40,322,451.77

Value US$:65,934,796,423.39





jan 12.2012:



TOTAL GOLD IN TRUST

Tonnes:1,254.16

Ounces:40,322,451.77

Value US$:66,963,739,550.16





JAN 11.2012



TOTAL GOLD IN TRUST

Tonnes:1,254.16

Ounces:40,322,451.77

Value US$:65,895,926,430.52





we neither gained nor lost any gold at the GLD despite the massive volatility in gold these past several days.




And now for silver Jan 14 2012: 


Ounces of Silver in Trust305,970,641.100
Tonnes of Silver in Trust Tonnes of Silver in Trust9,516.75

Jan 12: 2011:

Ounces of Silver in Trust305,970,641.100



we neither gained nor lost any silver today in the SLV.


end.




end



And now for our premiums to NAV for the funds I follow:


1. Central Fund of Canada: traded to a positive 4.4 percent to NAV in usa funds and a positive 3.9% to NAV for Cdn funds. ( Jan 14 2012.).
2. Sprott silver fund (PSLV): Premium to NAV fell   to  23.93% to NAV  Jan 14 2012:
3. Sprott gold fund (PHYS): premium to NAV rose  to a 4.89% positive to NAV Jan 12. 2014). 

end.


The Sprott silver fund has been retreating in premiums over the past few days, but the central fund of canada has gained.  Maybe a bit of arbitrage is occurring.
The gold premiums have been remaining quite strong for the Sprott gold.

Let us head over to the COT report which was released after the market closed:


Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
166,262
33,502
33,354
160,949
327,523
360,565
394,379
Change from Prior Reporting Period
-3,077
-4,866
-3
-3,168
1,563
-6,248
-3,306
Traders
161
68
79
50
51
246
172


Small Speculators




Long
Short
Open Interest



57,358
23,544
417,923



896
-2,046
-5,352



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, January 10, 2012



Those large speculators that have been long in gold, pitched 3077 contracts from their long side.
Those large speculators that have been short in gold covered a rather large, 4866 contracts from their short side, thinking gold would advance and their move was accurate.

Our commercials:

Those commercials that are close to the physical scene and generally long in gold somehow missed the tea leaves and pitched, 3168 contracts from their long side.

Those commercials who are perennially short in gold, added another 1563 positions to their short side.

Our small specs:

The small specs that are long in gold, added a tiny 896 contracts to their long side and got it right.
The small specs that are short in gold covered a rather large for them, 2,046 contracts as these guys were fearful of a gold advance and they were right.

Conclusion:  a little bearish as the bankers were preparing their raid.

And now silver:



Silver COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
26,208
15,137
18,856
38,959
58,021
84,023
92,014
-421
-1,854
-356
-2,341
805
-3,118
-1,405
Traders
63
37
42
35
41
121
102

Small Speculators




Long
Short
Open Interest



20,322
12,331
104,345



362
-1,351
-2,756



non reportable positions
Change from the previous reporting period

COT Silver Report - Positions as of
Tuesday, January 10, 2012



Our large specs that are long in silver, covered only a tiny 421 contracts in silver.  These spec longs seem to be in very strong hands.

Our large specs that are short in silver, saw the tea leaves and covered a rather large 1854 contracts from their shortfall.

Our commercials:

Those commercials who have been close to the physical scene and generally on the long side, pitched a rather large 2341 contracts from their longs.

Those commercials who have been perennially short in silver and subject to the silver investigation by the CFTC, added 805 contracts to their shortfall.

Our small specs;

The small specs that have been long in silver added  362 positions to their long side.
The small specs that have been short in silver covered a rather large for them, 1,351 contracts.

Conclusion:  slightly bearish from the point of view of the commercials going more short.

Ted Butler had this to say Friday in a report to his subscribers.

(courtesy Ed Steer/Ted Butler)
.
Ted Butler mentioned that despite the hopes that the short position in SLV might have declined substantially with the big engineered price decline in silver over the holidays, that did not turn out to be the case. The good folks over atshortsqueeze.com showed that the number of SLV shares shorted jumped from 22.0 million to 24.9 million...an increase of 13.15%.
It was much the same with GLD shares, as their short position rose by 5.43%...as the number of shorted shares rose from 14.77 million to 15.58 million.

Ed Steer reports on silver and gold sales at the USA MINT for January.  As you can see,
demand for gold and silver are quite high especially in silver with sales already at 4.6 million oz.

The yearly sales in silver at the mint is somewhere around 40 million oz or around the amount of silver production in the USA.

Canada also has sales of silver 1 oz coins greater than Canadian silver mine production.
Thus the comex folk need to import silver from Europe to satisfy long investor needs.



(courtesy Ed Steer)
The U.S. Mint had a sales report yesterday. They sold 3,000 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 340,000 silver eagles. Month-to-date the mint has sold 85,500 ounces of gold eagles...8,000 one-ounce 24K gold buffaloes...and 4,597,000 silver eagles.

end


Early Friday morning there were rumours that S and P was going to downgrade France.
Finally at the end of the day we got this notice of a downgrade to AA plus and outlook negative.
This puts the EFSF and its successor in funding the euro crisis in jeopardy as France will no longer contribute:

(courtesy zero hedge)


It's Official: France Cut To AA+ From AAA By S&P, Outlook Negative

Tyler Durden's picture




Today's worst kept secret just hit the wires, as S&P announces that it has officially downgraded France
  • FRANCE CUT TO AA+ FROM AAA BY S&P, OUTLOOK NEGATIVE
  • "we believe that there is at least a one-in-three chance that we could lower the  rating further in 2012 or 2013"
  • "we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating,"
One notch, but the negative outlook means a future downgrade is likely.
Full statement below:
France's Unsolicited Long-Term Ratings Lowered To 'AA+'; Outlook Negative
Overview
  • Standard & Poor's is lowering its unsolicited long-term sovereign credit rating on the Republic of France to 'AA+'. At the same time, we are affirming our unsolicited short-term sovereign credit rating on France at 'A-1+'.
  • The downgrade reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone, with which France is closely integrated.
  • The outlook on the long-term rating is negative.
Rating Action
On Jan. 13, 2012, Standard & Poor's Ratings Services lowered the unsolicited long-term sovereign credit rating on the Republic of France to 'AA+' from 'AAA'. At the same time, we affirmed the unsolicited short-term sovereign credit rating at 'A-1+'. We also removed the ratings from CreditWatch with negative implications, where they were placed on Dec. 5, 2011. The outlook on the long-term rating is negative.
Our transfer and convertibility (T&C) assessment for France, as for all European Economic and Monetary Union (eurozone) members, is 'AAA', reflecting Standard & Poor's view that the likelihood of the European Central Bank restricting nonsovereign access to foreign currency needed for debt service is extremely low. This reflects the full and open access to foreign currency that holders of euro currently enjoy and which we expect to remain the case in the foreseeable future.
Rationale
The downgrade reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the eurozone's core and the so-called "periphery." As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers' rising concerns about job security and disposable incomes, eroding national tax revenues.
Accordingly, in line with our published sovereign criteria, we have adjusted downward the political score we assign to France (see "Sovereign Government Rating Methodology And Assumptions," published on June 30, 2011). This is a reflection of our view that the effectiveness, stability, and predictability of European policymaking and political institutions (with which France is closely integrated) have not been as strong as we believe are called for by the severity of what we see as a broadening and deepening financial crisis in the eurozone.
France's ratings continue to reflect our view of its wealthy, diversified, and resilient economy and its highly skilled and productive labor force. Partially offsetting these strengths, in our view, are France's relatively high general government debt, as well as its labor market rigidities. We note the government is addressing these issues through, respectively, its budgetary consolidation strategy and structural reforms.
Outlook
The outlook on the long-term rating on France is negative, indicating that we  believe that there is at least a one-in-three chance that we could lower the  rating further in 2012 or 2013 if:
  • Its public finances deviated from the planned budgetary consolidation path. Budgetary measures announced by the French government to date may be insufficient to meet deficit targets in 2012 and 2013, should France's underlying economic growth in these years fall below the government's current forecast of 1% and 2%, respectively. If France's general government deficit were to remain close to current levels, leading to a gradual increase in the net general government debt to surpass 100% of GDP (from just above 80% currently), or if economic growth were to remain weak for an extended period, it could lead to a one-notch downgrade.
  • Heightened financing and economic risks in the eurozone were to lead to a significant increase in contingent liabilities, or to a material worsening of external financing conditions.
Conversely, the ratings could stabilize at current levels if the authorities are successful in further reducing the general government deficit in order to stabilize the public debt ratio in the next two to three years and in implementing reforms to support economic growth.

end.


The following is a great article written by Roberts.  He asserts how QEIII will do nothing for the "Average Joe".  The authors speculates that the Fed will engage in the purchase of massive mortgage backed securities.  I differ with the author only in terms that the Fed is still engaging in QE III behind the scenes using swap dollars overseas to buy debt instruments nobody wants.

(courtesy Lance Robert/Street Talk Advisors/zero hedge)

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