Guess Who's Rigging the U.S. Equity Markets?
Gold had a rollercoaster ride during Friday's trading day. The price didn't do much in Far East or London, but shortly after New York opened, down went the price… with the low coming at [or very shortly after] the London p.m. gold fix at 10:00 a.m. Eastern. From there, gold had a sharp rally that lasted about an hour… but a not-for-profit seller showed up to make sure the rally died… and that, as they say, was that. The high of the day occurred during early afternoon trading in Hong Kong… around $1,099 spot. The low was around 10:10 a.m. in New York. Kitco reports the low price tick at $1,080.90 spot.
Silver, or course, is the metal that's at the centre of JPMorgan's universe… and they hold around 40% of the entire silver short position on the Comex all by themselves. As you can tell, dear reader, silver has been singled out for special treatment during this sell-off. From it's high to its low… the silver price has 'dropped' two dollars in the last three trading sessions. It lost 30 cents of that yesterday… with the low coming shortly after 10:30 a.m. in New York at $16.86 spot.
Despite the negative price action in gold and silver… plus the huge drop in the Dow… the precious metals shares were just about the tallest hog at the trough yesterday… with the HUI spending most of the day in the plus column. The shares were strongly positive during the big gold rally that started shortly after the London p.m. fix… but got hit the moment that the gold price ran into that not-for-profit seller shortly after 11:30 a.m.
Thursday was another huge day as far as volume went in both metals. Gold open interest only fell 2,424 contracts… but, as I mentioned yesterday, the bullion banks are really careful about covering their tracks, and it's a good bet that there was more liquidation than meets the eye. Gold volume was way up there again… 327,311 contracts. Silver open interest actually rose… up 721 contracts. Considering the drop in price, I'd say it was the bullion banks going long as the tech funds sold… and proof of that won't be known until next week's COT report. Total silver volume on Thursday was pretty big at 56,203 contracts.
Yesterday's Commitment of Traders report [for the week ending Tuesday, January 19th showed virtually no change in silver's open interest. The bullion banks are net short 308.5 million ounces of silver… virtually every ounce of it by the '4 or less' traders… of which the lion's share is held by JPMorgan.
In gold, the bullion banks reduced their net short position by 8,841 contracts. The bullion banks are now net short 27.4 million ounces of gold… still preposterously high. The decline in their net short positions was not a large amount, but it's how they did it that's worth mentioning. They only covered 95 of their short positions… but they went long the other 8,746 contracts. As I've mentioned many times this week [the last being a few paragraphs ago]… the bullion banks can hide what they're doing by going long instead of covering their shorts. This gives a false reading of the daily changes in open interest… and that's exactly what they did during the week that was… and I'll bet that's exactly what they're doing now. The link to this week's COT report is here.
Not one contract of either gold or silver that got sold in this week's price decline is in the COT report that was issued yesterday afternoon at 3:30 p.m. Eastern. Don't forget that the bullion banks pulled the plug on Tuesday evening… about 3 hours after the cut-off for this Friday's COT report… so the entire decline in open interest won't show up until next Friday's report. This was a deliberate act by the bullion banks, as I've seen this scheme many times over the years. In a court of law, the judge [in handing down the appropriate jail sentences] would call it by its legal name… collusion!
Of course silver analyst Ted Butler has got a few things to say about it all. His latest interview with Eric King at King World News is linked here… and I urge you to stop right here and listen to what he has to say.
The CME Delivery Report had nothing worth mentioning. There were no changes once again in either the GLD or SLV. But over at the U.S. Mint there was another update. They reported another 12,000 one-ounce gold eagles and another 243,000 silver eagles sold yesterday. This brings their monthly total to 81,000 gold eagles and 3,090,500 silver eagles… and this silver eagles number is very close to a record. The Comex-approved depositories reported that 295,164 ounces were withdrawn on Thursday.
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My first story today is one that was sent to me by reader Joseph Weiler a couple of days ago. The U.S. unemployment insurance system is in crisis. So far, 25 states have run out of funds and have been forced to borrow from the federal government, raise taxes or cut benefits. The headline reads "Two Dozen States' Unemployment Funds in the Red; Nine More Within Six Months". There's an inter-active graph that shows you how each state is doing… and how far down the road to insolvency each is. The link is here.
I note in a Reuters story that two more U.S. Senate Democrats are going to vote against Ben Bernanke for a second term as Fed chairman. If he gets the old 'heave ho'… my only concern is what moron will take his place. The headline reads "Bernanke second term in doubt"… and the link is here.
In a story out of The Guardian in London on Tuesday, comes this piece headlined "FBI fabricated terror emergencies to get phone records". A lot of people now believe that 9/11 was 'fabricated' as well so that the Patriot Act could be passed. I thank reader Brad Robertson for sending this story along… and the link is here.
I got the following January 19th video clip from a couple of sources yesterday… but reader Brad Robertson was the first in the door. Charles Biderman, founder and CEO of Trim Tabs Investment Research, discusses the possible role of U.S. government cash in the current stock market rally with Bloomberg's Lori Rothman. He basically says that the markets are rigged, the Fed [through its primary dealers] is pumping the overnight futures market and is the stock buyer of last resort. He says that when it ends, the markets will crash. The video runs about 8 minutes… and is a must watch… and the link is here.
Florida reader Donna Badach sent me the following Bloomberg piece. It appears that "AIG submitted four rounds of regulatory filings in six months, with more than 1,000 redactions, as the Federal Reserve Bank of New York pressed the insurer to withhold data about bailout payments to banks." Treasury Secretary, Little Timmy Geithner, ran the New York Fed during AIG's September 2008 bailout and… along with Gentle Ben Bernanke… could be out of job real soon. The link to the story is here.
Rick Mercer, one of Canada's top comedians, does a skit on the new airport procedures that all Canadians will soon endure the moment they want to fly to the United States. This video has been making the rounds quite a bit during the last week or so… and this is the umpteenth copy that I've received. I thank reader P.S. for sending me this one… and the link is here.
We haven't heard anything about that world-wide scam called Global Warming for a while. With their collective reputations in ruins, the 'scientists' who have been at the forefront of all this nonsense are trying to pretend that they no longer exist. However [as F. William Engdahl puts it] "a new scandal over the scientific accuracy of the UN IPCC 2007 climate report has emerged. Following the major data-manipulation scandals from the UN-tied research center at Britain’s East Anglia University late 2009, the picture emerges of one of the most massive scientific frauds of recent history." This story first appeared at Bill Murphy's lemetropolecafe.com website early yesterday morning… but it has now been posted in the clear at financialsense.com. As mentioned before, it's written by F. William Engdahl… a writer who I have all the time in world for… is headlined "More Scandals Implicate IPCC Climate Scientists"… and the link to this must read article is here.
Lastly is another interview from King World New. This time Eric interviews Rob Arnott. Arnott is the Chairman of Research Affiliates, a global leader in innovative investing and asset allocation strategies. The firm manages and licenses nearly $50 billion. Rob sub-advises the Pimco All Asset Fund and also sub-advises mutual funds and ETFs for the Schwab Funds, Powershares and Nomura. He also discusses the massive US debt and deficit situation as well as other headwinds the United States faces… commodities, overseas investing, the economy, the U.S. stock market and investor psychology. It's a longish interview… but well worth your time… and the link is here.
A statue of a bird of prey made of gold is pictured at a gold and silver exhibition at the Ginza Tanaka store in Tokyo… October 23, 2009.
Personally, I have little confidence in the government's claims of the Fort Knox gold supply, and only slightly more confidence in GLD's books. 2008 taught us hard lessons about counterparty risk, and I prefer to hold it in my hand rather than see it in my brokerage account. – Simon Black, Sovereign Man… 22 January 2010
Today's 'blast from the past' is from the late 1970s. Without doubt you'll recognized it instantly… so turn up your speakers and click here.
It will be interesting to see how gold and silver do next week. Options expiry in both metals is on Tuesday… and I note that the U.S. Treasury has another $166 billion in paper to sell next week as well. It's a known fact that the Fed and Treasury want to keep both gold and silver under wraps until the Treasury has sold all its paper to the Fed. Anything could happen of course, but using the past as prologue, this is the most likely scenario.
However, after that, I'm far more optimistic… especially in the precious metals. It's my opinion [along with others] that we should be near the bottom of this JPMorgan-led bear raid in the silver and gold markets. As Warren Buffett said in the past… you should be buying stocks when everyone is afraid to touch them. In the precious metals… that would mean at lows like this… and the HUI certainly showed that the 'bottom fishing' buyers were out in force on Friday. I urge you to consider doing the same. That's why I keep ranting and raving about Casey Research's flagship publication International Speculator. The stock picks by CR's research team are the very best in the business… and a subscription is risk-free as well. Check it out!
And, in closing, I note that the CME website has posted preliminary volume numbers for Friday's trading. Gold traded 261,747 contracts… and silver traded 51,689 contracts… subject to [probably upward] revision. This isn't quite as high as trading volume on Thursday… but they're still pretty big numbers for both metals nonetheless. The open interest changes won't be posted until around lunchtime in New York on Monday… and I must admit that I can hardly wait to see what they are.
Enjoy the rest of your weekend… and I'll see you on Tuesday morning.