JPMorgan is 'Simply Outrageous'

As I pointed out in my closing comments yesterday, gold hit its high price of the day [around $1,102 spot] shortly after 10:00 a.m. in Hong Kong trading on Tuesday morning… the moment a dollar 'rally' developed. From there, it was it was a $10 slide in price… and at 8:00 a.m. [shortly before the Comex opened] the price really got stepped on. The absolute low price of the day came at 9:15 a.m. in New York… with the low tick reported at $1,084.30 spot. This is approximately the same time as the dollar rally came to an end as well.
Surprisingly, gold made it back to $1,100 during the ensuing rally… but a seller showed up and the price took its usual hard turn to the right… and that was that.

As per usual, JPMorgan absolutely bushwhacked silver. Silver followed gold down, but at an accelerated rate. From it's approximate high of $17.24 spot early in Hong Kong trading Tuesday morning, it was down exactly 40 cents by the time that trading began on the Comex. JPMorgan et al pulled their bids at that instant… and the technical funds found themselves dumping their long contracts into a black hole… and the price cratered. By the time the bloodbath was over at 9:15 a.m… silver had shed another 50 cents to its low of the day… which was $16.32 spot.

A more blatant example of price management is just not possible. Yesterday's silver graph should go down in the history books. But the CFTC pretends that everything's fine. Well, everything's not fine. Everyone at the CFTC should be in jail for dereliction of duty. What are U.S. taxpayers funds doing paying for an organization that will allow a robbery like this to occur in broad daylight… and right under their noses to boot?

Anyway, silver gained all it's New York losses back within the next couple of hours… and the chart headed sideways for the rest of the day.. but the technical damage to the downside had already been done.

The dollar 'rally' yesterday [about 50 basis points from low to high] was nothing special, but JPMorgan used it as a smokescreen to bash the precious metals through most of Far East and European trading, before pulling their bids at the New York open. But you have to give 'da boyz' over at JPMorgan et al full marks… it worked like a charm. Crime pays!

The shares were down again today… after remaining in positive territory for most of the day. They got caught in the late afternoon equity sell-off. The HUI was down 1.32%.

The open interest numbers that were reported for Monday's trading are as follows. Gold o.i. was down… but only by 954 contracts. I guess we should be thankful for small mercies, as it could have gone up that amount. Final volume was 210,193 contracts… which, surprisingly, was the same as the preliminary volume number. In silver, open interest also fell… this time by 1,093 contracts… on volume of 31,198 contracts.

After today's pounding [especially in silver]… both Ted and I are expecting some pretty impressive open interest numbers when they are posted later this a.m. But, regardless of what they show [and the bullion banks are great at hiding their tracks]… it won't matter, because whatever is reported this morning will be in Friday's Commitment of Traders report. My fervent wish is that JPMorgan et al will report all their trading activity yesterday… not just some of it. As you already know, dear reader, the bullion banks can be rather tardy about reporting a big downside move… especially when it occurs on Tuesday… the cut-off date for Friday's COT report. We'll see.

The CME posted no deliveries worth mentioning for Thursday. First day notice for February delivery [in gold] is tomorrow. There were no changes in SLV or GLD… and no report from the U.S. Mint. The Comex-approved depositories showed a decline of 419,737 troy ounces.

The European Central Bank weekly statement of condition indicated no change in the group's "gold and gold receivables". During the prior week, there was an addition of 1 million euros… a "technical adjustment". The last time the ECB reported a significant gold sale was for the week ending September 25th [the last week of Q3/09] when 58 million euros — 2.71 tonnes — was reported sold. [I thank the "usual New York gold commentator" for that tidbit. – Ed]

Today's first story is posted in the January 29th edition of Investor's Digest of Canada. In it, Sprott Asset Management's chief investment strategist, John Embry, grouses about the latest manipulation of the gold market but predicts that gold will gain 30 percent or more this year. The story is linked here.

I hate to denigrate this column by posting comments from the likes of CNBC's Jim Cramer, but Florida reader Donna Badach sent me this video clip from his "Lightening Round" of his Mad Money show yesterday. Starting at the 6:20 mark of the video, he said [when asked about Silver Wheaton] that "I want every investor to have 10% gold and/or silver in their portfolio." James Cramer touting precious metals? The link to his rant is here.

Tim Geithner, Ben Bernanke, Hank Paulson and Goldman Sachs… are the names flying around AIG these days. Now there's talk of a whistle-blower inside the Fed. Here are a couple of stories from the huffingtonpost.com that are more than worth your while.

The first one [which is a very long read] is headlined "How Paulson's People Colluded With Goldman to destroy AIG And Get A Backdoor Bailout". I thank the usual New York gold commentator for providing the story… and the link is here.

The second is headlined "Is Bernanke Hiding A Smoking Gun?"… and the link to that story is here.

Al Korelin of the Korelin Economics Report interviewed GATA's full Board of Directors during the Vancouver Resource Investment Conference last week — Chairman Bill Murphy, secretary/treasurer Chris Powell, and board members Catherine Austin Fitts, Adrian Douglas and Ed Steer. The video is 16 minutes long… and the link here.

More bad news for Global Warming fans. In a news story posted at investors.com comes a report that large numbers of weather stations in Canada's high arctic are not being included in the global weather database… including my old stomping grounds at Alert, N.W.T… the most northerly weather station on planet earth. That jibes with what the Russians were complaining about in Copenhagen earlier this month, because most of Siberia's weather data is not included, either. The headline reads "Climate Flimflam Flaming Out". I thank reader Bryan Bishop for bringing it to my attention… and the link is here.

And lastly comes this must watch video. It's an interview from ABC News that's posted over at yahoo.com. The gentleman being interview is Herb Kay, New York Times best selling author and President of HK Turnaround. He sounds like our own Doug Casey… and kind of looks like him too. He doesn't pull his punches and appears to be quoting everything all of us at Casey Research have been going on about for the last number of years. I urge you to watch this a couple of times… and then share it with your friends and neighbors. I thank Casey Research's own Jeff Clark for bringing it to my attention… and the link is here.

A man holds a spoon full of gold leaf, ready to eat it with his sushi at the "Seven Sushi Samurai" Sushi of the Year awards for 2009 at the Olympia exhibition center in west London… on November 14, 2009. The gold leaf was an ingredient in last year's winner Mitsunori Kusakabe's entry. [LEON NEAL/AFP/Getty Images]

Never, in my 35 years of market observation, have I witnessed a more blatant manipulation. Make no mistake, this deliberate sell-off [in silver] is the handiwork of JPMorgan. This sell-off would not be possible were it not for their large concentrated short position. More upsetting is the apparent complicity of the CFTC in allowing the illegal manipulation of the silver market. The CFTC's probable involvement undermines the very concept of market integrity. – Ted Butler, 26 January 2010

Well, it appears that JPMorgan et al are serious this time. Silver's takedown was huge… and deliberate. The low yesterday was $16.32 spot… and the 200-day moving average is down at $15.70. That's only 62 cents away… a chip shot at the rate that these guys are going. Gold's 200-day moving average is about $90 below yesterday's close. If these are the targets that the U.S. bullion banks have in mind… well, it could get ugly. Here's the 3-year silver chart.

After a smallish rally in Far East trading early in their morning, the metals were under pressure again right through the London open. Volume so far in gold [at 5:01 a.m. Eastern time] is 29,402 contracts in the February contract… which is now the current month. In silver, volume is showing 4,225 contracts for March.

The preliminary volume numbers for Tuesday's trading are now posted at the CME website. They show that approximately 342,000 gold contracts were traded… a lot of which would be spread and switch related… as options expiry was yesterday. Silver traded a bit over 50,000 contracts.

I wouldn't be entirely surprised if JPMorgan et al had another trapdoor waiting during Comex trading in New York again this morning. These guys look like they're in some sort of hurry. As I mentioned earlier, Ted and I expect to see some rather large improvements in open interest later this morning… and if they're not obvious, we'll just have to wait until Friday to see what they hid from us in their reporting today… if they report everything, that is.

We could be in for another entertaining day in the gold and silver pits in New York when trading begins shortly.

See you on Thursday.