Gold & Silver Daily: GATA Appeals to CFTC Regarding Manipulation - Mar 09, 2010

GATA Appeals to CFTC to Act Against Manipulative Shorts
Gold did absolutely nothing in either Far East or European trading... but at 9:40 a.m. in New York, the bullion banks hit the 'sell gold/buy dollar' button... and that was that. By the time the low was in for the day at precisely 11:30 a.m... gold was down a hair over $18... with its absolute low being $1,117.70 spot. The price recovered a tad after that... but the damage was done.

Silver rose a bit in Far East trading... and then fell a bit in London trading... with the London low being precisely at the 12:00 p.m. silver fix in London. From there, the price advanced nicely and looked like it was developing some serious upside legs. But that all ended at 9:40 Eastern time yesterday morning... and the graph below tells the tale. The absolute high in silver [$17.53 spot] occurred ten minutes before gold's high. Silver's low at 11:30 a.m. in New York was $17.10 spot. Silver gained back about 15 cents of its loss before the close of trading at 5:15 p.m. Eastern time.

The dollar rally that began at the same moment that the metals got creamed, was rather anemic... and that's being kind... as it was only up 36 basis points from 9:40 a.m. until moments before noon in New York. I find it rather revealing that 'da boyz' can manufacture a dollar rally just as easily as they can run the Dow up... or smash gold and silver prices. Especially when they can do it all at the same time. The President's Working Group is everywhere these days... as they have to be. But one must ask... how much longer can they keep up these tricks when the entire world's economic, financial and monetary systems are circling the drain?

The Dow and the HUI looked very similar yesterday... both headed south the moment that gold and silver did at 9:40 a.m... and the Dow and the HUI also bottomed at exactly 11:30 a.m. Is all of the above just coincidence? Not bloody likely. But, considering the waterfall decline in both metals, I was happy that the HUI was only down 1.07%.

There was absolutely no reason that I could see for gold and silver to be taken to the cleaners like they were yesterday... especially when platinum was actually up $15 on the day. Platinum would have been up a huge amount if the bullion banks hadn't stepped into the Zurich market at 7:00 a.m. Switzerland time early Monday morning. Here's the platinum chart... and you'll also note that 'da boyz' hit platinum the moment that Globex trading began in the Far East earlier this morning. How obviously "in your face" can they get!!!

Friday's open interest numbers were not what I was expecting... or wanted to see. For whatever reason... gold's open interest jumped a large 8,033 contracts on volume of 174,889 contracts. Gold's total open interest is now back over 500,000 at 502,886 contracts. As Ted Butler mentioned in his King World News interview on Saturday... the '5 through 8' bullion banks were going heavily short on this rally. The '4 or less' traders apparently aren't involved at the moment... at least they weren't as of a week ago... which was the cut-off for last Friday's COT report. Maybe that's changed... but that won't become apparent until this Friday's COT report is released.

Silver's open interest was also up... but only 649 contracts. Volume was a smallish 28,236 contracts.

If you, dear reader, scroll back up to the gold and silver chart posted at the beginning of this column... you will note that there was nothing in gold's price action on Friday that would hint at an open increase of this size... unless it was spread trades. I guess it could have been someone going long... but with that many long contracts placed, one would think that the price would have been driven higher. Silver's action was much more 'volatile'... and I'm surprised that open interest was only up 649 contracts.

The CME's Daily Delivery notice posted yesterday shows that one whole gold contract and 61 silver contracts are up for delivery tomorrow. There were no reported changes in either the GLD or SLV on Monday... and the U.S. Mint had nothing to say for itself, either. But over at the Zürcher Kantonalbank in Switzerland, they reported the following increases in the respective gold and silver ETFs: gold up 13,065 ounces... and silver was up another bunch, this time it was 584,432 ounces. The Zürcher Kantonalbank now has 4.85 million ounces of gold and 64.0 million ounces of silver.

The Comex-approved warehouses reported a decline of 616,582 troy ounces of silver on Friday.

One of the things that I neglected to mention on Saturday was the silver short position of the four biggest bullion banks... led by JPMorgan. In Friday's Commitment of Traders report, if you subtract the total Commercial long position from the total Commercial short position... you come up with a 'net short' position of 40,940 contracts... which is 204.7 million ounces of the stuff. The '4 or less' bullion banks hold about 47,950 short contracts on the Comex... which is 239.8 million ounces. In percentage terms, the 'four or less' bullion banks in the Commercial category are short 117.1% of the Commercial net short position... and, when you take out the b.s. spread trades, these same four bullion banks are short about 53% of the entire Comex silver market. And it's about 65% of the silver market when you include the '8 or less' traders. And I think those percentages are on the conservative side as well.

Today being Tuesday, I have a lot of stories to cover from the last three days. I'll start with two of the gold-related stories that I have in my in-box. The first one is posted at gulfnews and is headlined "Dubai records Dh106.6b gold trade in 2009"... and the link is here.

The next story is from the Monday edition of The Wall Street Journal. The headline reads "China Cautious on Gold Buying" China's chief foreign-exchange regulator made this absolutely b.s. statement... "Gold is not a bad asset, but currently a few factors limit our ability to increase foreign-exchange investment in gold," said Yi Gang, director of China's State Administration of Foreign Exchange. He said gold doesn't offer good long-term returns due to price swings." Maybe the 'Tokyo Rose' of the gold world wrote his speech for him... as the rest of it is b.s. too. The link is here.

China was also in the news on Saturday with this headline out of The Telegraph in London. "The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual." The headline is short and sweet... and reads "China ready to end dollar peg"... and the link is here.

What would my column be without a story about Greece. Here's an item posted over at BBC - Homepage that surprised me. The headline reads "Greece does not need financial aid, says Angela Merkel" This was news to me... and to a lot of other people as well, I'm sure. Everything must be fine over there...LOL! I thank Australian reader Wesley Legrand for bringing it to my attention... and the link is here.

From one Eurozone basket case to another... we now go to Iceland where the voters [rightly] have voted to reject a deal to pay Britain and the Netherlands billions for losses in the collapse of the Icesave Bank. Too bad the rest of the Western world can't vote on the same sort of issues! The story is posted over at France24 - TOP STORIES - the latest news from around the world - read about the events that make international headlines... and is headlined "Voters say 'no' to repaying Dutch and UK Icesave losses". I thank reader Roy Stephens for bringing it to my attention... and the link is here.

In last Friday's edition of The New York Times, comes this piece by veteran columnist, Gretchen Morgenson. As she so bluntly states in her opening paragraph... "As more details surface about how derivatives helped Greece and perhaps other countries mask their debt loads, let’s not forget that the wonders of these complex products aren’t on display only overseas. Across our very own country, municipalities, school districts, sewer systems and other tax-exempt debt issuers are ensnared in the derivatives mess." Amen to that!!! The headline reads "The Swaps That Swallowed Your Town"... and this story is very much worth your time... and I thank Florida reader Donna Badach for sending it along... and the link is here.

Here's another story that Donna B. sent me... and this one's a beauty. As most of you may be aware, I'm a 27-year veteran in residential real estate sales here Edmonton... so is it's obviously an area that I have some expertise in. This is a story that I urge every condominium association in the United States to latch onto with both arms and both legs... and I quote... "Revenue-starved condominium and homeowners associations struggling to keep the taps running and the lawns mowed have found a novel way to squeeze money from units that don't pay what they owe. It's called a reverse foreclosure, a tool that can force banks to pay association maintenance fees when unit owners don't." I remember back in the early 1980s when the oil boom came to an end in Edmonton. Quite a few condominium projects went under for this very reason... and now here's a way for them to fight back. The story was in the Sunday, March 7th edition of The Miami Herald... and the headline reads "Desperate condo, homeowner associations thrown a lifeline"... and this must read story is linked here.

This next essay is the weekly missive from Adam Hamilton over at Zeal Speculation and Investment. Last Friday his commentary was entitled "Euro Gold Records 2". I feel that this [rather verbose] article is required reading, as it gives the gold price story as seen through the eyes of the average European investor. The two graphs are first rate... and I thank Wesley Legrand for forwarding the story... and the link is here.

The last story today is a GATA release that was dispatched yesterday afternoon. The letter, linked in the paragraph below, was delivered to the chairman of the U.S. Commodity Futures Trading Commission, Gary Gensler. It's a letter from GATA Chairman Bill Murphy, appealing to the CFTC to act against the concentrated and manipulative short positions in the precious metals markets. The commission is expected to hold a hearing this month on establishing position limits in those markets.

As of this writing, neither silver analyst Ted Butler, the man who has complained to the CFTC about the silver price manipulation for the last 25 years... nor Bill Murphy or Chris Powell, GATA's two principals in the gold price manipulation arena for the last 11 years... have been asked to testify at this March 25th meeting. I'm sure that the last people that the bullion banks want to see at this hearing would be the persons most able and willing to expose their shenanigans in front of the TV cameras. The hearing will be a total farce if they're not asked to appear to state their respective cases... and the link to the GATA release is here.

Below is the 6-month gold chart. You'll note that in the last four trading days, it seems like the gold price is rolling over. It's hard to say whether this is going to correct itself... or if it's going to go lower. If it does go lower from here... it will certainly not be due to any free market forces that I can think of... but it's too soon to tell right now.

I note in Far East trading that nothing much is happening. Gold has bounced off the $1,120 mark several times during their Tuesday trading day... and silver has touched $17.10 a few times as well. I'd be delighted if that was the bottom... but we'll just have to see what JPMorgan et al have in the way of marching orders when trading begins in New York this morning.

Gold volume as 4:08 a.m. Eastern time is 18,446 contracts... which really isn't a big number... at least not compared to what we've seen over the last several months. Silver has only traded 2,159 contracts. So volume is pretty light in both metals early in London trading. This will change quite drastically once the New York bullion banks open this morning.

The CME has posted their preliminary volume figures for Monday... and they show that only 164,460 contracts traded in gold yesterday... and in silver, it was 30,067 contracts. After yesterday's waterfall decline in both gold and silver... the open interest numbers will be of great interest when they're posted on their website later this morning.

See you tomorrow.