Putting Monday In The Books

It seems like I've got a whole bunch of stuff to cover with you but not much time to do it in. Let's get started.

First up...We've been waiting since Friday to get a peak at the open interest numbers. They were released on schedule this afternoon and below is a C&P of the summary I wrote in the comments section of the previous blog post. Always keep in mind that the OI data are 24 hours delayed so the numbers released today are as of the close Comex close back on Friday.

"Unlike the past couple of weeks, the numbers from Friday present a cloudy and confusing picture and they are going to require some guesswork on my part.
Let's start with silver because that was the number I was waiting for. Remember that Friday was a huge day in silver, up about $1.20 on the Comex and something like $1.60 by the close of the Globex. I was looking for a rise of just 500-1000 contracts because I felt the rally was primarily EE short-covering. If the rally was Sprott-induced, it should have been about 4000-5000 contracts. The actual number was 2350 as total OI rose from 102,055 to 104,406. Hmmm. What does this mean? Upon review and reflection, I think I am wrong and everyone else is right. 2350 is a lot of new open interest, particularly considering where OI is now versus April last year and taking into account the outrageous margin levels.
I think this implies a further rally in silver. A good rush of new money based upon the strong, Sprott fundamentals. $33 should only be a "speedbump" and silver should, instead, move toward $35 and onto the Battle Royale line near $37. Much more on this in the next blog post.
Now onto gold, which is even more strange. Gold was up almost $10 on Friday and had been seemingly capped and held below 1666 for about the 5th straight session. If this was indeed the case, we should have seen total gold OI continue to rise. Instead, total OI dropped by nearly 3000 contracts! This does smell like the short-covering I expected to see in silver. So what does this mean? Basically that Friday was an anomoly. The Cartel had indeed given up on holding the 1666 line and was intent on pulling back to a higher level. Thus we see the rise today that has outpaced silver and taken gold up toward 1680. From here, I expect a further rally on Happy Tuesday before The Cartel reasserts itself and attempts to stop gold dead in its tracks between 1690 and 1705."

So, why am I concerned about 1690-1705 in gold? The charts below will show you:

paper_1-23pmgoldd.jpgpaper_1-23pmgoldd2.jpg

Silver has its own resistance to deal with. However, if I'm right about the "Sprott Effect", silver should soon move decisively through 33 and head toward 35.50. From there it will tackle the main trendline connecting the April and September highs. Once/if it gets through there, its Katy bar the door!

paper_1-23pmsilvd.jpgpaper_1-23pmsilvd2.jpg

And, if anyone is wondering, lease rates continue to improve. The only negative rate now is the 1-month and all of the other rates are close to their 12-month highs. While not necessarily a short-term positive for gold, it definitely isn't a negative.

paper_1-23pmlease.jpg

Those looking/hoping for QE3 should continue to closely monitor the declining POSX and U.S. treasuries. Right now, both are beginning to give indications that overt QE may be coming sooner rather than later.

paper_1-23pm10yr.jpgpaper_1-23pm30yr.jpg

paper_1-23pmpig.jpg

OK, here are some important items for you to review in the overnight hours. First up, Ranting Andy wrote up a terrific summary for his daily email today. You should read the entire thing:

http://campaign.r20.constantcontact.com/render?llr=n7vdaxbab&v=0014hlzXZJE_jvBSAyuEIJSNosbfHBuimmsa3do4qs2LnusZ7a4eQKqgg2V8mkebZ9jAjil_gyR5j4SuPE5A4fJoPA-lZ-kpbu7PcKawsfrBUWKovaiiFkOvw%3D%3D

Our buddy, Jim Quinn, has filed another interesting article. It can be found here:

http://www.theburningplatform.com/?p=26210

We spent some time discussing the plunging Baltic Dry Index rate today. I suppose that every index has its nuances that effect how it changes over time...but...a drop of 50% in less than a month should get your attention, regardless. Also note that, at 860, the index is now at its lowest level since 2008.

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Another item we covered in detail in the comments today was the story of India purchasing Iranian oil with gold instead of dollars. Here's another c&p of what I typed earlier:

Yes, Iran will likely exchange some of the gold for other things like gasoline. Some of the gold. Some. The main thing is this:

  • Less global demand for dollars. Less demand + more supply = downward price (gold positive)
  • India will certainly act to purchase gold to replenish supply "spent" on Iranian oil (gold positive)
  • Another step on the path toward dollar irrelevance as reserve currency (gold positive)

And here is the original story from debka. If you don't like debka as a source, this was first reported on ZH about a year ago.

http://www.debka.com/article/21673/

http://www.zerohedge.com/article/india-offers-pay-iran-oil-gold

ZH printed this chart earlier today. I think it's fantastic! Note where 1913 falls on the chart (if you can't tell, it's about right in the middle):

large_world_crises.jpg

Along those lines, a Turdite sent me this, which is pretty cool:

http://greshams-law.com/2012/01/22/a-century-of-b-s-fed/

And, lastly, our new buddy Jeff Nielson (I hope you enjoyed the podcast) just posted his latest missive on silver. You should be sure to take the time to read this, too.

http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=23894:exposing-silver-mythology-part-i&catid=49:silver-commentary&Itemid=130

OK, that's probably enough for now. We made it through Monday. What will tomorrow bring? I can't wait to find out!!

TF

138 Comments

Thefreeman's picture

Portuguese Government Bond Market Halts Amid Uncertainty In Gree

Portuguese Government Bond Market Halts Amid Uncertainty In Greece

-- Trading in Portuguese government bonds dries up

-- ECB buying, liquidity injection for banks acts as only driver

-- Uncertainty over Greek restructuring package poses questions for Portugal

-- Portugal's CDS keep climbing to fresh records

By Nick Cawley and Art Patnaude
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Trading in Portuguese government bonds has virtually ground to a halt in recent days, as market participants await clarity on the Greek debt-restructuring deal for how it may effect Portugal's future funding costs.

http://online.wsj.com/article/BT-CO-20120123-707044.html

ClinkinKY's picture

Not first

"Un uh, not gonna do it" (in Dana Carvey, impersonating Poppy Bush voice)

"Never mind " (in Gilda Radner -Emily Littela voice)

dgstage's picture

Max Keiser & Gonzalo Lira

If anyone has interest there is a interview of Gonzalo Lira on On The Edge.

alphamorph's picture

Euphoria

Keep a lid on the euphoria.  Yes, war is a game changer and yes, India/China/Russia trading directly with Iran (some in gold - none in US$) makes a HUGE difference but remember that
this is how things looked at the end of last week....
* Total commercial net short position increased by 1300 contracts, to 20,400 contracts, maybe more.
* The total commercial net short silver position increased for the third straight week, as prices rose (which is the norm).
* Over the past month, the concentrated net short position in COMEX silver futures of the 4 largest commercials has increased by 3500 contracts, or 12.5%, to 31,500 contracts, a cause for grave concern.
* The technical funds and other speculators, have mostly bought back shorts and have not added to longs so far.

They're still there... just like the boogey men/women they are.

ReachWest's picture

Acceleration?

Is it just me, or do things seem to be accelerating?

Great stuff Turd regarding the OI numbers. I wonder if this really is a "Sprott" (or similar) investor of size that is taking on the Cartel re Silver. I think it's risky for him to do so. (By that, I mean - would they really deliver?). Either way, though, it sounds bullish for price, and the lease rate data would appear to be pointing in the same direction. Acceleration??

Here is another Cartoon newscast. (In this episode, we talk about Davos, the FOMC meeting, Obama's State of the Union and the Iranian Central Bank.)

bernard's picture

Would hate to be stuck in ZSL

Would hate to be stuck in ZSL for the move that's coming... 

¤'s picture

Thanks big yellow hatted one

Something out of the blue seems likely in this gold/silver market at some point soon. Just wait until PAGE or something along those lines opens up.

We seem overdue for some type of Chinese news. The Year of the Dragon seems like as good a time as any for something dramatic to come forth from China.  Something market rattling.

http://www.tfmetalsreport.com/forum/3172/daily-dphaze-news-machine

tniutnia's picture

where is HUI and the miners

where is HUI and the miners in all of this?

Thanks.

goldenbear's picture

ZH Article

http://www.zerohedge.com/article/india-offers-pay-iran-oil-gold

Actually I think its a year old. Same stuff though.

Bay of Pigs's picture

ZH article

No, that would be a year and two weeks ago.

Be Prepared's picture

EU to ban all trade in gold with Iran

Reuters report that the EU has agreed to freeze the assets of the Iranian central bank and ban all trade in gold and other precious metals with the Iranian Central Bank and other public bodies in Iran.

According to IMF data, at the last official count (in 1996), Iran had reserves of just over 168 tonnes of gold. The FT reported in March 2011 that Iran has bought large amounts of bullion on the international market to diversify away from the dollar, citing a senior Bank of England official.

Currency wars continue and are deepening.

I don't think this will stop India from sending 226 Metric Tonnes of Gold to Iran for oil......  China and the Asian Trading Block won't honor this "ban" as well.  It seems that we are really trying to kill the U.S. Dollar with more vigor this year.... Thanks, Prez. Obummer... you doin' a might fine job....

In one corner.... we have the Asian trading bloc.... and the other corner..... the fading Western bloc.... who will win?  Everyone knows but we're playing it like its not a fait accompli.

ReachWest's picture

@DPH

DrkPurpleHaze - Just wanted to let you know I'm enjoying checking your "Daily DPHaze News Machine" Forum. I don't know how you do it - but that's a phenomenal collection of the latest news and info, from a multitude of sources. 

It's part of my daily read list!

SuperLeggera's picture

GATA’s Bill Murphy, Chris Powell interviewed

Fresh from a packed presentation on “GATA’s Tremendous Year in 2011,” Chairman Bill Murphy and Secretary-Treasurer Chris Powell of the Gold Anti-Trust Action Committee answer some questions.

http://resourceclips.com/2012/01/23/no-more-tinfoil-hats/

Irene's picture

SilverSeek.com’s 3rd Virtual Silver Investment Conference

Tuesday • January 31 • Eastern Time Zone
10:00am David Morgan                10:30am Endeavour Silver
11:00am Extorre Gold Mines       11:30am James Turk
12:00pm First Majestic Silver      12:30pm Huldra Silver
  1:00pm   Julian Phillips                 1:30pm   BREAK
  2:00pm Eric Sprott
  3:00pm SilverCrest Mines            3:30pm Great Panther Silver

FREE you just need to pre-register

https://seek.6connex.com/portal/goldsilver/login

ClinkinKY's picture

In Other Words---"Yes"

 Carney Asked if ‘Saul Alinsky Portrait’ Is Hanging in the White House

 

Fox News Ed Henry Asks Jay Carney if Barack Obama Displays Saul Alinsky Portrait in White HouseDuring a White House press briefing on Monday, Fox News’ Ed Henry asked Press Secretary Jay Carney if the White House displays a portrait of Saul Alinsky for its staff to look up to. Carney’s answer was less than direct, and would seem to hint that there just might be something to the Alinsky portrait rumors.

“I wonder if you could clear something up,” Henry began.

“Newt Gingrich keeps saying on the campaign trail that the President’s vision comes from Saul Alinsky, the community organizer. I haven’t heard you asked about him but… Is there some kind of portrait of him hanging up in the White House that people look up to or is this BS?”

“Look,” Carney said. “The President’s background as a community organizer is well documented in his own books. His experience in that field contributed to who he is today. But his experiences abroad also included alot of other areas in his life. So I’ll just leave it at that.”

Nick Elway's picture

Wall Chart Financial Crises

I went searching for the full-size chart.  It is available as a 36 x 18 inch wall poster!

If you click on the poster image you can zoom in, pan,  and read everything.

https://www.historyshots.com/FinancialCrisis/index.cfm

Turdle GG's picture

Silver spot price anomaly

Thanks again Turd.

For about 20 minutes (maybe more), Bloomberg has been showing a spot silver price about 20c to 30c above my broker's feed price.  It fell down to the right price, jumped up again, and is now back to where it should be.

It may be nothing, but have never seen this before.

¤'s picture

Thanks ReachWest

Appreciate that! cool

¤'s picture

When the Levee Breaks (in Au/Ag)

ClinkinKY's picture

Couldn't Resist:)

399730_252187314852807_128319863906220_6

ClinkinKY's picture

Dodd Looking For A Hollywood "Waitress Sandwich"? (Google It)

 

Dodd's Disgrace: Shilling For SOPA

  •  

Christopher Dodd

Former Sen. Chris Dodd, now chairman of the Motion Picture Association of America, with Jim Gianopoulus, CEO of Fox Filmed Entertainment, in April 2011.

We plain people of Connecticut would be well advised to limit the activities of U.S. Sen. Richard Blumenthal, simply because we cannot afford to have another current or former senator join the ranks of the intensely disliked.

The Lieberman Problem has been lavishly chronicled in this space. Last week, it was former Sen. Chris Dodd's turn to ooze, Jabba-like, into the spotlight and croak unpalatable nonsense while decent people looked on, horrified.

Dodd now pulls down $1.2 million as the front man for the lobbying arm of the movie industry. As Salon's Glenn Greenwald pointed out last week, this would seem to fly in the face of his 2010 avowal that he would do no lobbying.

http://www.courant.com/news/opinion/hc-op-mcenroe-dodds-fall-to-movie-industry-shill-0-20120122,0,3320032.column

¤'s picture

Clink

Lol!  I knew there must be some sort of reason.   

ClinkinKY's picture

Who knew?--My Senator is a "terrorist"

It's almost like Jay Carney expected this question and was reading from a script:)

---------------------------------------------------------------------------------------------------

Turd Ferguson's picture

Sorry about that

MODERATOR

Bad Turd. Turd moving too fast. Turd not taking two seconds to confirm date of ZH story. Turd dope.

Thanks for keeping me on the ball!

Response to: ZH Article
Be Prepared's picture

Police Use of GPS Devices Limited by U.S. Supreme Court

Police Use of GPS Devices Limited by U.S. Supreme Court

Jan. 23 (Bloomberg) -- The U.S. Supreme Court for the first time limited police power to track people using GPS devices, ruling in a case that will shape the privacy rights Americans should expect from a new generation of wireless electronics.

Today's decision addresses the unprecedented power that technology is giving police to peer into Americans' day-to-day activities. The ruling, which centered on a global-positioning system device officers attached to a drug suspect's car, may also affect mobile phones and other technologies.

The decision means that police in many cases will need a warrant to track suspects using GPS, even as the court's divided reasoning left the exact parameters of that constitutional requirement unclear. The justices unanimously overturned the conviction of Antoine Jones, who was found guilty of running a narcotics trafficking operation out of his nightclub in Washington. They splintered into three camps in their reasoning.

"Law enforcement is now on notice that almost any use of GPS electronic surveillance of a citizen's movement will be legally questionable unless a warrant is obtained in advance," said Walter Dellinger, a Washington lawyer who represented Jones in the case.

Five justices faulted police for the act of attaching the GPS to Jones' car without a valid warrant. Writing for the group, Justice Antonin Scalia said officers "encroached on a protected area," when they "physically occupied private property for the purpose of obtaining information." <Article Here>

NOW, if only the U.S. Supreme Court would strike down NDAA and Patriot Act provisions which nullify our Constitutional Rights!

SRV - ES339's picture

Tragically Hip

Thanks for the video DrkPurpleHaze!

Never could understand how this great Canadian band never caught on in the rest of the world... btw, for those not aware, New Orleans is Sinking was recorded a few years before Katrina... kinda spooky but a great tune!

¤'s picture

Rock & Stock Stats

http://www.caseyresearch.com/cdd/industrial-mans-gold

Rock & Stock Stats Last One Month Ago One Year Ago
Gold 1,655.00 1,598.00 1,372.00
Silver 30.79 28.78 29.32
Copper 3.79 3.30 4.36
Oil 100.39 93.88 90.85
Gold Producers (GDX) 52.15 51.17 55.47
Gold Junior Stocks (GDXJ) 26.70 24.84 35.76
Silver Stocks (SIL) 22.42 20.55 23.30
TSX  (Toronto Stock Exchange) 12,380.69 11,539.70 13,439.04
TSX Venture 1,554.20 1,407.39 2,285.02
Be Prepared's picture

Obama to Use Pension Funds of Ordinary Americans

Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement”

Obama’s latest housing market chicanery should come as no surprise. As we discuss below, he will use the State of the Union address to announce a mortgage “settlement” by Federal regulators, and at least some state attorneys general. It’s yet another gambit designed to generate a campaign talking point while making the underlying problem worse.

The president seems to labor under the misapprehension that crimes by members of the elite must be swept under the rug because prosecuting them would destablize the system. What he misses is that we are well past the point where coverups will work, and they may even blow up before the November elections. If nothing else, his settlement pact has a non-trivial Constitutional problem which the Republicans, if they are smart, will use to undermine the deal and discredit the Administration.

To add insult to injury, Obama is apparently going to present his belated Christmas present to the banking industry as a boon to ordinary citizens. He refused to appoint a real middle class advocate, Elizabeth Warren, to the Consumer Financial Protection Bureau, but he’s not above stealing her talking points.

We and other commentators have discussed how the mortgage settlement negotiations nominally led by Iowa attorney general Tom Miller had descended into farce. Almost nothing the Miller camp said was believable. They were presented as “attorney general” discussions when the Administration was pulling the strings. They’ve described a deal as weeks away for over a year. They kept claiming that they had undertaken investigations when not a single subpoena was issued by the AGs still involved in the negotiations. They’ve argued from the get go that a pact will be good for homeowners when the deal reached by under-resourced Nevada attorney general Catherine Cortez Masto with a single servicer, Saxon, resulted in a payout that is 10 to 20 times what the Administration is calling a victory. And that assumes that the banks will live up to their side of the deal when past settlements of servicing abuses have shown that they don’t.

The administration has finally woken up to the fact that the housing mess is almost certain to get worse before it gets better, and Obama must therefore be armed with better propaganda. The Miller-led talks have become a bit of an embarrassment and needed to be put out of their misery. So Team Obama and Federal banking regulators have agreed on terms and as we discussed last Friday, are upping the pressure on state attorneys general to fall into line. As reported by Shahien Nasiripour of the Financial Times:

Banks and government negotiators have cleared a big hurdle in efforts to resolve allegations of widespread mortgage-related misdeeds, agreeing on terms for a settlement that are being circulated to the 50 US states for approval, state officials and a bank representative say.

The proposed pact would potentially reduce mortgage balances and monthly payments by more than $25bn for distressed US homeowners…

State prosecutors have already received a set of documents detailing new mortgage servicing standards that the banks and the government negotiators have agreed to. The states were also being sent documents detailing other main components of the deal, such as the liability release for the banks, the so-called “menu” of options describing the various forms of aid to be given to borrowers, as well as the precise language of the so-called “most favoured nation” clause, which spells out how participating states in the deal would be eligible to receive more advantageous terms should a holdout state strike a more favourable deal on its own with the five targeted banks.

The story did not outline terms, but previous leaks have indicated that the bulk of the supposed settlement would come not in actual monies paid by the banks (the cash portion has been rumored at under $5 billion) but in credits given for mortgage modifications for principal modifications. There are numerous reasons why that stinks. The biggest is that servicers will be able to count modifying first mortgages that were securitized toward the total. Since one of the cardinal rules of finance is to use other people’s money rather than your own, this provision virtually guarantees that investor-owned mortgages will be the ones to be restructured. Why is this a bad idea? The banks are NOT required to write down the second mortgages that they have on their books. This reverses the contractual hierarchy that junior lienholders take losses before senior lenders. So this deal amounts to a transfer from pension funds and other fixed income investors to the banks, at the Administration’s instigation.  <Rest of the Article>

¤'s picture

Tim Thomas

I'm glad I took the time to read that.

I like Thomas as a goaltender and I really like him know as a person. Way to go Tim!

Someone might want to tweet him (or whatever) about TMFR.  It sounds like he'd probably respond.

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