From Ed Steer:

Gold didn't do much in the Far East or in Europe on Friday. The horrific employment numbers brought a spike in New York gold trading on the Comex about 8:30 a.m. Eastern time...which got squashed...and every subsequent attempt to climb much over $940 was met with firm selling.

Silver action was somewhat similar. The price was slightly positive all through Far East trading, and the spike up shortly after the London open was obviously too positive for some not-for-profit sellers. From there it traded quietly until it spiked up along with gold in New York. It was obvious that someone was laying in wait for that as well. Silver, like gold, didn't do a thing for the rest of the day.

On Thursday's big day in gold, open interest was only up 3,753 contracts to 369,981...which is not very much for such a big move. Silver o.i. actually fell 260 contracts to 92,307...which is really counterintuitive to the price action. The Chicago Mercantile Exchange web site is down right now...and I can't get at the delivery numbers or the Comex warehouse silver stocks.

However, there is a new Commitment of Traders report out...plus a new Bank Participation report. I'll start off with the COT...and silver. The numbers were not even close to what Ted and I thought they would be. During the latest reporting period, silver dropped about $1.60 from Wednesday, February 25th to Tuesday, March 3rd. The COT should reflect this drop in price by the tech fund dumping their longs and going short...and the bullion banks in the Commerical category covering their shorts and going long. Didn't happen. The opposite occurred. The tech funds in the Non-Commercial category actually went net long by 1,478 contracts...while the small traders in the Nonreportable category did what they were supposed to...they went net short 1,005 contracts. JPMorgan et al went net short 473 contracts. Since the longs=shorts...[1,478=1,005+473]. The COT for silver is now in a more technically negative position than last week...even though the silver price has corrected by more than two dollars! Go figure! Ted and I have no answers...just questions. The silver COT are linked here.

In gold, the numbers were far more believable. The tech funds in the Non-Commercial category decreased their net long position by 2,572 contracts, while the small traders in the Nonreportable category actually increased their long position by a miniscule 37 contracts. JPMorgan et al went net long to the tune of 2,535 contracts...[2,535+37=2,572...the longs have to equal the shorts, and they do]. The gold COT graph is linked here.

This week's silver COT report is what it is...but it is so counterintuitive to the price action...that I have a great deal of trouble accepting it as the truth. One week ago Saturday, in the previous COT to this one, I said the same thing about a counterintuitive number in the gold COT report. At that time I said that "I flat out didn't believe it." That's where Ted and I are on the silver numbers this week. Something just doesn't pass the smell test here.

With no real improvements in either gold or silver short positions for the last couple of weeks, we're still vulnerable to a fairly healthy correction below the 50-day moving averages in both metals, as the boyz still have the fire-power to do it.

And now, for the Bank Participation report. What it shows, is a larger and even more concentrated position for the '2 or less' U.S. banks that have the huge short positions in silver. The same applies to the '3 or less' U.S. banks in gold. Here it is in a nutshell...for positions held at the end of trading on Tuesday, March 3rd.

In silver:

'2 or less' U.S. banks hold zero long positions and 30,838* short positions on the Comex
'13' Non-U.S. banks hold 8,773 long positions and 2,322** short positions on the Comex
* this is an increase in their short position of 3,649 contracts from February's BPR.
** there is virtually no change in net short/long position by the '13' Non-U.S. banks since the February report...less than 100 contracts.

In gold:

'3 or less' U.S. banks hold 322 long positions and 109,091* short positions on the Comex
'21' Non-U.S. banks hold 37,513 long positions and 58,900** short positions on the Comex
* this is an increase in their net short position of 1,208 contracts from February's BPR.
** this is an increase in their net short position of 12,486 contracts from the February BPR.

It's not hard to see that the short positions of JPMorgan and HSBC dwarf everyone else’s postions...either long or short. They are in total control of the silver and gold price. And it just so happens that the custodian of the SLV is JPMorgan, while the custodian for GLD is HSBC...the two biggest shorts on the Comex....and between the two of them, they hold 97% of all the precious metals derivatives held by U.S. banks. I dont' trust them as far as I can throw them...and neither should you.

And lastly, from the usual gold commentator in New York, comes this story. I don't deal in the options and futures markets much, so this may have relevance to some...but not to others...so don't come to me looking for advice or explanation. Just consider it 'for information purposes only'..."TheBullionDesk.com has an interesting and important story: "Liquidity drains from far-dated gold options market; could help accelerate a move to much higher prices." This reports that bullion dealers and others are short a large amount of long-dated gold calls, the supply of which has shrunk: "In November and December, some players bought substantial amounts of one and two-year options, which were sold by the market dealers at levels they may not have not been able to buy back,” one trader said.

Another trader agreed: "A significant amount of options have been embedded in long-dated investment products which are largely bullish plays on the gold price, which means there is a structural shortage of long-dated calls in the market as there are no natural sellers," he said.

"The market is net short vol (implied volatility) across the curve and the market is looking for option sellers," the second trader added.

A gold options squeeze? This situation has been a long time coming. End

Mercifully, I only have three stories today. They're all 'economy related' in one form or another. The first is from Subic Bay in the Philippines of all places. It's a Bloomberg story headlined "Empty Ships Flock to Subic Bay as Lines Battle Plunging Rates" Apparently it's a wonderful place to mothball ships when times are tough. I thank P.S. for sending me the story...and the link is here.

The second story is also from Bloomberg...and filed from London. The headline reads "Bank of England's King 'Groping in the Dark' as U.K. Prints Money"..."While U.K. officials are at pains to deny similarities with the economic policies of Robert Mugabe's Zimbabwe, where printing money has fueled hyperinflation, some economists argue that the Bank of England hasn’t much of a choice left." [Nor do a lot of other countries. As I've said before...it's hyperinflate...or die! - Ed] The link is here.

The last article is from Vanity Fair...and it's a major read. A lot of good reporting has come from this publication...and this piece is no exception. It's the story of how Iceland blew up. It has the title of "Wall Street on the Tundra". So blow the froth off a cool one [or two] and get at it...as it's definitely worth your time. I thank John Grandits at Casey Research for sending it along. The link is here.

Government has no wealth of its own. Before it gives anything to anyone, it must take from those who produced it. - John Stossel

Today's 'blast from the past' is by a group I featured earlier this year. They are just fantastic. Here's another huge hit of theirs...sung live and in concert. Turn up your speakers, click here...and enjoy!

The layoffs were horrendous and the jobless rate soared to 8.1%. I'm sure John Williams over at shadowstats.com is busy writing that it's really double that. JPM and GS both had 'bad hair' days yesterday. I would go as far to say that you can put both of these pillars of virtue on your 'death watch' list. And I note that the PPT was alive and well yesterday too. They pumped the Dow right from the get-go, but it crashed and burned anyway. Finally...not-so-gentle hands showed up at 3:30 Eastern time to ramp it to a positive close.

What has America come to??? It’s sad, sad, sad....

See you on Tuesday