ECB Says No Bail-Out For Greece

From the Far East open [gold's high price of the day], gold slid about $8 and basically oscillated between $1,130 and $1,135 right up until the close of New York trading on Thursday afternoon. This was quite a respectable performance considering the robust rally in the U.S. dollar.

As I mentioned in my previous column, there was a big spike at the Hong Kong open yesterday morning [more on that below] and from that point, the silver price declined to $18.10... and sat around that price until the Comex open in New York. From there, silver rallied for the next six and a half hours, but sold off a hair into the New York close.

And now about that big spike in the silver price at the Hong Kong open yesterday morning. Here's what it looked like up close and personal. An unknown someone put in a 300+ contract market order at 7:30:24 p.m. Eastern time Wednesday night... 8:30 a.m. Thursday morning in Hong Kong. This drove the price up to $18.43 in a heartbeat. I thank Carl Loeb for providing this graph.

The dollar put in a decent rally, and as I said earlier, both metals did well with that big of a headwind yesterday. Even though the shares were down a touch yesterday, it could have been a lot worse.

Gold open interest for Tuesday was a bit of a surprise. It only rose 6,387 contracts on that $20 move to the upside. I was expecting far worse. Total volume yesterday was 203,652 contracts... with total open interest now up to 514,030 contracts. Silver was an even bigger surprise, as open interest actually fell 208 contracts. Volume was 38,180 contracts... and total open interest is now 125,183 contracts. Ted Butler mentioned to me yesterday that silver is up $1.50 so far this week... and silver open interest has only risen 1,500 contracts. He's very encouraged by that.

Today we get the Commitment of Traders report... and the Bank Participation Report. Both will be out at 3:30 p.m. Eastern time this afternoon.

Yesterday's CME Delivery Report showed that 76 gold and 2 silver contracts are up for delivery on Monday, January 11th. There was a tiny drop of 11,846 ounces in the GLD ETF yesterday... and no changes in SLV once again. The U.S. Mint reported another 3,000 ounces of gold were sold in gold eagle bullion coins... and another 23,500 silver eagles were also sold. The Comex-approved depositories reported that a rather chunky 755,480 ounces of silver were withdrawn from their collective inventories on Wednesday.

As everyone knows, California is in deep financial trouble... and Arnold has just applied for financial aid from Washington. Here's an op-ed piece in the Chicago Tribune about the sad state of financial affairs in Illinois. I would suspect that the vast majority of U.S. states now find themselves in somewhat similar circumstances. The piece is entitled "Splurge. Borrow. Repeat."... and I thank reader Joseph Weiler for bringing it to my attention... and the link is here.

In another article in a similar vein... also sent to me by Joseph Weiler yesterday... is this piece from The New York Times. "In a strikingly blunt State of the State address, New York Governor David A. Paterson chastised the lawmakers seated before him on Wednesday, saying they had spent the state into near-ruin and stood by as a plague of political corruption destroyed New Yorkers’ trust in their government." Paterson certainly didn't pull any punches... and it would be an understatement to say that his speech was not well received. The headline reads "Paterson Says Legislators Put State in Danger"... and the link is here.

One of the big stories in the corridors of power yesterday concerned AIG. "The Federal Reserve Bank of New York, when led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer's payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show." The longish story posted over at bloomberg.com is headlined "Geithner's Fed Told AIG to Limit Swaps Disclosure"... and the link is here.

The Chinese are deadly serious about not honouring derivatives contracts entered into by Chinese companies and New York investment houses. Here's one where Morgan Stanley ended up losing a whole chunk of money. It's certainly worth the read. The headline in the Financial Times in London states "Morgan Stanley Settles Derivatives Lawsuit with Chinese Company"... and the link is here. I hope they [and Goldman Sachs] lose a lot more.

The next story is courtesy of reader North Carolina reader Bob Dillon... and it's posted at theaustralian.com.au. It appears that French President Nicolas Sarkozy is less than happy with the falling U.S. dollar, as it makes "euro-priced exports more expensive and is putting eurozone producers at a competitive disadvantage." The headline reads "'End US dollar dominance', urges France"... and the link is here.

The last piece today is an Ambrose Evans-Pritchard offering from The Telegraph in London. "The European Central Bank has given its clearest warning to date that there will be no EU bail-out for Greece if it fails to control its spiralling deficit, raising the stakes in a game of brinkmanship over the future of the euro." Greece isn't the only EU country that's got it's financial and monetary back to the wall... and 2010 could be an ugly year for all of them. The headline reads "Euro brinkmanship escalates as ECB shuts door on Greek bail-out"... and the link is here.

Today [around 8:30 a.m.] is the day that the December jobs report is released. And, as Bill Murphy over at lemetropolecafe.com has pointed out every month [with only one exception] for at least the last five years, 'da boyz' hit the price of gold and silver the moment the report is released. Let's see if they follow s.o.p. again today.

Both gold and silver are now back above their respective 50-day moving averages. As I said yesterday, I'm hoping for the best, but always on the lookout for 'in your ear'.

In Far East trading during their Friday session, gold got sold off about $5 and silver was down about 10 cents heading into the London open. Gold has already traded 28,090 lots in the February contract... and silver has traded 3,780 lots in the March contract... as of 4:01 a.m. Eastern time.

The preliminary volume numbers for Thursday's trading are now posted at the CME website. They show that gold only traded about 129,000 contracts and silver a hair under 29,500 contracts. That's a surprisingly low number for gold.

Well, the first four trading days of 2010 have been pretty good for the precious metals stocks. I'm sure not complaining. A lot of the stocks I hold in my portfolio are ones that are recommended in Casey's Gold & Resource Report. Just a 40 cent move in one these stocks paid for an entire year's subscription to this most excellent publication. Don't forget, dear reader, that your satisfaction is 100% guaranteed. If, for any reason, Casey's Gold & Resource Report doesn't live up to your expectations, simply give us a call within the first 90 days, and every penny will be refunded. How can you possibly lose on a deal like that??? Please think about it.

I hope your weekend goes well... and I'll see you here Saturday morning.