JPMorgan et al Do It To Us One More Time

Gold had gained about five dollars by shortly after 3:00 p.m. in Hong Kong trading on Thursday afternoon. This turned out to be the high of the day... around $1,117 spot. But at that point, the U.S. dollar turned slightly higher for the next four hours... and gold was only too happy to 'lose' $15. This dollar rally lasted until 6:00 a.m. Eastern time... and gold's price decline came to an end. The dollar promptly rolled over, and gold began a shallow rally that ended the moment that the London p.m. gold fix was in at 3:00 p.m. local time... 10:00 a.m. in New York. Once the 'fix was in', gold got clocked for another $21... with the low of the day [$1,087.00 spot] coming at 11:30 a.m. in New York. The subsequent rally got sold off by a not-for-profit seller... and gold basically traded sideways for the rest of the New York session.

Silver's path was virtually the same. The only minor difference was the silver stopped declining at the close of trading in Hong Kong... then traded virtually flat until the Comex opened in New York. Then it rallied into the London p.m. gold fix... and promptly got clubbed along with gold. Silver's high [and low] of the day occurred the same time as gold's... with the high around $18.02 spot... and the low reported at $17.31 spot.

Here's the 24-hour U.S. dollar chart. Note where the dollar rolled over starting at 6:00 a.m. Thursday morning. Gold rallied in sympathy until the London gold fix was in at 10:00 a.m. New York time... and that, as they say, was that.

The gold stocks had another rotten day. The fact that the general equity markets got creamed as well, didn't help the situation... and the HUI closed on its absolute low of the day.. down 4.44%.

Well, to say that Wednesday's gold open interest numbers were a bit of a surprise, would be an understatement. The numbers shows that gold open interest only fell 1,160 contracts... but there was far more liquidation than that. As you are aware, dear reader, the bullion banks are quite capable of hiding their tracks by going long in lieu of covering their short positions... and they can also hide their tracks with spread trades. Undoubtedly 'all of the above' occurred during yesterday's trading. Final volume [276,998 contracts] was substantially higher than the preliminary number the CME posted in the wee hours of Thursday morning.

It was a different matter in silver. Final volume was a very large 61,515 contracts... and open interest fell a big chunk... 5,165 contracts. This appears to have been plain vanilla liquidation.

Of course, what really happened on Wednesday won't be known until next Friday's Commitment of Traders report on January 29th... not today's. As I've mentioned many times in the past, these crooks always seem to arrange a major decline in prices starting after the Tuesday cut-off for Friday's [today's] Commitment of Traders report. This decline began on Tuesday night [Wednesday morning in the Far East] at 8:00 p.m. in New York... about three hours after the markets had closed on Tuesday. Note the 8:00 p.m. high price tick [blue trace] on the gold chart at the top of the page.

The other thing I forgot about yesterday was the fact that we're coming up hard on the next gold delivery month... which is February. Option expiry for the February contract is next Tuesday, January 26th. Needless to say, the bullion banks are leaning on the price for that reason as well. Tuesday the 26th is also the cut-off for next Friday's COT report, so the banks can keep what they're doing hidden between now and then... and they obviously are... at least in gold.

The CME Delivery Report shows that 74 gold and one whole silver contract are up for delivery on Monday. There were no reported changes in either GLD or SLV... the U.S. Mint didn't have a report, which isn't a surprise considering the big numbers they reported on Wednesday... and the Comex-approved depositories showed that a smallish 83,409 ounces of silver were received on Wednesday.

I've got a couple of stories about credit cards today... and the first one segues into the second... both of which are worth reading. The first is courtesy of reader Joseph Weiler... and is posted over at insurancenewsnet.com. The title reads "Fitch: U.S. Retail Credit Card Defaults Hit Near-Record Levels with No Relief in Sight". The link is here.

The second is courtesy of Craig McCarty. The title is very long... and the first part of it reads as follows... "Credit Card Companies Pulling Back Credit Offers to American Households..." It's longer than most, but well worth the read. Between it and the previous story, you'll be 100% up to date on the sorry state of the consumer... and his/her credit cards. The link is here.

GATA long has said that the best blow against the gold and silver price suppression schemes is struck when you buy precious metal and take delivery, depriving the price suppressors of access to it. But another blow may be struck by withdrawing deposits from market-manipulating, derivatives-mongering, bailout-receiving, and grotesque bonus-paying money-center banks and moving them to community banks and credit unions. This idea has been organized into an Internet site by The Huffington Post's Arianna Huffington and a few friends... and is being publicized with a clever video you can find linked here.

Here's a surprising story that appeared in my own back yard. This is from Canada's globeandmail.com... and is dated yesterday. The 2010 Winter Olympics are due to open in Vancouver, B.C. next month, and the very ski resort that the Olympic downhill races will be held on... Whistler Blackcomb... is about to be auctioned off to the highest bidder because it's no longer able to pay its huge debts. This story is worth running through... and bears the headline "How did Intrawest rack up so much debt?"... and the link is here.

The big story yesterday was President Barack Obama's proposal "to endorse measures pushed by former Federal Reserve Chairman Paul Volcker, which would place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. Administration officials say they want to place "firewalls" between different divisions of financial companies to ensure banks don't indirectly subsidize "speculative" trading through other subsidiaries that hold federally insured deposits." IF Obama can get this passed, it would certainly make a difference. The Wall Street Journal story was sent to me by Ted Butler... is headlined "Proposal Set to Curb Bank Giants"... and is linked here.

Today's last story is from GoldMoney founder and GATA consultant, James Turk, editor of the Free Gold Money Report. James has recalculated his "Fear Index" and concludes that gold is still underpriced despite nine years of increases. Turk adds that the U.S. dollar is not the measure of things economic; rather, gold is. Turk's commentary is headlined "Two Important Messages from the Fear Index"... is a must read... and is linked here.

A visitor touches the world's largest solid gold brick weighing 220kg [worth over US $7.8 million at today's price], at the Jinguashi Gold Museum in Ruifang, Taipei county, on December 2, 2009.

As an American, I am not so shocked that Obama was given the Nobel Peace Prize without any accomplishments to his name... but that America gave him the White House based on the same credentials. - Newt Gingrich

So now that the 50-day moving averages in both gold and silver have been taken out with a vengeance to the downside... is this bullion bank-orchestrated decline over? It's too soon to say. I suppose that the 200-day moving average [currently $1,006.76] is a possibility... as the short position held by the bullion banks in both metals is still sky high. But can they... or will they? Here's the 3-year gold chart to put the current decline into perspective.

I'm still 'all in'... and am prepared to wait this out. I'd like to believe that the CFTC meeting regarding position limits and trading exemptions in both gold and silver that are scheduled for early March, will change the current situation... as having '8 or less' traders short over 75% of the entire Comex silver market is a crime in progress. Even CFTC commissioner Bart Chilton has admitted as much.

There's an old saying that the best time to buy is when "blood is running in the streets"... and that's exactly what's happening now. Every Friday I urge you, dear reader, to shell out the $39/year subscription price and invest in Casey's Gold and Resource Report. It's a small price to pay for the expert advise, research, hand-picked stock recommendations... and special reports that are contained in every month's issue. Of course, it comes with the usual no-risk, 90-day trial subscription. Please give this serious consideration.

I note, as I wind this column down early this morning, that gold and silver are inching higher in Far East trading... as the dollar dithers. Volume [as of 3:52 a.m. Eastern time] shows that gold has already traded 31,919 contracts in its front month [February]... and silver is lagging way behind with only 2,904 contracts traded in its front month, which is March.

London is now open... and nothing much seems to be happening there, either. But I would assume that this will change once 'da boyz' show up for work when the Comex opens this morning.

Preliminary volume figures for Thursday's trading action in the precious metals shows that gold traded an absolutely monstrous 327,311 contracts... and silver was right up there at 56,203 contracts. Wednesday's gold volume figures were adjusted 13.3% higher when the final numbers were posted at the CME website yesterday morning... and I would assume that we'll see an upward volume revision for Thursday when the numbers are posted later this morning. Changes in open interest will be what I'm mostly interested in... but if Wednesday is any indication... the bullion banks may hide their tracks with these numbers as well. We'll find out soon enough.

I hope you have a great weekend... and I'll see you here on Saturday.