Germany Says 'NEIN' to Greece

Gold once again did nothing in Far East trading yesterday... and there were no real signs of life until precisely 9:00 a.m. in London. Then it rallied a bit until 10:00 a.m. in New York... and then caught a bit of a bid when the dollar fell out of bed. The high of the day [$1,146.20 spot] was at precisely noon Eastern time... and from there it got sold off a bit... and lost of half of its Wednesday's gains by the close of trading at 5:15 p.m. Eastern time. With some minor exceptions, I'd say that yesterday's price moves in gold were basically dollar related.

Silver's chart looked very similar to gold's... with the only minor difference being a triple price top during Comex trading in New York. The high of the day was $17.38 spot.

As I mentioned above, the metals and the dollar were basically tied at the hip yesterday. But it was obvious that any attempt by either metal to break higher than the dollar move might warrant, was met by quiet [but firm] not-for-profit selling. The dollar's low and gold's high occurred right at noon Eastern time.

The precious metals stocks pretty much followed the price action of both gold and silver for a change. The top for the HUI was precisely at noon, of course, and finished up 1.51% on the day.

Open interest numbers for Tuesday's trading were not quite what I was expecting... and I'm happy about that... especially in silver. Gold o.i. rose, but it was only up 9,950 contracts. I must admit that I was expecting worse. Volume was a pretty chunky 223,933 contracts. Silver's open interest change was a huge surprise... up only 175 contracts. There must have been some short covering going on. Volume was a decent 39,250 contracts. Since I'm the suspicious type, it's entirely possible that not all the changes from Tuesday's 'action' were reported in a timely manner... so I await Wednesday's o.i. numbers with some interest when they're released later this morning. One thing that is for sure, however... is that these open interest numbers from Tuesday will be in tomorrow's Commitment of Traders report. This report, especially for silver, is one that I'm really looking forward to seeing.

The CME Delivery Notice shows that deliveries have slowed down a lot since first notice day a week ago. In the wee hours of this morning, the CME reported only 39 silver and zero gold contracts are up for delivery on Friday. So far in March... 2,670 silver contracts have been delivered and only 116 in gold. And at the moment, there are only 637 silver contracts left to deliver in the current month... and that number is shrinking by the day.

The GLD showed an increase yesterday... up 127,165 ounces. There were no reported changes in SLV. The U.S. Mint had nothing to say for itself, and the Comex-approved depositories added another big chunk of silver to their inventories... this time it was 1,276,076 troy ounces.

Today's first story is a Bloomberg piece posted over at their businessweek.com website. The headline reads "Gold Rises to Six-Week High on Demand for Currency Alternative". The whole story is definitely worth the read... and pay particular attention to the sub-heading "Russian Central Bank". I thank Australian reader Wesley Legrand for bringing it to my attention... and the link is here.

The next gold-related story is posted over at kitco.com. In it, Donald Coxe, Strategy Advisor for BMO Capital Markets say that gold is gradually becoming the shadow currency... "people are saying, maybe all the currencies are going to turn out to be bad". The story is titled "Gold rise linked to sovereign credit bonds: BMO's Coxe"... and is definitely worth running through. Once again, I thank Wesley Legrand for sending it along. The link is here.

The following story is a Reuters piece filed from Singapore earlier today. It appears that the U.S. Department of Justice is launching an investigation into whether certain hedge funds may have worked together to bet against the euro. They have also asked these 'certain hedge funds' to save all their euro trading records. The headline reads "U.S. probes hedge fund bets against euro"... and I thank Swiss reader Dr. Bittar Gabriel for sending me this story... and the link is here.

This next item is a Bloomberg story filed from London. Iceland is back in the news. Normally a referendum in Iceland isn’t the kind of event that would attract much world attention. But this time it truly is different. The headline reads "Bailout Mutiny Looms With Iceland's Taxpayer Vote". Along with the story itself is a BBC video interview with the columnist who wrote it... Matthew Lynn. Both are very much worth you while. The story is courtesy of yesterday's King Report... and the link is here.

Here is [courtesy of reader Wesley Legrand] an interesting unemployment graph from John Williams over at shadowstats.com. The Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers. Based on these numbers [which I believe are far closer to the truth] the current U.S. unemployment rate is hovering around 21%.

Here's a story that showed up in Monday's edition of The Washington Times. Like all news stories these days, it's not a happy read. "For the first time since the Great Depression, Americans took more aid from the government than they paid in taxes." The headline states "American reliance on government at all-time high". I thank Casey Research's Jeff Clark for sending it to me... and the link is here.

And finally today, is this Bloomberg story filed very early this morning, bearing the following headline... "Germany Snubs Greek Aid Plea as Protest Snarls Athens Traffic". That's what the headline reads now... but a few hours before that it read "Greece Aid Plea Snubbed by Germany in 'Historic Moment' for EU". George Orwell's 'thought police' are obviously on the job over at Bloomberg. It now appears that the IMF is the only recourse left for Greece. The story is a must read... and I thank reader Roy Stephens for bringing it to my attention... and the link is here.

Each central bank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world. - Carroll Quigley

Despite the modest gains in both gold and silver yesterday, I was very encouraged by the open interest figures that came out for Tuesday's trading... especially in silver. To have virtually no change in the face of such a big rise in the silver price was an eye-opener. Ted Butler is more than a little hopeful. His remark in his opening comments to his private clients yesterday read as follows... "The good news is that the silver price action appears to be unfolding according to plan [he said as he looked over his shoulder]." Well, it does look promising... but, as both Ted Butler and myself have said many times in the past, how far any particular rally goes depends 100% on what JPMorgan does. If they sell short again, this rally will have a very limited life span. If not... well, it could get interesting. So, dear reader, we'll just have to wait it out. But there's a reason why I'm all in... and this is it.

I noted in a Financial Times story out of London yesterday that Paul Volker has backed down on proposals to block investment banks from engaging in proprietary trading activities... and I'm sure he had some help changing his mind. I'm wondering how that will affect JPMorgan et al... and their price management of both silver and gold. We'll find out soon enough I would think. The headline reads "Washington aide ‘has changed mind’ over proprietary trading". For a change, I dug up this story all by myself... and the link is here.

All is reasonably quiet as trading in the Far East draws to a close... and London opens for the day. The dollar has been edging higher ever since it's low yesterday at noon in New York [gold's exact high price for Wednesday]... and the precious metals have been edging lower since that point in time. Volume in gold right now [4:58 a.m. Eastern time] is 22,927 contracts for April... about what it was yesterday at this time... and silver's volume is already a respectable 3,841 contracts for May.

Wednesday's preliminary volume numbers are now posted at the CME's website... and they show that gold traded 179,413 contracts... which is down about 45,000 contracts from Tuesday's volume. In silver, a very chunky 43,435 contracts changed hands. The open interest numbers for Wednesday [which won't be in tomorrow's COT report] should be interesting when they're posted in a few hours.

I hope your day goes well... and I'll see you tomorrow.