Utah House Passes Bill Recognizing Gold, Silver as Legal Tender

The gold price stayed pretty much range-bound for all of Far East and London trading during their Friday trading session...but caught a bid shortly before nine a.m. in New York...with a secondary high of the day coming at 12 o'clock noon right on the button.

From there, the price declined until 2:45 p.m. in electronic trading, before resuming its rally into the close...with the gold price closing virtually on its high price of the day, which was reported as $1,434.60 spot.

Gold has only closed on its high of the day a handful of times in the twelve years I've been watching this market...and this is the first time I remember it closing at its high on a Friday. Whether it means anything or not, remains to be seen.

The silver price gained about thirty cents up until 10:00 a.m. Hong Kong time...and then hugged the $34.50 spot price point until exactly 9:00 a.m. in New York.

Then silver was off to the races...gaining a bit over 60 cents in the next forty-five minutes. From that point, the decline rate slowed, but ground steadily higher for the rest of the Comex and electronic trading session.

Silver, like gold, closed virtually on its high of the day...which Kitco recorded as $35.71 spot...a new 30+ year high.

The dollar didn't do much for most of the Friday...but when it did make a move, it was reasonably significant. As you can see, the standout on the graph was the dip in the dollar between 8:40 and 10:00 a.m. That was the time of day when both gold and silver made their most significant gains. Other than that, the dollar was not a factor in yesterday's precious metals price action at all.

The gold stocks pretty much following the gold price...but with a notable lack of enthusiasm, I thought. The HUI only finished up 0.73%. But, in fairness, gold went on to set new highs after the equity markets closed so, without doubt, the gold stocks would have done better if the markets had remained open longer.

The silver stocks were in a world all their own, with double-digit gains...and high single digit gains...as far as the eye could see. The silver stocks are now in a runaway bull market that the general public is totally unaware of. There's a reason why my personal portfolio is heavily skewed to the silver market...and has been for years.

If I'm personally [along with Jeff Clark over at Casey Research's BIG GOLD] going to help write an ad in this column saying that silver is going to $60 within five months...then I'm going to put my money where my mouth is...all my money...because I believe [regardless of whether it's five months or ten months] that silver will rise to that price...and probably several multiples of that, before this bull market breathes its last.

Here's the HUI for the week that was.

And just to show you how the major silver stocks are doing...here's Nick Laird's "Silver 7 Sentiment Index" graph updated with Friday's closing prices.

Well, the CME's Daily Delivery Report delivered another big surprise yesterday, as only one [1] gold contract, along with five [5] silver contracts, were posted for delivery on Tuesday. Once again I'm at a loss to explain this...and I didn't have much time to talk to Ted Butler yesterday...and when I did, this subject never came up. But I can say without fear of a lie, that this delivery week was a week without precedent in Comex delivery history for this, or any other commodity. Here's the link to yesterday's 'action'.

There were no changes in either GLD or SLV yesterday...and the U.S. Mint didn't have a report either.

But over at the Comex-approved depositories on Thursday, they reported receiving no silver at any of their warehouses...but shipped out a grand total of 343,326 troy ounces. The link to that action is here.

The Commitment of Traders report didn't show as much improvement in the silver short position as I was hoping. The bullion banks reduced their short position by only 1,333 contracts. The Commercial net short position in silver now sits at 282.3 million ounces.

The '4 or less' bullion banks are short 220.0 million ounces...and the '8 or less' bullion banks are short 281.8 million ounces of the stuff.

Of note here is the fact that for the first time in years, the '8 or less' traders [which includes the '4 or less'] are, in total, short less than the total Commercial net short position of 282.3 million ounces.

Here's the full-colour silver COT graph. It is noteworthy in the fact that it is a visual representation of the decline in total open interest as the bullion banks continue to pare back their short positions that they started doing last year.

In gold, the Commercial net short position increased by 18,790 contracts...which is no surprise at all, as the bullion banks have been shorting this latest $125 gold price rally all the way up. The Commercial net short position now sits at 25.06 million ounces of gold. It's been over 32.0 million ounces at one point, so we're not at the extreme end of the spectrum yet, so there's still room to rally, if the bullion banks chose to allow that to happen.

The '4 or less' bullion banks are short 16.9 million ounces of gold...and the '8 or less' traders are short 23.3 million ounces of gold. As in silver, this 23.3 million ounce short position held by the '8 or less' traders is now less than the Commercial net short position. Its also been many a moon since that has happened in gold as well.

What this means in both metals, is that traders other than the '8 or less' are going short on this rally. Is it silver analyst Ted Butler's raptors? Unfortunately I never had time to ask him that question, but I'll find out when I read his weekly commentary to his clients tomorrow.

Here's the full-colour COT chart for gold...and you can see how different it looks compared to the silver COT chart...as the shorting on this rally has been relentless since the end of January.

Nick Laird over at sharelynx.com in Australia provides Ted's "Days to Cover" graph...and it's always worth looking at.

Well, in a week full of surprises, why should the latest Bank Participation Report prove to be any different? The report itself came out late on Friday afternoon...and the first hint that there was something odd about it came in an e-mail from Ted where said there was a "big increase in the Bank Participation report of 6,000 net contracts short in silver by US banks from 19,000 to 25,000."

Both Ted and I were expecting a decrease...and what we got instead was the exact opposite. I must admit that I don't pretend to understand why, because all the signs pointed to a month-over-month decline...and I never got the opportunity to discuss it with Ted. He's the real expert on this. I'll certainly be talking to him about it this weekend, but for the moment I'll just set that aside.

In the "Non U.S. Bank" category, the numbers were also a bit of a surprise, as the total silver short positions of the foreign banks rose as well. From the January to February, the net short positions of the roughly 10 foreign banks rose from 3,463 contracts, up to 4,804 contracts...an increase of 1,341 Comex contracts.

Along with the 6,255 rise in the short positions of the two or three U.S. banks...the world's bullion banks increased their Comex short positions in silver by a total of 7,596 contracts from January to February.

In gold, the four U.S. banks decreased their Comex short position by 7,300 contracts in February...but the non-U.S. bullion banks went the other way. They increased their Comex short positions in gold by a whopping 16,879 contracts during the same period.

Frankly, I don't know what to make of it, as the Bank Participation reports for the last several months had shown a steady decline in Comex short positions in both gold and silver by all banks...both domestic and foreign. This latest report blows that sequence totally out of the water...and I'll certainly have more to say on this in my Tuesday column.

Before I get into the stories I have for you today, Nick has a couple of charts that are posted below. As he commented in an e-mail to me earlier this week..."Although the GLD ETF has declined from 1,320 tonnes to 1,220 tonnes, the global holdings across all the precious metals for all the ETFs shows that we are back to all-time highs. So what GLD has sold off in the U.S...has been taken up and surpassed on a global basis...and has been taken up by silver.

The dollar amount in silver has taken up the slack from dollar amount that gold dropped. So the overall of the story is that the silver ETFs are going wild with demand...and more than compensating for the sell-off in GLD.

Here's the graph that shows total ounces across all Mutual Funds and ETFs...plotted against the gold price.

And this graph shows the total dollar value of all Mutual Funds and ETFs

Nick's right. The graphs obviously show that both are at record highs...and that the silver ETFs are "going wild with demand"...as Nick says. My coin dealer would agree, without even seeing these graphs...and that's probably one of the reasons why bullion dealers, refiners...and mints, can't keep up with demand. Plus the SLV ETF is owed many millions of ounces as well.

¤ Critical Reads

Passing the Buck: European Central Bank Wants to Unload PIIGS Bonds

Today's first story is courtesy of reader Roy Stephens...and it's a posting over at the German website spiegel.de. During the crisis, the European Central Bank began buying up bonds from debt-ridden countries like Greece. Now the bank wants to transfer responsibility for those securities to the EU's euro rescue fund. Meanwhile, the parliamentary group of German Chancellor Angela Merkel's conservatives have issued a resolution opposing such bond purchases. The link is here.

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ECB prepares rate rise as global tide turns

Roy has our next two stories as well. The first is out of yesterday's edition of The Telegraph...and is an Ambrose Evans-Pritchard offering. The European Central Bank has surprised markets by signaling a rate rise as soon as next month, brushing aside warnings that this may compound damage from the oil shock and push EMU debtor states deeper into crisis. I would guess that this is the ECB's attempt to jaw-bone the markets, but they will do nothing when push becomes shove. The link is here.

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Shell chief Peter Voser warns oil demand could outstrip supply

Roy's next offering is another piece from yesterday's Telegraph. Peter Voser, the chief executive of Royal Dutch Shell, believes the $116 oil price caused by the Middle East crisis will soon ease back, but warned of a longer-term shock where "supply cannot meet demand". That's a thinly-veiled warning that peak oil is about to rear its ugly head. The link is here.

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Making the Chicken Run

Here's your first big read of the day. It's a long essay by our own Doug Casey. Rolling into 2011, the U.S. is in real trouble. Not as bad as Rhodesia 40 years ago, and definitely a different kind of trouble, but plenty serious. For many years, it’s been obvious that the country was eventually going to hit the wall, and now the inevitable is rapidly becoming imminent.

With the U.S. government’s ever-increasing stranglehold on Americans’ assets, smart investors are now taking their wealth abroad. Doug tells you how to do it, and why you shouldn’t put it off any longer. Although this is directed primarily at U.S. citizens...this is applicable to citizens of most countries.

Needless to say, this is well worth the read...and the link is here.

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The Extraordinary Events in the Middle East and the Coming Global Tsunami

This essay just missed making last Saturday's column because it wasn't posted in the clear at that time, but now is. This is your second big read of the day. "The extraordinary events in Tunisia, Egypt and Libya are the initial high tides of an eventual tsunami that will impact the world that globalists have so fervently promoted for decades, in ways not necessarily to their liking. The first wave has struck and is now retreating from the shore, but will shortly return with redoubled force, and what and who will be swept away and what will be left standing is anyone’s guess." This is an absolute must read...so top up your coffee/wine glass...and then click here. Once again I thank reader Roy Stephens for bringing this essay to our attention.

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MASSIVE gold demand continues to break records in China

Pretty much everything else I have today is precious metals related in one form or another. The first item is provided by reader Ray Wiberg...and is a posting over at the mineweb.com. Author Lawrence Williams digs deeply into China's 200 tonne gold demand that they experienced in the first two months of this year. This story, which is only a handful of paragraphs, is more than worth your time...and the link is here.

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Utah House Passes Bill Recognizing Gold, Silver as Legal Tender

Reader David in California provides our next reading material, which is a posting over at Fox News. Utah took its first step Friday toward bringing back the gold standard when the state House passed a bill that would recognize gold and silver coins issued by the federal government as legal currency. I would guess that this is the thin edge of the wedge...and it will get thicker in a real hurry. This is a must read...and the link is here.

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Interview With Ben Davies - CEO of Hinde Capital

Next, I have three items from over at King World News. I must admit that I've had no time to listen to this Ben Davies interview, as it arrived in the wee hours of Saturday morning, but I'm sure that it will not only be interesting...but will mostly be about silver and gold. The link is here.

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Interview With James Turk

Here's another audio interview that I haven't listened to, either. Eric King and James Turk go at it...and what they have to talk about is always worth noting. The link is here.

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Interviews With Two Johns: John Embry and John Hathaway

Here's a GATA release that contains two more King World News interviews...one with John Embry yesterday...and the full audio interview with John Hathaway from earlier this week. I would guess that both are worth your time...and the link to these interviews is imbedded in this GATA release...and the link is here.

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Interview with Eric Sprott: Silver is Money

Lastly today is this interview with Eric Sprott...CEO of Sprott Asset Management in Toronto. It was done on Canada's Business News Network on March 1st...and I stumbled across it when I was at the sprott.com website yesterday. It's all about silver...and is a must watch/listen from one end to the other. The clip runs 5:41...and the link is here.

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Today's 'blast from the past' is one that I've run before...because at this hour of Saturday morning, I'm too tired to look for anything new. So turn up your speakers and click here.

What a day it was in the precious metals market yesterday...especially in silver. I get the distinct feeling that yesterday's jobs report had no influence whatsoever on the gold price...and silver definitely had a mind of its own.

Gold volume was well over 200,000 contracts...and the preliminary gold open interest numbers suggest that there was deterioration...but it should not be excessive, considering the gold price action. I was expecting worse...however, the final o.i. numbers when they're posted on Monday morning, will tell all.

Gold's final open interest number for Thursday's trading actually showed a decline of 3,688 contracts. Considering the fact that the gold price was down on Thursday, this should be no great surprise. However, the preliminary open interest numbers looked awful...and I'm glad that the final numbers were this good.

Of course the big star of the day was silver once again. Net volume was just north of 110,000 contracts...a really big number. The preliminary open interest number is pretty chunky as well [but not that chunky...considering the price action], so I'd guess that there was deterioration in silver o.i...but just how bad it was won't be known until the CME posts the numbers late Monday morning Eastern time.

Thursday's final open interest number in silver showed a smallish increase of 141 contracts...a number which is a bit of a surprise considering how poorly silver did on that day.

March open interest is now down to 1,676 contracts, which isn't a lot...but if nothing is being delivered against it...it looms as a huge number. It's just another silver situation that seeks resolution.

Nothing has changed in the backwardation situation since Thursday. Silver dips into backwardation in the September delivery month, rather than the December delivery month...and the backwardation from March 2011 to December 2015 settled at $1.105 on Friday.

Here's an interesting graph that Washington state reader S.A. sent my way yesterday. It's a Casey Research graph titled "Gold Price: Nominal and Adjusted for Inflation". As you can see, we've got a ways to go to get back to the inflation-adjusted high of $2,467 spot.

However, that price is obtained by using 'official' government inflation data. When you plug John Williams' [shadowstats.com] real inflation number in there, the inflation-adjusted price suddenly becomes $7,500.

If my memory serves me correctly, the 'official' inflation rate-adjusted silver price is around $168/ounce...which John Williams recalculated to something over $400 the ounce. Just food for thought this weekend.

Well, you can toss the latest Bank Participation Report on top of everything else that's going on in the silver world...and it all adds up to the most incredible [and unbelievable] scenario either Ted or I have ever seen. You couldn't dream up a situation like this, even if you tried. I listened very carefully to what Eric Sprott had to say about silver tightness in that video clip...and along with what Ted Butler has been telling me for years...I can't see what's stopping a nuclear explosion in the price of silver.

I'm still sitting here 'all in'...and ever so glad that my portfolio is very heavily weighted towards silver. As the "Gold:Silver Ratio" graph shows below...that's where the big money is being made...not in gold stocks at the moment. And, until this silver situation resolves itself, I expect that the cards will be stacked in silver's favour from now until then.

There's still a bit of time left [but not too much, in my humble opinion] to either readjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

That's more than enough for today. Enjoy the rest of your weekend...and I'll see you here on Tuesday.