MURPHY ON GOLD & SILVER
Central Bank
Sales News/Gold Open Interest/COT Report:
STUNNINGLY
BULLISH!!!
Robert
Rubin as he reveals the motivation or drivers of crisis management in the
interaction between himself, Lawrence Summers, the ESF [exchange stabilization
fund], the IMF and presumably the Maestro at the Fed - during the Clinton
administration. On pages 290 - 291 of his book, In An Uncertain World,
referencing the Brazilian financial crisis of the late 1990s, Rubin outlines
how very expensive "bad decisions" can buy time. Sometimes, he
asserts, these bad decisions have a great deal of merit because they can …
"..Probably defer the impact of the collapse for six or eight
months, and that will more than justify the effort." …Robert Rubin
GO GATA!
Yes, Mr.
Rubin, the young adults and children of America thank you.
It’s Action
Jackson Time. Gold fell $3 during Asian trading last night and gradually
firmed up going into the Comex opening … a nice change of pace. The AM Fix was
$559.75. However, the PM Fix came in at $561.75. At one point on Comex gold was
up nearly $4.
With
silver up 20+ cents in the early Comex trading, it appeared both precious
metals were ready to rocket. Yet, as usual, on the days when gold and silver
should do the best, The Gold Cartel goes into all out attack mode. Clearly, the
cabal forces furiously leaned on bullion to calm down the gold market and
continued their defense of the $563/$564 level. After all, we have the Bush
State of the Union Address on the same day Alan Greenspan leaves office,
January 31. How would it look if the price of gold were soaring going into, or
on, that day? A real Gold Cartel/Planet Wall Street/Orwellian No-No.
According
to our floor sources, it was massive dealer selling which took gold down $7 off
its highs … a.k.a Gold Cartel and allies.
David
Letterman-like reasons for gold and silver to sell off:
*The price
of crude oil shot up $1.50 to $67.76 per barrel.
*Platinum
gained $7.60 to $1072.70, an all-time high close.
*March
copper closed at $2.2330, up 3.15 cents, and another all-time high.
*The CRB
rose 3.67 to 347.13, an all-time high close.
*The Hamas
victory in Palestine.
*
Surprisingly constructive comments about central bank gold sale reductions.
I cannot
stress how bullish this central bank gold story is:
Central
Bank Gold Sales Seen Falling Short of Quota -HSBC
LONDON
-(Dow Jones)- European central banks are highly unlikely to sell the total
2,500 metric tons of gold permitted under the five-year Central Bank Gold
Agreement, HSBC analyst Alan Williamson said Friday.
Total
confirmed and probable sales under the renewed agreement currently stand at
1,441 tons, of which 599 tons has already taken place and a further 842 tons
are expected to take place over the balance of the agreement, Williamson said.
"Within
this category we have included the 130 tons of Swiss sales, which completes the
longstanding disposal program, the 600 tons of likely French sales (151 tons
already completed) and the Dutch sale of 165 tons (75 tons already),"
Williamson said.
"In
addition, we have included likely Portuguese sales of 160 tons (of which 65
tons has been completed), Austrian sales of 90 tons (of which 15 tons done
already) and probable Swedish sales of 60 tons (17 tons done)," he added.
Williamson
said also included are European Central Bank sales of 47 tons undertaken so far
and the 6 tons of gold sold by the Bundesbank for coin minting.
Also,
Belgium has likely sales of 120 tons (of which 30 tons have been completed),
and Spain has sold 63 tons.
"These
sales total 1,441 tons, or just over half of the potential sales under the
agreement," Williamson added.
In
addition to these sales, there is a potential 876 tons of central bank
disposals that can be identified, Williamson said.
"Within
this we would include a further 594 tons of German sales if the Bundesbank were
to take up its full 600 tons allocation - although it passed on the possibility
of sales in the first year of the revised agreement and has not yet stated its
intentions," he noted.
"In
addition, we have included a further 220 tons of possible ECB sales, which is
approximately what would need to be sold to reduce its holdings to 15% of total
reserves, and a possible 62 tons of Belgian sales," he said.
But even
in the "unlikely event" all these sales materialize, Williamson said
total sales under the renewed Central Bank Gold Agreement would be just over
2,300 tons, still almost 200 tons short of the maximum permissible.
"Unless
another central bank emerges as a seller, we remain of the view that the full
2,500 tons quota will not be filled. Indeed, in the event that either the
Bundesbank and/or the ECB decide not to undertake any further sales, aggregate
sales will fall short of the 2,500 tons maximum," he added.
The
five-year agreement is the second of its kind and limits combined annual sales
of gold by individual countries to a total 500 tons. Each Central Bank gold
agreement year runs from the end of September.
-END-
Seems to
me Mr. Williamson was neutral to bearish all the way up the last four years.
Why the MIDAS hoopla:
*The gold
market cannot handle an unexpected 1,000 tonne drop in expected central bank
sales. The Gold Cartel and other shorts desperately need the European central
banks to sell 2500 tonnes of gold per year and clandestinely lease gold on top
of that.
*The
yearly supply/demand deficit is 1500 to 2,000 tonnes right now. The price of
gold is taking off anyway. Without all the allowed central bank gold hitting
the market, the price HAS to SOAR!
*This is
nothing less than sensational talk coming from the mainstream gold world. It
MUST have The Gold Cartel gagging.
*All of
this continually changing talk has surfaced following Gold Rush 21 and the
Russians leaving our conference in Dawson City.
Before
Gold Rush 21, talk of central banks buying gold (Russians, Iranians, Chinese,
South Koreans) was virtually non-existent, as was any talk the central banks
might not come close to meeting their Washington Agreement quota.
*The Gold
Cartel is likely experiencing some angry fallout from central bank sheeples who
now feel duped about selling their gold at such low prices. GATA hero Ferdi
Lips said years ago the Swiss would rue the day they dumped gold at bargain
basement prices years ago.
The gold
open interest news is nothing less than stunning and very exciting as it
continues to confirm the MIDAS/GATA analysis that The Gold Cartel and others
are desperately trying to cover their shorts whenever they can. It fell a
whopping 9987 contracts to 351,369!!!
I am not
sure how yesterday’s option expiry plays into this (probably call owners
selling futures the last few days and given long futures for their calls,
thereby reducing the OI, which led to this sharp OI reduction). However, it
does not matter in the end. The bottom line is gold has risen some $120+ while
the gold open interest is more than 20,000 contracts off its highs.
The gold
market is NOT overrun with foaming specs yet. Based on the price action, there
is room for 100,000 more specs to pile into this market before it gets overdone.
Those specs will be competing against more and more pale faced shorts trying to
cover their butts. Gold remains explosive.
Just in …
Not only are the gold open interest numbers continually bullish, so is the
Comex Commitment of Traders report. The large specs reduced their longs by
2,722 contracts and increased their shorts by 2,908 contracts. The small specs
reduced longs by 695 contracts and increased their shorts by 661 contracts. The
commercials reduced longs by 3152 contracts, yet REDUCED SHORTS by 10,318
contracts.
Once again
we have concrete evidence the Commercial Signal Failure is in play. Facts are
facts. Meanwhile, instead of the specs driving the market up, they are going
more SHORT. This is SO bullish!
The silver
open interest only rose 1069 contracts to 133,175. The Silver OI is around
10,000 contracts off its old high. For silver to rise like it has, and for the
open interest to go up so modestly, tells us the silver shorts are scared stiff
… with many of them finally wanting out too.
March
silver
http://futures.tradingcharts.com/chart/SV/36Weekly
silver (up a rabid 70 cents)
http://futures.tradingcharts.com/chart/SV/WThe floor
noted some buy silver/sell gold spreading.
The John Brimelow Report
ETFs - substitute for C Banks - or India
Friday, January 27, 2006
Indian
ex-duty premiums: AM $2.51, PM $3.36, with world gold at $558.20 and $559.45.
Adequate for legal imports. The rupee firmed again this afternoon, as the
Bombay Stock Exchange closed again at record highs. India is positioned to
block any serious sell-off.
Japan
remained indifferent. Volume was static at the equivalent of 23,578 Comex lots
(+1.2%), and open interest slipped the equivalent of 248 Comex lots – although
Mitsubishi’s data implied that the public added 1.3 tonnes to its long. In the
absence of a strong uptrend in world gold or (even more helpful) a downtrend in
the yen, TOCOM’s traders are likely to be distracted by platinum and silver
futures.
The
Shanghai Gold Exchange, which will now be closed for a week, displayed
discounts to world gold only slightly narrower than yesterday: $2.42-$2.65. A
Reuters story today reports comparatively strong Chinese interest in gold items
for the lunar New Year celebrations: but there is no evidence the country is a
significant factor in the world gold trade at present.
The two
precious metals where their absence might be felt are platinum (of which China
is a substantial importer) and silver (where for some years they have been a
heavy exporter). In the current state of the silver market, China being closed
might have an effect.
Yesterday
in NY volume was very heavy: 130,369 lots (37% above estimate) or 100,000 net
of the switch effect. Open interest dropped a starting 9,987 lots (31 tonnes).
No doubt this was somewhat connected with the Comex option expiry: the $350
calls expired in the money, wit an unusually substantial open interest.
ScotiaMocatta remarks that yesterday:
"Gold
gave back about $5.00 overnight, trading 557.20/557.70 by the time New
York
opened for business. Follow through selling from overseas sources hit the
market shortly after the open forcing gold to the session low of 554.60/555.10.
The market mood soon …helped along by a renewed buy interest from funds. The
fund buying enabled gold to reach a peak of 560.90/561.40 before finishing the
day 560.00/560.50."
Today sees
the OTC options expire: and the same capping operation has been in effect,
blocking an attempt by gold to move after the adverse GDP figure. Estimated
volume at 1PM was 115,000.
HSBC put
out an interesting piece reported by Dow Jones, suggesting, for no obvious
reason, that the full Washington Accord quota might not be sold by the
participating Central Banks. It did not discuss possible purchases. Viewed as
further evidence that the major bullion banks are increasingly pessimistic
about the volume of net sales forthcoming, this report is significant.
Apprehension about Central Bank intentions has sunk pretty deeply into the mind
set of Western professional investors.
The HSBC
daily offers the arresting slogan
"Gold
ETFs; bigger consumer of gold than India? This of course involves being
confident about what the ETFs actually hold – but in the current climate is the
sort of thing which might cause a buyer stampede.
With the
lower $560s looking increasingly congested, the issue as to the nature of the
resistance there, raised yesterday, remains open. Gold’s friends can take some comfort
from the robust behavior of the gold shares.
JB
--------------------------
Hello
Bill:
We have a lease rate event! This time it's in silver:
In
the past two days, silver lease rates have tripled in the one month term and
spiked to somewhat lesser peaks in the other terms, but all terms are up at
least 50% in absolute terms. The relative concentration of the spike in the
near terms screams price suppression as the principal motive. Gold on the other
hand displays a weak internal backwardation, and a widening spread between one
month and one year, which is indicative of less suppressive leasing. Silver's
rates are rising across all terms, and rising (at the moment) faster in the
later terms than the near terms. In this, silver differs from gold, and I think
that difference is related to the liquidity crunch in the physical market.
There is relatively little central bank silver, so the rates respond to lease
demand far more violently than gold rates. In any given term, there is
relatively little metal available to borrow, so the leasing is spread out
across all terms to spread the cost, and I think concentrated in the later
terms with the expectation that time will let the borrowers out of their
exposure at lower prices.
The
surge in later terms may also reflect higher risk of a market blow up. It has
always been my contention that silver is more explosive than gold simply based
on the supply/demand fundamentals, lease rate behavior, and the
incontrovertible fact that silver is still Constitutional money. Silver has
been under suppression by various monetary authorities (mostly British) for 300
years. If the authorities suppress price while demand balloons, there must come
an inevitable price explosion. Perhaps this has arrived for silver.
Platinum
is also under attack, with a lease surge that resembles the one in silver, but
not in degree. Rates here are increasing across all terms, but more so in the
later terms. The platinum lease market is also illiquid. Palladium has blown
out into a full inversion, as one month lease rates surge, while later terms
fall.
Over
in the pits of COMEX, 1.22 Moz of silver were delivered. And who took most of
it you ask? Why Bank of Nova Scotia (again). They took all but 3 of the
contracts delivered this morning. That brings the total silver deliveries up to
7.46 Moz for the month of January.
http://www.kitco.com/market/lfrate.html
Have a
nice weekend, Rhody.
Gold,
silver and the shares remain THE historic investment opportunity of a lifetime!
GATA BE IN
IT TO WIN IT!
MIDAS
January 28, 2006
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