The subsequent rally into electronic trading didn’t last long. And considering the size of the rally in the precious metals on Thursday, there sure wasn’t huge volume in either.

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The only difference between the price action of the two metals yesterday, was that silver had its high of the day in Globex trading…after floor trading on the Comex closed. And despite the wonderful time that gold and silver prices had on Thursday, it also seemed that someone didn’t want the HUI to blast through 300…as every attempt to break out, was firmly sold down. Note specifically that the 12:30 noon rally in the gold and silver price, produced exactly the opposite reaction in the shares for about half an hour. Maybe I’m imagining things…but maybe not. Here’s the HUI from yesterday…and you can be the judge.

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In gold news yesterday, I noted a story posted at kitco.com, that gold/jewelery sales in Dubai were down 60%. Yesterday there was no change in the SLV ETF…but another 7.5 tonnes was added to the GLD ETF…which makes 23.5 tonnes in four days…about 750,000 troy ounces. That’s getting awfully close to the figure of one million ounces that Ted Butler mentioned on Monday was owed to GLD. So, if Ted was right about that, then he’s probably pretty close to mark on silver as well…where he figures that SLV is owed somewhere between 15-20 million ounces…of which only 2.5 million has showed up so far. And lastly…a couple of gold stories…the first, a story posted at mineweb.com, has this headline…”ETFs absorb more than $3 billion of gold so far this year.” The link to this story is further down. The second, from the Financial Times in London, is a story about South Africa’s gold production…and that item is linked below as well.

In other news…in a Bloomberg report yesterday “The Bank of England cut the benchmark interest rate to the lowest [now 1% - Ed] since the bank was founded in 1694 to help drag the British economy out of the deepening recession.” [Note to Bloomberg: The British Prime Minister called it a 'depression' on Wednesday! - Ed] In a story headlined “The City fears Russia’s default” filed out of Moscow at en.rian.ru, there is now deep concern in London that Russia will, once again, default on its foreign debts. Credit default swaps have blown out to rates higher than Iceland…1,123 basis points! That’s junk!!! And I note in another Bloomberg story that the once almighty AIG had their shares trade at less than $1.00 for a time yesterday. And lastly, I see that Ron Paul has re-introduced, before the U.S. House of Representatives, the bill to abolish the Fed. He doesn’t pull his punches. His accompanying speach is a quick read, and the link is here.

There are so many quality must read stories that are well worth your time today, that I’m just going to post the headline and the link to all of them. Then it’s up to you, dear reader, to decide which to spend time on. I feel obligated to present everything to you, as I do not wish to misinform by censoring something that might be of great interest…or importance…to you personally. We are now rapidly accelerating down the path to Armageddon…and some of these stories reveal, in depth, just how fast events are moving along. I’m not sure how much longer ‘the world as we know it’ is going to last at this rate.

1) Mine Web – ETFs Absorb more than $3 Billion of Gold so far this year. Click here.
2) Bloomberg – Bank of England Cut Main Rate a Half Point to 1%. Click here.
3) The Telegraph – ECB delays on interest rates despite German industrial slump. Click here.
4) Bloomberg – Bill Gross of Pimco says “Trillions must be spent…not billions”. Click here.
5) RIA Novosti – The City [London] fears Russia’s Default. Click here.
6) Reuters – Geithner convenes meeting of President’s Working Group…the PPT. Click here.
7) Financial Times – South Africa: A rich country insisting on being poor. Click here.

The fundamentals [Britain's] are still weak, and there is still some scope for orthodox policy easing. It’s preferable to nudge [interest] rates further now, than to turn to the printing presses. – Ross Walker, economist…Royal Bank of Scotland, Bloomberg, February 5, 2009

With Bloomberg reporting that the President’s Working Group on Financial Markets was meeting yesterday, there was no way on God’s green earth that anything bad was going to be allowed to happen. And as the King Report said earlier this a.m…”This is a blatant signal to the stock market, which is close to another breakdown, that the PPT stands ready, willing and able to rig the stock market if needed.” The Dow had another miracle starting about 10:00 a.m….and gold and silver prices, and their respective equities…were kept in check. Any of the above posted stories should be screaming red flags…almost the same as front page ads in The Wall Street Journal…extolling the reasons why everyone should be buying gold and silver with both hands. Never in my wildest dreams could I have invented such positive gold and silver stories on my own.

Have a great weekend…and I’ll see you on Saturday sometime.

Source: And Then There’s This…Friday, February 6th, 2009

Industry sources say the rise in retail demand for gold may turn Japan into a net importer again, but that may not happen immediately as many players are still looking to unload their gold holdings when prices recover.

Japan was a net importer of gold in October for the first time this year as investors bought on a plunge in prices, but exports exceeded imports again in November, finance ministry data showed on Friday.

In the eleven months to November, Japan’s exports of unwrought solid gold, gold bars and sheet totalled 393.9 tonnes, up from 174.9 tonnes in 2007.

In November alone, Japan exported 47 tonnes of gold, rising more than five-fold from October, while imports more than halved to 4.1 tonnes from the previous month.

A Tokyo-based trader said the rise in exports last month may have been related to spot gold prices rebounding above $800 an ounce after falling to near $680 in late October.

“There were still many people who hadn’t sold,” the trader said, referring to a wave of selling after spot gold prices hit a record high of $1,030.80 an ounce in March.

But he noted that in Japan, premiums on spot gold rose by as much as about $2 when gold prices dipped below $700, reflecting strong demand from Japanese individual investors.

That compared with discounts deepening by as much as around $3 when the gold market was rallying.

The global financial turmoil has prompted many Japanese retail investors to reassess gold as a long-term investment rather than just a safe haven at times of crises, industry sources say, adding that a wider array of investors are now attracted to metal.

Other overseas assets have lost their appeal as central banks around the world slash interest rates close to zero, wiping out huge yield differences and on the yen’s appreciation to 13-year highs against the dollar.

“Although the principal is not guaranteed and it’s does not bear interest, gold does not fail,” said Osamu Ikeda, general manager at Tanaka Kikinzoku Kogyo, Japan’s biggest bullion retailer.

Tanaka Kikinzoku saw a record number of new customers signed up for its online gold savings plan in November, which allowed customers to start from a purchase of a minimum of 1,000 yen worth of gold each month.

Tanaka does not report actual volumes or value, but it said its sales of gold exceeded its purchases for the fourth month in a row in November.

“Given the lack of a key, strong currency, the importance of gold as an alternative to the dollar has been heightening,” said Takeo Okuhara, market economist at Daiwa SB Asset Management.

“Gold is an asset with value more than zero and is also regarded as a type of savings in times of economic deterioration,” he said.

Some of the gold individual investors sell to bullion houses is recycled for industrial and jewellery use in Japan, but the remaining bulk is sold via Singapore and other trading centres to the rest of the world.

Chikako Mogi, TOKYO, Dec 26 (Reuters)

The dollar fell anew against the euro and yen while yields on U.S. and European government debt traded at or near historic lows on Wednesday, a day after the bold credit easing by the Federal Reserve to combat a worsening recession.

Oil prices dropped as much as $3 a barrel after dealers said a record supply cut by the Organization of Petroleum Exporting Countries would not be enough to counter slumping energy demand brought on by the global economic downturn.

Equity markets on either side of the Atlantic slid as the initial enthusiasm over the Fed’s surprisingly aggressive interest rate cut on Tuesday gave way to weak financial results at key banks and European data reinforced a dismal outlook.

Despite yields already at historic lows, investors piled into debt. Short-term government bonds still offer a safe-haven for investors fearful that a deepening recession will lead to further losses in other assets.

The yield on 30-year U.S. government bonds led a rally in the United States, touching a series of record lows to yield as little as 2.58 percent. Yields move in the opposite direction of bond prices.

“We are trading in no man’s land and expect this will continue into year-end,” said Thomas di Galoma, head of government trading at Jefferies & Co. in New York.

The benchmark 10-year U.S. Treasury note was up 36/32 in price to yield 2.14 percent.

Two-year German government bond yields hit their lowest level since the euro zone was created, with the two-year Schatz hitting 1.842 percent , according to Reuters data.

It was the lowest level since the rate-sensitive Schatz was launched in 1991.

The Fed’s surprisedly large cut further eroded the U.S. currency’s appeal against the euro, which has gained a staggering 11 percent so far during the month.

The dollar hit a fresh 2-1/2 month low versus the euro and fell towards a recent 13-year low against the yen, in a plunge that stoked speculation Japanese authorities may intervene to rein in its climb, which is hurting the nation’s exporters.

“The underlying story in the FX market remains yield. The fact that the Fed made this major policy move yesterday really changed the balance of power towards the euro for the time being,” said Boris Schlossberg, director of currency research at GFT Forex in New York.

The dollar fell against a basket of major currencies, with the U.S. Dollar Index off 1.48 percent at 79.011. Against the yen, the dollar fell 1.21 percent at 87.85.

The euro rose 1.65 percent at $1.4331.

U.S. and European stocks fell. Morgan Stanley shares slid after reporting a worse-than-expected $2.2 billion quarterly loss as the credit crisis caused more write-downs.

BNP Paribas revealed an 11-month loss at its investment banking unit, hit by exposure to an alleged fraud by U.S. financier Bernard Madoff.

“Weaker company data are back in focus,” said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany.

“The news about BNP is the main trigger regarding European banks, while Morgan Stanley’s results only seem to seem to have a marginal impact,” he added.

Apple Inc was a major weight on the Nasdaq after the iPod maker said Chief Executive Steve Jobs will not deliver the keynote address at the Macworld trade show next month, reviving concern about his health.

Apple’s shares tumbled about 7 percent.

Sal Arnuk, co-manager of trading at Themis Trading in Chatham, New Jersey, said investors were initially enthused after the Fed’s moves on Tuesday made it clear it would do whatever it takes to get the U.S. economy back on track.

“This morning we awaken with a hangover and the realization of how many bullets do they have left?” Arnuk said.

Before 1 p.m., the Dow Jones industrial average was off 41.50 points, or 0.47 percent, at 8,882.64. The Standard & Poor’s 500 Index was down 3.55 points, or 0.39 percent, at 909.63. The Nasdaq Composite Index was down 6.67 points, or 0.42 percent, at 1,583.22.

The FTSEurofirst 300 index of top European shares closed down 0.76 percent at 828.53 points.

OPEC announced an agreement to cut 2.2 million barrels per day of output starting Jan. 1 — the biggest single reduction on record — adding to previous cuts of 2 million barrels since September.

U.S. light sweet crude oil fell $2.36 percent to $41.24 a barrel.

Spot gold prices rose $8.00 to $864.70 an ounce.

Asian stocks rose overnight, supported by sectors sensitive to interest rates in anticipation regional policy-makers will take more aggressive steps to support growth after the Federal Reserve’s easing on Tuesday.

The MSCI index of Asian-Pacific stocks outside Japan rose 2.3 percent to the highest since Nov. 11. But Japan’s Nikkei share averagE shed early gains to end down 0.5 percent as the yen’s strength walloped exporters.

Herbert Lash
NEW YORK, Dec 17 (Reuters)