Well, the 9:00 a.m. BST sell-off in London proved to be the low of the day. The subsequent rally was weak...and then the price tailed off once again going into the New York open.
The secondary low of the day came about ten minutes before the Comex began to trade...and the rally that followed came to an end at 9:40 a.m. Eastern time...and then traded sideways to down a hair going into the 5:15 p.m. electronic close in New York.
The low of the day was a few dollars below $1,590 spot at 9:00 a.m. BST...and the New York high of $1,607.40 was at 9:40 a.m.
Gold closed at $1,603.10 spot...up $4.10 on the day...and back above its 50-day moving average. Volume was around the 107,000 contract mark.
The silver price pattern was very similar to gold's, except more 'volatile'. Silver's high [$28.13 spot] also came at 9:40 a.m. Eastern as well...and from there it got sold off and closed 30 cents off its high. Silver's low came at 9:00 a.m. BST...and was somewhere below $27.50 spot.
Silver closed on Wednesday at the precise same price as it did on Tuesday...and Monday...$27.83 spot. What are the chances, dear reader, that this was the free market in action? Net volume, once the rolls out of the September delivery month were subtracted, was a tiny 18,500 contracts.
The dollar index opened around the 82.55 mark, with the low of the day coming at precisely 10:00 a.m. in London. Then in the next ninety minutes the index rose to 82.75 before giving back about 10 basis points going in the 5:30 p.m. New York close. In a nutshell, the dollar index didn't do much yesterday...and was never a factor in Wednesday's precious metals price activity.
The gold stocks spiked up a bit at the open, but slid into negative territory as soon as it became obvious that the 9:40 a.m. high in gold was all there was. The stocks traded down about half a percent until about 2:20 p.m. Eastern. Then, like the Dow, they caught a bid...and by the close of trading, the HUI finished in the black to the tune of 0.43%.
For the most part, the silver shares finished in the plus column yesterday...and Nick Laird's Silver Sentiment Index closed up 0.72%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 88 gold and 4 silver contracts were posted for delivery within the Comex-approved depositories on Friday. Morgan Stanley and the Bank of Nova Scotia were the two issuers of note, with 50 and 35 contracts respectively. HSBC USA and Deutsche Bank stopped 55 and 32 contracts respectively. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in GLD but, after about 1.6 million ounces was withdrawn from SLV on Tuesday, an authorized participant added 1,356,958 troy ounces of silver yesterday.
There was no sales report from the U.S. Mint.
The Comex-approved depositories did not receive any silver on Tuesday, but they shipped 378,196 troy ounces out the door. The link to that activity is here.
After my remarks about First Majestic Silver Corporation yesterday, I was less than surprised to find an e-mail from the company in my in-box when I finally crawled out of bed yesterday morning...and here it is in its entirety...
Hi Ed – Hope all is well. Thanks for reading our news release yesterday, however, I’m honestly quite surprised to read your comment below in today’s G&S Daily…
Mr. Neumeyer (like yourself) is a silver bull and employs the use silver futures to trade the volatility in the market. By utilizing some of the top physical metal traders in the world (whom trade approx.. 70% of the world’s silver market), we have access to valuable information. Furthermore, this activity is nothing new… for more than 2 years our shareholders have benefited from this activity. For the first half of 2012, First Majestic has realized a gain of $2.3M; 2011 +$2.4M; 2010 +$2.9M.
Quite frankly, I realize your issue is not with the trading activity; it’s directed at the use of Comex futures. Your concerns have been received and we always appreciate valuable shareholder feedback.
BTW - the use of stops are not practical for professional trading…
Todd Anthony, MBA
Investor Relations Manager
Toll Free: 1-866-529-2807
I have the usual number of stories for a weekday...and I hope you have time to at least skim the 'cut and paste' portions of each.
JPMorgan Chase & Co. and Barclays Plc are among seven banks subpoenaed in New York and Connecticut’s investigation into alleged manipulation of Libor, according to a person familiar with the matter and company filings.
Subpoenas were sent in recent weeks to five of the banks, Deutsche Bank AG, Royal Bank of Scotland Group Plc and HSBC Holdings Plc in addition to JPMorgan and Barclays, the person said yesterday. Citigroup Inc. and UBS AG received subpoenas earlier this year as part of the investigation.
New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen are jointly investigating alleged manipulation of the London interbank offered rate by lenders. RBS, UBS, Lloyds Banking Group Plc and Deutsche Bank are among the lenders regulators in Europe, Asia and the U.S. are investigating. The U.S. is conducting a criminal investigation.
This story was posted on the Bloomberg website yesterday...and I thank Donald Sinclair for bringing it to my attention...and now to yours. The link is here.
We have such an eroded public safety net that folks are reduced to selling their life insurance policies for the sake of paying their medical bills.
When we think of “innovative financial products,” we probably think of credit-default swaps, collateralized debt obligations, and other ghoulish abstractions that we nervously half-remember from that last Michael Lewis book we read. We probably don’t think of life insurance. But a fascinating new article in the New York Times Magazine gives a very informative tour through the “life-settlements business:” an emerging marketplace whereby people who need cash near what is ostensibly the end of their life sell their life insurance policies to a third party for a price.
As ghoulish as this sounds, the article’s writer, James Vlahos, makes the case that this is in fact a pro-consumer innovation in the life insurance marketplace. But what many commenters to the article really find ghoulish is the simple fact that [here in the U.S.A.] we have such an eroded public safety net that folks are reduced to selling their life insurance policies for the sake of paying their medical bills and the other costs associated with old age.
This article showed up on the alternet.org website on Tuesday...and I thank Roy Stephens for his first offering of the day. The link is here.
I’ve been on deadline in the past week or so, so I haven't had a chance to weigh in on Eric Holder’s predictable decision to not pursue criminal charges against Goldman, Sachs for any of the activities in the report prepared by Senators Carl Levin and Tom Coburn two years ago.
Last year I spent a lot of time and energy jabbering and gesticulating in public about what seemed to me the most obviously prosecutable offenses detailed in the report – the seemingly blatant perjury before congress of Lloyd Blankfein and other Goldman executives, and the almost comically long list of frauds committed by the company in its desperate effort to unload its crappy “cats and dogs” mortgage-backed inventory.
In the notorious Hudson transaction, for instance, Goldman claimed, in writing, that it was fully "aligned" with the interests of its client, Morgan Stanley, because it owned a $6 million slice of the deal. What Goldman left out is that it had a $2 billion short position against the same deal.
If that isn’t fraud, Mr. Holder, just what exactly is fraud?
Matt Taibbi, in his usual pithy prose, tees Holder up and drives him down the fairway. This commentary was posted on the Rolling Stone magazine Internet site yesterday morning...and I thank Randall Reinwasser for bringing it to my attention. The link is here.
Every participant in the manipulated, rigged stock market is now a muppet.
Just as President Richard Nixon signalled his embrace of endless fiscal stimulus and bottomless deficits by declaring "We are all Keynesians now," it is now apparent that we are all muppets now, willing participants in a fraudulent, manipulated market in the hopes that we will skim the same outsized gains reaped by the manipulators.
Actually, Nixon said, "I am now a Keynesian in economics," but the catchier phrase has entered popular history.
Using the word muppets to describe credulous investors who could be ripped off at will originated with investment banking giant Goldman Sachs.
This piece showed up on the Zero Hedge website yesterday...and I thank reader Marshall Angeles for sending it. It's a short, but very worthwhile read...and the link is here.
Minutes of the Bank’s Monetary Policy Committee meeting this month showed that, although the decision to hold rates at 0.5pc and leave quantitative easing unchanged at £375bn was unanimous, the decision was “finely balanced” for some of the nine members.
The release of the minutes coincided with separate comments from deputy governor Charlie Bean and fellow rate-setter Paul Fisher, both of whom suggested that QE still has a role to play in helping the recovery.
The MPC voted 7-2 in favour of adding another £50bn to QE in July. It is expected to increase that again by £50bn before the end of the year. According to the minutes, some members even considered doing more this month “since a good case could be made at this meeting for more asset purchases”.
Last week, the Bank downgraded its forecasts for growth to zero this year and the minutes reflected concerns about the economy. The Bank now believes that even long-term prospects may have been damaged.
This story was posted on the telegraph.co.uk Internet site in the very early afternoon BST...and I thank Roy Stephens once again. The link is here.
British authorities have “warned” Ecuador that they could raid its embassy and arrest Julian Assange if he is not handed over. The Ecuadorian Foreign Minister responded by saying such a move would be a “flagrant violation” of international law.
Ecuador received a "direct" threat from the authorities in London that they are prepared to storm the Ecuadorian Embassy and arrest Assange if he is not delivered to their custody. Ricardo Patino, Ecuador's Foreign Minister, said the "written threat," an aide memoire, was delivered to Ecuador's Foreign Ministry and ambassador in London.
The letter received by the Ecuadorian Embassy stated that British authorities have a legal basis, founded in the Diplomatic and Consular Act of 1987, to arrest Assange on the Embassy’s premises.
"You need to be aware that there is a legal base in the UK, the Diplomatic and Consular Premises Act 1987, that would allow us to take actions in order to arrest Mr Assange in the current premises of the Embassy,” read the letter. "We sincerely hope that we do not reach that point, but if you are not capable of resolving this matter of Mr Assange's presence in your premises, this is an open option for us."
This story was posted on the Russia Today website early today...and I thank Roy Stephens for sending it our way. The link is here.
It could have been disastrous. Standard Chartered was facing a hearing before New York state’s Department of Financial Services (DFS) on August 15th that would have certainly aired embarrassing information. Instead it will be expensive. The bank has acceded to a fast settlement of the charges that it had illicitly processed $250 billion in transactions with Iran, paying $340m in civil penalties and agreeing to various other provisions.
As a result of the deal, the bank's management is temporarily off the hook for personal liability. Just as important, they will not have to defend the bank's actions before the regulator. The agreement also appears to cap potential penalties which, in theory, could have included losing a critical license to operate in America and thus provide its vast emerging-markets network with cross-border dollar transactions.
Any celebration, however, will be muted. In the agreement, Standard Chartered acknowledged that the scope of its illicit activity was indeed $250 billion, the number put forward by the DFS, and not merely $14m, which the bank initially insisted was the case.
Furthermore, the payment does not stop America’s other regulators from pursuing their own charges. Ordinarily there is a sorting out process between regulators before a settlement, and often before the announcement of charges. But in this case the DFS moved ahead on its own, much to the surprise of Standard Chartered, as well as officials at the Federal Reserve, Treasury and Justice Department.
This very short story was posted in the economist.com website yesterday...and I thank Donald Sinclair for sending it. The link is here.
Greek Prime Minister Antonis Samaras is expected to have a difficult mission next week. He wants to persuade German Chancellor Angela Merkel to ease strict austerity conditions on his country, and he may also need to ask for billions in additional aid. Speculation is also growing about a possible bond-buying program for Spain.
Antonis Samaras is showing a bit of courage at the moment. Next week the Greek prime minister plans to travel to Berlin, where he wants to personally persuade Chancellor Angela Merkel to loosen tough conditions for aid despite growing criticism of Athens in Germany. Samaras plans to seek a two-year extension, to 2016, of an austerity plan that was previously agreed with the so-called troika of the European Commission, the International Monetary Fund and the European Central Bank, the Financial Times is reporting, citing a document it has obtained.
The British newspaper is reporting that Samaras wants to first present the plan next week to French President François Hollande and then travel to Berlin one day later for a meeting with Merkel. Iannis Mourmouras, Samaras' chief economic adviser, told the newspaper the extension was justified because of the country's deep recession, with the economy set to shrink this year by 7 percent.
This story was posted on the German website spiegel.de yesterday...and I thank Donald Sinclair for sending it. The link is here.
Antonis Samaras' trip to Germany next week will be a complicated one. The Greek prime minister is expected to ask Angela Merkel for his country to be given two more years to adhere to the austerity conditions attached to the country's EU-IMF bailout program. With political resistance growing in Berlin, the chancellor has little leeway for compromise.
The recent shrill threats toward Athens made by some in her government camp haven't pleased Merkel, either. Yet Greek Prime Minister Antonis Samaras shouldn't hope for too much understanding when he makes his first official visit to Germany next week. On the contrary, his appeal for understanding may fall on deaf ears because the chancellor has no maneuvering room left for compromise. Within her coalition government -- which includes her Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU), and its junior partner, the business-friendly Free Democratic Party -- patience with Greece has been exhausted. Each additional concession toward Athens could trigger a revolt against Merkel within the ranks of her own government.
This was another story from the spiegel.de Internet site yesterday...and another offering from Donald Sinclair. The link is here.
On July 16, a businessman and father of three hanged himself in his shop on the island of Crete. A 49-year-old man from Patras was found by his son. He had also hanged himself. On July 25, a 79-year-old man on the southern Peloponnese peninsula hanged himself with a cable tied to an olive tree. On August 3, a 31-year-old man shot himself to death at his home near Olympia. On August 5, a 15-year-old boy hanged himself in Pieria. And, on August 6, a 60-year-old former footballer self-immolated in Chalcis.
These are also reports from Greece, reports that, at first glance, seem to have nothing to do with the economy. They come together to form a grim statistic, raising questions of what is triggering the suicides and whether the high incidence is merely a coincidence.
Or do people see suicide as a way out of the crisis that has taken hold of their country and their lives? Are they bowing out before things get even worse? Germany and the International Monetary Fund (IMF) are opposed to a new bailout package for Athens. The country faces a shortfall of at least €40 billion ($49 billion). Greece could very well be officially bankrupt by the fall.
This story is another one from the spiegel.de Internet site yesterday...and is courtesy of Roy Stephens...and the link is here.
Regional tensions flared on the emotional anniversary of Japan’s World War II surrender as activists from China and South Korea used Wednesday’s occasion to press rival territorial claims, prompting 14 arrests by Japanese authorities.
China’s official Xinhua News Agency said the arrests had caused tensions over its territorial dispute with Japan to surge “to a new high.”
The 14 people had travelled by boat from Hong Kong to a set of uninhabited islands controlled by Japan but also claimed by China and Taiwan. Japanese police initially arrested five activists who swam ashore in the East China Sea chain, known as Senkaku in Japanese and Diaoyu in Chinese.
This AP story was posted on the france24.com website yesterday...and it's worth running through. It's also Roy Stephens final offering in today's column...and the link is here.
The first is with Richard Russell. It's headlined "Get Ready For Massive QE3 & Epic Inflation". The second blog is with Stephen Leeb...and it's entitled "$12,000 Gold, Paulson, Soros, & A Coming Mania In The Shares". The last blog is with Dan Norcini...and it's headlined "Get Ready, Gold Bears To Be Crushed & Silver To Catch Fire". The audio interview is with Bill Fleckenstein.
At a time when hedge funds are the least bullish on silver in almost four years, investors' holdings are near a record, siding with the analysts predicting a rally as central banks move to bolster growth.
Speculators cut bets on higher prices by 72 percent since the end of February, mirroring changes in their copper wagers, which turned bearish in May, U.S. Commodity Futures Trading Commission data show. Silver held in exchange-traded products climbed for three months and is now valued at $16.2 billion, according to data compiled by Bloomberg. Prices will average $33.02 an ounce in the fourth quarter, 18 percent more than now, the median of 13 analyst estimates compiled by Bloomberg show.
Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Investors and analysts are bullish on expectations central banks will do more to stimulate economies, expanding consumption and increasing the allure of precious metals as a store of value. Prices tripled as the Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011.
This rather strange Bloomberg story was filed from London on Tuesday...and I'm not sure what to make of it. Of course there isn't a word in there about the short-side corner that eight largest traders have in the metal...and how that influences the price. I thank Donald Sinclair for his final offering in today's column. It's posted over at the mineweb.com Internet site..and the link is here.
B2Gold is on the hunt for acquisitions, as are many other mining and mineral exploration companies. The goal is to grow and, presumably, to take advantage of markets that have not been this bad since 2008, or that are arguably worse.
The slow grind down over the past year - as opposed to the trampoline like crash and recovery in 2008/2009 - has forced many, explorers especially, into ever tightening corners as money burns out. As James West of the Midas Letter succinctly retold the history of junior crashes recently: "Since the post-2009 high of 2,423 reached in March of 2011 (on the TSX Venture), we have again seen the market sliding back towards the sub-1,000 mark, but this time, it's happening so slowly that its toll on public company treasuries in the junior resource space is far worse. Companies deferred raising money throughout 2011, as the feeling was that the markets were poor, and they would wait for improvement. Well now the markets are worse, and more companies are running on fumes."
But B2Gold CEO Clive Johnson was being stymied in his efforts. He said it was surprising how many companies out there are unwilling to sign confidentiality agreements at all. And if they are willing, they come with caveats - shackles in the form of standstill agreements - that make it tough to do anything even if you can get into the data room. The self interest here is evident. B2Gold wants to leverage its position of relative strength. The beaten down, however, see no reason to put ink on paper at market lows. To do so is like starved lambs letting the fat wolves in, the thinking may go. If they do open the gate, well, they add a little poison to the ink.
This very interesting story was brought to my attention by Casey Research's own Jeff Clark. It's posted over at the mineweb.com as well...and it's worth the read. The link is here.
While the highly "sophisticated" traders that make up the gold market continue to buy or sell the precious metal based on whether the Fed will or will not do the new QE tomorrow, China continues to do one thing. Buy.
Beijing continues to buy non-US gold, in the form of 68 tonnes in imports from Hong Kong in the month of June. The year to date total is 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tonnes, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world.
This must read Zero Hedge posting from yesterday was sent to me by West Virginia reader Elliot Simon...and the link is here.
This being August 15, 2012, students of the history of monetary economics no doubt are aware that this is the 41th Anniversary of the breakdown of Bretton Woods. It was on this day 41 years ago that President Nixon defaulted on the promise to exchange gold for paper dollars presented for exchange by foreign central banks. Aug 15th marks the anniversary of the collapse of Bretton Woods and the gold-exchange standard that was established after WW II. (Notice that dollar debasement has been bipartisan over the years: Republicans Nixon and Bush and Democrats Carter and Obama have all presided over major declines in the value of U.S. money.)
The current crisis in the global monetary system pales in magnitude to the sundering of gold from central banks' fiat paper currencies in 1971. That is, we are not witnessing the wholesale dismantling of an entire monetary system. What we are witnessing is a loss of confidence in the current monetary system, which, of course, is equivalent to a loss of confidence in central banks' ability to restore stability. However, the decision to renege on the gold-exchange standard that was made 41 years ago is still reverberating today. In *fact*, many or most of the problems observed today are the direct result of wrong-headed discretionary monetary policies.
What was it that made the current morass inevitable once the paper dollar was severed from gold?
The answer is simple: fiat paper money that is not grounded in any objective standard can be manipulated at the whim of the issuer. Without the requirement to exchange fiat money for gold or some other commodity, the central bank can issue unlimited amounts, thus making its value subject to extreme volatility and, as we have seen, perpetual debasement.
According to the folks over at the zerohedge.com Internet site yesterday evening, this essay was courtesy of Kenneth Landon of JPMorgan. One has to wonder if this is some sort of 'trail balloon' as well. It's a must read for sure...and is another offering from Elliot Simon. The link is here.
Great Panther Silver Limited, (TSX: GPR NYSE.A: GPL)headquartered in Vancouver, Canada, is a profitable primary silver producer operating two 100% owned mines in Mexico. Over 94% of revenues are derived from unhedged precious metals production with approximately 74% generated from silver sales and 20% from gold. Since entering production in the first quarter of 2006, the Company has seen five consecutive annual increases in revenues and provides strong leverage to future rises in precious metals prices.
In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a political metal. In the true meaning of the word, its price is "governed".
This is so for the very simple reason that Gold in its historical role as a currency is fundamentally incompatible with the modern worldwide financial system.
Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is no escape because no paper currency has had any link to Gold.
All of the economic, monetary, and financial upheaval of the past 41 years is a direct result of this fact.
The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold. - Bill Buckler, Gold This Week.
Well, yesterday didn't prove to be the start of the big sell-off. It turned out to be the usual high-frequency traders doing the dirty...digging a hole for gold and silver to climb out of in overnight trading, so it could be arranged to finish the New York trading session basically unchanged from the previous day. As Ted Butler pointed out yesterday, this tight trading range has mostly consisted of that pattern for the last few months or so.
And nothing could prove that point more than the closing price of silver on Monday, Tuesday and Wednesday. It closed at $27.83 spot on all three days. The statistical probability of that being free market forces in action is beyond astronomically high, so it was obviously a big 'up yours' from the powers that be.
Far East trading during their Thursday was a non-event once again, with net volumes as low as I can remember them being...especially in silver. The dollar index is up a tad, but nothing significant...and now that London is open, not much is happening their, either. I'm sure that Comex trading will probably be interesting once again.
So we still sit here in these manufactured 'summer doldrums' waiting for the next shoe to drop. I can't shake the feeling that when it does it hit the floor, it will be heard around the world...and the impact will be a market-altering event. The only unknown is what form it will take...and I'd like to believe that gold [and silver] will play their part in it.
See you tomorrow.