It was another 'nothing' sort of day in the gold market on Tuesday...right up until 8:30 a.m. Eastern time...when either a not-for-profit seller, or high-frequency trading platform, carved eighteen bucks off the gold price in less than fifteen minutes. However, it appears that retail sales and producer price index data was released at 8:30...and that may have been the cause of the sell-off...or the fig leaf behind which the bear raid was conducted. I highly suspect the latter scenario.
The actual low price tick...$1,590.40 spot, if Kitco's number can be believed...came at 9:00 a.m....and the gold price recovered slowly from there, before getting sold off a hair going into the 1:30 p.m. Comex close. After that it traded ruler-flat going into the 5:15 p.m. electronic close in New York. The New York high tick came just a minute or so after the Comex opened...and that printed $1,615.30 spot.
Gold closed at $1,599.00 spot...down $10.90 from Monday. Net volume appeared to be just as heavy as Monday's volume...around 125,000 contracts.
Here's the New York Spot Gold [Bid] chart on its own, so you can see the relevant action up close and personal.
Silver's price path was more or less similar to gold's. It's attempt to rise above the $28.00 spot mark ran into a willing seller about half an hour after the London open...and the London low came around the 12 o'clock noon London silver fix.
The subsequent rally ran into the same not-for-profit seller at the same New York time as gold did...with silver's low [$27.56 spot] coming the same time as gold's...right at 9:00 a.m. Eastern. The rally that followed got nowhere...and after all the price gyrations of the preceding 24-hour time period, silver closed at $27.83 spot, the same price it closed at on Monday.
Net volume, once the roll-overs out of the September delivery month were subtracted out, came in at a very tiny 17,500 contracts...give or take. Silver's high price tick in New York was $28.05 spot and, like gold, that came just minutes after the Comex open.
Here's the New York chart on its own...
Just for 'information purposes only'...here's the platinum chart from yesterday...and you thought the intervention in the gold market was egregious!
If you check the high ticks in both gold and silver above, you'll see that both were set to blast off as well. It's just so much more obvious on the above platinum chart, as the trace actually shows up on the chart, but the price rallies were too fast in the other two metals.
The dollar index rolled over about twenty basis points during Far East trading...and hit its low of the day [82.21] shortly before 9:30 a.m. in London.
The subsequent 35 basis point rally lasted until about 10:40 a.m. in New York, before the dollar index more or less traded sideways into the 5:30 p.m. Eastern time 82.53 close.
You'd have to smoke one or more of those pointy cigarettes before you could see much co-relation between the precious metals prices and the dollar index on Tuesday.
Surprisingly enough, the gold stocks put on a decent showing despite the fact that the metal itself had just had the living snot kicked out of it less than an hour before the open. The stocks peaked shortly after 10:00 a.m....and then traded sideways until around the 1:30 p.m. Comex close...and then they slowly sold off into the close. The HUI finished down only 0.50%. It could have been worse.
For the third day in a row, the silver stocks were in the red virtually across the board...and Nick Laird's Silver Sentiment Index closed down another 1.33%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 339 gold and 2 silver contracts were posted for delivery within the Comex-approved warehouses on Thursday. JPMorgan was the biggest short/issuer with 267 contracts...179 in its in-house account, along with another 88 in its client account. The Bank of Nova Scotia was in distant second place with 72 contracts posted for delivery. The only two long/stoppers of note were HSBC USA with 212 contracts...and Deutsche Bank with 121 contracts. The link to yesterday's Issuers and Stoppers Report, is here.
There were no reported changes in GLD yesterday...but an authorized participant withdrew 1,647,762 troy ounces from SLV.
I got a call from David Morgan last night...and one of the subjects of our discussion was just how much silver that the Sprott Physical Silver Trust was still owed. A quick e-mail exchange with Nick [Hawkeye] Laird revealed that they'd already received 6,546,513 troy ounces of the stuff, so it appears that they still have a bit over 1.5 million ounces yet to go. I had guessed at 600,000 ounces in this space on Tuesday.
There was no sales report from the U.S. Mint.
Over at the Comex-approved depositories on Monday, they reported receiving 800,439 troy ounces of silver...and shipped a very small 9,249 troy ounces out the door. The link to that action is here.
Well, First Majestic Silver Corporation posted their second quarter financial results yesterday...and here's an interesting item from that report..."In addition to cash, First Majestic was carrying 574,000 PSLV (Sprott Physical Silver Trust) units at quarter end with an approximate market value of $6.65 million...and 100 Silver Futures contracts representing 500,000 ounces of silver valued at $1.7 million including the unrealized gain and the margin requirement. The Company is currently holding 150 contracts representing 750,000 ounces of silver at an average cost basis of $27.277."
750,000 ounces of paper silver? They mine this stuff...and buy paper silver? I'm sure that JPMorgan laughed with glee as they sold them the Comex futures contracts. You can't make this stuff up! It makes me want to sell my position in the company at the open this morning, but I won't. Let's see if 'da boyz' can arrange for them to get stopped out, which is precisely what they deserve to have happen.
Here's a too-cute-for-words photo of a baby spotted skunk that my daughter Kathleen sent me yesterday...and I thought it worth sharing.
Despite ruthless editing, I still have a fair number of stories for you once again today.
JPMorgan Chase & Co. will allow customers to house excess swaps and futures collateral in a separate bank account as it seeks to reassure investors after losses at MF Global Holdings Ltd. and Peregrine Financial Group Inc.
The new service will allow clients to automatically aggregate excess margin at JPMorgan Chase Bank N.A., the firm’s insured deposit-taking unit, Emily Portney, head of agency clearing, collateral and execution at the New York-based bank, said in a telephone interview.
“It’s certainly in response to client queries and more emphasis on safekeeping of client money,” Portney said. “The key is safety, operational efficiency and more choice for clients” in how their funds are protected and invested, Portney said.
This Bloomberg story was posted on their website just before lunchtime in New York yesterday...and I thank reader Ulrike Marx for sending it. The link is here.
Stockton and other Californian cities have slashed public services, thus putting the demands of public employees above the concerns of taxpayers and residents who rely on public services. Now we see that even bondholders don’t stand a chance when their interests collide with those of public-sector unions.
It’s easier to take on an offshore firm than confront CalPers [California Public Employees’ Retirement System], which had threatened to wage a protracted court battle against another Californian city, Vallejo, if it decided to reduce pension promises after its 2008 bankruptcy. Stockton officials no doubt are aware of that threat.
Why not screw the bondholders?
This story showed up on the townhall.com Internet site yesterday...and I thank reader Marshall Angeles for bringing it to our attention. The link is here.
For several years, the Wall Street wizards who built a faster, more fragmented stock market justified their creation by pointing to the benefits it yielded for investors in the form of lower trading costs.
But as the speed and complexity of the markets have continued to change at a rapid pace — with trade times now measured in millionths of a second — a growing number of studies and market participants suggest that those benefits to investors have stalled or even started to reverse.
Research from the broker Abel/Noser indicates that the total cost for an investor to get into and out of a single share of stock fell by more than half between 2000 and 2010, to 3.5 cents. Since then, though, the cost has leveled off and then ticked up in the most recent quarter to 3.8 cents, confirming a trend that has also been visible in recent data from Credit Suisse Trading Strategy and from Celent, a consulting firm specializing in financial markets.
This story was posted in The New York Times on Monday...and I thank Donald Sinclair for sharing it with us. The link is here.
The Office for National Statistics said its consumer prices index (CPI) measure of inflation rose to 2.6pc in July from 2.4pc in June, driven by a 21.7pc rise in the cost of flights which saw overall transport prices rise by 1pc.
The Retail Price Index inflation figure, which will be used to calculate the increase in rail fares, jumped to 3.2pc, against expectations of 2.8pc, leaving commuters faced with the prospect of £100-a-week fares.
In England fares will rise by inflation plus 3pc, while in Scotland they will go up by inflation plus 1pc. Wales has yet to set a figure for its increase.
The jump in inflation is a blow for the Bank of England's Monetary Policy Committee, which has repeatedly overshot its 2pc target in recent months.
Every negative surprise is "unexpected"...and/or a "temporary blip"...and it's a given that the inflation numbers are much worse than the government is reporting.
This Roy Stephens offering was posted on the telegraph.co.uk Internet site mid-morning BST in London...and the link is here.
Owning a charming holiday home in the heart of rural France may no longer be the life-long dream of Francophiles across the world, thanks to new substantial tax rises.
A massive tax rise affecting foreigners who own second homes in the country has been given its blessing by France’s highest authority, the Constitutional Council.
The legislation was approved on August 9, despite strong claims by many in the property market that it is against EU laws.
It comes even after President François Hollande appeared to reassure Britain’s legion of holiday home owners during a recent trip to the UK.
This story was posted on the france24.com website on Monday...and I thank Roy Stephens for finding it for us. The link is here.
A quarterly filing by the insurer in the US shows that the firm is working to slash its exposure to both European sovereign debt and the eurozone’s banks, a further indication that companies are losing confidence in the single currency,
Between December 31 last year and June 30, the company reduced its holdings of German, French and Spanish government debt.
Its reduction in exposure to German sovereign debt was the most marked, falling 16pc over six months, from $1.85bn (£1.2bn) to $1.37bn, indicating that Europe’s largest economy is not insulated from the capital flight gripping the eurozone’s southern and heavily indebted members.
The company has also reduced its holdings in German, French, Spanish and Italian banks, the quarterly filing of its investments shows.
This story was filed on The Telegraph's website late afternoon BST on Saturday...and I thank London reader Iain Doherty for digging it up on our behalf. The link is here.
Greece raised €4.063bn (£3.2bn) in a sale of three-month debt on Tuesday, paying a modestly higher rate of 4.43pc that will help the government avoid a cash crunch.
The extraordinarily large sale was held ahead of the redemption of a €3.2bn bond held by the ECB which expires on August 20. it will also help the country pay salaries and pensions while it awaits the next installment of its EU-IMF bailout package.
In its last equivalent sale on July 17, Greece raised €1.625bn euros at a slightly lower rate of 4.28pc.
Greece has been shut out of the long-term debt markets since 2010 and has regularly issued short-term debt, but previous placements had not been as high as Tuesday's.
And so it has come to this...a loan to get it through until the next IMF pay day. This story was posted on the telegraph.co.uk Internet site at 7:00 a.m. Eastern time yesterday morning...and I thank Roy Stephens for sending it along. The link is here.
Spanish prime minister Mariano Rajoy has remained tight-lipped on whether he will make a formal request for a bail-out, as Olli Rehn indicated the ECB and EU were ready to shore up the eurozone.
Speaking in Mallorca after meeting King Juan Carlos, Mr Rajoy repeated that the government would act “in the best interests” of Spaniards. Asked if the pair had discussed the possibility of a second bail-out, he said: "Until we know what decision the ECB has taken on this matter, we aren't going to take one either".
Earlier this month, Mr Rajoy opened the door to a bail-out request, but said he would first need to know the attached conditions as well as the form a rescue would take.
Mr Rajoy also confirmed that the government will renew a six-month jobless subsidy designed for people who have exhausted other jobless benefits.
This is another story from yesterday's edition of The Telegraph...and it was posted on their website mid-afternoon BST yesterday...and it's another story courtesy of Roy Stephens. The link is here.
Germany’s shipping industry faces a wave of bankruptcies over coming months as funding dries up and deepening economic woes across the world cause a sharp contraction in container trade.
Over 100 German ship funds have already shut down as the long-simmering crisis in global container shipping finally comes to a head. A further 800 funds are threatened with insolvency, according to consultants TPW in Hamburg.
They are not alone. Britain’s oldest ship owner, Stephenson Clark, dating back to 1730, went into liquidation last week, closing the final chapter of Britain’s coal trade and the industrial revolution.
It cited “incredibly depressed” vessel rates. The firm over-invested in the boom four years ago, betting too much on the China syndrome.
Germany is the superpower of container shipping, controlling almost 40pc of the world market. The Germans also misread the cycle and have been struggling to cope ever since with a legacy of debt and a glut of ships. Now everything is going wrong at once.
This Ambrose-Evans Pritchard blog was posted on the telegraph.co.uk website late on Monday night...and I thank Australian reader Wesley Legrand for sending it along. It's definitely worth reading...and the link is here.
The first is headlined "Deal lets India resume Iran oil shipments". The second is entitled "Russia says new U.S. sanctions on Iran are 'overt blackmail', could affect ties". Both items are courtesy of Roy Stephens.
Having failed to graduate from high school in a country that places significant emphasis on education and where 92 percent of the population graduates, Hiro knew his prospects of a steady job in a Japanese company were slim.
But, he says, “I never thought it would be this bad. I didn’t ever expect to be rich, but I never thought it would be this tough,” says the 27-year-old, who asked to be identified only by his first name out of respect to his family.
Hiro represents a growing number of Japanese living below the poverty line.
Famously, a majority of Japan’s population once considered themselves middle class. While this was always something of an illusion, income inequality was lower than in other industrialized nations and there was almost full employment. Now, the ranks of those being left at the bottom of the world’s third-largest economy are swelling, and they are falling further behind the rest of society. The Health, Labor and Welfare Ministry announced last month that a record 2.1 million people are now receiving benefits and other financial assistance.
This Christian Science Monitor story was posted on the businessinsider.com Internet site yesterday...and is definitely worth reading...and I thank Roy Stephens for his final offering in today's column. The link is here.
The first is with Bill Fleckenstein...and it's headlined "Markets Will Crush Central Bank Actions". The second blog is with Rick Rule. It's entitled "Gold Strong, Expect Merger & Acquisition Boom In Miners". And last but not least is this blog with Robert Fitzwilson of The Portola Group...and it's headlined "This Will Be The Biggest Financial Fight In Human History".
Sierra Leone plans to cut taxes on gold produced by small, individual miners nearly in half to reduce smuggling and boost exports, a year after the West African state did the same for diamonds, a top mining official told Reuters on Monday.
The move would undo part of a mining law drawn up in 2009 and backed by the International Monetary Fund. The law was meant to increase government revenue in the war-scarred country but instead backfired by triggering a slide in official exports.
The proposed cut would bring export taxes on individually mined gold down to 3 percent from the current 5 percent, he said. The move would follow a cut on individually mined diamonds to 3 percent in March 2011 from the previous 6.5 percent.
This Reuters story, posted at the mineweb.com website yesterday, was filed from Freetown on Tuesday morning...and I thank Donald Sinclair for sharing it with us. The link is here.
John is poised to deploy the one-third of his portfolio he's been holding in cash into his top 10 gold and silver stocks.
It goes without saying that this 'analyst' never once mentions the real driving force behind gold and silver prices...and that's the grotesque Comex short positions held in both gold and silver, along with the price management techniques of JPMorgan et al. He should know better.
This interview was originally posted on The Gold Report website...and is posted here on the mineweb.com Internet site. I thank Donald Sinclair for his last offering in today's column...and the link is here.
We have said it over and over, we'll say it again. For all those who for one reason or another would like to boycott the broken markets, yet trade gold in paper form, please understand that all the invested capital is at risk of total loss...and can and will be lost, co-mingled and re-hypothecated, not necessarily in that order, with little to zero recourse...and the residual claim on liquidating assets pushed to the very end of the queue.
[Now] here comes Amber Gold: a gold-based investment Ponzi scheme out of Poland, in which it is likely needless to say that the gullible investors never had actual possession of the gold. And when they tried, it was gone. All gone.
This must read Zero Hedge posting from yesterday evening was sent to me by reader 'David in California...and the link is here.
Billionaire investors George Soros and John Paulson increased their stakes in the biggest exchange- traded fund backed by gold as prices posted the largest quarterly drop since 2008.
Soros Fund Management more than doubled its investment in the SPDR Gold Trust to 884,400 shares as of June 30, compared with three months earlier, a U.S. Securities and Exchange Commission filing for second-quarter holdings showed yesterday. Paulson & Co. increased its holdings by 26 percent to 21.8 million shares.
Australian reader Wesley Legrand sent me this story early on their Wednesday morning. It's posted on the businessweek.com Internet site...and it's certainly worth skimming. The link is here.
Bayfield Ventures Corp. (TSX.V: BYV) is exploring for gold and silver in the Rainy River District of NW Ontario. The Company’s 100% owned “Burns” Block property adjoins the immediate east of Rainy River Resources’ (TSX.V: RR) world-class gold deposit which includes an indicated resource of 5.72 million ounces of gold, averaging 1.18 g/t, in addition to an inferred resource of 2.25 million ounces of gold, averaging 0.79 g/t. Drilling to date on Bayfield’s Burns Block demonstrates that the ODM17gold zone extends from Rainy River Resources' ground onto the Burns Block. Bayfield is currently carrying out 100,000 metres of diamond drilling on its Rainy River properties. Drill results thus far have been very encouraging. Notable drill results include 60.05 grams per tonne gold and 362.96 grams per tonne silver over 11.2 metres within 26.70 grams per tonne gold and 170.69 grams per tonne silver over 25.5 metres, as well as 35.93 grams per tonne gold and 359.65 grams per tonne silver over 10.0 metres. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. Please visit our website to learn more about the company and request information.
There are no markets anymore...only interventions. - Chris Powell, GATA
Well, with gold closing just below the $1,600 spot price mark...and also breaking below, but closing just above, its 50-day moving average...you have to wonder what's coming next. As I said in the first paragraph of this column, the 8:30 a.m. Eastern time engineered sell-off was about as blatant an act as your likely to see...until the next one.
Here's the 6-month gold chart...
(Click on image to enlarge)
Exactly the same thing could be said about silver as well...and here's the 6-month chart for that...
(Click on image to enlarge)
Could this be the start of the sell-off that I mentioned in yesterday's column? I don't have an answer for that yet, but I doubt very much if JPMorgan et al will leave us in suspense for long.
Yesterday at 1:30 p.m. Eastern time, was the cut-off for Friday's Commitment of Traders Report...and all the volume data from yesterday morning's price 'action' should be in that report when it comes out. The last couple of the times that 'da boyz' have smashed the price to the downside, they did it the day after the cut-off for the COT report...and that would be today.
As has been the case for the last while, there was no price action worth mentioning during Far East trading...and volumes were vanishingly small once again. The dollar index is unchanged.
But very shortly before the London open, both gold and silver developed a negative bias...and at 9:00 a.m. BST, the bid vanished...and the prices of both metals dropped like a stone. At this moment, it's 9:03 a.m. in London...4:03 a.m. Eastern time...so this is happening in real time as I write this paragraph. Here are the updated charts for both silver and gold as of 4:09 a.m. Eastern.
If 'da boyz' follow the standard plan, the low will be in at such a point in time that nobody in North America will be able to trade it in any significant way. Everyone on this side of the Atlantic will wake up and find the deed already done...and we'll all be looking at the event in the rear view mirror.
It now boils down to how low this 'correction' will go...and over what time period it will occur. I believe I mentioned in this space yesterday that we could be looking at around $60 down in gold...and about a $1.50 in silver. I'll stand by those numbers...and if I'm out, it won't be by much. And whatever ultimate lows are painted, it won't last long...and is another opportunity to buy the physical metal itself.
If you're so inclined, dear reader, the most famous of all gold conferences in North America is coming up later this year...and that's the annual wiener roast in New Orleans...the New Orleans Investment Conference...which runs from October 24-27, 2012. I've attended it many times...and it's always a hoot. New Orleans is a very interesting city as well...and this boy from Canada hasn't got tired of it yet. If you have any interest, you can find out more by clicking here.
As I hit the 'send' button at 5:20 a.m. Eastern time, I must admit that I await the Comex trading session with more than the usual amount of interest...and it will be interesting to see if First Majestic's futures contracts make it through today's trading session.
See you on Thursday.