In Far East and early London trading yesterday, both attempts by gold to break above the $1,790 spot price...and head for $1,800...got sold off immediately. By the time that the Comex opened in New York on Wednesday morning, the gold price was basically unchanged from Tuesday's close...and this state of affairs lasted until the London p.m. gold fix at 10:00 a.m. Eastern time...3:00 p.m. in London.
Then the hammer fell, as the engineered price smash began. Sell stops were hit at various strike prices...and 'da boyz' pulled their bids along the way. This happened at five separate times. The last of those engineered price declines came at 3:30 p.m. Eastern in the very thinly traded New York Access Market, which took out the leveraged longs at the $1,700 strike price.
The gold price pretty much traded sideways from there. Gold closed at $1,696.70 spot...down a whopping $87.20 on the day. Net volume was off the charts at 320,000 contracts. Gold's intraday price swing in New York was an eye-watering $101.60.
But, as always, silver was the metal 'da boyz' were really after...and they got it good. The silver spent most of the Far East and London trading day a respectable amount above the $37.00 spot mark. Then, around 9:30 a.m. Eastern time, silver rallied about 50 cents right up until the London p.m. gold fix thirty minutes later...and the rest, as they say, is history.
Silver's intraday price move was $3.94...which works out to a decline of 10.7% from it's high of the day, which was $37.62 spot. In a 15-minute interval between about 11:16 a.m. and 11:31 a.m. in New York..the silver price 'fell' about $2.25 cents...as the sell stops got hit...and the Commercial traders collusively pulled their bids.
Silver closed at $34.60 spot...down $2.29 from Tuesday's close. Net volume was a hair over 100,000 contracts...about the biggest one day volume number that I can remember.
Of course both platinum and palladium got it in the neck as well, but they were spared the big losses. Platinum was down 2.33%...and palladium was down 2.50%. As a comparison, Kitco showed gold down 4.89%...and silver down 6.20%. Copper traded over a wide range...but finished the day only down 3 cents a pound. Crude oil finished a up a hair.
You pretty much have to be brain dead not to see that this engineered price decline was precious metals specific...and deliberate.
The dollar index continued its decline up until 1:00 p.m. Hong Kong time in their afternoon yesterday, but by around 11:40 a.m. in London, the index rallied a bit, only to roll over and retest the Hong Kong low at 9:45 a.m. in New York...which was about 15 minutes before JPMorgan et al pulled the plug on the precious metals.
From that New York low, the dollar index went on a 75 basis point rally that ended at precisely 3:30 p.m. Eastern time. From that high, the index sold off a hair and basically traded sideways into the close...gaining about 55 basis points on the day.
That 3:30 p.m. high tick proved to the beginning of the last take-down in the gold and silver prices during the New York Access Market...and it nearly goes without saying that such a minor rise in the dollar index certainly didn't account for much of the intraday move in the precious metals in New York yesterday.
Of course the gold stocks got hit...with virtually all the day's losses coming by 11:45 a.m. Eastern time. Then, from that point on, no matter how poorly the gold price itself performed, the stocks basically moved sideways from there. One has to wonder who was scooping up those shares during the rest of the trading day. The HUI finished about a percent off its low...down 3.41% on the day. It could have been worse.
The silver shares got hit pretty hard as well but, like the gold stocks, it could have been worse. Nick Laird's Silver Sentiment Index closed down 4.34%...erasing all of Tuesday's gains...and that was all. As I said, it could have been worse...much worse.
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The CME's Daily Delivery Report for the second day of the March delivery month showed that 81 gold and 247 silver contracts were posted for delivery on Friday. In silver, the big short/issuer was Barclays with 235 contracts issued. The biggest long/stopper was Goldman Sachs with 110 contracts. The rest of the 'usual suspects' were present, but not in a big way. The link to yesterday's Issuers and Stoppers Report is here.
Despite the blood in the streets in gold and silver yesterday, both ETFs had metal added to their respective stockpiles. In GLD it was a very chunky 291,500 ounce of gold...and in SLV it was 777,235 troy ounces. I'll be watching with great interest to see how much metal is removed from both these ETFs after yesterday's price shenanigans.
There was a tiny sales report from the U.S. Mint to end the month of February. They sold 1,000 ounces of gold eagles...and 30,000 silver eagles. For the month of February, the mint reported selling 21,000 ounces of gold eagles...7,000 one-ounce 24K gold buffaloes...and 1,490,000 silver eagles. All in all, not a very impressive performance when measured against January.
It was a pretty quiet day over at the Comex-approved depositories on Tuesday, as they received 375,616 troy ounces of silver...and shipped a very tiny 9,978 ounce out the door. The link to that action is here.
Silver analyst Ted Butler had his mid-week commentary to his paying subscribers yesterday...and here are two free paragraphs containing his thoughts on Wednesday's price action.
"Exactly when the crooks will strike is always an open question. Sometimes, it’s on a Sunday evening when no one is around, other times it’s in broad daylight with an attempted cover story of comments from a Fed chairman. It doesn’t matter, as it’s always the same at the core – an artificial market move caused by a concentrated short position and a collusive group of speculators (called commercials) waiting like jackals to pounce by surprise."
"Also as always, the COT structure analysis explains in advance these big price drops. I am not suggesting, for an instant, that the COT structure predicted today’s smash, but it certainly explained it. The few comments I have received so far on this drop suggest to me that more see the reason for this smash than ever before. And while I don’t intend to get into the short term price prediction business, I find the very heavy volume in gold and silver today as healthy and suggestive that many recent participants to the long side were quick to sell and run. The fear of getting caught in a ten dollar price smash [in silver] is still vivid in many minds, as the memories of 2011 still loom large. Of course, if many sell quickly, then subsequent selling pressure will abate."
Washington state reader S.A. sent me the graph below, which he obviously lifted from an article at zerohedge.com.
I have the usual number of stories, so I hope you have time to plough through them.
The signs of better times are easy to spot downtown: the picturesque marina on the San Joaquin Delta, the gleaming waterfront sports arena, and the handsome high-rise that was meant to house a new city hall. But those symbols are now bitter reminders of how bad things are here today: on Tuesday this city of almost 300,000 moved a step closer to becoming the nation’s largest city to declare bankruptcy.
During a contentious meeting that stretched late into the night, the City Council decided, nearly unanimously, to begin mediation with public employee unions and major bond creditors in what is widely seen as the city’s last-ditch attempt to restructure its finances outside of bankruptcy. Facing a budget deficit from $20 million to $38 million on a budget of roughly $165 million, the Council declared a fiscal emergency for the third year in a row.
This story appeared in The New York Times yesterday...and I thank reader Phil Barlett for sending it. The link is here.
Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.
Bookings for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey.
Last month’s decrease in capital goods orders extends a pattern of declines early in a quarter that are typically reversed later. Demand for non-military capital goods like computers, engines and communications gear have dropped in the first month of a quarter in all but three instances since the end of 2005.
This Bloomberg story from Tuesday was something I plucked from yesterday's King Report...and the link is here.
Home prices fell in December for a fourth straight month in most major U.S. cities, as modest sales gains in the depressed housing market have yet to lift prices.
The Standard & Poor's/Case-Shiller home-price index shows prices dropped in December from November in 18 of the 20 cities tracked. The steepest declines were in Atlanta, Chicago and Detroit. Miami and Phoenix were the only cities to show an increase.
Nationwide, prices have fallen 34 percent since the housing bust, and are now back to 2002 levels. A gauge of quarterly national prices, which covers 70 percent of U.S. homes, fell to its lowest point on records dating back to 1987 after being adjusted for inflation.
Back in January of 2007 I said that we probably wouldn't see the bottom of the U.S. real estate market until sometime in 2013. We'll see how close I am. This AP story was picked up by the finance.yahoo.com website yesterday...and is the second story in a row that I 'borrowed' from the King Report...and the link is here.
Amongst young adults (18-24) in the US, the employment rate is just barely above half, or 54%, which just happens to be the lowest in sixty-four years, and 7% worse than when Obama took office promising a whole lot of change three years ago.
This zerohedge.com story was sent to me by Washington state reader S.A...and the link is here.
The Justice Department is conducting a criminal probe into whether the world's biggest banks manipulated a global benchmark rate that is at the heart of a wide range of loans and derivatives, from trillions of dollars of mortgages and bonds to interest rate swaps, a person familiar with the matter said.
While the Justice Department's inquiry into the setting of the London interbank offered rate, or Libor, was known, the criminal aspect of the probe was not.
A criminal inquiry underscores the serious nature of a worldwide investigation that includes regulators and law-enforcement agencies in the United States, Japan, Canada and the UK.
This story was posted on the Reuters website on Tuesday evening...and I found it in a GATA dispatch last night. The link is here.
The financial crisis has left the five biggest banks even more powerful than before, he said at an event in Mexico City.
"After the crisis, the five largest banks had a higher concentration of deposits than they did before the crisis," he said. "I am of the belief personally that the power of the five largest banks is too concentrated."
"The purpose of Dodd-Frank was to reduce the concentration of power and we have a term called 'too big to fail'... perversely, these banks are now even bigger, they are too 'bigger' to fail than before."
This story was posted over at the cnbc.com website yesterday afternoon...and I thank West Virginia reader Elliot Simon for sharing it with us. The link is here.
Zero Hedge's pseudonymous Tyler Durden yesterday noted the purchase by the Federal Reserve Bank of New York of the Wall Street building from which the Fed conducts its surreptitious market interventions.
This GATA release from yesterday contains two zerohedge.com links on this issue...and both are must reads. The link is here.
A ruling by the country's highest court has given the German parliament more authority in handling the euro crisis -- but the decision is potentially a blow to Chancellor Angela Merkel's ability to tackle the continent's debt problems.
On Tuesday, the Federal Constitutional Court ruled that a secret nine-member committee meant to fast-track approval for euro zone bailout funds was, "in large part," unconstitutional. The special committee was formed last year to allow for a quick approval of aid in urgent situations when a vote by the full 620-seat parliament, the Bundestag, would be too cumbersome.
But the panel was suspended by the high court in October, following a complaint by two members of the opposition center-left Social Democrats (SPD), who argued that parliament's powers were being weakened. The court was concerned that the parliament's right to maintain oversight of the country's budget was being sidestepped, since large disbursements of money have been necessary for the bailout of stricken euro-zone countries.
This story appeared on the German website spiegel.de yesterday...and I thank Roy Stephens for digging it up on our behalf. The link is here.
Mario Draghi’s latest half-trillion blast of credit averts a funding crunch for crippled banks and crippled EMU states, but raises the ultimate cost to catastrophic levels if the underlying crisis in southern Europe drags on into the middle of the decade.
Some 800 banks took up €529.5bn of loans at Mr Draghi’s second long-term refinancing operation (LTRO) on Wednesday, borrowing at 1pc for three years with almost any form of collateral. Citigroup said this amounts to €316bn of fresh liquidity, stripping out renewal of old loans. This compares with €200bn in extra stimulus at the first LTRO in December.
"It helps enormously that banks have time to recover. Cheap loans will boost M3 money growth and drive a wider economic recovery this year. Needless to say, the Draghi Bazooka doesn’t solve the external imbalances in the Club Med countries. They will still have to go through internal devaluations, and the question is whether they can endure the agony," said Professor Tim Congdon from International Monetary Research.
This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk website early yesterday evening...and is worth running through. I thank Roy Stephens once again...and the link is here.
This first blog is by Jean-Marie Eveillard...and it's entitled "Desperate Central Banks Intervene in the Gold Market". The second blog with John Embry is headlined "Gold and Silver Smash Temporary, Oil to Super-Spike". The next KWN item is an interview with Rick Rule. I posted the blog on that the other day...and the link to the audio interview is here.
Platinum is luring jewelers away from gold after investors pushed up bullion prices to records escaping market turmoil.
Platinum jewelry’s appeal is spreading, driven by China, which accounts for about 68 percent of consumption. In India, the world’s biggest market for gold ornaments, the grayish-white metal’s popularity is gaining among young women, with the switch partly explained by the surge in gold prices, Platinum Guild International country manager Vaishali Banerjee said in Mumbai.
“All retailers are reporting a strong uptake” in India, Banerjee said. “2012 will be a stronger year for platinum.”
This Bloomberg story was sent to me by reader Scott Pluschau yesterday...and the link is here.
In an interview with King World News last night, market analyst and mining entrepreneur Jim Sinclair details the intervention against gold undertaken by central banks today.
Sinclair says: "Today does qualify as one of the biggest injections of liquidity into the system in the history of the system. Today was a cover-up by the Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred."
The link to the KWN interview is here.
GATA's Chris Powell provides today's last commentary. In an extensive editorial, with several imbedded links, Powell puts Ron Paul's feet to the fire...asking him why he doesn't ask Bernanke the really hard questions that Paul knows should be asked.
This is a must read from one end to the other, as are all the links. You can find this story posted at the gata.org website...and the link is here.
North American Nickel’s latest news from our 100% owned Post Creek property in the Sudbury mining camp is what geologists always hope for….a large, clearly defined, un-tested target close to surface in a known camp with excellent infrastructure advantages for mining. Drilling is scheduled to begin in September. In this case it’s an EM anomaly 200 m long, that has been interpreted as the electromagnetic signature of ‘near-massive to massive sulphide.’ It’s located approximately 55 m below surface and the trend of the anomaly corresponds, in part, to both the CJ#1 dyke and the Whistle Offset Structure to the south. Please visit our website to read the full news release and learn more about North American Nickel.
The pessimist sees the glass as half empty; the optimist sees the glass as half full; the outsourcing consultant will tell you that you have 50% too much glass. - Author Unknown
Well, yesterday was the 2012 version of the 2011 drive-by shootings that we've already lived through. I must admit that I was taken aback by the severity of it...and in broad daylight as well...none of this sneaking around in the thinly-traded Far East markets on a Sunday night this time around.
It also happened on the last day of the month...and the day after the cut-off for Friday's Commitment of Traders Report...AND Ben Bernanke was speaking. Without doubt, this was the perfect set up to do the dirty...and I should have seen it coming. Actually, I did see it coming...and said so yesterday...but wasn't expecting it the very same day.
In one fell swoop the bullion banks and their buddies in the Commercial category took away all of February's gains in both gold and silver...plus more. It was the perfect crime, as the CFTC and CME will do nothing about it...and neither will the management and board of directors of any of the precious metal mining companies which we supposedly own. It's worse than a bad dream...it's a nightmare. The very organizations that are supposed to be looking out for the public and shareholders' best interests will pretend like nothing has happened...including everyone's good friend, Bart Chilton.
The big question is, will there be more to come? As you can see from the gold and silver charts posted below, JPMorgan et al came close to taking out all the significant moving averages in one go yesterday. Here's gold's 6-month chart.
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For 'da boyz' to engineer a further price decline of $50 or so...and take out both the 50 and 200-day moving averages with some authority...is child's play after what they did yesterday.
Here's the silver chart.
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As you can see, JPMorgan et al would have a bit of work to do to drop the price below its 50-day moving average...but if you look at the price action of those three days late in September on the left of this chart, you can see what they can do when they put their minds to it...and have no one standing in their way.
There's also a reasonable chance that the huge sell off that they engineered yesterday may have been all they needed to clean out the weak longs that had entered the market since the late-December low. In my daily chat with Ted Butler, he wasn't sure how much of the trading volume in both metals was of the HFT variety...and how much was real tech fund long liquidation.
We won't have a clue about that until next Friday's Commitment of Traders Report, because as I said earlier, they pulled this off the day after the cut-off for tomorrow's report. These crooks are smart...and as I've pointed out ad nauseam, they've used this trick to their advantage many times over the last ten years or so. We'll just have to wait it out.
In Far East trading on Thursday, both gold and silver rallied until 1:00 p.m. Hong Kong time...midnight in New York...and then both got sold off going into the London open. As of 5:18 a.m. Eastern time, gold is up about twenty-one bucks...and silver about 20 cents. Volume is absolutely monstrous in gold...north of 60,000 contract [net] already...and silver's net volume is already over 9,000 contracts. The dollar is down a hair from yesterday's close in New York.
That's all I have for today. It will be interesting to see what JPMorgan et al have in store for us during the New York trading session today.
Enjoy your Thursday...Friday west of the International Date Line...and I'll see you tomorrow.