It was pretty quiet in the gold world yesterday. The day's high came at the London a.m. gold fix at 10:30 a.m. GMT...or 5:30 a.m. Eastern time.
The tiny rally attempt at the Comex open ran into the obligatory sell-off at 9:30 a.m....the open of the U.S. equity markets...and the low of the day [$1,691.30 spot] came minutes after 10:30 in New York trading.
From that low, gold gained back about fourteen bucks before surrendering a bit of that rally's gain going into the close of electronic trading at 5:15 p.m. Eastern. Gold finished a hair over $1,700 at $1,700.80 spot...down $12.70 from Friday's close. Gross volume was 202,000 contracts, but the net volume was only half of that by the time all the roll-overs out of the April contract were subtracted out.
Silver's price action, as every commentary just relishes pointing out every opportunity they get, was more 'volatile'. When I use the word 'volatile' in that form, it's an euphemism for 'more rigged'.
Silver was under pressure right from the open in New York on Sunday night...and hit its Far East low just minutes before 2:00 p.m. Hong Kong time. The subsequent rally took silver to its high of the day which came at precisely 10:30 a.m. in London...the a.m. gold fix.
That rally ended the same way as the next two rallies [both in New York] ended... each getting sold down to lower lows on the day. The absolute low [$33.28 spot] came about two minutes before the 1:30 p.m. Comex close.
After that, silver made a decent attempt at a rally, but was never allowed to get very far. Silver closed at $33.61 spot...down 71 cents on the day. Net volume was pretty light at around 31,000 contracts...and would have been substantially less than half of that if the high-frequency traders' volumes were removed. Of course, the price would have ended up on the day if they hadn't been around. That's why they're there.
The dollar index didn't do much of anything on Monday...hitting its zenith [such as it was] of 80.12 just minutes before 2:00 p.m. Hong Kong time. Then it slid slowly in fits and starts to its low of the day [such as it was] of 79.84 spot just below the close of trading in New York yesterday afternoon. I doubt very much that the dollar index had any effect on gold and silver prices.
The gold stocks made a serious attempt to break into positive territory during the first ten minutes of trading in New York...but got sold off almost two percentage points by the time gold hit its New York low just minutest after 10:30 a.m. Eastern. Even though the gold price recovered from there, it made little difference to the shares, as they flat-lined for the rest of the day...although the shares did not quite finish on their lows of the day...and the HUI nudged back above the 500 mark at 501.07...down 1.74%.
With silver down 71 cents, the silver stocks got hit as well...and Nick Laird's Silver Sentiment Index closed down 2.60%.
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The CME Daily Delivery Report was pretty quiet, as only 13 gold and 9 silver contracts were posted for delivery tomorrow.
There were not reported changes in GLD yesterday...but an authorized participant withdrew 339,987 troy ounces of silver from SLV yesterday.
One thing that I forgot to mention in my Saturday column were the changes in short interest in both GLD and SLV. For the third report in a row, they both showed declines. GLD's short position declined 8.76%...from 11.09 shares to 10.12 million shares held short.
SLV's short position declined 16.05%...from 12.55 million shares/ounces down to 10.53 million shares/ounces. Ted Butler was a happy camper.
The U.S. Mint had another sales report yesterday. They sold 2,000 ounces of gold eagles...and 320,000 silver eagles.
The Comex-approved depositories reported that no silver was added on Friday, but 620,117 troy ounces of silver were withdrawn...all of it out of Scotia Mocatta. The link to that is here.
Silver analyst Ted Butler had a few things to say about SLV short selling in his weekend commentary to his paying subscribers. Here are three paragraphs that I've borrowed on this...
"You know I've made this SLV short selling as big a deal as possible...and that I am eternally grateful to those of you who took the time to write to SLV’s sponsor, BlackRock, to pressure them to help reduce the short position. I’ve also discussed previously the threatening letter that I received from BlackRock’s attorneys back in December and how a subscriber (a European money manager) told me at the time how he felt that was good and how it would work towards reducing the short position. What I didn’t tell you about was a brilliant suggestion he made at that time. His suggestion was so brilliant that I felt embarrassed that I wasn’t smart enough to think of it on my own. At least, I was smart enough to instantly recognize it as being brilliant. I used his idea in my response to BlackRock’s lawyers and I firmly believe it may have been the deciding factor behind the dramatic subsequent decline in the short position of SLV (and GLD)."
"Regular readers should know that I am very sensitive about my work being plagiarized by others...and I am also sensitive that I not do that to anyone else. My friend wishes to remain anonymous, so I won’t release his name, but I can reveal his observation. He pointed out that the short selling in shares of SLV; in addition to creating shares being issued on an unauthorized basis and resulting in shares not backed by actual metal as required by the prospectus, resulted in something else as well. Any shorted shares would also result in shares being issued in which BlackRock wouldn’t collect a management fee (0.5% annually)."
"So not only were the shorted shares fraudulent to SLV holders...like my wife...and manipulative to the price of silver; these same shorted shares were depriving BlackRock and its shareholders of income, which I calculated at $5 million for 2011. By cracking down on the shorted shares, BlackRock would be hitting three birds with one stone and, to boot, be doing the right thing as well. That BlackRock and its attorneys saw the wisdom of this and reacted accordingly (by moving to get the short position reduced) is what I think came about. Certainly, the timeline more than supports my conviction. As I said, this was a brilliant suggestion for which silver investors everywhere owe this anonymous money manager a nod of appreciation."
Here's a chart courtesy of John Williams over at shadowstats.com that West Virginia reader Elliot Simon sent my way yesterday. It appears that the only credit expansion going on in the economy is in student loans.
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Reader Scott Pluschau mentioned the potential double bottom pricing pattern on gold on the daily chart...and he put out a post on it. As Scott says, it's not bullish until the neckline breaks. If you would like to read about it, the link is here.
Since it's Tuesday, I have more stories that I care to admit. I hope you have time to at least read the 'cut and paste' from each one.
Back in 2009 and 2010, TrimTabs Charles Biderman made waves for being the first person on prime time financial TV to tell it how it is, namely that the Fed is indirectly and directly affecting asset prices.
Then he was ostracized.
Now, it is not only a given that the Fed does everything in its power to hike stock prices, but is in fact welcome. Indeed, none other than Bob Pisani made point of highlighting that between central bank intervention and kicking the can down the road, the status quo has managed to restore credibility in the system.
This 4:29 minute video is posted over at zerohedge.com...and I borrowed it from a GATA release on Saturday. It's a must watch...and the link is here.
I used to be one of your biggest fans. Back when I was 17 years old working at a Salomon Smith Barney branch in Ft. Lauderdale, you were fired from Citigroup when everyone had you pegged as the heir to Sandy Weill’s burgeoning empire. Everyone at the branch was shocked, as we all knew you by reputation as a brilliant CEO-in-the-making, and frankly, most of us were disappointed as we genuinely were all looking forward to working under your leadership one day.
Then, the MF Global bankruptcy happened. And, I became aware of your bank’s involvement with the firm’s collapse. How the New York Times reports that JPMorgan received 325M in segregated customer funds despite the fact that JPMorgan Chase was a primary custodian for them. Then, JPMorgan Chase reportedly failed to return the funds when MF Global reported that they erroneously transferred customer assets and went a step further into “CYA” mode by requesting a comfort letter indicating that JPMorgan Chase had not received customer funds. JPMorgan Chase reportedly did not receive this letter, yet still, it kept customers’ property.
Through my role as the co-founder of the Commodity Customer Coalition and pro bono counsel for some 8,000+ customers whose property it looks like your institution may be holding without their consent, I have loudly advocated for JPMorgan Chase to return this property. In response to this, rather than doing the right thing, you closed all of my personal and corporate bank accounts and my personal credit card. I have been told by multiple members of the media that JPMorgan Chase has called them and stated that if their media outlet has me on television again, that JPMorgan Chase will pull their advertising from the offending network.
The name 'great vampire squid' would equally apply to JPMorgan as well as Goldman Sachs. As you can see, they are crooks on multiple fronts. Reader U.D. sent me this longish zerohedge.com piece on Sunday...and it's worth running through if you have the time. The link is here.
A few days ago we noted that based on preliminary data, the February budget deficit would hit $229 billion (yes, nearly one quarter of a trillion in one month, about where real Greek GDP is these days) - the largest single monthly deficit in history. Unfortunately, this number was low: the final February deficit was just released and the actual print is $231.7 billion. It also means that in the first 5 months of the fiscal year, the US has raked up $580 billion in deficits.
This very short zerohedge.com piece contains two very excellent charts...and for that reason alone it's worth checking out. I thank reader Bob Fitzwilson for sharing this story with us...and the link is here.
It was not a good week for New York's cities and counties.
On Monday, Rockland County sent a delegation to Albany to ask for the authority to close its widening budget deficit by issuing bonds backed by a sales tax increase.
On Tuesday, Suffolk County, one of the largest counties outside New York City, projected a $530 million deficit over a three-year period and declared a financial emergency. Its Long Island neighbor, Nassau County, is already so troubled that a state oversight board seized control of its finances last year.
And the city of Yonkers said its finances were in such dire straits that it had drafted Richard Ravitch, the former lieutenant governor, to help chart a way out.
This story, out of the Saturday edition of The New York Times, was sent to me by reader Phil Barlett...and the link is here.
A New York Sun editorial yesterday echoed the point often made by GoldMoney's James Turk -- that gasoline isn't going up in price, but rather the dollar is going down in value, and that the relevant policy isn't energy policy, but monetary policy.
This is another item I lifted from a GATA release yesterday...and I thank Chris Powell for wordsmithing the above introductory paragraph...and the nysun.com link is here.
Robert Rubin, who as U.S. Treasury secretary in the 1990s promoted a stronger dollar, said he has too much of his personal investments in the currency.
A "disproportionate amount" of his assets is in cash and he "should be more allocated away from the dollar," Rubin, 73, said yesterday in a speech at the TradeTech conference in New York. He said he also was "greatly over-weighed" in private equity and had investments in hedge funds.
What goes around...comes around. This Bloomberg story from last Friday was another one that I extracted from a GATA release...and the link is here.
A couple of weeks ago, I sat on the speakers' podium during the opening panel of the Euromoney Bond Investors' Congress in London. Together with leading industry experts, including senior ratings agencies' officials, we engaged in a detailed discussion of the contentious aspects of the Greek debt debacle and the fate of the eurozone.
The audience was "top drawer; the room packed with 500 of the world's biggest bond market participants; the combined assets under management measured in the trillions of dollars.
"Who thinks the upcoming Greek bail-out will be the last, drawing a line under the eurozone's sovereign debt crisis?" asked the senior Euromoney staffer chairing the panel. "Put your hands up".
Not a single hand was raised. Not a single hand among hundreds of the world's leading bond market practitioners was stirred to support a debt swap now presented as the key to the world economy shaking off the post sub-prime torpor and taking us into the sun-lit uplands of sustainable global growth.
This story was posted in The Telegraph last evening...and is Roy Stephens first offering of the day. The link is here.
The good news is Greece won’t default on March 20, and 10-year borrowing costs for Spain and Italy have dropped below 5 percent. The bad news is similar- maturity Portuguese bonds still yield more than 13 percent.
Last week, Greece pushed through the biggest sovereign restructuring in history, with private holders forgiving more than 100 billion euros ($131 billion) of debt, a condition for the nation to win the bailout it needs to repay 14.5 billion euros of debt coming due next week.
“The ECB liquidity is life support,” said Robin Marshall, director of fixed income in London at Smith & Williamson Investment Management, which oversees about $18 billion. “They’ve bought time but they must use the time to implement proper reform. It’s hard to see there not being more defaults, more private sector involvement. It makes it more likely we’re going to get another market rout later in the year.”
This Bloomberg story was filed from London early Monday morning...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
The first instinct of any card-carrying Eurocrat is to reach for his wallet, or as clear-thinking MEP Daniel Hannan points out, someone else's wallet. His prophetic words with regard the bailout-and-borrow bandwagon, that Europe remains on, running out of track are so critical that they bear repeating as he remains incredulous that his fellow MEPs still see the one solution to a debt crisis as yet more debt...
This 1:02 minute youtube.com video is imbedded in this short zerohege.com piece...and I thank reader Phil Barlett for sending it along. It's worth 1:02 of your time...and the link is here.
The global liquidity cycle has already rolled over. Assuming that no fresh action is taken, world economic growth will peak within a couple of months and then fade in the second half of the year - with grim implications for Europe’s Latin bloc.
Data collected by Simon Ward at Henderson Global Investors shows that M1 money supply growth in the big G7 economies and leading E7 emerging powers buckled over the winter.
The gauge - known as six-month real narrow money - peaked at 5.1pc in November. It dropped to 3.6pc in January, and to 2.1pc in February.
This is comparable to falls seen in mid-2008 in the months leading up to the Great Recession, and which caught central banks so badly off guard.
“The speed of the drop-off is worrying. This acts with a six months lag time so we can expect global growth to peak in May. There may be a sharp slowdown in the second half,” said Mr Ward.
If so, this may come as a nasty surprise to equity markets betting that America has reached “escape velocity” at long last, that Europe will scrape by with nothing worse than a light recession, and that China is safely rebounding after touching bottom over of the winter.
The rest of this Ambrose Evans-Pritchard offering is a must read as well. This is another story from The Telegraph yesterday evening...and I thank Roy Stephens for bringing it to my attention. The link is here.
Nicolas Sarkozy received £42 million from Muammar Gaddafi in funding for his 2007 presidential election campaign, it was claimed on Monday.
The “terms” for handing over the money were agreed in a meeting between the two men in Libya two years before Mr. Sarkozy’s election, documents published by a French investigative website suggest.A memo obtained by the Mediapart site and handed to a judge alleges that the meeting on Oct 6, 2005 resulted in “campaign financing” of “NS [Nicolas Sarkozy]” being “totally paid”.
At the time Mr Sarkozy was France’s interior minister with well-documented ambitions to succeed Jacques Chirac. Political financing laws ban candidates from receiving cash payments above €7,500 (£6,300) but Mediapart claims that €50 million mentioned in the memo were laundered through bank accounts in Panama and Switzerland.
This story was filed in The Telegraph late last night as well...and I thank Australian reader Wesley Legrand for sharing it with us. The link is here.
Nicolas Sarkozy is unpopular because he has behaved more like an upstart than a president. He's trying to get re-elected, claiming to have changed, but it might be too late. The French people prefer his Socialist opponent François Hollande, who would bring change to France and upheaval to Europe.
Once again, Nicolas Sarkozy and his people are not on speaking terms. Visiting a huge construction site for a soccer stadium in Nice, he marches over the rubble in his dark-blue suit and dark-blue tie, feet spread wide apart in his strange, jerky gait. His face is waxen and wan. He appears tense.
Today Sarkozy is meeting young people whom state programs are meant to help find training and jobs, but they are of little interest to him and he makes no effort to hide that fact.
The President morosely asks them all the same question: "And where do you want to work in the future?" But he barely listens to their flustered answers and doesn't stand still for long. He looks like someone with other things on his mind
This 2-page essay was posted over at the German website spiegel.de yesterday...and I thank Roy Stephens for his second offering of the day. The link is here.
The first is headlined "Saudi Arabia reluctant to replace Iranian crude"....and the second is titled "High oil prices cushion Iran from sanctions". Both appeared in today's edition of the Tehran Times...and both are courtesy or reader Roy Stephens, for which I thank him.
CME Group Inc said its chief executive officer Craig Donohue will step down at year end, when his contract expires.
One would like to believe that the heat is on over at the CME about MF Global...and a lot of other things as well. Someone had to be the fall guy...and he was it. It would be a stretch to say that he was leaving voluntarily...and the only thing that I'm unhappy about is that he's not leaving sooner, like immediately.
This very short Reuters story was sent to me by Elliot Simon...and the link is here.
Taiwan's central bank governor says the bank has made a bonanza from gold purchases in 2008 but does not plan to buy more of what he calls a risky asset.
Governor Perng Fai-nan said Monday that Taiwan has a policy to diversify its foreign reserves that now stand at $394 billion and does not plan to reduce its U.S. Treasury holdings to buy more gold.
He said the bank purchased about 19,000 ounces of gold in 2008. Gold was trading at $1,705 on Monday, more than double the 2008 price.
Perng said Taiwan now has 13.6 million ounces in gold holdings. He said its total value accounts for 5.5 percent of the island's foreign reserves, higher than Japan's 3.2 percent and China's 1.7 percent.
This is another story from a GATA release yesterday. It's only four paragraphs...and you just read them. The link to the hard copy of this story was posted over at the cbsnews.com website yesterday...and the link is here.
This first is a Keith Barron blog headlined "Greek Situation Catastrophic, Expect More Black Swans". The second KWN blog is from John Hathaway. It's entitled "9 Key Points for the Gold and Silver Markets". The last two are audio interviews of blogs that I posted on either Friday or Saturday in this column. This first is with Caesar Bryan of the Gabelli Gold Fund...and the second is with Dr. Stephen Leeb.
A silver shekel in circulation at the time of a Jewish rebellion against their Roman masters nearly 2,000 years ago sold Friday in New York for $1.1 million, Heritage auction house said.
The sale was a record for a Judean coin, fetching four times as much as the previous top price.
Heritage said a California dealer bought the coin on behalf of an unidentified, private American collector. It was part of the Shoshana Collection of more than 2,200 ancient Judean coins, which the auction house hopes to sell for a total of $10 million.
The silver shekel dates to 66 AD when Jewish forces were rebelling against Roman rule. Only one other such coin is known to have survived.
Reader Sean McLaren sent me this story on Saturday. It's a short, but very interesting read...and it's posted over at the news.yahoo.com website...and the link is here.
Gold Resource Corp. is pleased to announce the scheduled launch of its innovative gold and silver dividend program. Gold Resource Corp. is a low-cost gold producer with operations in the southern state of Oaxaca, Mexico. The company has paid 20 consecutive monthly dividends since declaring commercial production totaling over $41 million returned to shareholders.
Gold Resource Corp. is scheduled to launch its gold and silver dividend program April 10. The default company dividend will continue to be in cash, but this unique option will give shareholders the ability to convert their cash dividends into physical gold and/or silver.
Shareholders may establish an "individual bullion account," whereby cash dividends are converted into Gold Resource Corp. "Double Eagle" 1-ounce .999-fine gold and/or 1-ounce .999-fine silver rounds.
Chris Powell posted this marketwatch.com story on the GATA website yesterday...and the link is here.
GoldMoney founder and GATA consultant James Turk was his calm old self yesterday, telling King World News that gold and silver will resume their uptrends imminently as the paper shorts give away again.
Yes, that may be true, dear reader...but always ask yourself this question as the rally proceeds: who is taking the short side of the long contract that's driving the price higher? If it's JPMorgan et al, the rally will end in the usual way...precisely as it did on February 29th. I thank Chris Powell for the intro...and the link to the KWN blog is here.
After the Netherlands, Switzerland, and Germany, maybe gold suspicion now has struck France, for the Banque de France has just granted a newspaper reporter, Le Figaro's Katia Clarens, a tour of its vast gold vault beneath the streets of Paris, where she discovered many bars of shiny yellow metal, some, perhaps, repatriated from the vault of the Federal Reserve Bank of New York almost a half century ago. (As all true Americans -- revolutionaries and anti-imperialists -- might say, just as was shouted in defiance by the denizens of Rick's Cafe Americain in December 1941: "Vive la France! Vive la democratie!")
Thanks to our friend J.S. and Google Translator for the attempt to put the Le Figaro story into English below. Clumsy as it is, it still may convey the point. But do check out the original story with its photos at the link under the byline. [They are nice eye candy. - Ed]
This GATA release from yesterday is well worth the read...and the link is here.
Now that even some gold fund managers and newsletter writers have started to get suspicious about surreptitious intervention in the gold market by central banks, maybe it's time to try again to get the support of mainstream gold and silver mining companies.
Yes, these companies are especially vulnerable if they start complaining about suppression of precious metals prices. Governments, the instigators of the price suppression, control mining licenses, royalty payment requirements, and enforcement of environmental regulations. And as mining is the most capital-intensive business, miners usually need financing by the biggest investment banks, the agents of central banks that implement the price suppression scheme.
So if you own shares of stock in precious metals mining companies or invest in the precious metals via a mutual fund, hedge fund, or other investment house, please write to their investor relations office and urge them to consider supporting GATA. You could tell them that GATA has pretty thoroughly exposed, documented, and litigated against the gold and silver price suppression schemes, that you've found GATA's work valuable, that we need and deserve financial assistance, that more information is available from me, and that we're happy to make presentations about our work.
This GATA piece contains an extensive preamble by GATA's secretary treasurer, Chris Powell and, in my opinion, is a must read. As I am a GATA board member myself, I sincerely echo everything that Chris has mentioned. The link is here.
GATA can't vouch for the data published in the latest edition of Alan M. Newman's financial letter, Crosscurrents, which argues that financial manipulation has become the main pursuit of the United States economy, but he is far from alone in his observations. Commentary about this trend arose around 20 years ago, perhaps first in The New Republic magazine.
Newman writes that dollar trading volume (presumably in U.S. markets) now is more than four times larger than the U.S. gross domestic product as well as four times larger than total stock market capitalization. "The churn continues at the most ferocious pace, making a mockery of our capital markets," Newman writes. "The theme of investing for the future is now meaningless as high-frequency trading distorts price discovery, resulting in gross pricing inefficiencies."
The Alan Newman letter, headlined "A Mockery of the Capital Markets" is linked in this GATA release...and Chris Powell's long, must read editorial is worth your while as well. It's posted over at the gata.org website...and the link is here.
Middle East War That Could Rocket Oil Past $220?
The secretive Pentagon and liberal White House wants this issue to go away. WHY? Because what I’m about to tell you could be lethal enough to at least DOUBLE the price of oil in 2012.
Being an intrinsically destabilizing force, financialization led to the global financial crisis of 2008. Central banks went into panic mode, printing and injecting trillions of dollars of new infectious material into the global economy in the hopes of sparking a new even grander cycle of financialization. But you can't create a new cycle of plague when the hosts are either dead or already infected. The world has run out of sectors that can be financialized; that plague has already killed or infected every corner of the global economy. - Charles Hugh Smith, 08 March 2012
Even though the gold price didn't do much yesterday, it still managed to finish above the $1,700 spot price level...but how long it stays there remains to be seen. Although James Turk seems to feel that much higher prices are imminent, I always remind myself that I was born in Missouri in another life...and I'll believe it when I see it.
And as I said in the introduction to Turk's KWN blog further up...the only thing you have to ask yourself on the next rally is...who is taking the short side of the trade? Nothing else matters. If it's 'da boyz'...the rally will end in the same old way.
From a technical point of view...and JPMorgan et al can paint a chart with the best of them...the price of both gold and silver are wavering above support, especially after Monday's price declines. They can also read a chart with the best of them...and if they decide to hammer silver and gold prices below their respective 50 and 200-day moving averages, there's not a hell of a lot anyone can [or will] do about it. We'll just have to wait it out and see how the rest of this month progresses.
April is a regular delivery month in gold...and if it suits them, we'll see lower prices going into month end.
As for silver, it still hasn't made it back above its 200-day moving average, so stay tuned.
Here are the 6-month charts for both metals. Prices could go either way...and I'd be delighted to be wrong.
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Today is the cut-off for this Friday's Commitment of Traders Report, so whatever happens today...to the upside or downside...will most certainly show up in it, if today's data is reported in a timely manner.
The gold price didn't do much in overnight trading...and what little gains there were in silver during the Far East session, had disappeared by the London open...and both metals are down a bit now that London has been open for a bit more than two hours. Gold volume is light...and silver volume is incredibly light, so I'm not about to read anything into what's going on price-wise at the moment. Volume will certainly pick up if we get some big price movements, either up or down.
The dollar index popped a hair around 8:20 a.m. in London...and I'm sure that's contributing to the minor declines in both metals and...like the volume numbers...I wouldn't read much into this dollar index 'rally' either. As I hit the 'send' button at 5:18 a.m. Eastern time, gold is down about four bucks...and silver is off about a dime.
That's all I have for today...and whatever's going to happen price-wise in the precious metals, should be know to us as the week progresses. Of course, I'm always rooting for 'up'...but always on the lookout for 'in your ear'.
See you on Wednesday.