The gold price got sold off about sixteen bucks during the first two hours of trading in the Sunday night electronic market in North America.
Once gold began to trade in the Far East in their Monday morning, a smallish rally began that took it back to just about unchanged. From there, it began a slow decline...and by the time that the Comex opened in New York at 8:20 a.m. Eastern time, gold was down a bit more than $10 from its Friday afternoon close.
Then a rally began that continued almost unabated for the rest of the New York trading day...both Comex and electronic...and gold finished on its absolute high of the day, which was up $19.90 spot from Friday. Volume was light.
Silver's price action was pretty directionless throughout most of Monday...and only showed signs of life in the New York Access Market once Comex trading was done at 1:30 p.m. Eastern.
The silver price almost closed above the $40 mark...but just couldn't quite make it...but did finish up 85 cents on the day. Volume was extremely light...with the emphasis on extremely.
The dollar vacillated between 74.60 and 74.40 up until shortly after 6:00 a.m. Eastern time...and then fell about 80 basis points in less than four and a half hours. The bottom was in just before 10:30 a.m. in New York...and closed just off its low.
Once again, there was no sign of this dollar decline in the gold or silver price. As I've said before, the price of the precious metals has basically decoupled from the dollar...and is acting as a currency in its own right.
With gold down a bit at the opening of the equity markets at 9:30 a.m. Eastern, it was no surprise that the gold and silver equities started the day in negative territory. But that didn't last long. Most of the gold stock's gains came by 2:15 p.m. Eastern time...and then traded sideways from there. The HUI finished up a very respectable 2.82%.
Virtually all the silver stocks finished well into the plus column yesterday...and that's certainly reflected in Nick Laird's Silver Sentiment Index, which was up a chunky 4.16%
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The CME's Daily Delivery Report showed that 50 gold, along with 52 silver contracts, were posted for delivery tomorrow. The surprise in silver was that the issuer/short seller was all Jefferies once again. That's 202 silver contracts they've had to deliver in the last two business days...and that's a hair over a million ounces. And, as always, it should come as no surprise that the Bank of Nova Scotia and JPMorgan were the two biggest receivers/stoppers once again.
There were no reported changes either in GLD or SLV yesterday.
After reporting no sales on Friday, the U.S. Mint had a pretty decent sales report on Monday. They sold a whopping 20,500 ounces of gold eagles...along with 4,000 one-ounce 24K gold buffaloes...and 640,500 silver eagles.
Month-to-date totals are as follows: 76,000 ounces of gold eagles...14,000 one-ounce 24K gold buffaloes...and 1,959,500 silver eagles. Gold eagle/buffalo sales in August so far, have far exceeded all of July's sales...and it's only the 15th of the month. I sure do hope you're getting your share, dear reader.
The Comex-approved depositories reported receiving 595,006 troy ounces of silver on Friday...and only shipped 972 ounces of the stuff out the door.
As I am wont to do, here are a couple of paragraphs that I stole from silver analyst Ted Butler's weekend commentary to his paying subscribers.
"In silver, there was also a massive reduction in the total commercial net short position of some 9,300 contracts, or the equivalent of 46.5 million ounces, one of the largest weekly reductions ever. The raptors (the smaller commercials apart from the big 4 and the 5 thru 8) accounted for 7,500 contracts of the total weekly reduction (80%), with the big 4 (read JPMorgan) responsible for 1,400 of the 9,300 total contracts bought back. Not that we were at bearish extremes in the silver COTs to start with, but this puts us squarely back into bullish territory. Based upon the extreme opposite movements between gold and silver prices in the reporting week, I am certain that a significant number of long silver/short gold leveraged spread trades were blown out, adding to the big decline in silver speculative long positions."
"Just like occurred in gold, the tech funds sold in silver as the commercials bought. But that is where the similarities end. Whereas gold experienced a stunning rally in the reporting week, silver had a sharp loss of more than $3. In gold, the commercials panicked as they bought back; in silver, it was business as usual in that the commercials rigged prices deliberately lower to induce speculative long liquidation. Here as well, there are important lessons for the regulators. In addition to the obvious collusive pattern of the commercials trading in unison, it is clear that the silver raptors forced the silver market sharply lower through HFT and other dirty tricks for a highly visible purpose. Silver suddenly dropped $3 for a very specific reason – so that the raptors could get long silver, which they did by increasing their long position from 1,500 contracts to 9,000. It can’t be any clearer that the silver raptors collusively rigged the price artificially lower for the sole purpose of buying thousands of contracts. I’m trying hard not to insult the regulators for not seeing this, but it’s difficult not to."
Here's a nifty chart that Nick Laird over at sharelynx.com sent me on the weekend. It shows the percentage gains and losses of the Dow and S&P going back to the year 2000. Plotted against that, in all its magnificence, is the percentage gain in the gold price over the same period of time. Any questions concerning this chart...and its meaning or significance...should be forwarded to Jon Nadler at Kitco.
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In a similar [pardon the pun] vein here is the S&P vs. Gold chart starting from last September. This arrived in my in-box yesterday...and I thank Washington state reader S.A. for sharing it with us.
I remember four or five years ago when a story on gold came out so seldom that you could count them on the fingers of one hand in a one month period. They are now arriving in my in-box at that rate per hour!
That's the excuse I'm using for the boat load of stories that I have for you again today. I have come to dread my Tuesday column, because there are three days worth of stories to post. In the 'old days'...a gold story on the weekend was unheard of. Now it's commonplace.
So gird your loins, as everything that is listed under "Critical Reads" today is exactly that.
As this chart of the M2 measure of money supply shows, it has gone on to experience a gigantic surge in the past seven weeks. M2 has risen almost $420 billion since the week of June 13th, on average almost 60 billion per week. To put this in perspective, annual M2 growth has averaged about 6% per year since 1995, and growth at this rate would translate into about $10 billion per week. In other words, M2 normally would have grown by $10 billion a week, but instead has grown six times faster. M2 has never grown this fast in a seven week period for at least the past 50 years. No matter how you look at it, this is a major event.
This short blog, complete with an excellent graph, is posted over at scottgrannis.com...and I thank reader Bob Fitzwilson [who I had the great pleasure of meeting in person in London last weekend] for sending it along. The graph is worth the trip all by itself...and the link is here.
It's not often I get to post something by Carl Swenlin...who has been around since dirt. But reader U.D. sent me this short piece that was posted over at financialsense.com on Saturday.
Carl says that "Considering the rapid deterioration of both price and internals, I think that a continuation of the decline to much lower levels is probable. That is to say that we'll probably see support at pervious bear market lows tested before we'll see this year's highs exceeded."
That's a big 10-4 good buddy...and the link to this short read, which is headlined Percent Buy Index [PBI] Deeply Oversold, is here.
World Bank chief Robert Zoellick has said that investors have lost confidence in the economic leadership of several key countries, warning global markets were in a "new danger zone" as a result.
Zoellick said a convergence of events in the United States and Europe had rattled investors in countries already struggling to cap sovereign debt issues and unemployment...and I think that those events combined with some of the other fragilities... have pushed us into a new danger zone. And I don't say those words lightly."
This story was posted in the Sunday Telegraph...and I thank Roy Stephens for sending it to me. The link is here.
Here's a 14-minute therealnews.com video with everyone's favourite CFTC commissioner. It's worth the listen...and I thank reader Randall Reinwasser for sharing it with us...and the link is here.
German Chancellor Angela Merkel's coalition partners are threatening a withdrawal from government if she agrees to eurobonds or any form of fiscal union to prop up southern Europe.
The simmering revolt in the Bundestag makes it almost impossible for Mrs. Merkel to offer real concessions at Tuesday's emergency summit with French president Nicolas Sarkozy.
"We are categorical that the FDP-group will not vote for eurobonds. Everybody must understand that there is no working majority for this," said Frank Schäffler, the finance spokesman for the Free Democrats (FDP).
Well, with everyone at daggers drawn, it should be an interesting meeting. This story was posted late last night over at The Telegraph...and it's well worth the read. The link is here...and I thank Roy Stephens one more time.
In a SPIEGEL interview, German Finance Minister Wolfgang Schäuble talked about his opposition to euro bonds, the limits to European solidarity and the need for governments to reduce their debt burdens....
SPIEGEL: Mr. Schäuble, have you bought any gold yet?
Schäuble: My private financial situation is such that I don't need to worry about my investments. I don't have much to invest.
SPIEGEL: Many people are worried about their savings. They're losing their trust in their currencies and in their governments' crisis management, in the US as well as in Europe. The price of gold is rising as a result. Can you understand this mistrust?
And it goes straight down hill from there. This is another Roy Stephens offering from yesterday...and the link is here.
This Jim Rickards interview falls into the absolute must watch/listen category...and is imbedded in this GATA release. Chris Powell's preamble is also worth your time...and the link to all of this is here.
Raging gold prices are disrupting United States Mint gold coin sales. The bureau on Friday stopped selling commemorative gold coins just three days after a similar suspension was implemented throughout collector pieces, including the American Gold Eagles, American Gold Buffalo and each of the First Spouse Gold Coins. The suspensions came as melt values of the coins raced toward their retail prices.
"The United States Mint has suspended sales of commemorative gold coins for re-pricing," the bureau said in a statement. "Due to the current market volatility, we will be placing these coins on a ‘pricing grid’ similar to the structure we use to price American Eagle, American Buffalo and First Spouse gold coins. A new grid specific to these coins is being developed and will be posted when complete."
I thank reader 'Charleston Voice'...and the story is posted over at coinnews.net. The link is here.
Gold and silver sales on eBay had already been rising steadily over the past several years -- so much so that eBay Inc. created a special area in May to make it easier for buyers to find sellers.
Now, activity on that part of the site, the Bullion Center, is intensifying as consumers unnerved by the economic uncertainty flock to gold in hopes it will be a stable investment.
"When people are coming down to the question, `Do they want to have cash in the bank or gold in their hands?' the answer is they'd rather have gold or silver," said Jacob Chandler, CEO of Great Southern Coins, the largest seller of precious metals on eBay.
This AFP story was picked up by finance.yahoo.com on the weekend...and I thank reader Scott Pluschau for sending it to me. The link is here.
Here's a story from yesterday's edition of The Wall Street Journal that's headlined "SAC's Steve Cohen: Gold Bug?".
SAC Capital Advisors L.P., the hedge fund run by Steven Cohen, disclosed a new position in options on the gold exchange-traded fund, SPDR Gold Trust.
The investment, options that allow SAC Capital to buy shares of the gold ETF at a defined point in time, is valued at $628 million, the single largest value of equity positions disclosed by SAC Capital, according to the hedge fund's quarterly snapshot of its U.S. investment holdings.
Chris Powell's comment in this GATA release was as follows: Watch them expire worthless a day before gold's next explosion. The link is here.
Fresh from his appearance at GATA's Gold Rush 2011 conference in London, Hinde Capital CEO Ben Davies flew to Asia and ended up on CNBC Asia in Singapore, where he got a minute to explain to that part of the world the difference between paper gold and real metal and how demand for the latter is crushing the former.
I stole the introduction and the headline from a GATA release. The segment is a little less than four minutes long and you can watch it at the CNBC archive here.
Here's a Ben Davies double header. The preamble and title is also courtesy of Chris Powell.
Hinde Capital CEO Ben Davies, who spoke at GATA's London conference, was interviewed today on CNBC Europe about gold's likely reincorporation into the international monetary system. The recent sequential financial crises, Davies said, show a "huge dollar burden being passed around." Gold, he said, will be part of the reform of the dollar reserve system. The interview with Davies is eight minutes long and you can watch it at the CNBC archive here.
GoldMoney founder and GATA consultant James Turk, who spoke at GATA's Gold Rush 2011 conference in London last weekend, has been sticking his neck way out with price predictions all summer and seeing them come true. Today Turk does it again in an interview with King World News: Gold above $1,800 by the end of the month. Turk says he is "amazed" by the demand for real metal and thinks silver is about to play catch-up.
I just love it when Chris does my work for me...as he did here again.
In an audio interview yesterday with Eric King of King World News, geopolitical analyst James G. Rickards, who spoke at GATA's London conference, reviews President Nixon's severing of gold from the dollar in 1971...and speculates that gold will be officially revalued to $7,000.
Whenever Jim Rickards is talking, I'm listening. I had the privilege of having breakfast with Jim a week ago Sunday when we were both in London at the GATA conference...and he's one smart guy. The link to this must listen audio interview is here.
Here's a short article from yesterday's edition of The Wall Street Journal. For all you newbie gold bugs under the age of 60...this is an absolute must read...and for all us over that number, it's an excellent refresher.
The WSJ story is posted in the clear in this GATA release...and the link is here.
In the aftermath of World War II, international finances were tied to the US dollar, which was backed by gold. It was known as the Bretton Woods system and it helped stabilize the currencies of participating countries.
All in all, it worked quite well as growth increased throughout the world. Yet with President Johnson’s Great Society programs and the Vietnam War, the system started to fall apart as the US began to run deficits.
There was a growing fear that foreign central banks would have a run on gold. Since there was only a finite supply of gold — unlike dollars which could be printed to manage fiscal policy — there was significant concern. So it was on August 15th, 1971, that President Nixon radically changed the global monetary system by nixing the gold standard.
This story appeared in Forbes yesterday...and it's a short 2-page read which is well worth your time. As per usual, I thank Roy Stephens for sharing it with us...and the link is here.
Here's another story about the 40th anniversary of the death of the gold standard at the hands of Richard Nixon. This piece appeared in the Saturday edition of The Telegraph...and the link is here.
Gold has gone up for 12 straight years in a stealth market. In the last ten years gold has had a compound annual growth of 20.5%. This is an absolutely outstanding return but investors should not look at gold as an investment but as money. Gold reflects governments’ deceitful actions in totally destroying the value of paper money by printing unlimited amounts of it. With gold up 7 times since the bottom in 1999, is it too late to jump on the Gold Wagon?
The answer to the above question is a categorical NO.
I had the pleasure of meeting Egon at the GATA conference...and I'm more than happy to be able to post his latest offering in this column. It's a bit of a read...but very much worth your while. I thank reader Bob Fitzwilson for his second contribution to today's column...and the link is here.
Sprott Asset Management's chief investment strategist, John Embry, discussed gold, silver, currencies, remarks made at the conference by other speakers, and the gold and silver price suppression scheme.
I listened to this interview on the weekend...and it's well your time, if you have it. The interview is 26 minutes long and you can watch it at the GoldMoney Internet site here.
Is Obama Terrified of the “Secret $200 Retirement Blueprint?”
If you’ve already retired, or want to retire soon, I urge you to watch this video presentation before we have to pull it down.
This “Secret $200 Retirement Blueprint” shows you step-by-step how to grow a monster-sized nest egg with a little time and a tiny grubstake.
The U.S. dollar is an 'I owe you nothing'...and the Euro is a 'who owes you nothing.' - Doug Casey
As I mentioned at the top of this column, gold volume was pretty light...and net of what few roll-overs there were, there were only 122,000 contracts traded. The preliminary open interest number showed a tiny increase of 1,421 contracts...and I'd bet serious money that the final number will show a fairly hefty o.i. decline when it's posted later this morning. Based on this data, I'd say that gold's rally during the New York session [both Comex and electronic trading] involved a decent amount of short covering.
Friday's final open interest number in gold showed a decline of 4,547 contracts, which certainly warms the cockles of my heart. I'm hoping that Monday's final o.i. number will be in this range as well...and maybe even larger. We'll find out soon enough.
Silver's net volume on Monday was an insignificant 21,000 contracts...and the preliminary o.i. number showed a decline of 186 contracts...so it appears that yesterday's 'rally' in silver was mostly short covering by the Commercial traders once again.
Silver's final open interest number on Friday was reduced all the way down to a smallish increase of only 469 contracts, which was a big improvement from the preliminary number.
Today, at the close of Comex trading at 1:30 p.m. Eastern, is the cut-off for this Friday's Commitment of Traders Report...and whatever changes in open interest we have today, will be in that report...along with everything since last Tuesday's cut-off.
Here's the 6-month silver chart. Not that I want to jinx this, but we may have seen the lows for this move down. As Ted Butler mentioned in his snippet earlier on, we are now back in bullish territory in silver...and that situation has probably improved even more since last Friday's COT report. I was particularly encouraged by yesterday's price action, as it appeared that the Commercial shorts are now covering as the price rises. Their short covering was the actual cause of the rally yesterday. Let's hope that this happy state of affairs continues...and these comments haven't been the 'kiss of death'.
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Here's the 6-month gold chart for comparison...and it still makes as nervous as a long-tailed cat in a room full of rocking chairs, as we're over $300 above gold's 200-day moving average...and I'm still on the look-out for "in your ear." I hate to utter those awful words, but maybe this time it is different. We'll find out soon enough.
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Gold didn't do a lot during Far East trading yesterday...and the tiny spike at the London open got hit immediately...but gold has since showed signs of life...and is heading back towards the $1,800 mark. Silver got sold down to around $39.60...and its spike at the London open got hammered flat as well...and silver is being sold off even further now that London has been open for a bit. This price pattern in both metals is very similar to the one that Ted Butler spoke of in his commentary further up in this column. It appears that this is a short covering rally in gold...and the silver price is being engineered lower by some of the Commercial traders. Both price actions are probably resulting in the same thing...short covering by the Commercial traders. I won't know for sure until the final open interest numbers for Tuesday are available tomorrow morning. As of 5:19 a.m. Eastern, volume in gold is already very heavy...and silver's volume is pretty decent as well.
The price action in both metals in New York trading today should be something to see.
Before I sign off, I've got a little something that I want to bring to your attention which isn't going to cost you a thing. There is a FREE on-line Casey Research sponsored event happening on September 14th at 2:00 p.m. Eastern time. It's entitled "The American Debt Crisis"...and it's posted over at the americandebtcrisis.com website. The introductory trailer runs 8:33...and if you want to register for this FREE webinar, you can just type in your e-mail address in the spot indicated in the right sidebar. The link to all of this, is here.
That's more than enough for one day...and I'll see you here tomorrow.