It was a pretty unexciting trading day in gold yesterday. The price chopped around in a five dollar band from the open in the Far East on their Tuesday morning, right up until Comex open in New York.
The high of the day...such as it was...came at 8:45 a.m. Eastern time, which was the precise moment that gold hit its New York low on Monday morning. From there, the gold price got sold off to its low of the day which came at the exact 1:30 p.m. close of Comex trading. After that, the price didn't do a lot.
Gold finished the Tuesday session at $1,614.90 spot...down an even seven bucks. Net volume was around 119,000 contracts.
Silver's high of the day [around $28.45 spot] came a few minutes after 11:00 a.m. in London...and from there, every rally attempt, no matter how small, got sold off...and silver closed in New York almost on its low of the day, which came about an hour or so before the close of electronic trading.
Silver finished the Tuesday trading day at $28.00 spot...down 18 cents from Monday's close.
The dollar index didn't do much, either. Its high of the day [82.88] came at 9:00 a.m. in London trading...and it's low [82.52] came about 11:05 a.m. in New York. From there it rallied about 18 basis points into it 82.70 close...finishing the Tuesday session down about 10 points from Monday's close.
The gold shares hung in around the unchanged mark up until about 11:30 a.m. Eastern time...and then rolled over. There wasn't even a hint of a recovery in the stocks after gold's low of the day was set at the 1:30 p.m. Comex close. The HUI finished down 1.97% and almost on its low tick.
In most ways, the HUI chart was almost a carbon copy of the Dow chart from yesterday.
The silver stocks got hit hard for no reason as well...and Nick Laird's Silver Sentiment Index closed down 1.77%.
(Click on image to enlarge)
The CME's Daily Delivery Report for the second delivery day in August showed that 685 gold and 15 silver contracts were posted for delivery from the Comex-approved depositories on Thursday.
In gold, there were more than two dozen short/issuers altogether, with Merrill being the largest at 244 contracts. The biggest long/stoppers were HSBC USA with 321 contracts...Deutsche Bank with 179...and Barclay's with 114. The Issuers and Stoppers report, linked here, is worth thirty seconds of your time.
There were additions to both GLD and SLV yesterday. Authorized participants added 106,700 troy ounces to GLD...and 1,551,120 troy ounces to SLV.
There was no sales report from the U.S. Mint yesterday...so July ended with sales of 30,500 ounces of gold eagles...4,000 one-ounce 24K gold buffaloes...and 2,278,000 silver eagles. July wasn't the worst month of the year, but it certainly wasn't the best, either.
On Monday, the Comex-approved depositories reported receiving 460,625 troy ounces of silver...and shipped 331,669 troy ounces of the stuff out the door. Like Friday, almost all the action was at Brink's, Inc...and the link to that is here.
I have a lot of stories for you again today and, as always, the final edit is up to you.
Every dawn in the early spring of 2011, Matthew Kluger peered out his window, wondering when federal agents would knock at his door. Kluger, a mergers-and- acquisitions lawyer, says he worried that authorities were closing in on him as the source of illegal tips in a three-man insider-trading ring that had eluded detection for 17 years.
The knock came on April 6. U.S. agents handcuffed Kluger, hustled him into a Dodge Intrepid, drove to the Federal Bureau of Investigation office in Manassas, Virginia, and laid out the case against him. The evidence included tape recordings of Kluger telling the man he tipped to get rid of a cellular phone that could lead back to him -- and to do it carefully because the authorities had dogs that can sniff out mobiles.
“I really would like to see this phone go bye-bye ASAP,” Kluger said, adding: “Do you want this to be our undoing?”
Kluger’s account offers a unique view of insider trading by a mid-level lawyer who moved from one powerful firm to another, exploiting his access to partners and confidential documents. It shows how difficult it is to police such activity when conspirators take care to conceal their crimes and trade with discipline. The trio’s downfall came only when one of them changed the routine after almost two decades.
This story appeared on the Bloomberg Internet site early yesterday afternoon...and I thank Washington state reader S.A. for sending it...and the link is here.
The blunt trauma that JPMorgan was implicated in the missing millions from segregated accounts in Jon Corzine's bankrupt MF Global may have passed but the memory lingers, especially for all those whose cash is still locked up somewhere in vapor space.
Yet one event that may tear the scab that patiently was healing, courtesy of a Copperfield market full of distractions such as JPM's CIO fiasco, Lieborgate, oh and, Europe, right off is the recent bankruptcy of Peregrine Financial, aka PFG, whose story we at Zero Hedge first broke, and which just as we suspected, has promptly become the second coming of MF Global, as at least $200 million has "evaporated."
It is thus with little surprise that we find that the first party of interest is none other than JPMorgan, which together with various other banks, will be the target of a subpoena by the PFG trustee. How shocking will it be to find that Dimon's company is once again implicated in this particular episode of monetary vaporization.
This story was posted on the Zero Hedge website yesterday evening...and I thank reader 'David in California' for sending it along. The link is here.
The U.S. Postal Service affirmed it won’t make a required $5.5 billion payment due tomorrow to the U.S. Treasury for future retirees’ health care, an obligation the agency said must end for it to become financially viable.
The service has said for months it couldn’t afford the payment, which was initially due last September, nor a $5.6 billion payment required by Sept. 30 for this year. Postal legislation passed by the U.S. Senate on April 25 would slow the schedule for those obligations. The House hasn’t acted on a different postal measure aimed at changes to help the service cope with declining mail volume.
“The default by the Postal Service on its obligation to its own employees and retirees follows decades of mismanagement, and a willful blindness to fundamental changes in America’s use of mail,” Representative Darrell Issa, the California Republican who is chairman of the Oversight and Government Reform Committee, said in an e-mail. “The Postal Service continues to fail to do all it can under current law to cut costs.”
This story was posted on the Bloomberg Internet site at lunchtime in New York yesterday...and is Washington state reader S.A.'s second story in today's column. The link is here.
At the beginning of each month, Markit, HSBC, RBC, JP Morgan and several other major data gathering institutions publish the latest local readings of the manufacturing purchasing managers index (PMI) for countries around the world.
By 11:00 a.m. Eastern time this morning, all the world's critical purchasing managers indexes will be updated at this Bloomberg link here...and I thank Roy Stephens for sending it.
The search was ordered by prosecutors in the southern city of Trani, who have opened a criminal probe into the possible Euribor manipulation following complaints filed by two consumer groups, Adusbef and Federconsumatori, two judicial sources told Reuters.
In a joint statement, the consumer groups said documents, computer material and emails were seized at Barclays Milan offices last week, "with the aim of looking for evidence that Barclays also manipulated Euribor, as it did with Libor, with a negative impact on mortgage rates paid by Italians".
Italian prosecutor Michele Ruggiero is investigating whether "just as it did with Libor, Barclays manipulated Euribor, with negative consequences on mortgage rates paid by Italians", the statement said.
This story was posted mid-morning in London BST yesterday...and my thanks to Roy Stephens for sending this story as well. The link is here.
[Yesterday] morning Deutsche Bank announced that it would lay off 1,900 people — 1,500 of whom would be in the investment banking sector.
They put out a press release to explain these job cuts (they said government capital requirements were forcing them to search for cash), so we gave it a close read.
We found one paragraph that gives you a hint of what will happen if you do get to keep your job at Deutsche Bank.
Basically, you should expect some changes in your compensation.
This interesting story showed up on the businessinsider.com website early yesterday afternoon...and I thank Roy Stephens for his third offering in today's column. The link is here.
U.S. Treasury Secretary Timothy Geithner and his German counterpart stressed the need for coordinated action Monday in the face of the eurozone debt crisis and faltering global growth, but left open what joint steps Europe and the United States would take to shore up the world economy in the coming months.
Geithner traveled to the German North Sea island of Sylt for informal talks with Finance Minister Wolfgang Schaeuble, before heading on to meet Mario Draghi, the president of the European Central Bank, later Monday.
Geithner and Schaeuble praised efforts by Ireland, Portugal, Spain and Italy to turn their debt-ridden economies around, and voiced optimism about economic reforms meant to deepen integration among the 17 eurozone members.
This cbsnews.com story was posted on their Internet site early on Monday morning...and I thank Manitoba reader Ulrike Marx for sharing it with us. The link is here.
Several leading euro zone states including France and Italy want to give the permanent euro bailout fund, the European Stability Mechanism (ESM), unlimited firepower by permitting it to obtain unlimited credit from the European Central Bank (ECB), the German daily Süddeutsche Zeitung reported on Tuesday.
Leading members of the ECB's governing council support the idea, the report said. But the German government and the German central bank, the Bundesbank, have in the past opposed the move because it could fuel inflation, endanger the ECB's independence and breach European Union treaties that forbid the ECB from financing euro-zone member states.
According to the Süddeutsche, the plan now being discussed would involve the ESM supporting countries like Spain and Italy through large-scale purchases of their government bonds. That would lower their borrowing costs which keep rising to unsustainable levels whenever markets are gripped by new uncertainty about the crisis.
Making money up out of thin air to buy the sovereign debt of bankrupt nation states. What a business plan that is. You can't make this stuff up. This story was posted on the German website spiegel.de yesterday...and I thank Roy Stephens for sending it. The link is here.
German Chancellor Angela Merkel’s coalition rejected granting the permanent euro rescue fund access to European Central Bank liquidity via a banking license, as the Finance Ministry said it saw no need for any such move.
The rules of the European Stability Mechanism don’t provide for refinancing through the ECB, the ministry in Berlin said today in an e-mailed response to questions. The ministry isn’t holding talks on the topic nor are secret meetings taking place on such proposals, it said.
France and Italy are building support for a previously floated plan to allow the permanent backstop to wield unlimited firepower courtesy of the ECB, Germany’s Sueddeutsche Zeitung newspaper reported today, citing a European Union official it didn’t name. Leading ECB governing council members are among those who now back the idea, the newspaper said.
This Bloomberg story was posted on their website late yesterday morning...and is another offering from Roy. The link is here.
Near-bankrupt Greece is fast running out of cash while it waits for its next installment of aid from international lenders, a deputy finance minister has said, sounding the alarm on the country's precarious financial position.
Greece's European partners have repeatedly promised the country will be funded through August, when it must repay a €3.2bn (£2.5bn) bond, but the details of the funding have yet to be disclosed.
In the absence of that money, Greece would run out of funds to pay everyday public expenses ranging from police and other public service wages to pensions and social benefits, Reuters reported.
This story was posted on the telegraph.co.uk Internet site around lunchtime BST yesterday...and is another story courtesy of Roy Stephens. The link is here.
Capital outflows from Spain more than quadrupled in May to €41.3 billion ($50.7 billion) compared with May 2011, according to figures released on Tuesday by the Spanish central bank.
In the first five months of 2012, a total of €163 billion left the country, the figures indicate. During the same period a year earlier, Spain recorded a net inflow of €14.6 billion.
The outflow has resulted from domestic banks sending money abroad, foreign lenders pulling out cash and mostly non-resident investors dumping Spanish assets. The steep rise was likely due to Bankia, the banking conglomerate, having requested a bailout in May.
Over the last 11 months, funds equivalent to 26 percent of gross domestic product exited the country, Tuesday's data from the Bank of Spain showed.
This Roy Stephens offering was posted on the spiegel.de website yesterday...and the link is here.
Spain's construction boom attracted many hustlers, particularly to the Costa del Sol's luxury resort town of Marbella. But now a singer's high-profile trial for bribery and money laundering is exposing the extent of the abuses and turning the city into a symbol of the consequences of an unsustainable growth model.
The Spanish tabloids and private TV stations had waited months for these images: The country's best known folk singer, and currently its most high-profile defendant, on the way to her trial. It seemed as if she were on stage as she walked up the steps to the glass-enclosed entrance of the provincial court on the outskirts of Malaga. It promised to turn into a courtroom operetta, a trial to rival the economic crisis.
The diva kept her face hidden behind oversized black sunglasses, with her long hair tied tightly into a ponytail. Dressed entirely in beige, with a white shawl over her shoulders, she stretched out her head and smiled like a benevolent queen.
Whether Isabel Pantoja, 55, is truly innocent will emerge over the course of the 49 days of the trial, which is likely to drag on until next spring. The popular Seville native has been charged with money laundering, and the prosecution is asking for a three-and-a-half-year prison sentence and a fine of €3.68 million ($4.64 million).
The investigative judges believe that they can prove she laundered at least €1.84 million, using half a dozen fictitious companies registered in her name, on behalf of her former domestic partner, a former mayor of the luxury resort town of Marbella on the Costa del Sol.
This is another story from the top drawer of the "You can't make this stuff up" filing cabinet. It was posted on the spiegel.de Internet site yesterday...and I thank Roy Stephens for bringing it to our attention. The link is here.
There is a "new China" active in the currency markets, according to analysts, as Switzerland's battle to weaken the franc inflates its stockpile of foreign currency reserves.
The Swiss National Bank was forced to buy tens of billions of euros in May and June after the eurozone crisis worsened, creating strong haven demand for the franc and threatening the ceiling the central bank set for its currency last September. The SNB is prepared to buy as many euros as it takes to hold the franc at SFr1.20 against the euro to protect the country's exporters.
As a result, Switzerland's foreign currency reserves have leapt more than 40 per cent this year to SFr365 billion ($375 billion), propelling it to the sixth largest holder of foreign exchange in the world from ninth last year, behind China, Japan, Saudi Arabia, Russia, and Taiwan.
Of course, Switzerland should be buying gold with their freshly minted Swiss francs as well, but they're not. This Financial Times story was posted in the clear in this GATA release yesterday...and it's worth the read if you have the time. The link is here.
Central bankers present themselves as Masters of the Universe. They are, but only in their own little Theater of the Absurd. In the real world, they are as clueless as any other mortals about the unintended consequences of their actions and the speed with which the corrupted, unsustainable financial Status Quo will decay and die.
The only attribute they possess in abundance is hubris. Their claims to godhood are comical when viewed in their little Theater of the Absurd, but they become tragic when the consequences of their actions play out in the real world.
Their job, such as it is, is to deflate a tottering system based on phantom assets slowly enough that it doesn't implode. Stripped of mumbo-jumbo, their strategy to accomplish this is to inflate other phantom assets to replace the phantom assets that are falling to zero.
This reminds me of the "pay no attention to the man behind the curtain" scene in the Wizard of Oz...and if you know the roots of that story by Frank Baum, you'll know that the theme of the book and the movie are identical to the comments in the post linked below.
This very short post over at the oftwominds.com Internet site yesterday is your first absolute must read of the day...and I thank Roy Stephens for being the first through the door with this item. The link is here.
China has ditched its reform strategy and prepared a vast stimulus package as the country’s soft-landing turns uncomfortably hard, with recession warnings flashing across East Asia.
The bellwether economies of Taiwan and Singapore both contracted in the second quarter. Korea’s industrial output fell in June, while Japan’s manufacturing PMI index fell in July to the lowest since the Fukushima disaster, with the export gauge crashing to recession levels.
“Factory output, new orders and exports all decreased at the fastest rates since April 2011. These are worrying developments given the weakness of global demand,” said Markit’s Alex Hamilton.
While China has ostensibly held up much better, electricity use has been falling in recent months. “Unless the Chinese steel and aluminum industries have discovered how to make do without electricity, it would appear that their growth has virtually ground to a halt,” said Berkeley professor Barry Eichengreen.
This story was posted on The Telegraph's website early yesterday evening British Summer Time...and is also courtesy of Roy Stephens. The link is here.
It was a Terrible Tuesday that 684 million Indians are not going to forget in a hurry. In the world's biggest blackout that affected one-tenth of the global population, 21 states and Union Territories went on the blink after three arterial power lines collapsed at 1 pm.
The northern, eastern and north-eastern regions suffered the outage when their respective grids collapsed in quick succession with devastating effect. The blackout disrupted normal life, rail and air services as well as industrial production across sectors.
Tuesday's grid collapse, like Monday's, was triggered at Agra, a major interconnect between the northern, western and eastern grids. On Monday, the Agra relay station had tripped to trigger a blackout. This time too, the station kicked off a domino effect after suspected overdrawal by some states in the eastern grid. Within a fraction of a second of the Agra station tripping, the northern, eastern and the north-eastern grids went down.
Who triggered the collapse? Fingers were pointed at Uttar Pradesh, Haryana and Punjab for overdrawing power. All three states stoutly denied the charge. PowerGrid chairman A M Nayak could not give a reason for Tuesday's grid collapse. "I am a technical person and it will be unfair on my part to suggest a reason without fully understanding and analysing the sequence of events that led to the problem."
For a while, 10 percent of the world's population were without power yesterday. This story, filed from New Delhi, was posted on The Times of India Internet site early this morning...and I consider it a must read as well. It's also Roy Stephens final offering of the day...and the link is here.
The first is with Citi analyst Tom Fitzpatrick...and it's headlined "Special Tuesday Consumer Confidence 'Chart Mania'". Next is this blog with Caesar Bryan over at Gabelli & Company. It's entitled "Europe, US & Gold Ahead Of Crucial Fed & ECB Meetings". And lastly is this blog with Robert Fitzwilson of The Portola Group. It's headlined "This Chart From The 70s Gold Bull Market Will Shock People".
A former Anderson County, South Carolina councilman and past national commander of the Sons of Confederate Veterans entered a guilty plea in U.S. District Court in connection with a Ponzi scheme in which an estimated 945 investors in 16 states were duped into investing a total of $90.1 million in alleged silver contracts.
In a complaint filed in the U.S. District Court in South Carolina, the U.S. Commodity Futures Trading Commission said Ronnie Gene Wilson, 64, of Easley operated a Ponzi scheme through his company Atlantic Bullion & Coin, Inc. since "at least 2001 through February 29, 2012."
"As part of their Ponzi scheme, Wilson and AB&C....fraudulently offered contracts of sale of silver bullion, a commodity in interstate commerce," said the CFTC. "Through their Ponzi scheme, defendants obtained at least $90.1 million, from at least 945 investors, for the purchase of silver."
Despite the offers of sale, defendants failed to purchase any silver at all with the $11.53 million they collected from the AB&C Investors. Instead, defendants misappropriated it," the CFTC asserted. "By late 2011, as their Ponzi scheme began to unravel, defendants attempted to conceal their fraud by issuing false and/or fraudulent financial statements."
Well, dear reader, do you know where your silver is??? If you got taken by this scam, you got precisely what you deserved...and is what Ted Butler and I have been going on about for years. It's physical metal in hand...or in a fund that you know actually owns the stuff. Even SLV would be better than this...and coming from me, that's saying a lot. I found this story on the mineweb.co.za Internet site in the wee hours of the morning...and the link is here.
Yesterday the 'Funny' I posted was the cover of The Economist from one of their 1996 editions. Here's the cover from their August 2012 edition...
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.
Usury once in control will wreck any nation...Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of Democracy is idle and futile. - William Lyon MacKenzie King, Prime Minister of Canada (1934)
I'm not prepared to read a whole heck of a lot into yesterday's price action in gold and silver. It was the last day of the month...and I'm quite sure that there was a lot of month-end gaming going on...and the precious metals were no exception.
But, having said that, the world's current situation is now beyond desperate on all fronts...and only the direct intervention by JPMorgan et al is preventing the precious metals from reaching their true market price...and we'd all love to see that would be.
I doubt very much that any solution that the world's bankers come up, unless it involves gold, will do much more than kick the can further down the road...and not much further at that. All we can do is sit here with our hands in our collective pockets and wait it out, while we commit Charles Hugh Smith's "The Central Banking Theatre of the Absurd" to memory. Dorothy was right. We ain't in Kansas anymore.
Once again both gold and silver didn't do much in Far East trading on their Wednesday...and not much is happening now that London has been open for a couple of hours. Volumes in both metals is on the lighter side...and the dollar index is down about 11 basis points from Tuesday's New York close, as I hit the 'send' button at 5:10 a.m. Eastern time.
I'm sure the combination of summer and the Olympics is certainly having some effect on all markets at the moment...but the reprieve will be short lived. Reality, when it finally does get back to centre stage, will return with a vengeance...and it's entirely possible that reality will return before the games...and the summer, are over.
Yesterday, at the 1:30 Comex close, was the cut-off for this Friday's Commitment of Traders Report. Without doubt, there has been deterioration in the Commercial net short positions in both gold and silver, as the usual suspects have been going short against all comers during the rallies of the previous reporting week.
Ted Butler mentioned the fact that 'da boyz' may now have accumulated enough short positions to engineer another sell-off and, as I've mentioned on countless occasions in this column over the years, I'm always on the lookout for "in your ear"...and you should be, as well.