Gold sold off about seven dollars from the Far East open on their Thursday morning, right up until 12:40 p.m. in London...which was 7:40 a.m. in New York...forty minutes before the Comex open.
At that point the dollar index began its 80 basis point rally...and the precious metals headed for the nether reaches of the earth.
The gold price made a bit of a recovery once the London p.m. gold fix was in...but the engineered price decline began anew shortly before 11:00 a.m. Eastern time. Gold hit its low price tick of the day [$1,563.30 spot] right at the 1:30 p.m. Comex close...and from there it basically traded ruler flat into the 5:15 p.m. electronic close.
Gold closed at $1,565.20 spot...down a whopping $41.60 on the day. For the second day in a row, net volume was immense at 207,000 contracts.
It was pretty much an identical story in silver, as the price declined below the $28 spot mark shortly after trading began in the Far East on Thursday...and then bumped along that price ceiling right up until the same 12:40 p.m. London time as gold, before suffering the same fate as the gold price. Up until that time, silver was only down about two bits.
Silver's absolute low price tick [26.77 spot] came a couple of minutes before the close of Comex trading. The price recovered a bit from there, but then traded flat into the electronic close. Silver's intraday price move was $1.35...or 4.80%.
Silver closed the Thursday trading session at $26.88 spot...down a whopping $1.24 on the day. Net volume was pretty chunky as well...43,000 contracts, give or take.
The dollar index opened around 81.53 on Thursday morning...and didn't do much of anything until it hit its 'low' of the day at 81.50 about 7:20 a.m. in New York. Then away it went to the upside, with the high of the day [82.36] coming about 3:15 p.m. Eastern time...and closed the day almost on that high at 82.30. From top to bottom, the dollar index rally was 86 points...up 1.06%.
There certainly was an amazing amount of carnage in the precious metals prices all things considered. If you look at the almost 80 basis point decline that the dollar index had on Tuesday, there is no sign of that in the price of any of the precious metals on that day. I pointed that abnormality out in this column on Wednesday...and you can read about it here.
So, was the big dollar index rally yesterday the cause of the big decline in the precious metals. Partly, I'm sure, but it was convenient cover for JPMorgan et al to really beat the living snot out of them one more time...especially silver.
Here's the 3-day dollar index chart so you can see the almost equally large decline on Tuesday...which had no effect on the gold price at all.
The gold stocks got smoked. They gapped down big...and continued to decline...finishing right on their lows of the day. The HUI finished down 5.28%.
The silver stocks got in the ear as well. Nick Laird's Silver Sentiment Index closed down a huge 6.81%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that six gold and one lonely silver contract were posted for delivery on Monday.
There were no reported changes in either GLD or SLV yesterday.
But the U.S. Mint had a sales report. They sold 7,000 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 275,000 silver eagles. Month-to-date the mint has sold 32,500 ounces of gold eagles...6,000 one-ounce 24K gold buffaloes...and 1,975,000 silver eagles. So far this month, silver eagles are outselling gold eagles/buffaloes by a 51:1 ratio.
Over at the Comex-approved depositories on Wednesday, they reported receiving 1,184,987 troy ounces of silver...and shipped 463,513 ounces of the stuff out the door. The link to that action is here.
Here's a chart that Washington state reader S.A. stole from some story posted on the Zero Hedge website yesterday. It shows the Spanish and US GDPs compared to the size of bailouts...if the US received a bailout in proportion to the Spanish bailout.
(Click on image to enlarge)
I have a lot fewer stories today, but if you read nothing else, the first story is a must read...and I'll leave the final edit of the rest up to you.
How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape.
Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo.
But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.
This Matt Taibbi essay was posted on the rollingstone.com website about lunchtime yesterday...and is from the July 5th issue of Rolling Stone magazine. It's a very long must read...and I thank reader U.D. for being the first one through the door with it. The link is here.
Ratings agency Moody's downgraded the long-term credit ratings of 15 major U.S., Canadian, and European banks today after markets in New York closed.
Of the 15 firms downgraded this afternoon, none were hit more than Moody's originally said was possible when it placed them on review in February.
The action will likely force many of the banks targeted post additional collateral against trades held on their books.
The fact of the matter is that most, if not all, of these banks are insolvent anyway. Only rule changes and 'new and improved' accounting procedures make them look good on paper. There is no market for most of the paper 'assets' they have on their respective books. This story was posted on the businessinsider.com website yesterday...and I thank Roy Stephens for sending it. The link is here.
Italy's prime minister, Mario Monti, has warned of the apocalyptic consequences of failure at next week's summit of EU leaders, outlining a potential death spiral whose consequences would become more political than economic.
The Italian leader is to hold talks with Chancellor Angela Merkel of Germany, the French president, François Hollande, and Spain's prime minister, Mariano Rajoy, in the hope that the single currency's big four countries can pave the way for a breakthrough at next week's meeting.
Speaking to The Guardian and a group of leading European newspapers, Monti said that, without a successful outcome at the summit, "there would be progressively greater speculative attacks on individual countries, with harassment of the weaker countries". The attacks would be focused not only on those who had failed to respect EU guidelines, but also on those like Italy, which he said had abided by the rules "but which carry with them from the past a high debt".
This story was filed from Rome yesterday...and is posted on the guardian.co.uk Internet site...and I thank Bob Fitzwilson for sending it. The link is here.
Italy's technocrat government risks a parliamentary mutiny unless premier Mario Monti can secure major concessions from Germany at a crucial summit of the eurozone's Big Four powers in Rome on Friday.
"Monti is desperate. Reform fatigue has breached breaking point," said a top Italian official. "There is a feeling here that the euro is basically dead already. Unless Germany offers a road map out of this crisis, Monti is not going to be able to hold it together much longer."
This story is the same as the one from The Guardian, except it has a whole different spin on it. Ambrose Evans-Pritchard does the honours in this piece posted on The Telegraph's website yesterday evening. I thank Roy for sending it my way...and it's certainly worth the read. the link is here.
Independent auditors said Spanish banks may need up to €62 billion in extra capital, to be filled mostly by a euro zone bailout, after Spain's medium-term borrowing costs spiraled to a euro-era record on Thursday.
Euro zone finance ministers met in Luxembourg to discuss how to channel up to €100 billion ($126 billion) in aid to Spanish lenders weighed down by bad debts from a burst property bubble. Madrid's economy minister said a formal request would be made in days for the bailout, which was agreed two weeks ago.
Many in the markets see the package as a mere prelude to a full program for the Spanish state, which Madrid vehemently denies it will need.
A prelude it is, as neither €62 or €100 billion will fix the Spanish banking system. This Reuters story was posted on their website yesterday evening Eastern time...and I thank Roy Stephens once again for bringing it to our attention. The link is here.
A meeting of eurozone finance ministers in Luxembourg was expected to send the “troika” of officials from the European Central Bank, European Commission and IMF back to Athens after the elections last weekend.
The new government, a fragile coalition which faces a strong far-Left opposition, has asked the EU for an extra two years to hit austerity targets set as part of the country’s €240bn (£193bn) bail-out.
Eurozone finance ministers, relieved that a pro-bailout Greek government has been formed, saving the EU’s single currency from almost certain break-up, are sympathetic to giving Greece more time.
This is another story posted on the telegraph.co.uk Internet site. This one was filed around 1:00 p.m. Eastern time. As usual, I thank Roy Stephens for sending it...and the link is here.
The International Monetary Fund has directly confronted Germany by urging the eurozone to take a "determined and forceful move" to "complete economic and monetary union" by sharing government debt and underwriting failing banks.
Christine Lagarde, the IMF's managing director, last night unveiled the blueprint to save the euro while warning that the EU's single currency was under "acute stress" that threatened "the viability of the monetary union itself".
The IMF's intervention is timed to tip the balance against Angela Merkel at a critical summit between Germany, France, Italy and Spain in Rome today where the embattled German Chancellor will be fighting off identical demands.
This Roy Stephens offering was posted on The Telegraph's website just before midnight British Summer Time. It's a must read in my opinion...and the link is here.
Air France said Thursday it is to slash over 5,000 jobs or around 10 percent of its workforce in voluntary departures by 2014 as part of a vast plan to make the struggling French airline profitable.
A total of 5,122 jobs will be shed and the carrier said in a statement that all departures would be voluntary provided a new framework agreement can be signed with unions.
"Air France has chosen to work in complete transparency and to privilege social dialogue to find structural and sustainable solutions, included in corporate agreements," it said.
This story was posted over on The Economic Times of India website earlier this morning...and is another story from Roy. The link is here.
For a long time, the German economic powerhouse seemed immune to the effects of the European debt crisis. In recent weeks, however, economic indicators have begun to suggest that dark clouds may be gathering over Germany.
This story showed up on the German website spiegel.de yesterday...and I thank Roy Stephens for digging it up for us. The link is here.
The HSBC manufacturing PMI, which monitors activity in the sector, fell to 48.1 in June from 48.8 in May - anything below 50 signals contraction. June marked the eighth consecutive month of contraction.
Chinese manufacturing was hit both by falling exports and weak domestic demand. New export orders fell sharply in June to the lowest level since March 2009, underlining the weakness of some of China’s major trading partners.
China’s manufacturing sector continued to slow in June,” said Qu Hongbin, HSBC’s co-head of Asian economic research.
I thank Roy for this story as well. It was posted early in the evening BST on the telegraph.co.uk website...and the link is here.
The first is with Egon von Greyerz...and it's headlined "We Are Headed For Panic As Global Markets Tumble". The last blog is with James Turk...and it's entitled "Gold & Stocks Smashed, Expect Massive Spike In Fear".
With gold crossing the Rs 30,000 mark, investors are betting on silver now. Last week's rally took the white metal's spot prices close to Rs 55,000 per kg from around Rs 52,000 barely a month ago. Bullion dealers say demand for silver is coming from the industrial sector and coin sales but analysts feel an upward swing in the prices of metals coupled with a weak rupee has resulted in the rally.
India imports the white metal as production is insufficient to meet growing demand. India is the largest importer as well as consumer and the average domestic consumption of the metal is around 3,000 tonne per annum, according to a report of the Working Group on Mineral Exploration and Development. "Indian import of silver for 2012 is expected to decline to a range of 3,500 tonne to 4,000 tonne owing to a weak rupee and a high import duty compared to 4,800 tonne imported last year.
This story was posted on The Economic Times of India website before the big New York smash-down yesterday. I thank West Virginia reader Elliot Simon for sending it along...and the link is here.
GATA's secretary/treasurer was interviewed for five minutes this morning on CNBC Asia in Hong Kong by news anchor Bernie Lo. Video of the interview has been posted at the CNBC Asia archive...and it's a must watch. The link is here.
The result has been a veritable cornucopia of ancient discoveries. The most beautiful find was made in the Gessel district of Lower Saxony, where 117 pieces of gold were found stacked tightly together in a rotten linen cloth. The hidden treasure is about 3,300 years old.
The 1.8 kilograms (4 pounds) of gold, which was found in a field, consists of some jewelry, but primarily spirals of gold wire, which are tied together in chains consisting of 10 spirals each. This isn't jewelry, but an ancient form of gold bullion.
I posted the original story of this find back in February when they first dug it up. A lot of water has passed under the bridge since then...and now the arguing has begun. It's a must read for sure...and Roy Stephens last offering in today's column. It's posted over at the spiegel.de Internet site...and the link is here.
Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization
Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.
Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.”
Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained.
Please visit our website for more information about the project.
Not until all this debt is repudiated and the world has gotten the usurious banking system off its back, with its tentacles reaching deep into government everywhere, will the world be able to move forward again. Then at long last we will be able to hail the return of true capitalism and the free market. - Clive Maund
Well, there's no denying the fact that it was a pretty ugly day yesterday, regardless of whether it was free-market forces or 'da boyz'. I'm sure that a lot of the sales of precious metals shares were done into a pretty illiquid market, which would certainly compound the losses in a 'forced sale' situation for anyone stupid enough to be in this market on margin.
In Far East trading during their Friday, the gold price spent all of its time in a ten dollar price range between $1,560 and $1,570 spot...and was at the lower end of that range during the first fifteen minutes of trading in London. But as I hit the 'send' button at 5:00 a.m. Eastern time, gold has rallied to just above its Thursday closing price in New York. Silver hung in just pennies under the $27 spot price until shortly after 1:00 p.m. Hong Kong time...and then slid from there...and was down about two bits just past the London open, but has now gained back all its losses as of 4:55 a.m. Eastern. Volumes aren't overly heavy...and the dollar index isn't doing a thing.
Today we get the Commitment of Traders Report for positions held at the close of Comex trading on Tuesday, June 19th. Too bad Wednesday's and Thursday's trading data won't be in it, as that would tell us a lot if it was.
You have to wonder how much longer this pounding in the four precious metals will continue. It will continue until JPMorgan et al have covered every possible short position they can. Ted Butler mentioned that the technical funds had probably put on between 25-30,000 long contracts as gold broke through its 20 and 50-day moving averages to the upside since the June 10th low...and it's a pretty good bet that all of those positions got taken out yesterday and Wednesday.
The silver price has barely had a sniff of its 50-day moving average, so I doubt if there's much in it for JPMorgan to continue engineering the price lower...but you just never know these things. If the lows aren't in for gold or silver, they must be pretty close...and all we can do is wait it out, plus use this opportunity to buy more bullion while JPMorgan et al have been thoughtful enough to put it on sale once again.
With today being the last trading day of the week, it will be interesting to see if JPMorgan presses its advantage as the Friday trading day unfolds in London and New York. As has been the case all week, the real price/volume action occurs during the Comex trading session and, without doubt, that will be the case again today.
I hope your weekend goes well...and I'll see you here tomorrow.