After briefly touching the $1,740 spot market in mid-morning trading in Hong Kong on Monday, the gold price went into a very shallow decline that ended at $1,640 spot, just before the 8:20 a.m. Eastern Comex open in New York. After that it basically traded sideways until 2:30 p.m. in electronic trading...and then got sold down another five bucks into the 5:15 p.m Eastern time close.
Gold closed at $1,724.80 spot...down $10.50 from Friday's close. Despite the lack of any significant price action, volume was pretty decent at around 115,000 contracts...20,000 of which was transacted before London opened. For that time of day, that's a lot.
Silver price action followed pretty much the same path as gold. The New York low came about 9:10 a.m...and the subsequent rally got sold off the moment that London closed for the day at 4:00 p.m. BST...11:00 a.m. Eastern. Neither the low nor high price tick reported by Kitco are believable.
Silver closed at $33.34 spot...down 34 cents from Friday. Net volume was huge at 48,500 contracts...of which 7,000+ came before the London open. Like gold, I would consider a lot of that action to be of the high-frequency trading variety.
The dollar index spent the entire Monday trading session working its way higher at glacial speed...and by the end of the day was up about 15 basis points. Like gold and silver, the dollar index action was like watching paint dry.
Not surprisingly, the gold stocks opened down a bit...and their highs of the day came shortly after the high in both gold and silver, which was just minutes after the 4:00 p.m. London close...11:00 a.m. in New York. From there, the gold equities drifted lower...and ticked up a bit into the close...but the HUI finished down 1.73%, as there was some obvious profit-taking.
The silver stocks didn't do particularly well, either...and Nick Laird's Silver Sentiment Index closed down 1.47%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that only 23 silver contracts were posted for delivery tomorrow. ABN Amro was the short/issuer on all of those contracts...and JPMorgan was the long/stopper on 21 of them. The link to that action is here.
The GLD ETF showed no change on Monday...and there have been no additions since last Wednesday. But over at SLV, they reported receiving another big shipment of silver...2,228,668 troy ounces to be exact. Since Tuesday of last week, SLV has reported receiving 5.16 million ounces of silver...but is probably owed about double that amount...not including what is owed on their current outstanding short position.
The U.S. Mint had a decent sales report yesterday. They sold 9,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 310,000 silver eagles.
Over at the Comex-approved depositories on Friday, they didn't report receiving any silver, but shipped 706,515 troy ounces out the door. The link to that activity is here.
Nick Laird didn't have a chart for me today, but instead sent me a photo of this butterfly he took in his back yard late last week...and I just didn't have room for it in Saturday's column, so here it is now. It's a monster and...with a wingspan as high as 150 mm [a bit under 6 inches]...the name implies that, as it goes by the handle of Cairns Birdwing.
Since this is my Tuesday column, I have a lot of stories today...and I'm happily leaving the final edit up to you.
China’s holdings of more than $1 trillion in U.S. debt and the prospect that it might “suddenly and significantly” withdraw funds don’t pose a national security threat, according to a first-ever Pentagon assessment.
“China has few attractive options for investing the bulk of its large foreign exchange holdings out of U.S. Treasury securities,” given their extent, according to the report dated July 20 and obtained by Bloomberg News.
China is the second-largest holder of U.S. government debt after the Federal Reserve. Acting at the direction of Congress, the Defense Department studied the rationale behind the investments and whether “the aggressive option of a large sell- off” would give China leverage in a political or military crisis. China’s debt holdings have been cited as a sign of U.S. vulnerability by Republicans in this year’s election campaign.
One wonders what Jim Rickards thinks of this...and I'm sure he'll have something to say about this rather soon I would think. I wouldn't want to put China to test....and it might give them even more impetus to buy up gold, or other precious metals. This Bloomberg story showed up on their website early yesterday evening...and is well worth the read. I thank Manitoba reader Ulrike Marx for today's first story...and the link is here.
Ticker tape: it’s an enduring image of Wall Street. The paper is gone but the digital tape runs on, across computer and television screens. Those stock quotations scurrying by on CNBC are, for many, the pulse of American capitalism.
But Sal L. Arnuk doesn’t really believe in the tape anymore — at least not in the one most of us see. That tape, he says, doesn’t tell the whole truth.
That might come as a surprise, given that Mr. Arnuk is a professional stockbroker. But suddenly, and improbably, he has emerged as a leading critic of the very market in which he works. He and his business partner, Joseph C. Saluzzi, have become the voice of those plucky souls who try to swim with Wall Street’s sharks without getting devoured.
This story appeared in the Saturday edition of The New York Times...and is courtesy of reader Donald Sinclair. The link is here.
For the past two years, the unfolding European debt crisis has repeatedly been at the precipice of unleashing powerful global de-risking/de-leveraging dynamics. The Draghi Plan is being crafted specifically to backstop troubled Spanish and Italian debt, faltering markets that were in the process of inciting a catastrophic crisis of confidence in the euro currency.
In unsubtle terms, the Draghi Plan has directly targeted those with bearish positions in European debt instruments and the euro. In this respect, it has been both effective and destabilizing. Draghi has dramatically skewed the marketplace to the benefit of the longs and to the detriment of the shorts – throughout European debt, equity and currency markets. And with simultaneous “open-ended QE” rhetoric from the Bernanke Federal Reserve, shorts have suddenly found themselves in the crosshairs worldwide. A huge short squeeze has unfolded, fomenting market dislocation – and an only wider divergence between inflating market prices and deteriorating underlying fundamentals. Panicked covering of short positions and the unwind of derivative hedges has thrown gasoline on already wildly speculative securities markets.
From my perspective, the key issue is not whether the ECB finally has a (Draghi) plan that will resolve Europe’s debt crisis - the coveted big bazooka. Monetary policy won’t solve Europe’s deep structural problems anymore than QE will resolve U.S. economic maladjustment and global imbalances. Indeed, there is little doubt that the Draghi and Bernanke Plans will only exacerbate global systemic fragilities. They have bought some additional time, but at rapidly inflating costs. We desperately needed global policymakers to work assiduously to extricate themselves from market interventions and manipulations. They’ve again done the very opposite.
How I managed to forget Doug Noland's Credit Bubble Bulletin commentary in Saturday's column is beyond me...but here it is now. If I had to pick one must read for you today...this would be it. It was posted over at the prudentbear.com Internet site on Friday evening...and the link is here.
The British bank is said to be in talks with the Financial Services Authority in the UK and the Department of Justice and the Commodity Futures Trading Commission in the US, The Financial Times reported.
Stephen Hester, the chief executive of RBS, warned in the summer that the state-owned bank was one of several global lenders being investigated over the alleged manipulation of an interest rate used as the benchmark for billions of pounds of loans each day.
“RBS is one of the banks tied up in Libor. We’ll have our day in that particular spotlight,” Mr Hester said in July.
The bank, in which the taxpayer still owns an 82pc stake, has confirmed the dismissal of several employees in connection to the Libor manipulation claims. RBS is also battling a claim for wrongful dismissal from a former trader in Singapore who alleges that RBS's own libor submissions were manipulated.
As I've been saying repeatedly...these LIBOR fines are basically licensing fees. Nothing fundamentally will change. It will be 'business as usual' when all is said and done. This story showed up on the telegraph.co.uk Internet site on Saturday...and is Donald Sinclair's second offering in today's column. The link is here.
Central bankers and the supposedly great intellects of the financial world can't figure out how to revive national economies and are out of ideas, GoldMoney Research Director Alasdair Macleod writes. It's because, he adds, they have destroyed markets and don't realize that only markets can fix things.
I borrowed the headline...and the above introductory paragraph from a GATA release yesterday. Macleod's commentary is headlined "Central Bankers and Politicians Are Running Out of Ideas" and it was posted at GoldMoney's Internet site on Sunday. The link is here.
Speaking at Trinity College, Dublin, Spencer Dale warned that more quantitative easing (QE) could store up problems for the future without solving current ones.
How effective it was as a policy depended on what had caused the economic weakness, he said, giving the example that simply pressing on the accelerator did not do much good to a car if the handbrake was on.
If the problems were misdiagnosed, rather than boosting growth, QE might just lead to higher inflation, he added.
His comments came in the wake of the Monetary Policy Committee’s decision in July to increase QE by £50bn to £375bn. Mr Dale had wanted to leave the amount un-changed but was outvoted. Economists now expect the committee to add another £50bn in November, despite opposition from pensioner groups whose incomes have been devastated by low interest rates.
This story is another one from Saturday's edition of The Telegraph...and I thank Roy Stephens for his first offering of the day. The link is here.
Christine Lagarde, the IMF's managing director, said that the fund was "ready to help" with the European Central Bank president's plan to staunch the eurozone crisis.
Last week, Mr Draghi launched an "unlimited" bond-buying programme that he said would provide a "fully effective backstop" to stricken eurozone economies.
Under the plan, the ECB would stand ready to buy any amounts of sovereign debt with a term of up to three years, thereby ensuring a government's access to funding, in return for a bailout deal with tight strings attached.
"What the central bank has announced last Thursday is a clear indication of the framework in which it would be an active player in restoring the situation in the euro zone," said Ms Lagarde, following an Asia-Pacific economic summit.
This is a story that was posted on The Telegraph's Internet site on Sunday...and I thank Donald Sinclair for sending it. The link is here.
The cold [water] douche begins. Markets will now learn that the European Central Bank's bond plan is a devout wish, not a done deal. Europe's political minefield lies ahead.
Nothing can happen until Spain and then Italy request a rescue from the EU bail-out funds (EFSF/ESM), and sign away their sovereignty. Nothing further can happen until an angry Bundestag approves the terms and signs away its money.
Germany has a 27pc voting weight and can veto any rescue.
Even less can happen if the German constitutional court issues a preliminary ruling on Wednesday blocking activation of the €500bn ESM fund. Morgan Stanley's team – mostly Germans as in happens – put a 40pc likelihood on this happening.
This is not to belittle the ECB plan for "unlimited" bond purchases. The Jesuit-trained Mario Draghi has pulled off a masterstroke, securing the assent of every northern ECB governor except the Bundesbank's Jens Weidmann, and crucially the assent of Germany's board member Jorg Asmussen, and indeed Chancellor Angela Merkel herself.
The stories from The Telegraph just keep on coming...this one from late Sunday afternoon BST. It's Ambrose Evans-Pritchard on a rant...and I thank Ulrike Marx for her second offering in today's column. The link is here.
At least one prominent politician is still trying to derail the ESM: Thanks to his persistent opposition to the euro rescue policies of Chancellor Angela Merkel's government, Peter Gauweiler has earned his reputation as a euro rebel. He has also challenged Germany's bailout policies at the Constitutional Court before. Gauweiler, who is with Bavaria's CSU, is trying to prevent the court from issuing another of its "yes, but" rulings in which the court imposes additional conditions on the government but basically allows it to continue funding the euro bailout as it has in the past. This weekend, Gauweiler attempted to torpedo the decision at the last minute, creating uncertainty in Berlin and Brussels.
The CSU politician submitted a new petition over the weekend to the Karlsruhe court to delay its ruling on the ESM. Gauweiler has based the petition on the decision announced on Thursday by the European Central Bank (ECB) that it would purchase unlimited quantities of sovereign bonds from crisis-plagued euro-zone member states. Gauweiler argues in his petition that the ECB's step has "created an entirely new situation" and that "almost all of the discussion that has taken place so far is now invalid". Through the bond-buying program, he argues, the ECB itself will become an "unlimited ultra- and hyper-bailout fund" -- one that national parliaments will have no control over.
Now Gauweiler is demanding that the court reject the ratification of the ESM treaty until the ECB revises its decision. He is arguing that if the court is not able to decide on the emergency petition that it should delay the ruling on the ESM that has been scheduled for Wednesday.
On Monday, a court spokesperson said the judges would convene later in the day to consider Gauweiler's petition and that a decision would likely be made by Tuesday morning on how the court would proceed.
This story showed up on the German website spiegel.de yesterday...and it's courtesy of Roy Stephens. The link is here.
In his first public comments since the bond proposals were unveiled by ECB president Mario Draghi earlier this week, Mr. Samaras said the plans has demonstrated that Greece must stay in the euro to remain a “modern and credible country”
“Draghi’s decision shows that the solution for a modern and credible country, for every country of Europe, is in the euro,” Samaras said in a speech to open the Thessaloniki International Fair in the north of the country.
“Staying in the euro and regaining credibility is the fight we are fighting now. If we left the euro, pensions wouldn’t be cut; they simply wouldn’t exist. There would be no spending on medicine. Petrol wouldn’t be more expensive: it would be rationed.”
The doomsday scenario was outlined by Mr. Samaras as he called for an end to talk of “Grexit” from the eurozone.
This is another story from The Telegraph on Saturday...and is another article from Donald Sinclair. The link is here.
The inspectors, who held talks with Greece's finance minister on Sunday, must approve the plan to trim roughly €12bn from the state budget over the next two years if Athens is to get a green light for the bailout money it needs to avoid bankruptcy.
"The troika has not accepted all the measures, but we have alternative proposals," said Socialist leader Evangelos Venizelos, a junior partner in the ruling coalition who was briefed by the finance minister at a party leaders' meeting.
Greek Finance Minister Yannis Stournaras played down the inspectors' objections, saying they had rejected only a "few" measures. A senior Greek government official had said earlier that the troika had sought more details on the proposals to understand them better.
Officials declined to specify what the objections related to but a source familiar with the matter said they were over measures to save roughly €2bn by cutting expenses in the public sector.
This story was posted on The Telegraph's website late Sunday night...and I thank Roy Stephens for sending it. The link is here.
Italy would not accept additional conditions being attached to any support from the ECB's bond-buying programme beyond the economic policy guidelines it has already agreed with its European partners, Prime Minister Mario Monti said.
He made the remarks to a closed-door conference in northern Italy, Reuters reports, citing his spokeswoman.
Mr Monti said the country-specific recommendations approved by the European Council in June already covered what a member state would have to do to receive help to control its borrowing costs, without asking for a full-scale bail-out.
"Italy would not accept conditions beyond those already agreed and which we are already respecting," Mr Monti's spokeswoman quoted the prime minister as saying during a debate with politicians and policymakers.
Mr Monti has said Italy has no plans to seek aid but that it would not be a "drama" if it were to one day.
What I should be doing is just linking the home page of The Telegraph in today's column...and you can just read away! This story was posted on their Internet site late last night...and I thank Roy Stephens for bringing it to our attention. The link is here.
Supposedly the euro crisis is all over. The mighty ECB has spoken. I have received triumphalist suggestions from bastions of euro-fanaticism that I should now capitulate.
They even suggested that I should send a rebate of fees to my clients. And something to Telegraph readers, perhaps?
Sorry to disappoint, but I am not remotely contrite. On the contrary. Was it not to be expected that Draghi would deliver some sort of bond-buying programme?
How many times since this crisis began have we supposedly been given “the solution” only to find in the succeeding weeks that it breaks in our hands?
What Mario Draghi has done is to deploy the ECB’s undoubted firepower to counter break-up risk in the yields on peripheral debt. If the height of such yields were the essence of the euro problem, then ECB bond-buying would indeed be a game changer.
But it isn’t.
This op-ed piece by Roger Bootle was posted on the telegraph.co.uk Internet site early yesterday evening...and I thank London, U.K. reader Iain Doherty for sharing it with us. It's worth reading...and the link is here.
We all know by now about the simmering leadership crisis in China. The Bo Xilai affair has lifted the lid on a hornet's nest. I had not realised quite how serious the situation has become until listening to China expert Cheng Li here at the Ambrosetti forum of the world policy elites on Lake Como. (My hardship assignment each year.) Nor had anybody else in the room at Villa d'Este. There were audible gasps.
The rifts within the upper echelons of Chinese Communist Party are worse than they were during the build-up to Tiananmen Square, he said, and risks spiralling into "revolution". Dr Cheng — a Shanghai native — is research director of the Brookings Institution in Washington and a director of the National Committee on US-China Relations. He argues that China's economic hard-landing is intertwined with a leadership crisis as the ten-year power approaches this autumn. The two are feeding on each other. "You cannot forecast the Chinese economy unless you have a sophisticated view of the political landscape and the current succession crisis," he said.
There has of course been a basic policy error. The government thought it could cool of the property boom with surgical tightening, leaving productive industry intact. That was an illusion. "They didn't expect the market reaction to be so strong and bring down the whole economy," he said.
It remains to be seen whether this is a variant of errors made by the Fed in 1928 and the Bank of Japan in 1990 when they tried to calibrate a soft-landing after an asset bubble had already run out of control. Charlene Chu from Fitch Ratings issued a note last week warning that China's banking sector assets are near $21 trillion, up from $9 trillion in late 2008. This is extraordinary rate of banking growth. Even a modest shock could "wipe out the sector's entire earnings," she said.
This is AE-P's second contribution to today's column. It's a blog from yesterday's Telegraph...and is your second must read of the day. I thank Ulrike Marx for digging it up on our behalf...and the link is here.
The first one is with Michael Pento...and the headline reads "Gold to Hit New All-Time Highs & Continue to $2,300". Next comes James Turk...and his blog is entitled "No Time to Wait for a Pullback, Gold to Hit New Highs". The third blog is with The Portola Group's founder, Robert Fitzwilson...and it bears the title "Truman Show, Jim Grant, Gold & Economies Close to Meltdown". Next is Dan Norcini...and it's entitled "Stunning Developments in the Gold & Silver Markets". In fifth place comes another blog with Michael Pento. It's headlined "Unprecedented Interventions Will Lead To Chaos & Destruction". And lastly is this blog with Gerald Celente. It's entitled "Gold, Silver & a Major October Surprise".
If there is a road to a happy ending in Afghanistan, much of the path may run underground: in the trillion-dollar reservoir of natural resources — oil, gold, iron ore, copper, lithium and other minerals — that has brought hopes of a more self-sufficient country, if only the wealth can be wrested from blood-soaked soil.
But the wealth has inspired darker dreams as well. Officials and industry experts say the potential resource boom seems increasingly imperiled by corruption, violence and intrigue, and has put the Afghan government’s vulnerabilities on display.
It all comes at what is already a critically uncertain time here, with the impending departure of NATO troops in 2014 and old regional and ethnic rivalries resurfacing, raising concerns that the mineral wealth could become the fuel for civil conflict.
This very interesting 2-page story showed up on The New York Times Internet site sometime on Saturday...and I thank Donald Sinclair for sending it. The link is here.
Around 10,000 striking South African platinum miners marched from one Lonmin mine shaft to another on Monday, threatening to kill strike breakers, as another illegal stoppage hit Gold Fields, the world's fourth biggest gold miner.
Wage talks to end the month-long Lonmin strike, which erupted in deadly violence last month, failed to start as scheduled. The independent labor mediator said it could only take part in the process if workers returned to work by a Monday deadline, but the vast majority stayed away.
The column of marching strikers, which swelled through the day, filled a two-lane highway and stretched for over a mile, watched by a heavily-armed escort of riot police. Many of the marchers were armed with sticks, spears and machetes.
This Reuters story showed up as a posting on the mineweb.com Internet site yesterday. It was filed from Marikana, S.A. yesterday...and I thank Manitoba reader Ulrike Marx for her final offering in today's column...and the link is here.
Lesiba Seshoka, spokesperson for the National Union of Mineworkers (NUM), says the latest strike at Gold Fields KDC West operations could have found its origins in the same bed of discontent with local union branch leadership that underlay the strike action at the mine's KDC East operations last week.
In seeing last week's strike by approximately 12 000 mineworkers from the KDC East (Kloof mine) result in the suspension of NUM's local branch leadership pending an investigation, the mine workers at KDC West may have the same objective in mind.
Seshoka confirmed that the NUM branch leadership at KDC West (or Driefontein) part of the operations is separate from the suspended KDC East leadership.
Lunsche confirmed that production at the KDC West mine was approximately 1400 ounces per day and that between 4500 and 5000 ounces were lost during last week's strike.
You need a program to keep up to the union politics in the mining industry in South Africa these days. But it's getting uglier by the minute...and I doubt very much that this genie is going back in the bottle any time soon. This mineweb.com story showed up on their Internet site yesterday...and I thank Donald Sinclair for his final offering in today's column...and the link is here.
The last time we looked at monthly Chinese imports of gold from Hong Kong in 2012, the comparable country in question was Portugal (whose citizens, if not central bank, incidentally have run out of gold to sell), because that is whose total gold holdings (at 382.5 tons) Chinese imports had just surpassed.
Fast forward a month later, and the update is even more disturbing. In July, Chinese gold imports from HK, after two months of declines, have picked up once more and hit a 3-month high of 75.8 tons. While it is notable that this number is double the 38.1 tons imported a year prior, and that year-to-date imports are now a record 458.6 tons, well over four times greater than the seven month total in 2011 which was 103.9 tons, what is far more important is that in the first seven months of 2012 alone China has imported nearly as much gold as the total holdings of the hedge fund at the heart of the Eurozone, elsewhere known simply as the European Central Bank.
This item was posted over at the Zero Hedge website on Saturday...and I thank U.K. reader Tariq Khan for sending it along. The link is here.
One of the points we've made several times over the last year is that traders stuck in an old paradigm are frequently selling gold for the wrong reasons. The most egregious (or just plain silly) example is that gold often drops when the euro drops.
This happens, not because there's anything wrong with gold at such times, but because gold is priced in dollars. Instead of being thought of as a store of value in many investors' minds, gold is viewed as a hedge against weakness in the dollar.
But what are dollars priced in? Nothing, actually. Purchasing power is the underlying reality any "price" for dollars should get at, but that's hard to measure - and the government can't be trusted to report the truth about this. Unfortunately, in today's world currencies are valued in many people's minds by their "strength" in foreign exchange markets.
So when the euro gets slammed, the dollar rises, and this apparent "strength" of the dollar makes gold seem less attractive as a hedge, and gold sells off. You can see this inverse correlation between gold and the dollar - as well as a very tight correlation between gold and the euro - in this chart of recent price action.
Yesterday's edition of Casey's Daily Dispatch was written by the International Speculator's editor, Louis James...and it's definitely worth reading. The link is here.
Don's entire Friday podcast from Chicago deals almost exclusively with gold...and on what he expects from the precious metal over the next few months and beyond. When you hear non-gold bugs like Don Coxe starting to talk dirty about gold, you know that this bull market has developed some real legs.
It's posted over at the bellwebcasting.ca Internet site...and the interview runs about 32 minutes. It's certainly worth listening to if you have the time. I thank reader Neil West for bringing it to our attention. The link is here.
We are not witnessing a time of peak gold prices, renowned gold expert Pierre Lassonde observed Monday during the Denver Gold Forum.
Nevertheless, Lassonde warned the gold mining industry faces a "very, very challenging time" trying to grow over the next 10 years, a situation he attributes to the lack of a paradigm shift "in our industry's exploration"
Junior exploration companies aren't getting funded, Lassonde noted, as new finds are taking longer to bring to market, an average of 12 to 15 years until production. Instead of today's mega-gold projects, Lassonde suggests mining companies need to find smaller, higher grade projects that are easier to permit.
Lassonde also quipped that he is willing to "bet a lot of money" on a dollar-gold ratio of 2-to-1 in the future, noting that the ratio was 42-to-1 in 2000 and is now down to 8-to-1.
This mineweb.com story was posted on their Internet site early this morning BST...and I thank Ulrike Marx for sliding this into my in-box in the wee hours of this morning. The link is here.
Even the eminently respectable institutional service, The Gartman Letter, expressed sympathy with the GATA bullish view of the silver market on Thursday.
The Privateer summarized the significance of gold's move: "In a bit more than two weeks, since Aug. 22, spot future gold is up $100. Almost all of that rise has in fact come since August 30 when gold closed at $1,657.
"On Sept. 7, it closed at $1,740. Gold's high for 2012 is $1,789, the spot future close on Feb. 23. A couple of more rises like the one on Sept. 7 and that will be comfortably taken out."
This must read marketwatch.com story was posted on their Internet site yesterday...and I found it in a GATA release. The link is here.
Base metals commodities are the strongest position against coming catalysts, noted investor Dennis Gartman said Monday on CNBC.
Earlier, data from the Commodities Futures Trading Commission showed that hedge funds are ramping up their commodities positions to a 16-month high, which Gartman said was “precisely the right thing” to do.
“To me, it looks like I want to own gold on balance in almost any type of commodity terms, dollar terms, euro terms, yen terms. And I even want to own gold while being short of soybean meal,” he said.
Chris Powell sent me the link to this story. His covering comment read "...time to dump everything." I knew before I clicked on the link that Dennis was "long of gold" once again...a sure sign, at least in the past, that gold was about to get clocked. Let's see how his track record holds up on this bet. This CNBC story was posted on their website late yesterday afternoon...and the link is here.
Shocking Gas Price Prediction Released...
At an industry meeting in Houston, a former Big Oil executive made a shocking prediction. He told the assembly of insiders that gas prices could soon soar as high as "$7 to $8 a gallon."
Smart Americans are getting ready for a "double" in gas prices, and setting themselves up to get rich as gas prices rise.
I’ve known that the silver market has been manipulated by concentrated commercial shorting since 1985, when I started complaining to the CFTC and the silver exchanges (COMEX, and back then, the CBOT). I never imagined it could last this long. Then again, in 1985 I never imagined such a thing as the Internet, or that I would be disseminating information about the silver manipulation on such a thing. It was not remotely possible for me to imagine I would be writing to...and about...the single entity responsible for the manipulation. I never imagined that I would be saying essentially the same thing in 2012 that I said in 1985. - Silver analyst Ted Butler, September 8, 2012
I certainly wouldn't read too much into yesterday's price action, although I was rather surprised at the large volume associated with what little price activity there was.
Nothing much has changed, though. Will we go higher from here, or be presented with an engineered price decline in the not-to-distant future? The answer is unknowable. The precious metals should be priced many orders of magnitude higher than they already are, so there should be nothing stopping prices from continuing to climb...unless JPMorgan et al can or will do something about it in the very short term.
Today is the cut-off for Friday's Commitment of Traders Report...and after last Friday's big jump in price, I'm not really looking forward to the numbers, although part of Friday's rally sure looked like short covering of some type, so I may be pleasantly surprised. But that's not the way I'd bet it, if forced to.
Since silver is the most overbought of all four precious metals, I thought that looking at the weekly chart, rather than the daily chart, would put this current rally in more perspective...and it does. As you can see, on a weekly basis, we are nowhere near overbought in silver when you consider the big rally that began in August 2010...and ended with the May 1, 2011 drive-by shooting. Both the RSI and MACD lines are a long way from nosebleed territory. As I keep saying, any sell off here should be considered a buying opportunity...and that's what I'll be using it as.
(Click on image to enlarge)
With all the talk last week about the Bank of India trying to discourage gold sales in that country...along with talk of another tax on gold...I posted the rupee/gold chart in this space a few days back. Now here's the silver equivalent of that chart...courtesy of Nick Laird, of course.
(Click on image to enlarge)
For the second day in a row, both silver and gold rallied in early morning trading in the Far East. But, also for the second day in a row, a not-for-profit seller showed up shortly before 11:00 a.m. Hong Kong time...and that was that. The prices of both metals have chopped more or less sideways since then...but both are now rallying now that London has been trading for a bit more than two hours. Volumes in both metals are even higher than they were at this time yesterday. The dollar index fell from 80.38 to 80.15 in a one hour time span starting around 3:20 p.m. Hong Kong time...and ending around 8:20 a.m. in London...and that small drop is evident in the price action during that time period. And as I hit the 'send' button at 5:20 a.m. Eastern time, gold is up about nine bucks...and silver is up 35 cents.
I haven't the foggiest as to how today, or even the rest of the week is going to turn out. The FOMC has their upcoming meeting, not that it matters in the grand scheme of things, so I'm ready for just about any eventuality...and will have a perfectly rational explanation if we blast higher from here, or get creamed in the short term.
That's more than enough for today. I hope your Tuesday/Wednesday goes well...and I'll see you here tomorrow.