After not doing a whole heck of a lot during Far East and most of the London trading day, the gold price blasted through the $1,600 spot mark around 9:00 a.m. in New York...and then worked its way slowly higher from there.
The high price tick...$1,619.00 spot...came around 11:45 a.m. Eastern time. From there, the gold price got sold off around twenty bucks, before working its way a bit higher into the close. The chart looks more impressive than the gold price action really was...as the metal only closed up $13.70 on the day at $1,609.80 spot. Net volume was pretty chunky at 140,000 contracts.
The silver price spent most of the Tuesday trading day below its Monday closing price, but it had recovered to almost unchanged by the time it, too, took off just before 9:00 a.m. in New York. Although it did manage to break through the $29 spot price mark, it was obvious that a willing seller was waiting to make sure that that was as high was it got.
Like gold, the chart looks great, but silver closed up only 39 cents at $28.97 spot. Net volume was around 33,000 contracts.
Platinum and palladium finished higher as well, but their respective chart patterns didn't remotely resemble the charts for gold and silver. I'm only guessing but the NASA moon-shot 8:45 a.m. rallies in silver and gold looked like short covering to me.
The dollar index opened almost at its high of the day...and hit its 82.70 high a couple of times during the Tuesday trading session...once in early Far East trading and the other around 10:20 a.m. Eastern time in New York. From there it faded a bit into the close and finished the day at 82.43...down less than 20 basis points. It's obvious that the trading pattern in the dollar index was not a factor in yesterday's precious metals price action.
The gold stocks gapped up a bit at the open...and then basically followed the gold price around. The twenty dollar drop in the gold price between 11:45 a.m. and around 2:30 p.m. didn't seem to phase the gold stocks too much...and they rallied nicely into the close from that low. The HUI finished up 2.50%.
The silver stocks put in a decent performance as well...and Nick Laird's Silver Sentiment Index closed up 3.03%.
(Click on image to enlarge)
The CME Daily Delivery Report showed that only 30 gold contracts were posted for delivery on Thursday.
GLD showed a tiny withdrawal of 13,323 troy ounces, which was obviously a fee payment of some kind. There was a decent addition to SLV yesterday, as an authorized participant deposited 873,097 troy ounces.
Switzerland's Zürcher Kantonalbank had an update for both their gold and silver ETFs as of the close of trading on Tuesday. Their gold ETF was up a decent 55,106 troy ounces...but it was their silver ETF that had the stand-out increase, as they took in 2,242,701 ounces of silver between June 4th and June 11th. That's the biggest once week change in silver I've ever seen in that fund.
There was a smallish sales report from the U.S. Mint. They sold 2,000 ounces of gold eagles and 25,000 silver eagles.
The Comex-approved depositories reported that 300,186 troy ounces of silver were added to their stocks on Monday...and 400,951 troy ounces were shipped out the door. The link to that activity is here.
I have the usual number of stories today...and I hope you have time to skim the ones that interest you.
Since the recession, persistent unemployment has left middle-class life out of reach for millions of Americans.
But few residents of Morris County, N.J., could have ever imagined they would end up on government assistance.
Morris County is known for its wealth and million-dollar homes. Median household income there is over $91,000. Yet, the number of people receiving food stamps in the area has nearly tripled in the past five years.
Phyllis Tonnesen is on the front lines of the epidemic. She works for the Department of Human Services Office of Temporary Assistance. In her 27 years at the agency, she says this is the worst she's ever seen it. The food stamp caseload has increased 240% since the beginning of the recession.
This cnn.com story was posted on their Internet site about lunchtime yesterday afternoon...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
JPMorgan Chief Executive Jamie Dimon will tell lawmakers that the bank's recent multibillion-dollar trading loss occurred because poorly managed traders embarked in January on a misguided hedging strategy they did not fully understand.
His written testimony prepared for a hearing on Wednesday gives a few more details about what went wrong, and what the nation's largest bank by assets plans to do about it.
Dimon does not, however, give an update on whether the losses have grown beyond last month's $2 billion estimate.
This Reuters story was picked up by the finance.yahoo.com website yesterday...and I thank Scott Pluschau for sending it our way. The link is here.
Between discussions of gold-backed debt issuance in Europe (from Rick Santelli) and why Europe's problem is not merely a banking crisis but far worse, Michael Pento asks, rhetorically we pre-supposed: "What is wrong with letting the free markets work here? Let's let what is going to happen, happen!"
But Bill Griffeth provides the truth-quote-of-the-day (in a stunning kimono-opening for the CNBC-watching public at large) when he opines on Pento's question that "There is not a single politician who hopes to let the free markets work and be reelected."
Indeed - as Santelli adds: "You Nailed It!"
I had to watch this CNBC video clip right to the end to hear those words come out Griffeth's mouth...and they did. The zerohedge.com piece, complete with the 4:49 minute CNBC 'Closing Bell Exchange', is linked here...and I thank Australian reader Wesley Legrand for bringing it to my attention.
The Asian markets are something of a canary in the coalmine when it comes to foreseeing how the day will unfold for European and US financial markets. And on Tuesday, that canary was looking woozy indeed.
After widespread investor optimism on Monday in the wake of the weekend news that Spain would receive up to €100 billion ($125 billion) in emergency aid for its wobbling banks, Tuesday has brought a return to realism. Black stock-exchange numbers have once again nudged back into the red and worries about the survival of the euro zone have returned despite the Spanish bailout.
The apparent skittishness isn't surprising. Greek voters go to the polls on Sunday in an election that many believe could determine whether the country remains in the euro zone or is forced out. Potentially more ominously, numbers released on Monday indicate that the Italian economy is in disastrous shape, having shrunk in the first quarter faster than it has in three years. It is the third quarter in a row that the Italian economy, the euro zone's third largest, has contracted. Many believe that it is merely a question of time before Italy also has to apply for emergency aid from the euro backstop funds.
Meanwhile, despite official optimism from Madrid -- and even from the oft-dour German Finance Minister Wolfgang Schäuble -- it is doubtful that €100 billion will be enough to save Spain's banking industry and put the euro zone back on the road to recovery. For one, recent history has shown just how quickly banks can run into significant trouble should the economic situation rapidly worsen.
This story, courtesy of Roy Stephens, was posted on the German website spiegel.de yesterday...and it's original title was "Europe Prepares for the Worst Despite Spain Bailout". If you don't want to read the whole story, you should at least skim the four paragraphs that I cut and paste above. The link is here.
Germany's central bank has shot down EU proposals for a European banking union, warning categorically that eurozone liabilities cannot be shared without a fundamental shift towards fiscal and political union.
The Bundesbank's vice-president Sabine Lautenschlaeger hammered home the point in what is a clearly co-ordinated push to check the plan. "The result would be a pooling of the governments' liabilities through the back door," she said.
"Whoever is footing the bill must also have a right of control, particularly when it comes to the large sums that are seen in banking crises," she added, alluding to rulings by German courts that unquantifiable EU liabilities breach Germany's constitution.
This story appeared on The Telegraph's website last evening...and I thank Roy Stephens for digging it up on our behalf. The link is here.
Egypt's presidential runoff election is pitting a former Mubarak associate against an Islamist. For many Egyptians, neither man is worthy of their vote. The country could face new unrest as a result.
Brothers Antar and Amgad used to be looking forward to taking part in a unique experiment. Proud Egypt, the most populous Arab country, was to become a democracy after decades of authoritarian rule.
But now the Farids -- two amiable, slightly overweight gentlemen with moustaches -- are standing in their tiny shop feeling frustrated. It is hot and dry, and the tired-looking ceiling fan barely makes a difference, as flies buzz around the roasting machines.
Like millions of other Egyptians, they feel cheated by their revolution, they were appalled to witness two hardliners turn out to be the frontrunners in the first round of elections on May 23 and 24: Ahmed Shafiq, 70, a former air-force general and member of the former Mubarak regime; and Mohammed Mursi, a 60-year-old engineer and senior official from the conservative core of the Islamist Muslim Brotherhood.
This is another story that was posted at the spiegel.de website yesterday...and another story courtesy of Roy Stephens. The link is here.
India may become the first nation among the BRIC to lose its investment grade, Standard & Poor's said in a report on Monday, resulting in a decline in the country's stock market.
Because of slow economic growth and political roadblocks to economic policy making, India's rating could be at risk, the rating agency said in a report titled "Will India Be The First BRIC Fallen Angel?"
BRIC nations comprise of Brazil, Russia, India and China. Currently, India's 'BBB-' long-term sovereign rating is one notch above the speculative grade.
This story was posted over at the rttnews.com website early Monday morning...and I thank Washington state reader S.A. for sending it along. The link is here.
The Chinese government has indicated it has no plans to change its position on oil purchases from Iran, a day after the United States left Beijing off a list of economies that are exempt from U.S. sanctions on Iranian oil imports.
Foreign Ministry spokesman Liu Weimin Tuesday rejected a question about whether China will reduce its oil imports from Iran and said these purchases are necessary.
China needs to import crude oil from Iran, Liu said, because of its economic development, describing it as “a completely legal” matter. China's purchase channels are normal, open and transparent and do not violate United Nations resolutions or harm the interests of any other party, he added.
This story was posted on the Voice of American website yesterday...and is Washington state reader S.A.'s second offering in a row. It's worth the read...and the link is here.
Christine Lagarde, the head of the International Monetary Fund, has warned that the world risks a triple crisis of declining incomes, environmental damage and social unrest unless countries adopt a more sustainable approach to economic growth.
"The idea that different economic, environmental and social objectives can be seen as distinct aspects of a single vision, essential parts of a connected whole."
But she said the current economic crisis in Europe and slowing growth worldwide, coupled with the growing threat from climate change and social tensions could wreck the efforts of leaders to chart a more sustainable future.
"Over the past four years, we have been mired in the worst economic crisis since the Great Depression. And we are not out of it yet.
"In fact, tensions are on the rise again, and financial stability risks have once more moved front and centre. Great uncertainty hangs over global prospects.
Lagarde is obviously a card-carrying member of the New World Order crowd. This story was posted in The Guardian yesterday afternoon...and I thank Scott Pluschau for his second offering of the day. The link is here.
Senior metals analyst for Casey Research explains why he feels there is almost no limit to how high the yellow can rise, and why a 'Greater Depression' could also be forthcoming.
This interview was done on June 1st...and was only posted on the hardassetinvestor.com Internet site yesterday. It's certainly worth the read...and the link is here.
The fate of the London Metal Exchange is about to be decided and a key board meeting is expected to convene today.
Quite apart from deciding whether a price tag of £1.2bn to £1.3bn is sufficient for shareholders (which for a company that makes no more than £10m profit is presumably a no-brainer) the board must also decide whether to award LME to an American bidder, Intercontinental Exchange (ICE), or its rival, Hong Kong Exchange and Clearing (HKEx). If the latter then that's a matter of genuine concern.
The LME's role in setting prices for industrial metals and in their trading, including the regulation of a global network of strategic warehouses, means it plays a pivotal role in world trade.
HKEx says it is entirely free of influence from Beijing and operating under the most "scrupulously high" levels of corporate governance. HKEx's chief operating officer, Gerald Greiner, claimed in a letter published by Telegraph Business on Monday that it is "ridiculous" to suggest otherwise. It's a claim aimed at addressing concerns about the LME's metals pricing and trading mechanism coming within the sphere of influence of China – the world's biggest consumer of metals.
It's my opinion that this story from The Telegraph late last night is required reading...and is Roy Stephens final offering in today's column. The link is here.
The first blog features John Embry...and is headlined "Despite Rally, Global Financial Crisis 2.0 is Imminent". The second is with Stephen Leeb...and it bears the title "This Is Exactly What Will Move Key Markets Going Forward". And lastly is this blog with the Godfather of newsletter writers Richard Russell. It's entitled "Financial Knockout, Gold & Zuckerberg"
Argentine President Cristina Kirchner has submitted a bill to Congress that would allow debtors to pay U.S. dollar-denominated contracts in pesos.
The bill comes amid a broad government push to wean Argentines off their long-held preference to use dollars for major transactions. It's unclear if the bill will apply retroactively or if it could affect government debt.
In early August the government faces a $2.2 billion payment on the Boden 2012 dollar-denominated bond.
The bill, as currently written, would allow debtors to "free themselves" from paying from the dollar payment requirement by paying "the equivalent amount" in pesos.
This story was in Monday's edition of The Wall Street Journal...and the headline is courtesy of Chris Powell. It's posted in the clear in this GATA release...and the link is here.
Kazakhstan's central bank plans to boost the share of gold in its gold and foreign currency reserves to 20 percent from 14-15 percent, deputy bank chairman Bisengali Tadzhiyakov said on Wednesday.
Tadzhiyakov, who gave no time frame for the move, said last week Kazakhstan planned to buy 22 tonnes of gold from local producers, which at that time he estimated would boost the share of the metal in the reserves to 15 percent from about 12 percent.
"We will buy from Kazzinc Corp. 20 tonnes (of gold) in 2012, and a further 4.5 tonnes from Kazakhmys," he told journalists on Wednesday, reading out updated figures from his report prepared for presentation in parliament. "The total volume is 24.5 tonnes."
I plucked this Reuters story from a GATA release that Chris Powell filed from Hong Kong on Wednesday evening...the wee hours of Wednesday morning in North America...and the link is here.
The chairman of the U.S. Commodity Futures Trading Commission, Gary Gensler, was ambushed by silver investor calling into an interview program this week on the cable television network C-SPAN, the Silver Doctors Internet site reports. Gensler wouldn't do more than shrug about the CFTC's never-ending supposed investigation of manipulation of the silver market. Silver Doctors has posted the full 39-minute interview here.
Pelangio Exploration Inc. (PX:TSX-V; PGXPF:OTC) announced the results of seven diamond drill holes totaling 1,574 metres from its ongoing drilling program at the Pokukrom East zone on the Manfo Property in Ghana. Highlights of the results included:
· 1.19 g/t gold over 113 metres, including 9.05 g/t gold over 7 metres;
The results continued to confirm a higher grade, shallow north plunging core of Pokukrom East zone with an open plunge of 600 metres from near surface in previously reported hole SPDD-088 (7.01 g/t gold over 19 metres) to 210 metres depth in the holes reported this week. Warren Bates, Senior Vice President Exploration, commented: “These are our best holes on the Manfo Property to date. These holes represent the north-plunging core of higher grade mineralization at Pokukrom East, now demonstrating an open plunge length of 600 metres.” Please visit our website to learn more about the project and request additional information.
If we don't do something to simplify the tax system, we're going to end up with a national police force of internal revenue agents. - Leon Panetta, U.S. Secretary of Defense
Although I was certainly happy with yesterday's price action in all the precious metals, the party favours are still in their box on the top shelf in the basement bedroom closet. A nice daily chart is not a breakout. We did go through gold's 50-day moving average to the upside yesterday, but that wasn't allowed to last.
As you can see from the 6-month chart below, gold has never been allowed to close above its 50-day moving average since the breakout attempt on June 1st. Let's see how it makes out as the week progresses...and silver has miles to go...over a dollar.
(Click on image to enlarge)
I mentioned in this column yesterday that one of the times that gold had been sold off on Monday was right at the open of the equity markets in New York...which is a phenomena that is quite common. I mentioned that I was going to comment on it in 'The Wrap'...which I did, but I forgot to attach the accompanying chart, so sweet young tender Juli, the nice lady that gets up at 5:20 a.m. Eastern time to post this column on the Casey Research website, pulled the associated paragraphs...which is precisely what she was supposed to do. So, I'll have at it one more time...
The 9:30 a.m. smack-down for both gold and silver was no surprise, as that is one of their favourite times to do the dirty...right at the opening of the equity markets in New York. Here's a little graph from German gold analyst Dimitri Speck that you've seen in one form or another in this space over the last many years.
And this is a new one he sent me last month...and it's updated to contain all the LBMA trading data in gold for every day of trading from August 1993 to the end of 2011...about 17 years, more or less.
Note gold's New York high tick is at 9:30 a.m. averaged out over those years...this past Monday being a case in point. But that event has occurred many times so far in 2012. That, and the London p.m. fix at 3:00 p.m. local time...10:00 a.m. in New York...are two of the stand-out features on this chart. It's the final act of the "London Bias" that I went on about in Tuesday's column.
(Click on image to enlarge)
Yesterday, at the close of Comex trading, was the cut-off for this Friday's Commitment of Traders Report...and I'll be more than interested in what it shows.
The gold market was as quiet as a church mouse in Far East trading during their Wednesday...and the price hung in just under the $1,610 spot price right up until shortly before the London open. Silver traded about one percent lower for a while during the Far East trading day, but fifteen minutes before the London open, silver is now down only about a nickel.
Volumes are the lowest I've ever seen for this time of day...2:45 a.m. Eastern time. Silver's net volume is a hair over 1,700 contracts...and gold's volume is 7,600 contracts. It's like the day before Christmas...and the dollar index isn't doing a thing, either. Hello...is anybody out there?
Almost two hours have passed since I wrote the above two paragraphs...and London has been open about ninety minutes. Both gold and silver are making rally attempts, but as of 4:25 a.m. Eastern time, gold hasn't been able to make it above yesterday's New York high...and silver is getting sold off every time it makes an attempt to break throught the $29 price 'barrier'. Volumes are double what they were from 2:45 a.m. Eastern time, but still very light...and the dollar index is down about 12 basis points as I hit the 'send' button at 4:30 a.m. Eastern.
Nothing much has changed in this slow-motion train wreck, as everyone is waiting for the next shoe to drop. Of course the entire world's economic, financial and monetary system is going to crash and burn in the not-to-distant future...and it's just a matter of how the end will manifest itself.
That's it for today...and I hope your Wednesday goes well.
See you on Thursday.