The gold price didn't do much until 3:00 p.m. Hong Kong time...and then the high-frequency traders showed up...and by the Comex open, gold was down about ten bucks from Monday's close in New York.
Then the bid vanished...and gold was down another twelve dollars in less than two minutes...and it was all down hill from there. The low price tick [$1,594.40 spot] was at 11:15 a.m. Eastern...fifteen minutes after the London close. From there, the gold price recovered about ten bucks going into the close of electronic trading at 5:15 p.m. in New York.
Gold finished the Tuesday trading session just above the $1,600 mark at $1,604.80 spot...down $33.70 on the day. Net volume was an eye-watering 194,000 contracts.
It was pretty much the same story in silver, although there was a bit of a bounce at the 12 o'clock noon London silver fix [7:00 a.m. Eastern]...but that didn't matter much once trading on the Comex began.
The low price tick [$29.06 spot] came at the same time as gold's...11:15 a.m. in New York. The subsequent rally got sold off...but silver rallied a bit from there, closing the day at $29.47 spot...down 62 cents from Monday. Net volume in silver was pretty big as well...42,000 contracts. But compared to the volume in gold, silver volume was tiny, as there just aren't that many speculative longs left to be flushed out at these price levels...or new shorting by the technical funds, and I'm sure there was some of that going on...and in gold, too.
But it just wasn't gold and silver that got it in the neck yesterday. Platinum and palladium got creamed as well, with platinum down 1.18% and palladium down a whopping 3.73%. Both gold and silver were down 2.06%.
The dollar index opened around the 79.60 mark...and by mid-morning in the Far East was in rally mode. The high water mark [about 79.95] came about 11:15 a.m. in New York...with a couple of minor dips along the way. That high tick coincided precisely with the lows for both gold and silver. From that high, the index fell about 25 basis point in the next two and a half hours...and after that began to rally a bit going into the close in New York.
The dollar index closed up about 25 basis points from Monday...but its intraday price move was about 40 basis points. That's not a lot of index movement to hang an intraday move in silver of $1.03...and $44 in gold...is it?
You pretty much have to have been born last night to believe that the sell-offs in the precious metals was related to that...considering the fact that the dollar was only up 20 basis points when the Comex opened for trading yesterday morning. A cursory glance at any of the charts of the four precious metals proves that this smack-down yesterday had nothing to do with what was going on in the currency markets. It was the 'da boyz' once again.
The gold stocks gapped down hard again...with the lows being set about 10:15 a.m. in New York. After that, the stocks traded pretty flat, even though the gold price continued to get hammered for another hour. Then late in the afternoon, the stocks rallied a bit...and the HUI managed to close back above the 400 mark. The HUI was down 3.38% on the day.
Despite the pounding that silver took, there were some green arrows here and there in the silver stocks. Nick Laird's Silver Sentiment Index closed down only 1.43%.
(Click on image to enlarge)
The CME Daily Delivery Report showed that 27 gold and 31 silver contracts were posted for delivery on Thursday...and the link to the Issuers and Stoppers Report is here.
There were no reported changes in either GLD or SLV yesterday...and the U.S. Mint reported selling another 3,500 ounces of gold eagles.
They didn't report receiving any silver over at the Comex-approved depositories on Monday...but they did ship 416,389 troy ounces out the door.
I was perusing the Q1 results for Endeavour Silver yesterday...and here's a paragraph out of their press release that's worth noting...
"In January and February 2012, gold and silver prices enjoyed a significant rebound from their lows in December 2011. Endeavour therefore elected to sell most of the precious metal inventory it accumulated in Q4, 2011 in order to capture the higher gold and silver prices. However, gold and silver prices corrected sharply once again in March 2012 so Endeavour management once again chose to accumulate its precious metal production in Q1, 2012 rather than sell at depressed prices. As of March 31, 2012 the Company held 941,875 oz silver and 4,156 oz gold in metal inventory carried at cost on the balance sheet."
This sort of intelligent thinking does wonders for the balance sheet of the company...and their shareholders should be grateful. I know that I am. But the management at Endeavour Silver, plus every other silver company, knows perfectly well that JPMorgan et al are rigging the silver price...and it would be far more useful if the silver companies withheld a small percentage [5-10%] of their annual mine production from the market on a permanent basis until this silver [and gold] price management scheme comes to an end.
Here's a chart of the "US Bond Yields" courtesy of Nick Laird. In his covering e-mail he made note of the fact that they were "pitiful...and D.O.A." That sums it up nicely.
(Click on image to enlarge)
I have lots of stories again today and, as always, the final edit is up to you.
More than 1,300 tubes that carry radioactive water inside the San Onofre nuclear plant in Southern California are so damaged that they will be taken out of service, the utility that runs the plant said Tuesday.
The figures released by Southern California Edison are the latest disclosure in a probe of equipment problems that have kept the coastal plant sidelined for more than three months.
At issue has been the integrity of tubing that snakes through the plant's four steam generators, which were installed in a multimillion-dollar makeover in 2009 and 2010.
This rather unhappy AP story was picked up by abcnews.com yesterday...and I thank Casey Research's own Bud Conrad for bringing it to my attention. The link is here.
Bank of America has started sending letters to thousands of homeowners in the United States, offering to forgive a portion of the principal balance on their mortgages by an average of $150,000 each.
The reduction for qualifying homeowners could amount to monthly savings of up to 35 percent on mortgage payments, Bank of America said in a news release on Monday evening.
The principal reduction offers from Bank of America Home Loans are the result of a $25 billion settlement agreement earlier this year with 49 state attorneys general as well as federal authorities who had been investigating allegations of abuses over the handling of foreclosures.
This short story was out of The New York Times...and was posted on the finance.yahoo.com website yesterday. I thank Scott Pluschau for sending it along. The link is here.
Tony Yang is getting beaten to a pulp.
He's not wanted by mobsters nor is he another Cybercrime bully. The former University of California doctoral student (c/o '09) just says that's what it feels like each quarter when he wraps up an adjunct teaching gig and goes home without a permanent job offer.
"It can be very tough on the psyche," he told the Chronicle of Higher Education. "The darkest moment had to be when I finished my dissertation. I turned it in and there (was) no job ... So when I graduated, the first thing I had to do was file for unemployment."
As a kid, his family supplemented their income with food stamps. Decades later, he found himself in the same position, applying for welfare to get by when his doctoral degree wasn't enough to bring home a steady paycheck.
This businessinsider.com story was posted on their website late last night...and I thank Roy Stephens for digging it up on our behalf. The link is here.
On most issues, former Gov. Mitt Romney tries to distinguish himself from President Obama and set his policies apart from those of the current administration. Yet, in one area Romney is not only a clone of Obama but has doubled down and insisted that the president's policies be applied with even greater force. This area involves China and its alleged currency manipulation.
The exchange rate between the U.S. dollar and Chinese yuan is the main battlefield in the global currency wars. Romney demands that China be officially branded a currency manipulator and suffer retaliation in the form of taxes and trade sanctions from the United States. This is just a more extreme form of Obama's continual diplomatic pressure on the Chinese to revalue their currency upward.
The currency wars that Romney has vowed to fight are a recipe for disaster. The right course is sound money as embodied in the King Dollar policies of Paul Volcker and Ronald Reagan. The way to compete in international trade is not with a cheap currency but with technology, innovation, education, good labor-management relations, and a business-friendly environment. This is exactly how the Germans succeed at the export game. Germany has had export success for decades even with a strong currency because they have a favorable business climate.
This must read Rickards commentary was posted over at the usnews.com website on Monday. I was saving it for the weekend, but thought the better of it. I thank reader Randall Reinwasser for bringing it to our attention...and the link is here.
Spain will swoop in with public money this week to clean up huge bad loans at the nation's fourth-biggest listed bank, Bankia, the government said Monday.
As news emerged of the impending rescue of Bankia, created in 2010 from a merger of seven savings banks, its executive chairman Rodrigo Rato announced his resignation.
Spain's banks are still struggling to emerge from a 2008 property bubble collapse, which eliminated millions of jobs and left the financial sector buried in risky assets.
This AFP story was picked up by news.yahoo.com on Monday. I borrowed it from yesterday's King Report...and it's definitely worth skimming. The link is here.
The trade row between Argentina and Spain took another twist on Tuesday after the Spanish telecoms giant Telefonica was ordered to pay $43m (£26.6m) for an interruption in mobile phone services lasting just a few hours.
The fine by Argentina comes just days after President Cristina Fernandez de Kirchner seized control of domestic energy company YPF from Spain’s Repsol.
Julio De Vido, the Argentine planning minister, said on Tuesday that the penalty against Telefonica, which owns O2 in the UK, was intended to be a warning to other telecoms providers that service interruptions will not be tolerated.
This is another offering from Roy Stephens. It was filed over at The Telegraph just before midnight their time last night...and the link is here.
A political landslide brought Viktor Orbán into power in Hungary, where he quickly cemented his position with a two-thirds majority. But halfway through his term, the state of his administration is grim.
Orbán probably would have envisioned his mid-term review differently. Two years ago, after the triumphant election victory of his right-wing nationalist Fidesz Party, the beaming winner Orbán announced the "overthrow of the old and the development of a new national order." In the meantime, the situation in Hungary could hardly be more desolate. The country is on the brink of financial ruin, its economy is headed downhill and the impoverishment of large groups of people is creating social problems. Hungary is extremely polarized domestically, and on the international stage it is more isolated than any other European Union country has ever been before.
As if all of this weren't enough, Orbán is also grappling with unpleasant personnel issues. On the morning of May 2, the parliament had to elect a new president. The previous officeholder, Pál Schmitt, had resigned in early April after only 20 months. The former Olympic gold medalist in fencing, hand-picked by Orbán in the summer of 2010 to play the role of a loyal rubber-stamper of laws, stumbled into a plagiarism scandal. His 1992 doctoral thesis consisted almost entirely of Hungarian translations of other works.
This story was posted over at the German website spiegel.de yesterday...and is another offering from Roy Stephens. The link is here.
Ukrainian President Viktor Yanukovych wanted to take revenge on his arch-rival Yulia Tymoshenko. But locking up the former prime minister was the worst mistake of his presidency, say analysts. Tymoshenko has the upper hand in the battle for public opinion, while Yanukovych is ruining his presidency.
The humiliation that Viktor Fedorovych Yanukovych experienced on March 27 couldn't have been worse.
The Ukrainian president had traveled to the South Korean capital Seoul to attend an international summit on nuclear safety. On the day before the summit, he had handed over the last highly enriched uranium still in Ukraine's possession to nuclear power Russia, in keeping with its commitment to relinquish its stock of the material before the summit. And now he wanted to receive the praise he thought he deserved from US President Barack Obama, the most important guest at the Seoul meeting.
The Foreign Ministry in Kiev had done everything in its power to arrange a private meeting with the America president. But the US president had no intention of enhancing the status of his Ukrainian counterpart with such a gesture. Instead, Obama spent only four minutes talking to Yanukovych while standing up in the conference center. It was clearly meant as a punishment for a political pariah.
This is another story that was posted on the spiegel.de website yesterday...and another hat tip goes out to Roy. It's a short story...and the link is here.
Left-wing leader Alexis Tsipras was handed a mandate to attempt to form a coalition, after the two mainstream parties failed to reach a deal following Sunday’s inconclusive election.
But fresh elections loom as soon as next month, after the politician said he would rip up the agreement under which Athens was bailed out by the EU and the International Monetary Fund (IMF), cancelling cuts and reforms.
The turmoil is seen as raising the chances of Greece leaving the shared currency.
This is another Roy Stephens contribution. It, too, was posted late yesterday evening in The Telegraph...and the link is here.
The political dam has broken in Europe. German Chancellor Angela Merkel no longer has enough allies in the club of EU prime ministers to impose her hair shirt agenda. Her methodical plans are disintegrating on every front.
Mrs. Merkel has insisted on austerity and reforms alone, imposing the full burden of adjustment on the weaker states. She has brushed aside arguments the EMU's crisis is in essence a North-South imbalance in trade and capital flows that cannot be corrected in this fashion within a currency union.
Her government has ignored warnings that simultaneous contraction in the whole of southern Europe - without offsetting monetary stimulus or expansion in North Europe - can only lead to a replay of the Gold Standard errors of the early 1930s.
This phase of the crisis over. Now Germany itself will have to adjust.
This AE-P offering last night in The Telegraph is a must read...and another offering from Roy Stephens. The link is here.
Iran is accepting renminbi for some of the crude oil it supplies to China, industry executives in Beijing and Kuwait and Dubai-based bankers said, partly as a consequence of US sanctions aimed at limiting Tehran's nuclear programme.
Tehran is spending the currency, which is not freely convertible, on goods and services imported from China.
Most of the oil that goes from Iran to China is handled by the Unipec trading arm of Sinopec, China's second-largest oil company, and through another trading company called Zhuhai Zhenrong, the oil industry executives said.
This story was posted in the Financial Times of London on Monday...and is posted in the clear in this GATA release...and the link is here.
Mainland China’s gold imports from Hong Kong surged more than six-fold in the first quarter, adding to signs that the country may displace India as the world’s largest consumer of the precious metal on an annual basis.
Imports from Hong Kong were 135,529 kilograms (135.53 metric tons) between January and March, from 19,729 kilograms in the year-earlier period, according to data from the Census and Statistics Department of the Hong Kong government. Shipments in March rose 59 percent from February, yesterday’s data showed.
Demand has climbed in the world’s second-largest economy as rising incomes and curbs on property speculation boosted purchases. China may become the biggest user annually this year, according to a forecast from the producer-funded World Gold Council. Last year, total Indian demand including for jewelry and investment was 933.4 tons to China’s 769.8 tons.
This Bloomberg story was filed from Singapore and Beijing early yesterday morning in the Far East...and it's no surprise that Australian reader Wesley Legrand was the first one through the door with it. It's a must read...and the link is here.
Part of this Goldcore Limited article contains the information in the previous Bloomberg story. The information contained in the headline to this story follows immediately after the China Gold Import story. This, too, is a must read...and I thank reader 'David in California' for bringing it to our attention. It's posted over at the goldseek.com website...and the link is here.
The first blog is a must read from Nigel Farage. It's headlined "There Will Be an attempt to Install a Dictatorship". The next blog is an exclusive piece written for KWN by Bob Fitzwilson. It's entitled "Global Meltdown of Historic Proportions & A Fork in the Road". And lastly is the audio interview with James Turk. I posted the blog of this interview in my column yesterday.
Gold is basically back to breakeven for the year, and analysts say the precious metal looks set to go even lower.
June gold futures plummeted $35 an ounce Tuesday to end the session at $1,604.50, after briefly dipping to $1,595.50, the lowest settlement and intraday price for gold since Jan. 3.
Gold has plunged about $120 from this year's high near $1,715 an ounce in early February.
The primary catalyst for gold's slide, say traders and analysts, has been the euro's decline and resulting strength in the U.S. dollar due to worries about the economic future of the eurozone, following weekend elections in Greece and France.
I don't know whether to laugh or cry when I see bilge water stories like this in the main stream press. West Virginia reader Elliot Simon said the same thing in his covering e-mail. It's posted over at the cnbc.com website...and the link is here.
“Investors who would like to take delivery of Gold Bars in exchange for their Shares (Delivery Applicants) may submit Shares to the Trust in exchange for Gold Bars,” the proposed ETF’s prospectus said—a new twist that may add to the allure of gold at a time when many believe it’s the only true store of value since the financial crisis of 2008-2009.
While it’s not at all clear that investors would even take advantage of this convertibility feature, it seems a fair bet that giving shareholders the option to turn their paper certificates into physical gold pretty much obviates objections raised by some of the more fervent gold holders who believe that gold—as in actual bars or coins—is really what investors should own.
More to the point, the plan takes off the table suspicions some gold investors have with physical gold ETFs that don’t allow for shares to be converted into actual gold. The most ardent gold bugs are quick to suggest that because current ETFs can’t be converted into bullion, it might be possible that they don’t actually hold gold. ETF sponsors are dismissive of such suspicions.
This story was posted over at the indexuniverse.com website yesterday...and I thank Randall Reinwasser for sending it along. The link is here.
Sprott Asset Management's John Embry today tells King World News that the counterintuitive drubbing of the monetary metals is an indication of the desperate circumstances of fiat money and its managers. He suspects that it presages another 100-percent-up year for the mining shares.
Meanwhile, mining entrepreneur and gold advocate Jim Sinclair tells gold investors that they should depart the kitchen if they can't stand the heat, but he's staying. [As am I. - Ed]
The links to both stories are contained in this GATA release...and the link to that is here.
Insofar as the price of gold is an international political decision as much as a market decision, we particularly do not know when crucial political decisions affecting the gold price will be made. But they have been made before, they will be made again, and we are seeing now so many developments that correspond to the developments immediately preceding the last great revaluations of gold, in 1968 and 1971.
[And] we do know from history that the biggest circumstances with gold, and thus gold's valuation, tend to change overnight, when all is revealed suddenly. The central bankers won't be calling us, or you, about this a day or two ahead of time. They'll be calling their agents at JPMorganChase and HSBC. All we can do is strive to hasten the day of change. And such days do happen, and have happened in times much like the ones we are experiencing now.
This op-ed piece by Chris is a must read...and it's posted over at the gata.org website. The link is here.
Forum Uranium Corp.(FDC.V) announces new uranium discovery in the Athabasca. Seven of nine holes at the Opie Zone encountered uranium mineralization at shallow depths, grading up to 0.142% uranium over 7.6 metres, and 0.458% over 0.7 metres. The zone remains open to the east, west and down dip. There is a high potential for more mineralization within the zone, and 15 more gravity targets to be drilled. Please visit our website to learn more about the project and request additional information.
The manipulation today is a lot more brazen than ever before. But the fundamental reason for it has not changed, it has merely become more pressing. Gold (and Silver) can NOT be allowed to emerge as any kind of a viable alternative to "traditional" mainstream paper investments. Even more to the point, Gold (and Silver) can NOT be allowed to emerge as any kind of viably alternative MONEY. - Bill Buckler, Gold This Week, 05 May 2012
As B.B. said above...it's "a lot more brazen that ever before"...and it was certainly all of that yesterday. However, I was encouraged by the immense volume in gold...and also to a certain extent in silver. This is almost always the sign of a washout to the downside. The only good thing about it...and only Commitment of Traders wonks like Ted Butler and myself can appreciate it...is that all of Tuesday's price action up until the close of Comex trading will be in Friday's COT report. It will certainly be a sight to see.
The Relative Strength Indicator in silver is now touching the oversold mark at 30.06 in the 1-year silver chart below. Can we go lower in price from here? Sure. Just glance at the RSI during the later part of December 2011 or, heaven forbid, the third week of September. But whether that happens or not is up to JPMorgan et al, as it always is.
(Click on image to enlarge)
When will the bottom be in? Don't know. But, as Ted Butler keeps harping away about, we'll only know it when we're looking at it in the rear-view mirror. But even more important than the bottom itself, will be the actions of JPMorgan et al on the subsequent rally. Will they step in as short sellers of last report as they always have...or will they put their hands in their pockets? As I keep saying at least twice each week...the answer to that question is all that matters.
In Far East trading on their Wednesday, all the precious metals were under pressure once again. The Far East lows in gold and silver came shortly after 1:00 p.m. Hong Kong time...and both have rallied off their lows, but have flat-lined going into the London open at 8:00 a.m. BST...3:00 a.m. Eastern.
At the London open, gold was down about twelve dollars...and silver was down a bit over 30 cents. At the Far East low, silver was down almost 70 cents.
The CME's volume figures for both gold and silver went M.I.A. about 2:30 a.m. Eastern time, but the last numbers I saw showed that gold volume was already north of 24,000 contracts...and silver was well over 4,000 contracts. With new lows being set for this move down, there was obviously more technical fund long liquidation...and more short selling by them and the small traders as well. But having said that, these are still immense volume numbers for this time of day...and this was before London even opened.
As of 3:10 a.m. Eastern time, the dollar index is basically unchanged from Tuesday's New York close, however it did manage to poke its nose above the 80.00 mark for a few hours. But, as you've already figured out, dear reader...the goings-on in the precious metals have nothing to do with the currency markets.
More than two hours have passed since I wrote those above four paragraphs. Since then, both gold and silver have hit new lows once again for this move down as of 10:15 a.m. in London...5:15 a.m. Eastern time. The CME's volume figures are now available on their website once again...and as I hit the 'send' button at 5:20 a.m. Eastern, gold volume is an immense 48,000 contracts, with silver north of 8,000 contracts. These volumes are double what they were before London opened. The dollar index is hovering around the unchanged mark...and just below the 80.00 level. Gold is down about twenty bucks...and silver is down over 70 cents. Here's the Kitco silver chart as of 5:18 a.m. Eastern time.
As the news stories of the last few days have hinted at, the world's current economic, financial and monetary system has reached the end of the line. There is no way out...and no way to "extend and pretend". We are done for. The only thing not known is how the end will manifest itself. But when it does arrive, the world as we know it today will collapse in a heap...and as far as I can tell, there's no "Plan B" waiting in the wings. But there's still the Gold card yet to be played.
I'll leave you hanging on that cheery note...and I await the Comex open with more than the usual amount of interest.
See you on Thursday.