As I said in 'The Wrap' last night, trading was dead in the Far East on their Wednesday. A one hour rally in gold began the moment that London opened yesterday morning. At 9:00 a.m. BST the gold price broke through Tuesday's New York closing high...and that was the high for the day.
The price slowly declined from there...and by 12:10 p.m. in New York, gold was down ten bucks from it's London high. At that point, the high-frequency traders showed up...and by shortly before the 1:30 p.m. Comex close, they had the gold price down another twenty bucks and change.
From that low [$1,653.80 spot] the gold price recovered a bit going into the close of electronic trading at 5:15 p.m. Eastern time. Gold finished the Wednesday trading session at $1,662.10 spot...down $18.50 from Tuesday's close. Volume in the April contracts was very heavy...around 193,000 contracts...with a very large percentage of that being roll-overs.
The silver chart was a duplicate of the gold chart. From its London high at 9:00 a.m. British Summer Time, to its low at the close of Comex trading...$31.68 spot...silver was down a buck.
However, silver did manage to claw back some of those loses by the close. Silver finished the day at $32.04 spot...down 55 cents. Net volume wasn't overly heavy at around 29,000 contracts.
The dollar index opened around 79.10 in Far East trading yesterday morning...and closed in New York around 79.15. But between the open and close there was a lot of movement down and then up...and it didn't matter whether the dollar index was rising or falling, 'da boyz' were determined that the gold and silver prices were going to decline...and that's exactly what happened.
The gold stocks gapped down a bit at the open...and then continued down until 12:10 p.m. Eastern...which was the exact time that the rug got pulled out from underneath the gold and silver prices. Despite the fact that the metal prices cratered from there, the stocks barely budged...and even managed to rally a bit into the close.
I don't know what to make of that, but it certainly seemed counterintuitive to me. As it was, the HUI finished down 1.82% on the day.
The silver stocks did not do well at all...especially some of the juniors...and Nick Laird's Silver Sentiment Index closed down 2.90%.
(Click on image to enlarge)
The CME Daily Delivery Report showed that 6 gold and 91 silver contracts were posted for delivery on Friday. In silver, there were quite a few short/issuers...the big one being Merrill with 52. But the big long/stopper with 82 contracts was the Bank of Nova Scotia.
These above deliveries are the last for the March delivery month...so the decks are already cleared for tonight's First Day Notice report from the CME. The link to yesterday's Issuers and Stoppers Report is here.
There were no changes reported in either SLV or GLD.
There was a sales report from the U.S. Mint. They sold a chunky 17,000 ounces of gold eagles...and another 3,000 one-ounce 24K gold buffaloes.
Tuesday was another busy day over at the Comex-approved depositories. They reported receiving 1,518,116 troy ounces of silver...and shipped 650,506 ounces out the door. The link to that action is here.
Silver analyst Ted Butler posted his mid-week commentary on his website yesterday afternoon...and here are his comments on yesterday's price action in gold and silver.
"A quick word on [Wednesday’s] price weakness. The current market structure does not suggest a pronounced price decline ahead. The commercials, acting collusively and with dirty market tricks (HFT) at their disposal, can and do put prices wherever they desire on a short term basis. But it should be clear that the commercials are always the big buyers on these engineered sell-offs. The sell-offs invariably end when there is little speculative long liquidation remaining, as it serves no purpose for the commercials to drive prices lower if they can’t buy more. It seems to me that we are at, or very close, to that point where the commercials can’t induce much additional speculative long liquidation and new short selling in COMEX gold and silver. There’s no doubt that silver is manipulated in price, but there is also no doubt that even manipulated markets have a rhyme and rhythm. Lower prices are rigged by the commercials to get others to sell to them. Bottoms are defined when that selling runs out."
Here's a chart that Washington state reader S.A. sent my way yesterday. It appears that it came from The New York Times. You can see that the middle class is being decimated, with the rich getting richer...and everyone else is getting slowly poorer.
Here's another chart from S.A...and it doesn't require any explanation from me.
(Click on image to enlarge)
I have the usual number of stories today and, as always, the final edit is up to you.
Three of the four executives at MF Global called to testify before a House panel on Wednesday said that they were cooperating with federal authorities.
Democrats and Republicans alike mocked the executives before them.
“I actually don’t have a clue what to ask you,” Representative Michael Capuano, Democrat of Massachusetts, told the witnesses. “How am I supposed to ask you questions if none of you knew what was going on and have no information whatsoever?”
“It is absolutely disgraceful,” said Representative Steven Lynch, Democrat of Massachusetts. “It’s not believable at all up here.”
You can't make this stuff up. This story was posted in The New York Times late yesterday afternoon...and I thank reader Phil Barlett for sending it along. The link is here.
When considering the shocking decision by Goldman Sachs Group Inc. to change its board structure, don’t think of the firm as a typical Wall Street bank, think of it as a professional gambling cartel...then, suddenly, everything makes sense.
If there’s one thing Goldman is good at, it’s knowing the odds and making bets or cutting the firm’s losses when those odds are too foreboding.
After former Goldman employee Greg Smith’s op-ed on March 15 in The New York Times, Chief Executive Lloyd Blankfein went on the defensive. He dismissed the complaints that Goldman treated its clients, in Smith’s words, as “muppets.” Behind the scenes, Goldman painted Smith as a whiner, outcast and disgruntled banker to the press.
Even then, Goldman probably knew the damage had been done. And it would face a serious revolt at its annual meeting. It’s an obvious trade for a trader, or bet, if you’re a gambler. At Goldman it’s impossible to tell the difference.
This short marketwatch.com story was sent to me by Florida reader Donna Badach. It's a must read in my opinion...and the link is here.
An annual report from a regional Federal Reserve bank is typically a collection of banalities and clichés with some pictures of local worthies who serve on the board.
And so it is with this year’s annual report from the Federal Reserve Bank of Dallas, whose pages are graced by the smiling, stolid portraits of board members who run local companies like Whataburger Restaurants.
But the text is something else entirely. It’s a radical indictment of the nation’s financial system. The lead essay, which is endorsed by the president of the Dallas Fed, contends that despite the great crisis of 2008, a cartel of megabanks is still hindering the economic recovery and the institutions remain too big to fail.
This is another story from yesterday's edition of The New York Times...and I thank Phil Barlett once again for sharing it with us. It, too, is a must read...and the link is here.
The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday.
"Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis," Goodman writes.
Goodman also warns that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”
"This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits."
This Wall Street Journal story showed up over at the moneynews.com website yesterday. I thank West Virginia reader Elliot Simon for bringing it to my attention. It's certainly worth skimming...and the link is here.
The Bank of Spain said the “contractionary dynamic” in the economy continued into early 2012 for the second quarter in a row, with an “intensifying” pace of job losses. It expects GDP to fall by 1.5pc this year.
Mr Rajoy said at a meeting in Seoul that he would press ahead later this week with a “very austere budget”, ordering 15pc cuts in spending across the ministries.
It is unclear how he can slash the budget deficit from 8.5pc of GDP last year to 5.3pc to meet the compromise target agreed with Brussels after a bruising confrontation.
“It is frankly impossible, given that it would aggravate the recession and this would crush state revenues,” said Jesús Fernández-Villaverde from the University of Pennsylvania.
This Ambrose Evans-Pritchard offering was posted on The Telegraph's website late Tuesday evening. I borrowed it from yesterday's King Report...and the link is here.
Italian Prime Minister Mario Monti on Wednesday said the root of Europe's debt woes lay partly in the irresponsible parenting of Germany and France during the bloc's infancy.
Monti told reporters in Tokyo that because the eurozone's two largest players had not abided by fiscal rules, they had set a bad example for the rest of the continent.
"The story goes back to 2003 (and) the still almost infant life of the euro," Monti said.
"It was in fact Germany and France that were loose concerning the public deficits and debts."
This AFP story was posted on the france24.com website yesterday...and I thank Roy Stephens for sending it our way. The link is here.
The European Central Bank (ECB) said loans to the real economy fell in February, scotching claims that radical long-term refinancing operation (LTRO) would stem the crisis.
Open Europe's Raoul Ruparel said: "The LTRO has succeeded in avoiding a severe funding crunch...[But] it does not tackle the underlying lending risks which the banks are still keen to avoid, particularly with the looming recession in Europe."
As Spain faces a general strike on Thursday, economists called for the eurozone to use its bail-out funds to support the country's banks.
Finance ministers are under pressure to boost Europe's "firewalls" in Copenhagan on Friday. But Jens Weidmann, Bundesbank president, warned that "just like the 'Tower of Babel' the 'Wall of Money' will never reach heaven".
This very short story was posted over at The Telegraph yesterday evening...and is worth your time. It's another Roy Stephens offering...and the link is here.
Fund manager Egon von Greyerz, was interviewed by King World News yesterday...and remarked that money printing in Europe has only begun and that saving the European banking system will require many trillions more euros. Devaluation, he says, is Europe's only option and gold the only defense against it.
An excerpt from the interview is posted at the KWN blog...and I thank Chris Powell for writing the introduction for us. The link is here.
The first blog is with MEP Nigel Farage...and is headlined "Western World Collaborated in Giant Ponzi Scheme". The second blog is with Eric Sprott. Eric says that the world's productive capacity can no longer carry its debt burden. Governments and central banks are posing as if everything is OK, but it isn't...and the merits of gold are growing ever stronger. The title to this blog is "Mainstream Bashes Gold, but new Highs Coming". Both are worth reading.
Columnist and novelist Matthew Lynn earned his tin-foil hat for his commentary over at the marketwatch.com website yesterday..."The Next Leg of Gold's Bull Run," which acknowledges that central banks hold gold reserves for currency market intervention and manipulation.
Lynn notes: "You can't manipulate the markets without anything to sell, and that means holding reserves." He speculates that even Western central banks will start buying gold for "insuring themselves against their own profligacy. They print money. The price of gold goes up. And if they hold a lot of the stuff in their vaults, they are the big winners from the rise in price. If you can pull it off -- and there isn't anything to stop you -- that sounds like an easy way to make a living."
I thank Chris Powell for wordsmithing the above preamble...and Florida reader Donna Badach for being the first one through the door with this story yesterday. The link to this marketwatch.com piece is here.
Some of gold's friends in Europe have started a campaign called "Repatriate Our Gold" to persuade all nations to call their gold reserves home from custodial nations and banks that do not have the owners' interests at heart.
Repatriating reserves of the monetary metal is a prerequisite of regaining national sovereignty and liberating the world's currency markets. GATA's executive officers are among the initiators of the campaign and we urge all our friends to learn about it.
The link to this GATA release is here.
The head of Newmont Mining told CNBC on Monday he sees the price of gold rising to $2,000 an ounce and the time to buy it is now before inflation "comes roaring back."
At a time when investors want to invest in gold exchange-traded funds rather than the gold miners that pull the metal from the ground, Newmont CEO Richard O'Brien said either option is an "opportunity to participate in a bull market."
This cnbc.com story was posted on their Internet site on Monday...and I thank Roy Stephens for sending it my way. The link is here.
People of Uzbekistan do not recognize the latest advances in prosthetics. Gold teeth are a sign of high social status and good investment. Sometimes the Uzbeks even replace healthy teeth with gold crowns. It took a lot of effort for photographer Irina Popova to make her subjects show their teeth.
The above is the English translation of a Russian story that was sent to me by reader 'Dmitry G'. The story is written in the Russian Cyrillic alphabet...and I thank Dmitry for doing the translation as well. He also commented in his covering e-mail that it was "A bit weird, but nevertheless, on the subject of gold as an "alternative" investment."
There are at least a dozen photos to run through...and you don't need a translator for those. They're posted over at the lenta.ru website...and they are definitely worth a look. The link is here.
Financial writer Chris Martenson hurled himself into the gold market manipulation camp with brilliant commentary that cites some of the documentation GATA long has been publicizing.
We disagree with him only insofar as, like some others, he shrugs off the manipulation as an opportunity for investors to obtain metal at a wonderful discount. As long as we live in a world where time is limited and thus equivalent to money, such a discount may be consolation only for those with long lives ahead of them.
Many gold investors have gone to their graves thoroughly cheated, without consolation, and of course the manipulation also entails constant deception of both investors and citizens generally, which is repugnant in itself.
But we wish Martenson the longest of lives so that he, unlike some of our departed friends, may cash in on his perceptiveness and so the rest of us might benefit from many more commentaries like his new one. I thank Chris Powell for providing this introduction...and this must read essay is posted over at the chrismartenson.com website...and the link is here.
In their March "Markets at a Glance" commentary, Eric Sprott and David Baker of Sprott Asset Management in Toronto remark at length on the manipulation of the gold and silver markets through paper trading grossly disproportionate to the amount of real metal likely to be available.
Not only do Eric and David go into the market management of the silver and gold prices, they also spend considerable time talking about the U.S. recovery that really isn't a recovery at all.
All the talk about economic recovery is in the first half of this essay...and discussion of the silver/gold price management scheme is contained in the second half.
This is an absolute must read from beginning to end. It's posted over at the sprott.com website...and the link is here.
Bayfield Ventures Corp. (TSX.V: BYV) is exploring for gold and silver in the Rainy River District of NW Ontario. The Company’s 100% owned “Burns” Block property adjoins the immediate east of Rainy River Resources’ (TSX.V: RR) world-class gold deposit which includes an indicated resource of 5.72 million ounces of gold, averaging 1.18 g/t, in addition to an inferred resource of 2.25 million ounces of gold, averaging 0.79 g/t. Drilling to date on Bayfield’s Burns Block demonstrates that the ODM17gold zone extends from Rainy River Resources' ground onto the Burns Block. Bayfield is currently carrying out 100,000 metres of diamond drilling on its Rainy River properties. Drill results thus far have been very encouraging. Notable drill results include 60.05 grams per tonne gold and 362.96 grams per tonne silver over 11.2 metres within 26.70 grams per tonne gold and 170.69 grams per tonne silver over 25.5 metres, as well as 35.93 grams per tonne gold and 359.65 grams per tonne silver over 10.0 metres. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. Please visit our website to learn more about the company and request information.
I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told by members of the public, and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act (CEA) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted. - Bart Chilton, Commissioner, U.S. Commodity Futures Trading Commission (CFTC), October 26th, 2010
Of course I was less than enthralled with yesterday's price action in both metals...especially those engineered price declines that began shortly after 12 o'clock noon in New York. I have no more to add to this, except to refer you to what silver analyst Ted Butler had to say about it further up in this column. It's worth your while to scroll up and read his comments one more time.
Yesterday's take-downs occurred after the cut-off for tomorrow's Commitment of Traders Report, so whatever happened in that short 80-minute time interval, won't be known until the April 6th COT report.
We're now well below all the moving averages in both gold and silver once again...and I'm not really sure how much longer this engineered sell-off will last. But, as Ted pointed out, it will be over when JPMorgan et al have been able to force as many leveraged longs to puke up their positions so they can cover their own short positions...or go long themselves.
As I mentioned earlier on, the last of the gold and silver deliveries for March were posted on the CME's website last night... and the First Day Notice numbers for the April delivery month will posted on their website later tonight.
It was pretty quiet during the Far East trading session during their Thursday, with the Far East low coming at precisely 3:00 p.m. Hong Kong time. Both metals rallied back to unchanged going into the London open...but both are down a bit [gold about $4...and silver about a dime] as I hit the 'send' button at 5:16 a.m. Eastern time. Net volume in both gold and silver is pretty light...and the dollar index isn't doing much of anything.
April goes off the board in all commodities at the end of trading today...and most volume in both gold and silver are now trading in their new front months...June for gold and May for silver.
With month end and quarter end coming up hard during the next two trading days, I'm expecting a fair amount of price gaming across the board in just about everything...and it wouldn't surprise me if the engineered price sell-off in the precious metals yesterday was part of that.
It will be interesting to see what 'da boyz' have in store for these last two business days in March.
That's it for today. I hope your Thursday goes well...and I'll see you here tomorrow.