The gold price got sold off about ten bucks in Far East trading yesterday...and the bottom was in very shortly after London opened for the day. From there, it rose steadily higher, closing at its absolute high of the day in the New York electronic market at 5:15 p.m. Eastern.
Looking at price pattern from the London open onward yesterday, it appeared that every time that gold wanted to take off in price, even by just a little, there was a willing seller there to knock it back down to the trend line. But maybe it's just my imagination. Volume was quite a bit lower [around 20%] on Friday than it was on Thursday.
The silver price mostly traded between $38.00 and $38.50 through most of Far East and London trading yesterday...and pretty much opened in New York unchanged from its Thursday closing price. From there, it climbed slowly and steadily...closing virtually on its high of the day. Volume was pretty decent, but a bit lower than Thursday.
The dollar chopped around about 20 basis points either side of 75.20...the price it opened at in the Far East on Friday morning...and closed down about 12 basis points on the day. As has been the case for quite some time now, the gold price has traded independently of the U.S. dollar...with today being another case in point.
With the gold price finishing the day and the week at another record high price, the gold stocks seemed to be hesitant as to what to do, but decided to rally into the close of trading...but did not quite make it back to their absolute high of the day, which occurred minutes after 11:00 a.m. Eastern. And, considering the fact that the gold price was only up about seven bucks on the day, the HUI finished up a respectable 1.21%.
Here's the graph for the week that was. The HUI was up about 5.4% on the week.
With the silver price up over a dollar yesterday, one would have expected the silver shares to do somewhat better than they did...but maybe that's just a sign of my impatience. Nick Laird's Silver Sentiment Index closed up a respectable 2.12% on the day...and 6.7% on the week.
Nick said it would have been 10.3% on the week, but the Index fell on Monday, so you could say that in the last four days it was up 10.3%
The CME's Daily Delivery Report showed that only 13 silver contracts were posted for delivery on Tuesday...a nothing report, but if you want to look at it anyway, the link is here.
The GLD ETF had another big chunk of gold deposited in it. This time it was 340,915 ounces. And, despite the big price increase in silver yesterday, there was no report from SLV.
The U.S. Mint had a smallish report...they sold another 100,000 silver eagles yesterday, bringing the total sales for the month up to 1,461,000.
Over at the Comex-approved depositories on Thursday they received 596,701 ounces of silver...all of it at Brink's, Inc. Only 2,157 ounces were reported shipped out.
I was not a happy camper when I saw yesterday's Commitment of Traders Report. This report was for positions held at the close of trading on Tuesday, July 12th.
Without getting into every little detail, the report showed that the Commercial net short position in silver increased by 4,039 contracts...and gold's Commercial net short position was up an eye-watering 42,247 contracts during the reporting week that ended on Tuesday.
That was the real bad news. The 'good' news is that a lot of this increase in short position was the small Commercials [everyone except the '8 or less' traders] selling out of their long positions and taking profits...which has the mechanical effect of increasing the net short position.
Yes, the bullion banks went short this rally as well, but it wasn't all about them in this report.
The unhappy part is that the bullion banks are not about to stand aside and let the price run away in an uncontrolled fashion in either metal. As many have said within the GATA organization...this is a 'controlled' price retreat by the bullion banks...and rarely [in every sense of the word] do they allow the gold price to rise more than 2% in a single day. GATA chairman Bill Murphy, over at lemetropolecafe.com, calls it the "2% rule"...and that's precisely what it has turned into.
Ted Butler said in his bi-weekly commentary to his subscribers on Wednesday that we will just have to wait and see how this rally plays itself out in the weeks and months ahead...and watch what the COT reports are telling us. Ted also pointed out [and rightly so] that the COT report is much better at indicating a bottom, than a top.
I'd also like to point out, rather unhappily, that with the big price rally in both metals since the Tuesday cut-off, the Commercial net short position in both silver and gold have deteriorated even more since.
Here's Ted 'Days of World Production to Cover Short Positions' for each commodity that's traded on the Comex. Both silver and gold stand out like sore thumbs...and both have increased materially since last week's graph. As always, I thank Nick Laird over at sharelynx.com for providing the chart.
I'm looking forward to what Ted has to say in his Weekly Review to subscribers later today. I'll steal what I think I can get away with...and post that in my Tuesday column.
Here's another chart that Nick slid into my in-box in the wee hours of Saturday morning. It's the 'Total PMs Pool' that shows the total physical ounces [and the US$ value] of all precious metals in all know depositories on Planet Earth. Although the ounces are down [mostly silver, thanks to the 'drive by shooting' on May 1st]...the dollar value is almost back to its old high. It looks like investors are heading back into the physical precious metal markets with a real vengeance.
I have a fair number of stories today...and a number of them are very long reads, but are the kind of essays that aren't appropriate for my weekday columns. They are all very much worth your time...so I hope you can fit them in sometime during the weekend.
Here's a Bloomberg/Businessweek story that was sent to me by reader U.D. yesterday. This is the first story that I've seen that comes remotely close to describing how far away from a recovery the U.S real estate market really is.
Doug Ramsey of Minneapolis investment firm Leuthold Group is a student of asset bubbles, from tech stocks in the late ’90s to commodities in the late ’70s and railroads in the 19th century. His outlook is very different from the HUD Secretary’s. Ramsey calculates that single-family housing starts would have to soar an unprecedented 60 percent to 70 percent from their current half-century low of a 419,000 annual rate just to hit the average low of the past six housing busts since 1960 (650,000 to 700,000).
Ramsey says every housing statistic he tracks, including new and existing home prices and the performance of homebuilding stocks, has so far matched the pattern of prices after the bursting of other bubbles, including the Dow Jones industrial average following the crash of 1929 and Japan’s Nikkei after its 1989 peak. It starts with a steep decline lasting three or four years, followed by a brief rally that ends in years of stagnation. The Dow took 35 years to return to pre-crash levels. The Nikkei trades at less than a third of where it peaked 22 years ago. “The housing decline,” he says, “will be a long, multiyear process, and the multiplier effect across the economy will be enormous.”
I'm 62 years old...and I will be a very old man before this real estate bust breaths its last. It's a very unhappy read...and the link is here.
Once credit rating agency [and I can't remember which one] is also threatening to downgrade the 'too big to fail' banks as well. This is all part of the brinkmanship that's going on regarding raising the government's borrowing limit.
S&P said government-controlled Fannie and Freddie, along with certain Federal Home Loan Banks and Farm Credit System Banks, could also default on their debts, given each institution's "direct reliance on the U.S. government."
The rating agency this week threatened to lower the U.S. government's credit rating if the White House and Congress can't agree to raise the $14.3 trillion borrowing limit and avoid a default in the coming weeks.
This story is posted over at usatoday.com...and I thank Washington state reader S.A. for sending it along...and the link is here.
This press release from the U.S. Treasury department is an update from their previously announced press release of the same name. Here's one sentence from it..."Today, as previously announced, the Treasury Department will suspend reinvestment of the Exchange Stabilization Fund, the last of the measures available to keep the nation under the statutory debt limit." I thank Edmonton reader B.E.O. for sending me this...and the link to this short read [which is well worth your time] is here.
The reason I posted the previous story about the super-secretive Exchange Stabilization Fund, is because GATA stumbled across it when we were attempting to get a handle on who was behind the gold price suppression scheme...and this organization popped up.
Only the President and the U.S. Treasury Secretary [and only they] can authorize the use of this clandestine slush fund...and all its operations are above oversight from any government department...including both legislative branches and the judiciary.
I used the previous story as a segue into this next piece posted over at zerohedge.com yesterday that reader U.D. was kind enough to share with us.
It's a very short read...and quotes most of the press release in the previous story. But it's an absolute must read, and the link is here.
Here's an essay that appeared in Newsweek earlier this week...and one of your longer reads of the day.
“Passing the Dodd-Frank bill was no easy task,” Obama told the 400 dignitaries who witnessed the most ambitious overhaul of the financial system since the Great Depression. “We had to overcome the furious lobbying of an array of powerful interest groups and a partisan minority determined to block change.”
The pomp and ceremony may have been premature. Ever since the law’s passage, those same “powerful interest groups” who opposed Dodd-Frank have been trying to prevent it from taking effect. As written, the law delayed implementation of most of its new rules for at least 12 months so regulators would have time to hammer out the finer points of the 2,319-page bill. But that delay has also provided an opening to banks and other financial institutions seeking to defang the law. “Just because we lost that round,” says Cam Fine, president of the Independent Community Bankers of America, which spent $1 million in the first three months of this year to lobby against implementation, “doesn’t mean we just give up. Congress changes its mind all the time.”
This story shows you just how successful they've been...Comex position limits in the precious metals being one victim. I thank reader 'Don in Virginia' for this story...which is well worth your time...and the link is here.
With no solution to the US debt crisis in sight, the rest of the world is starting to get nervous. German commentators urge congressional leaders to get their act together. A US default would have catastrophic consequences, they warn.
"Washington still considers a default to be unimaginable. Obama does not want to go down in history as the president who bankrupted America, so the only alternative is another unsavory deal -- the 'kick the can down the road' solution, as American politicians like to call it. The debt limit will be raised again just before the impending volcanic eruption, exacerbating the problem and postponing an attempt to solve the problem (of the US's enormous debt) to the next, not too distant deadline.
Even China has issued a similar warning. I thank Roy Stephens for this story which was posted over at the German website spiegel.de yesterday...and the link is here.
Here's another longish read...and this one is a posting from over at antiwar.com. Here are a couple of paragraphs...
You may have noticed, however, that these are not normal times: we’re in a crisis of epic proportions, not only an economic crisis but also a cultural meltdown in which our social institutions are collapsing, and with them longstanding social norms. In such times, ideological categories tend to break down, and we’ve seen this especially in the foreign policy realm, where both the "extreme" right and the "extreme" left are calling for what the elites deride as "isolationism." On the domestic front, too, the "right" and "left" views of what’s wrong with the country are remarkably alike, as demonstrated above. Conservatives and lefties may have different solutions, but they have, I would argue, a common enemy: the banksters.
This characterization of the banking industry as the moral equivalent of gangsters has its proponents on both sides of the political spectrum, and today that ideological convergence is all but complete, with only "centrists" and self-described pragmatists dissenting. What rightists and leftists have in common, in short, is a very powerful enemy – and that’s all a mass political movement needs to get going.
If I had to chose just one non-gold story for you to read today...this would be the one. I thank reader Michael Riedel for sending me this story...and the link to this must read essay is here.
European banks are set for a day of “chaos” on Monday as investors and analysts derided the latest round of industry stress tests as “inadequate”.
In addition to the nine that failed, another 16 banks need to strengthen their balance sheets to rebuild confidence in the embattled sector.
Britain’s lenders received a clean bill of health but five banks in Spain, two in Greece and one in Austria failed the tests. Another German bank would have failed but dropped out of the tests due to a dispute over its capital. A further seven Spanish, two Greek, two Portuguese and two German lenders were among the 16 identified as perilously close to danger.
Don't get mislead by all this, dear reader, as virtually every bank in the world is already technically insolvent. I thank Roy Stephens for this story out of this morning's edition of The Telegraph...and it's a must read as well. The link is here.
Here's an audio interview with one of the brightest and most plugged-in guys I know. I haven't had time to listen to it yet but, like you, I will certainly get around to it sometime this weekend. Eric sent it to me earlier this a.m...and the link is here.
As promised in this column yesterday, I would advise you of the amount of Sprott's offering...and the headline says it all. And if the underwriters exercise the over-allotment option in full...and I'll bet big bucks that they will...the total proceeds will come to US$305 million in total. A back-of-the-envelope calculation comes out at around 185,000 troy ounces...which is around 6 tonnes.
I stole this story from Andy Hoffman's rant yesterday morning, for which I thank him. The link to the finance.yahoo.com story is here.
Just about every week reader Carl Loeb sends me the numbers for these Switzerland-based gold and silver ETFs. Now my good friend Catherine Austin Fitts has published an in-depth report on the bank's ETFs. I've skimmed this short report...and it looks very comprehensive to me.
It's certainly worth a few minutes of your time...and is posted over at Catherine's website solari.com. The link is here.
This was a sub-heading in yesterday's edition of Casey's Daily Dispatch. Jeff Clark, the editor of BIG GOLD, posted some currencies that were spawned by some of the biggest hyperinflationary events of the last several hundred years.
I wonder what the U.S. $1-trillion bill will look like when they finally get around to printing it...and whose picture will be on it? I could pick a couple of worthy candidates. The link to yesterday CDD is here...and you have to scroll down a bit to get to all those pretty pictures of coloured toilet paper. They are definitely worth the look.
Here's a Reuters story from yesterday that was sent to me by Roy Stephens.
A rally that ignited two weeks ago when euro zone debt fears revived, has extended its run into record territory this week as President Barack Obama and Republicans traded demands for a serious deficit plan, deepening a stalemate in negotiations to raise the debt limit before August 2.
Gains in crude oil, a plunge in U.S. consumer confidence and concerns about euro zone debt contagion also helped the metal to its largest two-week gain in over two years, rising more than 7 percent since the start of July.
Of course the price of gold would have been astronomically higher if JPMorgan et al weren't going short against all comers. The link to the story is here.
Here's a GATA release of subscriber-protected story out of yesterday's Financial Times in London. Chris Powell does the honours...and you can read all about it here.
I'd already run the blog of this interview...and wasn't too keen on posting the audio interview...and told Eric so. But he begged hard enough...and this is what he said: "If at all possible please consider putting out this extraordinary audio with Felix Zulauf where he discusses the summer breakout in gold. He was absolutely incredible...and as you know is a 20 year veteran of the Barron's Roundtable."
The interview is linked here...and I would think it's worth a listen.
A French couple have found a hoard of gold coins worth at least 100,000 euros (L89,000; $140,000) in the cellar of their home in the town of Millau.
They were working on their drains when they dug up the 34 coins in a little clay pot, French media said.
The coins date from 1595 to the French Revolution, which began in 1789, said a local coin expert who evaluated them.
Mr. Aigouy said the couple wish to remain anonymous but they live on rue Droite, an old Roman road which is the oldest street in Millau, in southern France.
This very interesting bbc.co.uk story, which I stole from a GATA release yesterday, is linked here...photo and all.
Pierre Jovanovic talks to James Turk about John Law, the Mississippi Bubble and how John Law duped the French people and the French Regent into buying his shares and allowing his Bank to issue bank notes. They explain how the whole experiment blew up in just 5 year and the terrible consequences for the whole of France. They then talk about the repetition of the fiat money experiment during the French Revolution and how that lasted only 7 years: from 1789 to 1796, with even more dire consequences for the French people. They also talk about current day similarities and lessons to be learnt.
I would think that this 41-minute youtube.com video is well worth watching. I haven't had the time to watch all of it myself, so it's going to end up as Sunday project. This is Edmonton reader B.E.O's second contribution to today's column...and the link is here.
Lastly, is another longish read, this one by author 'Silver Shield'...and is posted over at the dont-tread-on.me website. Some of the stuff in here may seem a little on the extreme side...but I wouldn't dismiss all of it out of hand, if I were you...as what is coming down the road in the economic, financial and monetary world may get that extreme [and probably more] before all is said and done.
It's definitely worth the read...and I thank reader Matthew Nel for sharing it with us...and the link is here.
Cornerstone has started drilling its flagship Shyri gold property in Ecuador
Ecuador, one of the world’s most under-explored and resource rich countries, has a brand new mining law that supports international investment. Cornerstone is one of the first companies invited back and has begun drilling the Gama Prospect at our flagship Shyri Gold-Copper Property in southern Ecuador. Together with our joint venture partner Intrepid Mines, we will spend $6.0 million on the property during the next five years. We’re very excited about this project that lies just a few kilometers away from a previously discovered multi-million ounce deposit and has the potential to host a significant gold-copper system. Read more about Shryi and Cornerstone’s entire portfolio of properties.
There is NO basis for confidence in ANY sovereign debt paper because there is NOTHING behind any of it except the promises to pay of future governments. But how can they "pay" if they go on spending more than they take in. And if they do pay, what will the stuff they pay with be good for? - Bill Buckler, Gold This Week, 09 July 2011
Today's 'blast from the past' is by one of the greatest rock musicians that ever picked up a guitar. Everyone know this song...so turn up your speakers and click here.
Gold volume yesterday was down quite a bit from earlier this week, as only around 110,000 contracts net of all roll-overs were traded yesterday...and the preliminary open interest number showed an increase of 'only' 9,400 contracts.
The final open interest number for Thursday's trading day actually showed a decline of 3,186 contracts. Both Ted and I feel that a big spread trade was lifted, as we are well into the roll-over out of the August contract, which is a big delivery month for gold. These daily changes in open interest in gold may not mean much between here and the end of the month, so we'll have to wait for the weekly COT report to set the record straight on what's really going on in the Comex futures market these days.
In silver, the net volume yesterday was a fairly heavy 47,000 contracts...and the preliminary open interest number was up only 2,196 contracts...which isn't a lot considering that the price was up over a buck from Thursday. I'm wondering if part of yesterday's rally involved some short covering...and that we won't know until next Friday's COT report.
The final open interest in silver for Thursday's trading day also showed a decline in o.i. It was only 779 contracts, but a decline nonetheless. Was it short covering? Possibly...but, once again, we'll have to wait until next Friday to find out.
The July open interest for silver showed a reduction of 101 contracts...and is now down to 384 contracts still open.
Well, it's certainly getting interesting out there. I'm only guessing...but the end-game, whatever it, is coming up on us hard...and the next two or three weeks are going to tell us a lot.
There's no way out of this economic, financial and monetary mess that I can see...unless they re-monetize gold...even if it's used only to back the world's central banks debt paper. If they don't, then it's only a matter of how long before we suffer a deflationary collapse...or a hyperinflationary depression. I hope you took a good look at all those pretty piece of paper that Jeff Clark posted in yesterday's Casey's Daily Dispatch...because we're not far away from that prospect the way things are headed at the moment.
I look forward to the opening of the Far East precious metals market on Sunday night with great interest.
Before signing off for the weekend, I'd like to remind you one more time of the US$39 'blue-plate special' that the good folks over at Casey Research announced earlier this week...
"In a shocking admission, the well-respected International Energy Agency (IEA) projected that conventional crude oil production will “never regain its all-time peak of 70 million barrels per day (mb/d) reached in 2006.”
"In other words, according to the IEA, the world actually crossed over the point of "peak oil production" five years ago!"
"So the world's supply of conventional oil was on a downward slope – even before the ground-shaking events in the Middle East and Japan."
I find nothing shocking about what's in these three paragraphs, dear reader...or the entire report in general...as I already know that 'Peak Oil' is something that is already visible in my rear-view mirror, as I'm very plugged into the oil patch here in Canada. It's only a matter of how steep the downward slope is going to be. What I can guarantee you is that life on this planet will be thrown into violent upheaval the further down this 'peak oil' road we get.
The promotion is headlined "Shell" Shocked: A Triple Threat is About to Tear the Financial Heart Out of America". It costs zero to check it out...and the annual subscription price is a measly $39...a saving of 50% off the regular $79 subscription price...and Casey Research's usual 90-day money back guarantee also applies.
The report also talks about a new "Energy Dividend"...and I urge you to read all about it by clicking here.
I'm done for the day...and the week. See you on Tuesday.