It was a pretty quiet trading day everywhere on Planet Earth on Wednesday...with all and sundry rally attempts during the Comex trading session being dealt with in the usual fashion. The gold price would have finished well above Tuesday's closing price, if left to its own devices.
Gold closed in New York at $1,762.60 spot...down $1.30 on the day. Volume was pretty decent at around 137,000 contracts.
Silver didn't do much either. The low price tick came in mid afternoon in Hong Kong...about fifteen minutes before the 8:00 a.m. London open. The price began to rally shortly before lunch BST and, like gold, all three rally attempts during Comex trading met the same fate at precisely the same times.
It's even more obvious that the silver price really wanted to fly, but was held in check by the usual suspects. Gold's low tick was around the $33.65 spot price mark around 2:45 p.m. Hong Kong time...and the high tick [$34.25 spot] came about 10:40 a.m. in New York.
Silver closed at $33.98 spot...up 8 cents from Tuesday. Volume was very decent at 42,000 contracts.
The dollar index opened just under the 80.00 mark...and then promptly rallied up to 80.17 by 10:30 a.m. in Hong Kong. From there, the index went into a slow decline, reaching its nadir twelve hours later at 10:30 a.m. in New York.
It mostly traded sideways from there, but an hour before the close, the index quickly climbed above the 80.00 mark...and closed at 80.10...up 11 basis points from Tuesday's close.
There's not a thing on this chart that indicates that the currencies were a factor in the gold and silver markets yesterday...particularly in New York. The negative price action there, was most likely JPMorgan and friend[s] capping every rally attempt.
The gold shares rallied to their high of the day, which occurred at 10:40 a.m. in New York...gold's high tick of the day. From there the gold stocks got sold off until about 1:00 p.m. Eastern...and then struggled back above unchanged to close up 0.43%...and barely back above the 500 mark on the HUI.
The silver stocks finished mostly in the green...and Nick Laird's Silver Sentiment Index close up 0.44%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 17 gold and 18 silver contracts were posted for delivery on Friday. Virtually every silver contract involved JPM as the short/issuer and the Bank of Nova Scotia as the long/stopper. The link to that activity is here.
There were no reported changes in either GLD or SLV...and no sales report from the U.S. Mint, either.
The shortsqueeze.com Internet site provided updated short position data for both GLD and SLV late Tuesday evening for both ETFs as of the end of September. The short position in SLV declined by 1,518,700 shares/ounces...or 11.53%. SLV still has a reported short position of 11.66 million shares/troy ounces, or 362.5 tonnes of silver.
The short position in GLD declined by 1,778,500 shares...or 8.91%. That works out to 177,850 ounces of gold. The current short position [as of the end of September] in GLD was 1.82 million ounces, or around 56.5 tonnes.
The 362.5 tonnes of silver, along with the 56.5 tonnes of gold, are what would need to be added to these ETFs to reduce their short positions to zero...and ensure that every share outstanding actually has all the metal backing it that it's supposed to. Finding 56.5 tonnes of gold would not affect the price much, but sourcing that much silver would certain have an immediate and upwards price effect on silver.
The Comex-approved depositories showed that 853,272 troy ounces of silver were delivered on Tuesday...and most of that disappeared into JPMorgan's depository, which is now up to 22.59 million ounces. There was also a withdrawal of 12,000 ounces of silver on Tuesday as well. The link to the Tuesday's numbers are here.
My daughter Kathleen sent me this photo in the wee hours of this morning...and I thought it too cute for words.
I have the usual number of stories for you today...and I hope you have time to fit them into your schedule. The last gold story is your big must read of the day.
"The economy would need to be growing at breakneck speed for unemployment to drop to 7.8% from 8.3% in the course of two months."
Imagine a country where challenging the ruling authorities—questioning, say, a piece of data released by central headquarters—would result in mobs of administration sympathizers claiming you should feel "embarrassed" and labeling you a fool, or worse.
Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn't make sense.
Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that's why I made a stink about it.
This op-ed piece by Jack was posted on The Wall Street Journal Internet site at 10:00 a.m. Eastern time yesterday morning...and I thank reader Federico Schiavio for our first story of the day. The link is here.
Earlier this year, Charlie Munger, who is billionaire Warren Buffet's right hand at Berkshire Hathaway and a sort of self-proclaimed mad oracle of Wall Street, made some interesting comments. He bashed people who buy gold, delivering an all-time amazing quote: "Gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold – they invest in productive businesses."
Munger, if you might remember, is the same gazillionaire dickhead who two years ago ripped people experiencing post-crash economic hard times, saying they should "suck it in and cope" and that anyone who wants to complain about the Wall Street bailouts should realize they were "absolutely required to save your civilization" (Munger thinks a lot about "civilization"). He added that even if you didn't like them, "you shouldn't be bitching about a little bailout. You should have been thinking it should have been bigger."
Some of those bailouts we shouldn't have complained about, of course, were directed at one of Munger's favorite companies – banking giant Wells Fargo, in which Munger and Buffett are heavily invested. Wells Fargo got as much as $36 billion in federal aid after the crash and got a massive push from the government to help it buy up the dying crash-era megabank Wachovia for $12.7 billion, a shotgun wedding that created the second-biggest bank in America. Wells Fargo not only got $25 billion in TARP funds just before it bought Wachovia, it got a special tax break from then-Treasury Secretary Hank Paulson, which some reports say was worth as much as $25 billion to WF at that time.
Matt, as usual, takes no prisoners in this very short commentary posted over at the Rolling Stone website during the New York lunch hour yesterday. I thank Manitoba reader Ulrike Marx for sending it along...and the link is here. As you have probably already discovered, the usual warning about Matt's 'pithy prose' applies here.
A key plan of the federal effort to combat the 2008 financial crisis has only made the problems that caused the crisis worse, according to the man who oversaw the program.
What’s more, the Wall Street-Washington revolving door makes it unlikely that any serious reform will happen before the next crisis.
Neil Barofsky, senior fellow at the New York University School of Law and outspoken critic of the Washington establishment, made these remarks at The Big Picture Conference in New York on Wednesday.
One way to address the problem would be to give regulators less discretion to act. The Dodd-Frank legislation gives regulators all the tools they need to break up the banks, but using those tools requires a political will that doesn’t exist, he said — it lets politicians boast about having enacted reform without seeing any real reform take place.
This marketwatch.com story showed up on their website around 10:00 a.m. Eastern time yesterday morning...and it's worth skimming. I thank Ulrike Marx for her second offering in a row...and the link is here.
Speculation limits for oil, natural gas and other commodities that were blocked by a federal judge Sept. 28 reflect wasteful spending by the U.S. Commodity Futures Trading Commission, according to four House Republicans.
“The commission’s limited financial resources spent promulgating and defending the position limits rule demonstrates a serious mismanagement of the agency’s priorities,” Representatives Scott Garrett of New Jersey, Spencer Bachus of Alabama, and Jeb Hensarling and Randy Neugebauer, both of Texas, wrote in a letter to CFTC Chairman Gary Gensler today seeking an accounting of the costs.
The four Republicans asked the CFTC to provide the time spent on the position limits rule and the total amount it cost to complete the rule and defend it in court.
Everyone is gunning to prevent Gensler et al at the CFTC from setting position limits in any hard commodity. Silver is never mentioned, but that's what it's all about. This short must read Bloomberg story was sent to me by West Virginia reader Elliot Simon...and the link is here.
Here are two very brief video clips of Jamie Dimon 'speaking his mind'. This guy is as slippery as a snake...and obviously full of himself. When talking about the Bear Stearns takeover, there's no mention of the silver short position that he inherited...and which is now larger under his care in broad daylight, then when it was out of sight at Bear Stearns.
Both short clips are well worth watching anyway...and I thank Washington state reader S.A. for bringing them to our attention. The first one, where he mentions Bear Stearns, is 1:10 minutes...and linked here. The second clip runs only 1:30 minutes...and is about the U.S. bond market. The link is here.
Bill Gross, manager of the world’s biggest bond fund, reduced his holdings of Treasuries for a third consecutive month to the lowest level since last October on concern record U.S. debt will lead to inflation.
The proportion of U.S. government and Treasury debt in Pacific Investment Management Co.’s $278 billion Total Return Fund dropped to 20 percent of assets in September from 21 percent the prior month, according to data released on the Newport Beach, California-based company’s website. Mortgages remained his largest holding at 49 percent. Pimco doesn’t comment directly on monthly changes in its mutual funds.
Gross wrote in his monthly investment commentary last week that the U.S. will no longer be the first destination of global capital in search of safe returns unless fiscal spending and debt growth slows, saying the nation “frequently pleasures itself with budgetary crystal meth.”
This Bloomberg story showed up on their website just before lunch Mountain Daylight Time on Wednesday...and I thank Elliot Simon for finding this for us. The link is here.
Standard & Poor's on Wednesday cut Spain's sovereign credit rating to BBB-minus, just above junk territory, citing a deepening economic recession that is limiting the government's policy options to arrest the slide.
The S&P downgrade comes with a negative outlook reflecting the credit ratings agency's view that there are significant risks to economic growth and budgetary performance, plus a lack of clear direction in euro zone policies.
"In our view, the capacity of Spain's political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining," S&P said in a statement.
This Reuters story was picked up by CNBC and posted on their Internet site at 9:00 p.m. Eastern time last night. I thank Elliot Simon for his third and final offering in today's column...and the link is here. It's worth reading.
The International Monetary Fund has issued a veiled warning that Spanish bond spreads could surge to a record 7.5pc and push the country into a deeper crisis if premier Mariano Rajoy continues to drag his feet on a bail-out request.
The fund said sovereign debt woes were spilling into the broader Spanish economy, risking a “pernicious feedback loop” for private companies. The danger is another bout of capital flight combined with a “credit shock” as banks deleverage drastically to meet higher capital ratios.
Olivier Blanchard, the IMF’s chief economist, said Madrid was courting fate by trying to muddle through without a bail-out – and without the tough terms it would bring – now that borrowing costs had fallen on hopes of bond purchases by the European Central Bank.
Mr Blanchard said investors had most likely anticipated a rescue by the ECB and the European Stability Mechanism (ESM). “If so, we can’t be sure that yields will stay low for much longer,” he said.
Well, it's almost like the IMF wants them to fail...and Standard and Poor's just gave them a final shove. I expect Spain to be priced out of the bond market in just a few days with all this happy talk. This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk Internet site late last night British Summer Time...and I thank Ulrike Marx for digging it up on our behalf. The link is here.
Société Générale’s Dylan Grice hasn't been thrilled by the Federal Reserve's decision to embark on QE3 — an effort to lower interest rates by buying bonds. And many of the world's central banks are pursuing aggressive monetary policy.
In response, Grice has previously said "the defining feature of coming decades will be a Great Disorder".
By this, he means that currency debasement would eventually bring about social disorder...and at yesterday's Big Picture Conference, Grice reiterated this argument when he posted this quote from John Maynard Keynes...
This short must read piece was posted over at the businessinsider.com Internet site yesterday afternoon...and I thank Roy Stephens for sending it. The link is here...and the Keynes quote is worth the trip all by itself.
Five years after the start of the global financial crisis, officials at the International Monetary Fund fear the stability of the global financial system may yet again be threatened. As in the past, the global institution is pointing its finger at the euro zone as a primary cause of the threat.
In a report on global financial stability released on Wednesday, just days before an IMF meeting that will bring together the world's finance ministers in Tokyo, the Washington-based institution has called on European countries to move swiftly to implement a pan-euro zone banking oversight regime and other measures aimed at preventing a recession and restoring market confidence.
"Commitment to a clear roadmap on a banking union and fiscal integration are needed to restore confidence, reverse the capital flight and reintegrate the euro area," said José Viñals, the head of the IMF's monetary and capital markets department. "Despite many important steps already taken by policymakers, this agenda remains critically incomplete, exposing the euro area to a downward spiral of capital flight, break-up fears and economic decline," the IMF said in its report.
This spiegel.de article from yesterday represents Roy Stephens' final offering in today's column...and the link is here. This story is somewhat similar to the IMF story from The Telegraph further up.
The first is with Keith Barron...and it's headlined "Lost Confidence Can't Be Restored & Gold's Final Move". Next is this blog with Caesar Bryan. It's entitled "Europe & The Major Breakout For Gold is Still in Front of Us". The last blog is with John Hathaway...and it bears the headline "Gold to Hit New All-Time Highs, Despite Pullbacks". The audio interview is with Dr. Stephen Leeb.
This is another in the series of excellent videos produced by Endeavour Silver. And, for a change, this one runs for more than five minutes...10:05 minutes to be exact. My complaint about these first rate videos is that they're never long enough...and even this one only touches the high points.
This is a fascinating look at the techniques and methods used to explore for silver and other precious metals. They look at prospecting, operating a drill rig and the various challenges involved with mineral exploration.
It's an amazing must watch...and it's posted over at the youtube.com Internet site...and the link is here.
The U.S.G.S. also reported U.S. mines produced 80,500 kilograms (2,588,140 oz.) of silver in July, a 12% decrease compared to July 2011.
"Silver holdings in exchange-traded products (ETP) reached their highest level in 14 months in mid-July, and provided a short-term boost to silver prices but not enough to cause the monthly average to increase," said the agency. "Physical holdings in major silver ETP increase a net 141 metric tons by the end of July 17 to 18,200 t of silver, a level last seen in May 2011."
For the period from January to July, U.S. mines reported 579,000 kg (18,615,300 oz.) of silver production with 130,000 kg (4.18 million oz.) coming from Nevada mines.
The United States reported total silver imports of 3.22 million kg (103,525,405 oz.) from January to July with the majority of imports coming from Mexico, Canada and Belgium. Total silver exports during the same period were 4.08 million kg (131,175,047 oz.) with the majority of U.S. mined silver exported to Canada and Mexico.
This mineweb.com story was filed from Reno...and posted on their Internet site in the wee hours of this morning. I thank Donald Sinclair for sending it along...and it's a must read. The link is here.
Exchange-traded funds tracking gold and inflation-protected Treasuries provided the best risk- adjusted returns of the biggest ETFs in the past five years as record stimulus by the Federal Reserve sent investors searching for inflation havens.
The Bloomberg Riskless Return Ranking shows the SPDR Gold Trust gained 5.9 percent in the five years ended yesterday when adjusting for price swings, topping the list of the 10 largest exchange-traded funds in the U.S., data compiled by Bloomberg show. iShares Barclays US Treasury Inflation Protected Securities ranks second with a return of 5.8 percent.
“Gold and TIPS are the most liquid way to get exposure to inflation,” said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. “The volatility in gold and TIPs will remain low going forward as the ugly head of inflation will emerge, and we will see a steady increase in gold demand.”
This Bloomberg story was posted on their website on Tuesday...and I thank Ulrike Marx for her final offering in today's column. The link is here.
Yesterday evening, Zero Hedge called attention to another thoughtful speculation on the rationale for an official revaluation of gold to a price far higher than the current paper-suffocated price. It was written by the chief investment officer of Guggenheim Partners in New York and Chicago, Scott Minerd, who concentrates on an angle often raised by Jim Sinclair, the (purported) U.S. gold reserve's "coverage ratio" of the U.S. money supply.
Minerd writes: "The U.S. gold coverage ratio, which measures the amount of gold on deposit at the Federal Reserve against the total money supply, is currently at an all-time low of 17 percent. This ratio tends to move dramatically and falls during periods of disinflation or relative price stability. The historical average for the gold coverage ratio is roughly 40 percent, meaning that the current price of gold would have to more than double to reach the average. The gold coverage ratio has risen above 100 percent twice during the 20th century. Were this to happen today, the value of an ounce of gold would exceed $12,000."
Well, dear reader, my guess currently stands at $18,000 the ounce, so the estimates are getting closer. But if gold only makes it to $12,000/ounce, I'm sure I'll manage somehow...as silver will be many hundreds of dollars per ounce...and the "new" gold.
Chris Powell was kind enough to provide the first two introductory paragraphs...and Minerd's speculation is headlined "Return to Bretton Woods". It's posted in PDF format at the zerohedge.com Internet site...and I thank Nick Laird for being the person to bring it to my attention. The link to this fairly long must read commentary, is here.
Aben Resources (TSX.V: ABN) is a Canadian gold and silver exploration company with a focus on developing properties in the Yukon and Northwest Territories. The Company owns a 100% interest in the 18,314 acre Justin Gold Project located in SE Yukon. A 2,020 metre diamond drill program was carried out in 2011 to test never before drilled zones. Aben made a significant new greenfields gold discovery when it intercepted 60m of 1.19 g/t Au in hole JN11009 at the POW Zone. Additionally, a new high grade silver-copper zone was discovered at the Kangas Zone with hole JN11003 returning 1.07m of 7320 g/t Ag (234 oz/ton) and 3.52% Cu. Aben carried out an aggressive exploration and drill program in 2012 to follow up on the initial discoveries. The first drill hole in 2012, JN12011, returned 46.4m of 1.49 g/t Au and extended the gold mineralization at the discovery zone 85 metres laterally. The Company has four other prospective Yukon and NWT projects in its portfolio along with a seasoned management and geological team. Aben’s chairman, Ron Netolitzky, is credited with exploration success on numerous properties including three Western Canadian gold and silver projects which became producing mines. Please visit our website to learn more about the company and request information.
We know now that Bear Stearns was the big silver short before its demise, not US or foreign banks. To those who might try to say that the banks are only doing what they normally do in shorting silver so aggressively; why weren’t they doing it prior to the Bear Stearns rescue? What changed in banking practices that now makes it normal for two banks to control the short side of silver? My answer is that when Bear Stearns failed, someone had to replace them as the silver price manipulator...and that fell to JPMorgan and its collusive foreign bank partner in crime. Otherwise, the price of silver would have been set free. - Silver Analyst Ted Butler, 10 October 2012
It wasn't a very exciting day in the gold and silver price world yesterday...and it's my opinion that their price movements, particularly during the Comex trading session, were well contained.
I certainly don't have much to say in 'The Wrap' section that I haven't already touched on more than once this week. I'm just sitting here waiting for the current situation to resolve itself...one way or another. One has to wonder whether or not the PM prices are in lock-down mode for the U.S. elections...and we shall find out in the fullness of time.
In the Far East on their Thursday, gold's low came around 9:00 a.m. Hong Kong time...and has been rallying since...and is up about six bucks in mid-morning trading in London. Silver followed the same price path as well...and is up about 15 cents as I hit the 'send' button at 5:15 a.m. Eastern time, but well off its earlier London high. The dollar index is down about 15 basis points...and volumes are nothing out of the ordinary.
I haven't the foggiest notion as to what Thursday's trading action might be like in New York...but if the last two weeks are to be used as a guide, nothing much will happen...or will be allowed to happen...just like Wednesday. But I wouldn't bet the ranch on that.
Enjoy your Thursday...and to those of you living west of the International Date Line...enjoy your upcoming weekend.