It was pretty quiet in the gold market in both the Far East and London on their Monday. The gold price edged lower right up until the Monday low of the day...$1,613.20 spot...which came at 8:45 a.m. in New York.
From that point, the gold price chopped higher for the rest of the New York session, with the high of the day [$1,626.20 spot] coming around 2:25 p.m. in electronic trading.
From there, gold got sold off a bit going into the 5:15 p.m. close...finishing the day at $1,621.90 spot...down $1.70 from Friday's close. Volume, which had been extremely light for most of Monday trading, increased quite a bit as the New York trading session moved along...and when all was said and done, net volume was a reasonably healthy 120,000 contracts.
The silver price sold off about two bits by mid-morning in Hong Kong...and bounced around a dime either side of $27.60 spot for many hours. The low was in around 10:00 a.m. in London...and from there the price developed a slightly positive bias...and really took off to the upside starting around 9:40 a.m. in New York. In less than thirty minutes, the silver price was up almost 50 cents.
Whether that rally was short covering...or a market gone 'no ask'...is open to debate. Ted Butler thought it looked like a hands-in-their-pockets moment for JPMorgan et al...as they appeared to have stood aside until the price went vertical...before stepping into the market with sell orders.
That rally lasted until a few minutes after 10:00 a.m. Eastern time...and then traded sideways to a hair lower going into the 1:30 p.m. Comex close. Once electronic trading started, a smallish rally developed that took silver to its high tick of the day [$28.36 spot] around 2:10 p.m. From there it sold off a bit into the close.
Silver finished the Monday trading session at $28.18 spot...up 39 cents from Friday. Net volume was around 34,000 contracts.
The dollar index jumped a bit over 10 basis points at the New York open on Sunday night...and then worked its way slowly higher from there...hitting it's high tick of day [82.97] just before 8:45 a.m. in New York. It hung in for about an hour around that mark, before rolling over and then drifting slowly lower into the close. The dollar index close around 82.79...up just under 20 basis points from Friday's close.
If there was a close co-relation between the dollar and the gold price, it's difficult to pick out on the Kitco gold chart above...and of course the forces acting in the silver market during the morning in New York had nothing to do with moves in the currencies.
The gold stocks had a mind of their own yesterday. Even though the gold price never stuck its nose above its Friday close in New York...the stocks did very well for themselves...and spent virtually the entire Monday trading session in the black. The HUI finished up 1.35%...close to its high of the day.
Surprisingly, the silver stocks finished mixed...but most of the ones in Nick Laird's Silver Sentiment Index finished well into positive territory...and the SSI closed up 1.61%.
(Click on image to enlarge)
Not surprisingly, the CME's Daily Delivery Report for Monday showed nothing...because as I mentioned in this space on Saturday, all deliveries in gold and silver in the July delivery month had been posted for delivery already. But, as expected, the CME posted the First Day Delivery Notice for August a little later in the evening. It showed that 4,841 gold and 115 silver contracts were posted for delivery from the Comex-approved warehouses on August 1st.
JPMorgan was the biggest short/issuer by far with 2,397 contracts in its in-house [proprietary] trading account...and another 1,857 contracts in their client account. A distant second was the Bank of Nova Scotia with 583 contracts. The biggest long/stoppers were HSBC USA with 1,934 contracts, followed by Deutsche Bank with 1,076...and Barclays with 828 contracts. There were a couple of dozen other issuers and stoppers in gold as well.
In silver, there were only two short/issuers...and they were JPMorgan with 87...and Jefferies with 28 contracts. The only long/stopper of note was the Bank of Nova Scotia with 113 contracts to be received. The Issuers and Stoppers Report is linked here...and well worth a look.
There were no reported changes in either GLD or SLV.
The U.S. Mint had a sales report on Monday. They sold 6,000 ounces of gold eagles...and 330,000 silver eagles. We'll see if they have one more sales report to round out the month, I'll report on that...and final July sales figures...tomorrow.
It was a busy day over at the Comex-approved depositories last Friday. They reported receiving 690,215 troy ounces of silver...and shipped 2,679,400 ounces out the door for parts unknown. All the activity worth noting occurred in the Brink's, Inc. warehouse...and the link to that action is here.
Here's a graph that I extracted from a story that reader Lou Horner sent me yesterday. It's the 3-year chart of the gold price in euros. The link to the story I lifted it from is here.
I have the usual number of stories for a Tuesday...a lot...and I hope you have time to at least read the 'cut and paste' portions of each news item.
New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates.
Some of those traders, including one who used to work at Barclays Plc in New York, still have senior positions on Wall Street trading desks.
Until now most of the attention has involved traders at Barclays, which last month reached a $453 million settlement with U.S. and UK authorities for its role in the manipulation of rates. Now it is becoming clear that traders from at least two other banks -- UK-based Royal Bank of Scotland Group Plc and Switzerland's UBS AG -- played a central role.
This Reuters story was posted on their website on Saturday...and I found it hiding in a GATA release. The link is here.
And so Liborgate drags on and on and on.
Last week, two senior Washington officials — Timothy F. Geithner, the Treasury secretary, and Gary Gensler, the head of the Commodity Futures Trading Commission — testified before Congress about the scandal surrounding Libor, the benchmark for global interest rates.
No great revelations were forthcoming.
As we await the full story, it’s worth remembering how Libor, the London interbank offered rate, became the world standard to begin with.
You probably won’t be shocked to learn that in mortgages, at least, Wall Street played a role in pushing Libor over another rate benchmark — one that some bankers say was better for borrowers.
This article showed up in the Saturday edition of The New York Times...and is a very interesting read. I thank Roy Stephens for his first offering of the day...and the link is here.
Ben Bernanke heads the most powerful central bank in the world. Yet the Federal Reserve chairman says he was largely powerless to stop what some are calling the biggest financial fraud in history: the systematic manipulation of a key global interest rate.
It's a line of argument that has fallen flat with some lawmakers and investors, who want to know why Bernanke and other key U.S. regulators did not do more to end a potentially criminal rigging of interest rates affecting trillions of dollars in financial contracts.
Bernanke said last week he had been largely unable to directly address problems with Libor, or the London interbank offered rate, which he said he learned of in 2008.
Republican Congressman Scott Garrett took aim at Geithner at a hearing of the House of Representatives' Financial Services Committee on Wednesday.
"You have been before this committee countless numbers of times since 2008 and if this is the crime of the century, as so many people are reporting today, never once did you ever once come and mention it as being a problem, never once did you come here and say this is what you're going to do about it," he said.
This story appeared on the moneynews.com website on Monday...and I thank West Virginia reader Elliot Simon for sharing it with us. The link is here.
This 7:54 video was posted over at the rollingstone.com website early yesterday morning...and I thank Roy Stephens for bringing it to my attention late last night. It's an absolute must watch...and the link is here.
Federal Reserve Chairman Ben S. Bernanke may be taking another look at cutting the interest rate the Fed pays on bank reserves to bring down short-term borrowing costs and spur the slowing U.S. expansion.
Bernanke testified to Congress on July 17 that reducing the rate from its current 0.25 percent is one of several easing steps the Fed might take to reduce unemployment stuck above 8 percent for more than three years. In February, by contrast, the Fed chairman told Congress that lowering the rate might drive away investors from short-term money markets.
“They’re reconsidering it,” said Ward McCarthy, a former Richmond Fed economist. A July 5 decision by the European Central Bank to cut its deposit rate to zero is prompting renewed interest in the strategy, said McCarthy, chief financial economist at Jefferies & Co. McCarthy said it’s unlikely the Fed will reduce the rate at a two-day meeting that starts [today].
This Bloomberg story was posted on their Internet site yesterday...and I thank reader Edward Costick for sending it along. It's a must read...and the link is here.
With expectations for a muddle-through slight positive print, the headline Dallas Fed index just printed at -13.2 (exp. 1.9). This is its lowest level since September of last year and the biggest miss of expectations since May of last year. The headline index is teetering on the edge of its worst levels since 2009 as the month to month change in the general business activity index dropped a massive 19pts - its largest drop since April 2005. Specifically it appears the outlook for capital expenditures was among the largest sub-index to have its hope crushed - and this strongly suggests (and confirms) a sub-50 ISM print.
This short story was posted over at Zero Hedge yesterday...and the charts are definitely worth looking at. I thank reader 'David in California'...and the link is here.
Investor confidence in the U.S. economy has hit its lowest point in 2012, a Rasmussen Reports survey shows.
The Rasmussen Investor Index dropped six points on Saturday to 83.2, the lowest level measured since Dec. 17, 2011, the polling firm reported.
Investor confidence is down five points from a week ago, 11 points from a month ago and 16 points from three months ago.
The Rasmussen Consumer Index, meanwhile, held steady on Saturday at 80.7.
Consumer confidence is down a point from a week ago, six points from a month ago and seven points from three months ago.
Here's another story from the moneynews.com Internet site...this one was posted there on Sunday afternoon. It's Elliot Simon's second offering of the day...and the link is here.
The United States has likely slid into another recession despite repeated attempts by the Federal Reserve to jolt the economy with stimulus measures that, in reality, have done little more than inflate asset prices, said Eric Sprott, chairman of Sprott Money Ltd.
All these monetary tools won't work, Sprott told Newsmax.TV in an exclusive interview.
They don't stimulate the economy but rather, pump up stock prices to make it look like the country is getting better.
"We’re probably in a recession right now in the U.S. and we’re certainly in a recession in Europe. We’re certainly in a manufacturing recession in China. And these things that the central banks do, the bottom line is they don’t stimulate the economy. They keep asset prices inflated."
This is today's third story from the moneynews.com Internet site...and the 14-minute video interview with Eric Sprott is probably worth your time. I thank Elliot Simon for this third offering in today's column...and the link is here.
Crop conditions across the US are still deteriorating, with less than a quarter of the corn crop now in "good or excellent" condition.
What's even more troubling is that the weather is not cooperating. The National Weather Service forecast for the continental US over the next 1-2 weeks looks dreadful....and the temperature are both expected to be significantly worse than historical averages. This is threatening to cause further crop damage.
This short, must read story, with excellent charts, was posted over at the soberlook.com Internet site yesterday...and I thank Casey Research's own Bud Conrad for sending it to me in the wee hours of this morning. The link is here.
Major banks face growing pressure to extract more money from, or even sever ties with, unprofitable hedge-fund clients as they cut costs in the face of tough trading conditions and try to refocus on the biggest managers.
Industry insiders say prime brokers — which provide services such as stock lending and financing for hedge funds — are sifting through their client lists, in some cases demanding higher fees on trading or a greater share of a fund's business, and sometimes telling funds to look elsewhere.
The moves come as banks, faced with a tough economic environment, higher regulatory costs, and looming Basel III capital standards that are set to reduce returns on equity, look to cut costs across the board and focus on more profitable activities.
This Reuters piece was posted on the cnbc.com Internet site early yesterday morning...and I thank Elliot Simon for his last offering in today's column. The link is here.
HSBC’s chief executive, Stuart Gulliver, has described the US money laundering scandal as “shameful and embarrassing” as the bank revealed the episode would cost it at least $700m (£444m).
In total, Britain’s largest bank said it had set aside $2bn in the first half of the year to cover the cost of money laundering as well as compensating UK customers mis-sold payment protection insurance and interest rate swaps.
Despite the provisions, HSBC reported a 11pc year-on-year increase in pre-tax profits for the first six months of 2012 to $12.7bn.
Mr Gulliver’s apology followed a damning report this month by the US Senate that slammed HSBC for letting clients shift funds from dangerous and secretive countries. The HSBC chief said the $700m provision was the bank’s “best estimate” of the cost of the scandal, but admitted the number could be “significantly larger”.
Those are crocodile tears you see in his eyes, dear reader. As I said before when this story first broke, every major bank in the world is involved in this sort of shady stuff, but HSBC either got too carried away with it, or was the sacrificial lamb for the rest of them. Maybe both. I thank Roy Stephens for this story that showed up on The Telegraph's website during their lunch hour yesterday...and the link is here.
Mario Draghi has promised the moon. The European Central Bank’s council had better deliver on his pledge this week. If it does not, the crisis will surely escalate out of control in August or soon after.
We are beyond the point where a quarter point rate cut will achieve anything. Nor will it help to launch a fresh round of "temporary and limited" bond purchases - to use the self-defeating language that Mr Draghi is forced to utter.
The only issue that matters at this late stage is whether Germany is willing to let the ECB step up to its responsibility as a global central bank after two years of ideological posturing and take all risk of sovereign default in Spain and Italy off the table - which it can do easily enough once it stops playing politics and obeys the “financial stability” clause (Article 127) of the Lisbon Treaty.
That is to say, whether Latin states are willing to mobilize their majority power on the ECB’s council to force a change in policy over German protest, or lamely let themselves be picked off one by one in serial disasters like the death of the Gold Standard in 1931.
This Ambrose Evan-Pritchard blog was posted on the telegraph.co.uk Internet site on Sunday afternoon BST...and is another offering from Roy Stephens. The link is here.
A full-blown sovereign bail-out of Spain would be economically and politically impossible and cost up to €650bn (£510bn), an in-depth study has warned.
Leading think-tank Open Europe made the estimate based on the assumption the Spanish government would be forced out of the markets for three years because of its unsustainable borrowing costs, as happened in Greece, Ireland and Portugal.
Between now and mid-2015, Spain has funding needs of €542bn, with its banks requiring up to €100bn on top of this. The Spanish regions possibly require another €20bn, according to the study.
A Greek-style bail-out for Spain would bleed dry the eurozone’s €500bn rescue fund, making an alternative solution essential.
This story was posted on The Telegraph's website late on Saturday night BST...and is also courtesy of Roy Stephens. The link is here.
A decisive point had been reached in the euro crisis and EU leaders and the European Central Bank must use all means at their disposal to rescue the currency, euro-group head Jean-Claude Juncker warned on Monday. He also confirmed plans to buy bonds from struggling member states.
The head of the euro group of euro zone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, warned on Monday that the euro zone was in danger of breaking apart. Leaders must use "all means at their disposal" to save the currency union, he urged.
"We have arrived at a decisive point," Juncker told German newspaper Süddeutsche Zeitung. "The world is talking about whether the euro zone will still exist in a few months."
"There is no time to lose," Juncker added. "We must now make abundantly clear with all available means that we are firmly determined to guarantee the financial stability of the currency union."
Well, the man certainly has a keen grasp of the obvious. This story showed up on the German website spiegel.de yesterday...and I thank Roy Stephens once again for sending it along. The link is here.
Jobs for your friends, contracts for your relatives, cash handouts for everyone: that's how politics works in Sicily. Now the island is on the verge of bankruptcy. It's an example of the underlying problem plaguing many parts of the southern European countries now struggling to contain the euro crisis.
Marcello Bartolotta, a surgeon from the Sicilian town of Messina, has hit the jackpot. He has just been granted a seat in the regional parliament as a replacement for a parliamentarian from his party who recently died. The assembly will be dissolved in October ahead of regional elections. That, though, is hardly a problem for Bartoletta. After all, for the three or four remaining sessions he will attend until then, he will get some €40,000 ($49,000), in addition to expenses.
That, though, is if Sicily doesn't go bankrupt first. And there is a chance it may.
Bartolotta's 89 fellow lawmakers and their 400 assistants have already been told that their July salaries won't be paid out punctually. The "Onorevoli," the "Honorables," as Italian parliamentarians call themselves, are up in arms at the announcement and the Palazzo Reale, where the assembly has its seat, echoed with shouts of "We want our money!" Yet the parliamentarians themselves have contributed significantly to Sicily's financial misery.
The problem isn't just that they receive a monthly net salary of €10,000 to €15,000 -- more than members of the national assembly in Rome get -- without working terribly hard. The assembly rarely convenes and the turnout is usually quite low. Even the fact that almost a third of the Honorables have a criminal record, are being sued or are under investigation is a cosmetic blemish at most. The true problem lies in what they have been doing: The political class in semi-autonomous Sicily has been doling out jobs and cash so lavishly over the years that the region is at risk of financial collapse.
It sound almost like Capitol Hill in Washington, does it not? Believe it or not, this story is a well worth your time if you have it...and I thank Roy Stephens for sharing it with us. The link is here.
You know a crisis is about to burst open when U.S. Treasury Secretary Timothy Geithner flies in unexpectedly to meet German Finance Minister Wolfgang Schaeuble and European Central Bank President Mario Draghi.
And that's just the start. Ahead of this week's meeting of the ECB governing board there is a Latin summit in Madrid between the two men -- Italian Prime Minister Mario Monti and his Spanish counterpart Mariano Rajoy -- in the hottest seats.
"I don't want to raise expectations but I must say that we have arrived at a decisive point," said eurogroup President Jean-Claude Juncker. "The euro countries have arrived a point where we must make extremely clear with all available means that we are determined to ensure the financial stability of the currency union."
"All available means" now joins Draghi's "Whatever it takes" as key phrases propping up the skeptical markets. But the markets expect a very large rabbit to be conjured out of the ECB's hat this week.
This UPI story was filed from Paris yesterday...and is Roy Stephens last offering in today's column. It's a must read from one end to the other...and the link is here.
Germany is becoming isolated, and no longer is Chancellor Merkel able to pretend that, deo volente, it will come right in the end. Instead Germany faces a crippling bill, now recognised by the rating agencies. In a GoldMoney podcast released last Wednesday, Philipp Bagus estimated the total cost to Germany to be four times her total tax revenues. That implies personal taxes of over 100% of private sector income. How do you carry your electorate along with you, simply to keep the euro project alive, with that sort of cost?
You cannot. Bagus sees no alternative to money-printing, and that is effectively what Draghi now says he is prepared to do; but unlike other fiat currencies, the euro has no single government backing it. Therefore the effect on the euro of Draghi’s money printing could be catastrophic.
It would be quite an event. We have not seen a major fiat currency collapse in recent decades, though there are those in Germany who remember the misery it brings. The speed at which the euro weakens could be very surprising indeed.
This short essay was posted over at the goldmoney.com Internet site on Sunday...and is well worth your time. I found it in a GATA release early yesterday morning...and the link is here.
The first blog is with John Embry. It's headlined "Gold to Explode, But Europe is in Terminal Condition". The second is with Stephen Leeb...and it's entitled "Gold & Silver To Surge As Money Pours Into These Markets". Next is Michael Pento with an interview headlined "Going For The Gold As Governments Destroy Currencies". The fourth blog is with John Hathaway...and it's entitled "We are About to See $100+ Up Days in Gold". Lastly is this audio interview with Art Cashin. Note: The John Embry/Hathaway blog/interviews are both must reads.
An extraordinary profile of the BIS by the investigative journalist Edward Jay Epstein, was published in Harper's magazine in November 1983 after Epstein was given what appears to have been unprecedented access to the bank. Epstein described the BIS as running practically the whole world financially in virtual contempt of elected governments and in near-complete secrecy. But Epstein's references to the bank's involvement in the gold market are of greatest interest to GATA's work.
Epstein reported that BIS headquarters in Basel has a floor of gold traders "constantly on the telephone arranging loans of the bank's gold to international arbitrageurs, thus allowing central banks to make interest on gold deposits."
Was the only purpose of that trading really just to earn a little interest on those gold deposits, as that sentence suggests?
The rest of Epstein's essay about the BIS suggests otherwise.
"The membership of this club," Epstein writes, "is restricted to a handful of powerful men who determine daily the interest rate, the availability of credit, and the money supply of the banks in their own countries. ... It was in the wood-paneled rooms above the shop and the hotel that decisions were reached to devalue or defend currencies, to fix the price of gold, to regulate offshore banking, and to raise or lower short-term interest rates."
This is your big read of the day...and Chris Powell posted it on GATA's Internet site gata.org in the wee hours of this morning. So top up your coffee and then click here.
Where Your Money Goes When You Buy Gas...
When gas prices go up, all eyes turn to the Middle East.
But do you want to know where your money really goes when you buy gas? Better yet, would you like to know how to get some of that money back... maybe even a lot of that money?
You cannot get the water to clear up until you get the pigs out of the creek. - Author unknown
I'm not prepared a to read a thing into yesterday's price action in the gold market, but the silver price action was another matter entirely. As I mentioned at the top of this column..."Whether the rally was short covering...or a market gone 'no ask'...is open to debate. Ted thought it looked like a hands-in-their-pockets moment for JPMorgan et al...as they appeared to have stood aside until the price went vertical...before stepping into the market with sell orders." Fortunately, we may get a hint of that in this Friday's Commitment of Traders Report.
What did happen on that price spike in silver was drive the price above its 50-day moving average for the first time since mid-March...and the first time it has risen through that average since mid-January. Every time this summer that it has approached its 50-day moving average, JPMorgan et al were standing by to make sure that this didn't happen...and I carefully pointed out that fact both times it happened. Here's silver's 1-year chart that puts the current situation into some sort of perspective.
(Click on image to enlarge)
It will be interesting to watch how things develop, or are allowed to develop, from here.
I mentioned in my Saturday column that there was a 'secret' meeting to be held on Monday between little Timmy Geithner and a couple of his 'peers' in Europe...and that I'd love to be a fly on the wall for those. I note that I wasn't the only person thinking that. Here is the opening paragraph from the Walker's World/UPI story above..."You know a crisis is about to burst open when U.S. Treasury Secretary Timothy Geithner flies in unexpectedly to meet German Finance Minister Wolfgang Schaeuble and European Central Bank President Mario Draghi." I wonder what they talked about...but whatever it was, I doubt that we'll have to wait too much longer to find out.
I would suggest that you use the next few hours/days/weeks to get your precious metals/financial affairs in order, because whatever's coming is going to be big...with a capital "B"...and we'll likely hear about it on a Sunday before the markets open in Japan. The only question is...which Sunday will it be?
Far East and early London trading was pretty uneventful in both gold and silver for the last day of July. Volumes are light...and the dollar index is down about 12 basis points as I hit the 'send' button at 5:06 a.m. Eastern time. There are meetings going on in both Europe and the USA today and tomorrow...and we'll have to twiddle our thumbs as we wait for the grand...and probably co-ordinated...pronouncements that will follow in due course.
See you tomorrow.