Gold didn't do much of anything in Far East trading...and what little gains there were, disappeared during the morning trading session in London.
But once the Comex opened, gold worked its way a bit higher... with the high of the day [$1,583.90 spot] coming shortly after 10:00 a.m. in New York...which may have been the London p.m. gold fix. From that high, the gold price drifted gently lower until a few minutes after 11:30 a.m. in New York...and then gold got sold off hard...with the low of the day [$1,545.70 spot] coming at the precise moment that the Comex closed...1:30 p.m. Eastern.
From that low, the gold price recovered a bit into the close of electronic trading. From its New York high to its New York low price, gold had an intraday price move of $38...plus or minus a dime or so. Gold closed at $1,554.80 spot down...$18.90 from the prior day.
As per usual, the silver price was much more 'volatile'. Its London high was about twenty cents higher than the Monday close...but got sold off more than 40 cents to its London low just before 1:00 p.m. BST.
The Comex opened about thirty-five minutes later...and away went the price to the upside, gaining back all of its London losses...and then powered higher to its high of the day [$28.81 spot] at 10:30 a.m. Eastern.
From there, silver followed the same flight path as gold...and 95% of the silver's price decline was in by around 12:20 a.m. in New York. From there it traded more or less sideways until the close of electronic trading at 5:15 p.m. Eastern time. The absolute low price tick [$27.67 spot] came about 3:40 p.m.
Silver had an intraday price move of $1.14...which is 3.96%...and closed down 55 cents to $27.88 spot. Net volume was an immense 48,000 contracts, most of which would have been of the high-frequency trading variety.
The dollar index traded in a fairly tight range around the 82.20 mark right up until about 10:40 a.m. in New York. Then during the next ninety minutes, the dollar index rallied a hair under 40 basis points...almost making it up to the 82.60 mark. From that high, the index swooned 25 basis points but regained some of that back by the close.
The dollar index closed up about 30 basis points on the day. It's more than a stretch to pin a $38 intraday gold move...and a $1.14 intraday move in silver, on yesterday's currency action. But it served as a convenient fig leaf...but a very tiny fig leaf...for JPMorgan et al to do their thing on the second-last trading day for the June contract in gold.
Not surprisingly, the gold shares started off in the plus column at the open of the equity markets...and of course rolled over when the engineered price decline in all four precious metals got under way. But if you check the HUI chart below, the stocks really didn't seriously head lower until a bit after the price decline began. Normally the stocks and the gold price are joined at the hip. Not this time.
But the HUI bottomed out at the precise moment that the Comex closed...1:30 p.m. Eastern time...which also happened to be the precise low for the gold price. From there, the gold stocks cut their losses by a full percent by the closing of trading...and the HUI only finished down 2.05%.
In the silver stocks, it was pretty much red across the board...except for Hecla. But, for whatever reason, Nick Laird's Silver Sentiment Index closed up a hair...0.08%. It sure beats me why that happened.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 5 gold and 16 silver contracts were posted for delivery tomorrow. The final deliveries [such as they are] in the May delivery month have to be posted by the close of business on Thursday night. That is also the time that First Day Notice for delivery into the June gold contract will be posted as well.
There were no reported changes in GLD...but over at SLV an authorized participant withdrew 1,455,513 troy ounces of silver.
The U.S. Mint had a sales report. They sold 2,000 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 397,500 silver eagles. Month-to-date they've sold 48,000 ounces of gold eagles...8,500 one-ounce 24K gold buffaloes...and 2,750,000 silver eagles.
Over at the Comex-approved warehouses on Friday, they reported receiving 700,953 troy ounces of silver...and shipped 704,090 ounces out the door. The link to that action is here.
Here's an interesting set of statistics that Australian reader Wesley Legrand sent me...and the table of data is pretty self-explanatory.
I have a few more stories than usual for you today...and I'm leaving the final edit up to you.
JPMorgan Chase has sold an estimated $25 billion of profitable securities in an effort to prop up earnings after suffering trading losses tied to the bank's now-infamous "London Whale," compounding the cost of those trades.
Chief Executive Jamie Dimon earlier this month said the bank sold corporate bonds and other securities, pocketing $1 billion in gains that will help offset more than $2 billion in losses.
As a result, the bank will not have to report as big an earnings hit for the second quarter.
The sales of profitable securities from elsewhere in the bank's investment portfolio will increase its costs by triggering taxes on the gains and by eliminating future earnings from the securities.
I'm just curious to know why he would sell $25 billion worth of profitable securities just to cover a loss of what most pundits think will only be $4-6 billion. I thank Washington state reader S.A. for sending me this CNBC story that was posted on their website shortly after midnight on Tuesday...and the link is here.
Following the now long-gone LTRO induced risk ramp through March, many of the C-grade economists out there predicted that housing would bottom in March (this time for real) and it would be smooth sailing from there.
Alas, the just released March Case Shiller data puts this latest speculation very much in doubt (once again), following a miss of consensus expectations in the Top 20 Composite of a 0.20% increase, printing at half that, or 0.09%, and more importantly, a decline from the February rate of increase, which was 0.15%. The non-seasonally adjusted number declined by 0.03%, the 7th consecutive drop in a row. All this begs the question: did housing just quadruple dip, with a February local extreme in the Sequential rate of change?
As I said back in January 2007...call me in 2013 and we'll talk about the bottom of the real estate market in the U.S. But from what I've read here, my 6-year time horizon may prove to be wildly optimistic. This zerohedge.com piece was sent to me by Phil Barlett...and the link is here.
Confidence among U.S. consumers unexpectedly fell in May to the lowest level in four months as optimism about employment prospects faded.
The Conference Board’s index decreased to 64.9 this month from a revised 68.7 in April, figures from the New York-based private research group showed today. Home prices in 20 cities dropped in the 12 months ended in March at the slowest pace in more than a year, according to another report.
The share of Americans expecting fewer job opportunities in the next six months climbed to the highest level since November, raising the risk that consumers will limit spending. A 30-cent decline in gasoline prices since early April failed to brighten spirits, showing that more progress is needed in the job market.
This Bloomberg story was posted on their website early yesterday afternoon...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
A trend is emerging: A host of MSM pundits/analysts/economists are predicting a complete catastrophe right when the debt ceiling comes up.
To wit: At Bloomberg View, economist partners Betsey Stevenson and Justin Wolfers predict that the next debt ceiling fight could sink the entire economy, in part thanks to the fiscal cliff issues being felt at the same time. They point to the economic deterioration seen last summer (when confidence collapsed around the time of the debt ceiling fight) as evidence for the trouble.
Ezra Klein recently called the next debt ceiling fight as something approaching a Lehman moment, again because it could come amidst the fiscal cliff miss.
At Slate, Matt Yglesias has argued that because Republicans have already reneged on the last debt ceiling deal, that making another deal will be even harder.
This Joe Weisenthal op-ed piece appeared on the Bloomberg Internet site early yesterday evening...and I thank Roy Stephens for digging it up on our behalf. The link is here.
The characteristic mark of a tyrannical regime is that it eventually finds it necessary to erect walls to keep people from leaving. This is why we should be troubled by the “Ex-PATRIOT Act,” an egregiously offensive bill recently introduced in the Senate. Following a long line of recent legislation and regulations attempting to expropriate more and more wealth from hard-working Americans, this new bill spits in the face of overburdened taxpayers and tramples on the Constitution.
Current law already dictates that Americans with a net worth of over $2 million who expatriate must be assumed to have sold all their assets and must pay a corresponding punitive exit tax on those assumed sales. The Ex-PATRIOT Act goes even further than current law by assessing a 30% capital gains tax on all future earnings of expatriates. Not content just with this additional tax, the bill also grants the IRS the sole authority to determine whether individuals have expatriated for tax purposes and allows the IRS to bar those individuals from ever re-entering the United States. Finally, the bill blatantly violates the ex post facto provisions of the U.S. Constitution by extending all of these provisions to anyone who has given up their U.S. citizenship within the past decade.
This short commentary by Congressman Paul is well worth the read...and I thank the good folks over at the 24hgold.com website for sending it along. The link is here.
If Greece left the euro, living standards would plummet, incomes would be slashed by more than half, and inflation and unemployment would skyrocket, the National Bank of Greece warned on Tuesday.
In a report released ahead of an election on June 17 that may determine whether the country stays in the single currency, the country's biggest bank said the risk of Athens exiting the euro was no longer just a theoretical possibility, warning that the fallout from such a move would be dramatic.
"An exit from the euro would lead to a significant decline in the living standards of Greek citizens," the NBG wrote ahead of a vote which parties opposed to austerity measures that have kept Greece in the euro so far have a chance of winning.
This Reuters story was posted on their website early on Tuesday evening New York time...and is Phil Barlett's second offering in today's column. The link is here.
Its membership in the euro currency union hanging in the balance, Greece continues to receive billions of euros in emergency assistance from a so-called troika of lenders overseeing its bailout.
But almost none of the money is going to the Greek government to pay for vital public services. Instead, it is flowing directly back into the troika’s pockets.
The European bailout of 130 billion euros ($163.4 billion) that was supposed to buy time for Greece is mainly servicing only the interest on the country’s debt — while the Greek economy continues to struggle.
This 2-page New York Times story from yesterday is well worth reading...and I thank Phil Barlett for sending it along. The link is here.
In an interview in The Daily Telegraph, British Home Secretary Theresa May says “work is ongoing” to restrict European immigration in the event of a financial collapse.
People from throughout the EU, with the exception of new member countries such as Romania and Bulgaria, are able to work anywhere in the single market.
However, there are growing concerns that if Greece was forced to leave the euro, it would effectively go bankrupt and millions could lose their jobs and consider looking for work abroad.
The crisis could spread quickly to other vulnerable countries such as Spain, Ireland and Portugal, although Britain is regarded as a safe haven because it is outside the single currency.
This story was posted in The Telegraph last Friday...and I borrowed it from yesterday's King Report...and the link is here.
Switzerland is drawing up plans for emergency measures including capital controls in case the euro collapses although it does not expect to need them and will continue to defend a cap on the franc in the meantime, the head of the central bank said.
"We must be prepared just in case the currency union collapses, although I don't expect that," Swiss National Bank President Thomas Jordan, who predicted the euro zone crisis in his 1994 doctoral thesis, told the SonntagsZeitung newspaper.
"One measure would be capital controls, in other words measures which directly influence the flow of capital into Switzerland," he said, but declined to give further details.
This Reuters story was filed from Zurich on Sunday...and is another piece I borrowed from yesterday's King Report. The link to that is here.
The computers of high-ranking Iranian officials appear to have been penetrated by a data-mining virus called Flame, in what may be the most destructive cyberattack on Iran since the notorious Stuxnet virus, an Iranian cyberdefense organization confirmed on Tuesday.
In a message posted on its Web site, Iran’s Computer Emergency Response Team Coordination Center warned that the virus was dangerous. An expert at the organization said in a telephone interview that it was potentially more harmful than the 2010 Stuxnet virus, which destroyed several centrifuges used for Iran’s nuclear enrichment program. In contrast to Stuxnet, the newly identified virus is designed not to do damage but to collect information secretly from a wide variety of sources.
Flame, which experts say could be as much as five years old, was discovered by Iranian computer experts. In a statement about Flame on its Web site, Kaspersky Lab, a Russian producer of antivirus software, said that “the complexity and functionality of the newly discovered malicious program exceed those of all other cyber menaces known to date.”
This story was posted in The New York Times yesterday...and is Phil Barlett's final offering in today's column. The link is here.
Mr. Coxe is global portfolio strategist for the Bank of Montreal here in Canada...and his weekly 30-minute conference calls are worth listening to.
At the 15-minute mark he mentions a Barron's interview with Ray Dalio where he suggests everyone should have 10% exposure to gold. Later he goes on to suggest there is a very good chance of Europe issuing gold-backed bonds and at the end of the podcast he gives a very interesting analysis of why that will happen.
If you have thirty minutes, it's worth your time...and I thank reader Neil West for bringing it to my attention. This podcast is from last Friday...and is posted over at the bellwebcasting.ca website...and the link is here.
Southern Europe's debtor states must pledge their gold reserves and national treasure as collateral under a E2.3 trillion stabilisation plan gaining momentum in Germany.
The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.
The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton's Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.
This must read Ambrose Evans-Pritchard story was posted on The Telegraph's website yesterday afternoon in London...and is headlined "Europe's debtors must pawn their gold for Eurobond Redemption". I found it posted in a GATA release yesterday...and the link is here.
The first is with Egon von Greyerz...and it's headlined "$100 Trillion+ to be Printed, Expect Capital Controls". The second blog is with Newmont Mining CEO Richard O'Brien. It bears the headline "China Doing Everything It Can to Get Gold". And lastly is this blog with Citibank analyst, Tom Fitzpatrick...and it's entitled"US Dollar Strong, What to expect From Gold & Global Equities".
If you're looking for another reason to attend this weekend's Vancouver World Resource Investment Conference, here it is: A spectacular 2 1/2-hour evening cruise around that beautiful port city on the first night of the conference, Sunday. The cruise will have door prizes, hors d'ouevres and refreshments, and plenty of networking with mining company representatives and financial experts. Admission is only C$25-$40 with the proceeds going to the children's charity of the British Columbia mining industry, Mining for Miracles.
Information about the cruise is posted in PDF format here.
The GATA delegation to the conference -- Chairman Bill Murphy, Board of Directors member Ed Steer, and your secretary/treasurer -- plan to join the cruise and hope to see many friends there as well as at the conference itself. Speakers will include GATA favorites Al Korelin of the Korelin Economics Report, Peter Grandich of the Grandich Letter, David Morgan of Silver-Investor.com, Jeff Berwick of The Dollar Vigilante, financial writer Thom Calandra, U.S. Global Investors CEO Frank Holmes, Jay Taylor of J. Taylor's Gold, Energy, and Tech Stocks letter, GoldSeek.com and SilverSeek.com proprietor Peter Spina, and Doug Casey of Casey Research.
I will also have my Casey Research hat on as well...and my presentation starts at noon on Sunday in the Casey Research pavilion. The full story is posted over at the gata.org website...and is worth the read. The link is here.
Deliberations on World Markets Author, Ian McAvity, believes that the world faces a number of major challenges that could see gold go significantly higher this year.
While the commodity spectrum as a whole peaked out around 14 months ago the sheer number of potential black swan events on the horizon could see gold breach $2,500 before year-end.
This is the view of Deliberations on World Markets Author, Ian McAvity, who maintains " the Continuous Commodity Index peaked in early 2011 and [commodities] have been declining and will continue declining - that's in a sense what the stock markets have been reflecting."
But, he says, gold is increasingly trading like a currency at the moment, a behaviour that is amplified by the fact that the speculative money has now largely been chased out of the gold market.
This story was posted over at the mineweb.com website yesterday...and I thank reader Donald Sinclair for sharing it with us. The link is here.
Forgive the hyperbole in the headline but we wanted to get your attention as something quite profound is happening that could propel gold to record new highs. Yes, potentially the biggest thing since the birth of the gold ETF and the liberalisation of the Chinese gold market in 2003. A decade on and we have grounds for saying that gold may well see a significant leg higher... the big new thing in gold. I'll explain...
Banking capital adequacy ratios, once the domain of banking specialists are set to become centre stage for the gold market as well as the wider economy. In response to the global banking crisis the rules are to be tightened in terms of the assets that banks must hold and this is potentially going to very much favour gold. The Basel Committee for Bank Supervision (or BCBS) as part of the BIS are arguably the highest authority in banking supervision and it is their role to define capital requirements through the forthcoming Basel III rules.
In short, they are meeting to consider making gold a Tier 1 asset for commercial banks with 100% weighting rather than a Tier 3 asset with just a 50% risk weighting as it does today. At the same time they are set to increase the amount of capital banks must set aside as well. A double win potentially.
This must read story by Ross Norman of Sharps Pixley was filed from London yesterday...and was posted over at the mineweb.com Internet site yesterday...and once again I thank Donald Sinclair for digging up this story on our behalf. As I said, it's a must read...and the link is here.
I don’t know about you but to me events seem to be accelerating in pace as we hurtle along towards what feels like another crisis point. These are historic times we are living through as the global monetary system undergoes realignment. The last time something like this happened World Wars I and II were fought and the global banking system moved its center from London to New York.
Some of the events of the past week have piqued my spidey-sense which is reacting to the sheer number of them in such a short period of time. And the CME Group (NYSE:CME) stands at the center of it.
The Three Signs...
The CME Group was involved in three major announcements this week, individually they mean very little but in conjunction say a lot: 1] The margin requirements for Gold and Crude Oil contracts were cut by 13% and 10% respectively. 2] They announced a 5 for 1 stock split and extended grain trading hours. 3] Both CME and Intercontinental Exchange (NYSE:ICE) were designated as systemic by the U.S. Dept. of the Treasury.
When you operate under the assumption that there are no coincidences then you have to wonder why this announcement now going into effect when it does? The CME and ICE have been given these resources because those resources need to be in place. If there was to be a failure of the COMEX or ICE due to an inability to deliver product to those longs who stand for delivery then the following course of action would take place: 1] The COMEX would declare force majeure and settle all contracts in Dollars. Stiffing the longs who stood for delivery. 2] Those dollars would have to come from the Federal Reserve.
The first thing I want to point out about this article, is that it is highly speculative in nature. He has a few of his facts wrong...and there are certain things he says that I don't entirely agree with. But, having said all that, he paints an end-game scenario that is highly probable...and it's my opinion that what he says [either in whole, or in part] may actually come to pass.
For that reason alone, it's a must read...as it's another possible piece of the puzzle as the world's financial and monetary system reach some sort of denouement. I...and other commentators...have stated for years that the price of gold is going to have to be adjusted to some fantastically high price [somewhere between $8-18,000 the ounce is my guess] in order to increase the asset side of the world's central banks' balance sheets. I thank Edmonton reader B.E.O. for bringing it to our attention. It was posted over at the alphavn.com website on Sunday...and the link is here.
North American Nickel’s latest news from our 100% owned Post Creek property in the Sudbury mining camp is what geologists always hope for….a large, clearly defined, un-tested target close to surface in a known camp with excellent infrastructure advantages for mining. Drilling is scheduled to begin in September. In this case it’s an EM anomaly 200 m long, that has been interpreted as the electromagnetic signature of ‘near-massive to massive sulphide.’ It’s located approximately 55 m below surface and the trend of the anomaly corresponds, in part, to both the CJ#1 dyke and the Whistle Offset Structure to the south. Please visit our website to read the full news release and learn more about North American Nickel.
There are no market anymore, only interventions. - Chris Powell, GATA
Well, with only two days left for June contract holders to sell or roll over their positions, 'da boyz' decided to give them all one more kick in the behind as they walked out the door. Like all the interventions since the drive-by shooting on May 1st of last year, they no longer care if their criminal activities are obvious, as no one is going to stop them...not the CME or the CFTC. They pretty much have a license to do whatever they want...and they are.
But at these price levels this far under all the important moving averages, one has to wonder how much spec long liquidation really occurred during yesterday's engineered price declines in all the precious metals. None of the four precious metals set new low prices for this move down, so I doubt very much that the tech funds put on fresh short positions. But this Friday's Commitment of Traders Report should give us some idea how successful this particular sell off was for JPMorgan et al...as yesterday was the cut-off for the report...and I hoping that all yesterday's trading data will be reported in a 'timely manner'.
In overnight action, gold was sold off to another low at 12 o'clock Hong Kong time...and silver hit another low at 9:30 a.m. in London. Today is the last trading day in the June contract...and it remains to be seen if the precious metals receive the same treatment in New York that they got yesterday. We'll find out soon enough.
As I hit the 'send' button at 5:27 a.m. Eastern time, gold is down about six dollars...and silver is down 35 cents. Gold volume is very decent...and most of the activity is now in the next front month, which is August. Silver volume is very heavy...and all of the activity is in silver's next front month, which is July. I would bet serious money that most of that volume is of the high-frequency trading variety. At the moment, the dollar index is up about 20 basis points.
That's more than enough for today. As you may have already gathered, I'm looking forward to today's trading activity in New York with great interest.
See you on Thursday.