Well, it turned into an interesting day on Thursday. The gold price declined up until just past 8:30 a.m. in London...and then trended a bit higher until just after 12 o'clock noon GMT. Then a seller showed up...and two hours later [minutes before 9:00 a.m. in New York] the gold price hit its low of the day, which was $1,704.30 spot.
From that low, gold rallied nicely...and starting shortly after Comex trading ended at 1:30 p.m. Eastern time, the gold price mostly traded sideways into the 5:15 p.m. New York close. The high tick of the day...$1,731.20 spot...came around 3:00 p.m.
The gold price closed at $1,728.80 spot...up a whole 70 cents on the day. Net volume was a very impressive 152,000 contracts...give or take a few thousand contracts.
Silver pretty much followed the same price path during Far East and early London trading...although the real sell-off in silver began at the Comex open, rather than shortly after 12 o'clock noon in London like the gold price did. Silver's low price tick [$32.56 spot] also came minutes before 9:00 a.m. in New York.
From there, silver rallied along with gold...and its price also traded basically sideways, starting very shortly after the Comex close at 1:30 p.m. in New York.
After being down a dollar on the day at one point, the silver price closed at $33.52 spot...up two whole cents from Wednesday. Net volume was pretty chunky at 44,000 contracts.
As I mentioned in my closing remarks in Thursday's column, the dollar index continued to rally above the 80.00 mark. That state of affairs that lasted right up until 7:30 a.m. in New York...and then it rolled over and declined a hefty 80 plus basis points, with the low coming about 3:45 p.m. Eastern. From there it recovered just a little...closing at 79.40...the exact same price it closed at in New York on Tuesday.
The gold stocks did well yesterday...and even though the price was still well in the red when the equity markets opened, it didn't take long for the associated stocks to get into the plus column...with the high coming at gold's high tick of the day, which was around 3:00 p.m. Eastern.
There was some minor profit-taking going into the close...and despite the fact that the gold finished up less than a dollar, the HUI finished up 2.68% on the day.
The same can be said for the silver equities. Even though the price only closed up two cents...and had been down over a dollar at one point...the silver stocks did great for the most part. Nick Laird's Silver Sentiment Index closed up 2.54%.
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The CME's Daily Delivery Report showed that only 6 gold contracts were posted for delivery on Monday but, as I alluded to yesterday, there was a big delivery posted in silver...124 contracts to be precise. And it should come as no surprise that it was Jefferies as the short/issuer with 113 contracts...and the Bank of Nova Scotia as the big long/stopper with 112 contracts. JPMorgan was a bit player yesterday, but they were issuers and stoppers as well.
Now we're up to 709 silver contracts issued for delivery in February. I'm wondering if Jefferies, who was obviously massively short silver...and other metals, is being helped out in the delivery process in order that it, too, does not fail as did MF Global. We'll probably never know for sure, but it appears that something is going on behind the scenes. The link to the Issuers and Stoppers Report is here...and it's worth a look.
By the way, another 30 silver contracts were added to the February delivery schedule yesterday as well.
An authorized participant over at GLD added 97,179 troy ounces of gold yesterday...and there was no report from SLV.
There was no sales report from the U.S. Mint, either.
The Comex-approved depositories received 596,255 troy ounces of silver on Wednesday...and shipped 790,009 ounces of the stuff out the door. The link to that action is here.
Here's a real interesting chart about Apple vs. the broader stock market. I ran a chart on that the other day...but this one that Australian reader Wesley Legrand just sent me, really tells the tale. Without Apple, the rest of the equity markets would look lousy.
Here's another chart from young Wesley. It graphs the 5-year Credit Default Swaps of the founding Eurozone countries against the percent of 25-34 year old males still living at home with their parents in those same countries. It ain't scientific, but...
I have a lot of stories again today, as there is so much going on in the world right now...and for whatever reason, a goodly number of them are precious metal related.
Moody’s Investors Service has put Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS and more than 100 other financial institutions on notice.
Citing increasingly challenging market conditions, the credit rating agency said it would review its grades for 114 banks based across Europe, as well as eight other financial institutions based elsewhere, including JPMorgan Chase, Bank of America and Nomura.
Moody’s indicated it could cut some credit ratings by as much as three levels as it weighed the risks to the banks’ investment banking models and large capital market exposures.
This story, filed from London, was in The New York Times yesterday...and I thank reader Phil Barlett for sending it. The link is here.
A gray-haired woman picking a flower with a young girl adorns the cover of an HSBC Holdings Plc brochure that promises investors both “the growth of the market” and “the security of FDIC Insurance.”
By tying interest rates to everything from the Dow Jones Industrial Average to precious metals, the pamphlet for HSBC’s Market-Linked Certificates of Deposits explains U.S. investors have the potential to earn “enhanced returns” over as long as seven years. A separate disclosure states that they also may earn zero, getting just their original principal back after the CD matures, while brokers may collect fees of 6 percent or more. Investors that need to get their money earlier must find a buyer for the CD, risking a loss.
“It is questionable whether some of these products should be sold to retail investors in the first place,” said Moritz Seibert in Westport, Connecticut, the former U.S. head of equity derivatives structuring at the Royal Bank of Scotland Group Plc who’s now starting an alternative investment business. “Traders at issuing banks understand the nitty-gritty pricing of those products very well. It seems that professional institutional investors would be a more suitable clientele.”
Wow! Derivatives for the great unwashed! What will they think of next? This very long Bloomberg piece was posted on their website on Tuesday...and I thank reader Ken Metcalfe for sending it along. The link is here.
In yesterday morning's Cashin's Comments, UBS's Art Cashin addressed what worries traders these days.
A Greek default has been on everyone's minds lately. But the traders Cashin has talked to think that it's just the tip of the iceberg.
The bigger fear is what happens in the credit default swap (CDS) markets. No one knows how big it is, who the counterparties are, and, worst of all, whether the CDS contracts will actually trigger in what many would consider a default.
Yep, this is a real can of worms involving tens of trillions of dollars. Good luck to all! This story was posted on the businessinsider.com website yesterday...and I thank Washington state reader S.A. for bringing it to my attention. It's worth the read...and the link is here.
Germany's Wolfgang Schäuble is entering into ever more dangerous waters.
His apparent demand that Greece postpone elections scheduled for April, and impose a technocrat junta (a l’Italiana) for another year without PASOK and New Democracy, takes your breath away. Is this really the position of the German government? Greek democracy be damned?
I presume he has seen pictures of the blackened buildings below the Acropolis – and yes, the evidence is everywhere: a neo-classical house near my hotel at Monastiraki metro station was completely gutted, as was a building across the road. (There were four homeless sleeping in the cold alley next door, being comforted by a young volunteer.)
I presume too that Mr. Schäuble has been well-briefed on the explosive political mood in Greece, so one can only view such a demarche as deliberate provocation – like the Austrian ultimatum to Serbia in 1914 (a miscalculation, as it later turned out, since "contagion" from Serbia could not be contained).
Hell hath no fury like Ambrose Evans-Pritchard when he's up on his soap box. This story from yesterday's edition of The Telegraph is Roy Stephens first offering of the day...and the link is here.
The regime of drastic cuts has tipped the economy into a violent downward spiral. They thought that private industry would muddle through as the state went through the austerity mincer. What the EU-IMF "Troika" did not fully understand is how many firms were really part of the state in disguise.
"The Greek government outsources everything," said one official with close knowledge of the events.
Faced with the guillotine, the state first slashed procurement contracts and then stopped paying its bills altogether. The government is now €7bn (£5.8bn) in arrears to private companies, including €3bn in unpaid VAT refunds for exporters. It is why business has borne the brunt of the fiscal squeeze, suffering 450,000 job losses, and why Greece's unemployment has soared to 21pc.
This is another piece by Ambrose...and this is one that was posted late last night London time. It, too, is a must read...and I thank Roy Stephens for digging it up on our behalf. The link is here.
As bombings go, this week's trio of apparent attempted attacks on Israeli targets -- which also included an attack on a car carrying the wife of an Israeli diplomat in New Delhi and a bomb found attached to an Israeli diplomatic vehicle in the Georgian capital Tbilisi -- seemed unusually inept.
But security experts believe they sent a clear message, the first serious retaliation for a quietly waged but increasingly bloody campaign of sabotage waged against Iran's nuclear program.
At least four Iranian nuclear scientists have been killed in recent years in attacks believed to have been carried out by or for Israel's intelligence services. While Israel invariably refuses to comment, some security analysts also suspect it has been involved in a string of major explosions at military and nuclear facilities in Iran, such as one in November that killed more than a dozen, including a senior Iranian general.
Tehran denied any involvement in this week's attacks, accusing Israel of staging them itself. But there are widespread suspicions that the real intent may have been to warn the Jewish state that Iran is prepared to retaliate in kind.
This Reuters story was filed jointly from Bangkok and London yesterday...and I thank Washington state reader S.A. for sending it to me. The link is here.
Taken together, the myriad developments are baffling. Iran says it has made advances in nuclear research, but wants to resume talks with the West. It is threatening to cut off oil supplies to Europe while allegedly sponsoring attacks against Israeli diplomats. German editorialists attempt to make sense of the confusion.
Is anyone at the controls in Iran? It is a question that many in the West are asking following this week's flurry of announcements, denials and conciliatory advances centering on the country's nuclear program. Perhaps even more vexing, however, is the fact that Tehran is also thought to be behind a series of decidedly amateurish attacks targeting Israeli diplomatic personnel in Georgia, India and Thailand.
"What we see is provocative acts … designed to distract attention from the demonstrated impact that (international) sanctions are having," White House spokesman Jay Carney told reporters on Wednesday. "It is not unusual for Iran to try to distract attention … by some burst of rhetoric or some announcement."
This story was posted on the German website spiegel.de yesterday...and is another Roy Stephens offering. The link is here.
What was the parade of European poodles thinking - that Tehran would just roll over and absorb the European Union's oil embargo, scheduled to start on July 1?
No wonder Brussels was caught as a Gucci deer in the headlights when the news started to flow that Tehran would preempt the move and immediately slap its own embargo of crude oil exports to six European Union countries - deeply in crisis Club Med members Portugal, Italy, Greece and Spain plus recession-hit France and the Netherlands.
Yet the vultures, jackals and hyenas of regime change/war can never be appeased in their sanction lust. The US is now forcing the EU to cut off Iran from Brussels-based SWIFT - the independent telecom mechanism/clearinghouse used by every bank in the world to exchange financial data (its official name is Society for Worldwide Interbank Financial Telecommunications). Iran's Central Bank itself may become a victim.
In a nutshell, SWIFT is the wheel that moves global financial transactions and trade. So if this is not an extended, remixed declaration of hardcore economic war against one country - nothing else is.
This story was posted on the Asia Times website early this morning...and is a must read. I thank Roy Stephens for sharing it with us...and the link is here.
A team of builders renovating a vineyard facility in France were stunned when U.S. gold coins worth $1 million rained down on them from the rafters.
The treasure trove of 497 coins was hidden in the attic of an old building in the rural village of Les Riceys in the country's famed Champagne region.
The pieces, which have a face value of $20 each, were minted between 1851 and 1928 and are the equivalent of 17 kilograms of gold.
This delightful must read story was posted in the Daily Mail yesterday...and the first one through the door with it was reader "Vic in Toronto". The link is here.
A German handyman renovating the kitchen of a woman who had recently died, opened what he thought was a bag of rubbish to find coins and gold bars worth at least €100,000.
The bag was full of Australian golden coins, gold nuggets stamped with Degussa, and a host of silver coins as well as silver cutlery wrapped in newspaper.
This is another very interesting read...and was posted over at the German website thelocal.de yesterday...and the link is here. I thank West Virginia reader Elliot Simon for sending it along.
South Africa sent troops to end rioting at the world’s largest platinum mine after owner Impala Platinum Holdings Ltd. asked for government help to stop violence stemming from an illegal strike that has halted output.
Protesters set fire to cars overnight, barricading the main road to Sun City, a resort within the platinum-producing region near Rustenburg, Impala Chief Executive Officer David Brown said today. The police presence at the mine has been inadequate, failing to end attacks and intimidation and prompting a request to the Security Minister to intervene, he said.
Impala last week fired 17,200 workers at the mine, which accounts for about 12 percent of global production of platinum, used in jewelry and cars. The disruption has caused lost output of 60,000 ounces worth about 1.2 billion rand ($153 million) as of Feb. 14, Brown told reporters on a conference call. The mine came to a halt Jan. 30 and it may take a further three or four weeks to restore operations, curbing global supplies, he said.
I thank Washington state reader S.A. for sending me this Bloomberg story from yesterday...and the link is here.
The first one is a Rick Rule blog headlined "Here's What I'm Doing With My Money Right Now". The second blog is titled "Stephen Leeb: This Will Spark the Next Leg Higher in Gold"...and the audio interview is with Keith Barron. The link to that is here.
The willfully ignorant sneering about gold in the mainstream financial news media never stops. The latest example comes from The Wall Street Journal's Liam Denning, who snickers in commentary appended here that support for gold now should be coming from central bankers, the scourge of gold bugs. Denning writes that "central bank buying masks the impact of weak jewelry demand, slowing increases in investment flows, and higher supply."
But in sneering that gold, "as an investment, yields nothing," Denning conveniently neglects to note that all major currencies now yield nothing as well, failing to pay a real rate of interest. Where's the sneering about them?
These are the first two paragraphs of Chris Powell's long preamble to the WSJ story...and it's definitely a must read. It's posted in the clear over at the gata.org website...and the link is here.
GATA's friend, the German freelance journalist Lars Schall, has just done a comprehensive interview with Sprott Asset Management's chief investment strategist, John Embry, touching heavily on gold market manipulation.
I borrowed the above introductory paragraph from the GATA release yesterday...but received this interview earlier in the day from Wesley Legrand. It's posted at Matterhorn Asset Management's Gold Switzerland Internet site...and the link is here.
China is poised to overtake India as the world's biggest gold market this year, as rising incomes fuel demand for the precious metal and a weak rupee diminishes Indian purchases, the industry body said.
The amount of gold bought in China rose 20pc in 2011 over the year before to 770 metric tons, the World Gold Council said in its annual report. That put China behind only first-place India, where 933 metric tons were bought.
Worldwide, the amount of gold purchased rose 0.4pc to 4,0671 metric tons worth $205.5bn (£131bn).
After the World Gold Council came out with its 2011 year-end numbers, there was no end to the number of stories about it in the main stream media on Thursday. This one is from yesterday's edition of The Telegraph...and is Roy Stephens final offering of the day. The link is here.
The World Gold Council believes China's central bank made significant gold purchases in the final months of 2011, contributing to a surge in the country's imports.
Marcus Grubb, managing director for investment at the WGC, a lobby group for the gold mining industry, told the Financial Times that buying by the People's Bank of China could explain a large discrepancy between Chinese imports and the WGC's estimates of consumer demand in the country.
"There is absolutely a discrepancy in the import figures," said Marcus Grubb. "The obvious inference is that the central bank is buying."
This story showed up in the Financial Times yesterday...and is printed in the clear in this GATA release...and the link is here.
Silver market analyst Ted Butler, who has long complained that the short position in the silver exchange-traded fund SLV serves to create a huge imaginary supply of the metal, discloses today that, perhaps as a result of silver investor agitation, that short position has been substantially reduced.
Needless to say, this is an absolute must read...and it's posted over at silverseek.com...and the link is here.
Great Panther Silver Limited (TSX: GPR) is one of the fastest growing primary silver producers in Mexico. The Company’s organic growth strategy will see output from mining operations increase by 30% in 2011 to 3.0 million ounces silver equivalent and again by 27% in 2012 to 3.8 million ounces silver equivalent, providing strong leverage to rising silver prices.
The Company has also been growing its resource and reserve base at both 100% owned operations. A new resource/reserve estimate was released for the Guanajuato Mines in late December 2010 and a new resource/reserve estimate for the Topia Mines is expected during the first quarter is 2011. The Company is also advancing drilling activities at its new discovery at the San Ignacio property in Guanajuato. Great Panther continues to replace mined ounces, grow resources and reserves at both operations, and is targeting a 10 year mine live at each.
Great Panther is committed to becoming a leading primary silver producer by acquiring, developing and profitably mining precious and base metals in Latin America.
Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by few powerful men at the top, you will not have to be told how periods of inflation and depression originate. – President James Garfield, 2 weeks before his assassination
With the dollar rally breathing its last early yesterday morning in New York, the boys hit gold and silver prices as hard as they could just before the dollar began to head south. During the two hours between 7:00 and 9:00 a.m. Eastern, they peeled about thirteen bucks off the gold price...and about 70 cents off the silver price.
Without doubt they were successful in getting a large number of speculative longs to sell out...and this allowed JPMorgan et al to either cover short positions...or go long themselves, or both. It's a near certainty that the subsequent rallies off the lows in both metals had a large short covering component to them as well. None of this will be in today's Commitment of Traders report.
It remains to be seen if this is the worst they could do, or not. It's still entirely possible that these engineered price declines will continue for another week. If that's not the case, then I'm somewhat surprised that they didn't hit the four precious metals even harder than they did on Wednesday and Thursday, considering the size of the dollar rally they had going for them.
As far as I'm concerned, I don't think we'll see a major rally in either precious metal until the $1,750 spot price in gold...and the $34 spot price in silver...are taken out with some authority. These two prices are being well defended...especially the $34 silver price.
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And here's the 6-month gold chart...
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Today we get the Commitment of Traders Report for positions held at the close of trading on Valentines' Day...and I'll have something to say about it in Saturday's column.
As of 10:14 a.m. in London, gold is up about five bucks...and silver is down a nickel. Volume is pretty light in both metals...and the dollar index dropped about 15 basis points about an hour after London opened. Since today is Friday, I'm ready for anything as far as price action goes in New York when the Comex opens for trading at 8:20 a.m. Eastern time.
There's still time to either re-adjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
That's all I have for today. Have a great weekend...and I'll see you here sometime tomorrow.