Note to all my readers: I will be attending the now sold out GATA conference in London all next week...and I will have no report for the entire time that I'm away. My last report before I leave will be on Saturday, which is tomorrow...and the next one won't be in your in-box until Tuesday, August 9th.
The gold price didn't do much of anything on Thursday...and the price was up about four bucks moments after Comex trading began at 8:20 a.m. Eastern time. Then it got sold off about fourteen dollars...with the absolute low of the day coming at 11:15 a.m. Eastern time.
You will note that the largest part of the decline in the gold price began right at the start of equity trading at 9:30 a.m. Eastern...the same as what happened on Wednesday, if you check the red trace on the chart further down.
Here's the New York spot gold chart. Note the 9:30 a.m. top. This is the third or fourth time in the last week of trading that a sell-off has come right at the open of trading in the New York equity markets.
The gold price recovered smartly during the next hour of trading... before getting sold off a bit...but still managed to close up a few bucks from its Wednesday close.
It's obvious, at least to me, that if this not-for-profit seller hadn't shown up at the Comex open, gold would have closed at a new record high yesterday...just like it would have done on Wednesday.
Volume, net of the last of the roll-overs out of the August contract, seemed to be pretty decent...but the fact that it was the last day of the August contract, makes it particularly difficult to tell.
Silver's high tick of the day came at 9:00 a.m. in London, which is 4:00 a.m. Eastern. From there, it slid slowly until 9:30 a.m. Eastern time in New York...where [just like gold] it got smacked right at the open of the equity markets for the second day running.
The low came around 11:20 a.m....and it recovered about 50 cents from its low of the day by 12:30 p.m. before trading sideways into the close the New York Access Market.
Silver closed down 51 cents...and volume was pretty decent.
The dollar didn't do much...trading within 20 basis points of its opening price of 74.10...and closed the Thursday trading day unchanged. The gold price action was totally unrelated to what the dollar did yesterday...which has been pretty much the case for a long time now.
The gold stocks gapped down a bit...and hit their nadir at gold's low...and then recovered quite a bit as the trading day wore on, but couldn't quite make it back into positive territory...and the HUI finished down 0.73%.
Despite the fact that JPMorgan put the boots to the silver price again yesterday, virtually every silver stock that I own [or track] closed within a very small fraction of a percent either above or below unchanged. Nick's Silver Sentiment Index reflected that by closing at 0.88%.
(Click on image to enlarge)
Well, the CME's Daily Delivery Report yesterday was a sight to behold, as 3,325 gold contracts, along with 275 silver contracts were posted for delivery on August 1st. JPMorgan was basically the only issuer/short, as they delivered 3,308 contracts...with 1,119 contracts coming out of their client account...and 2,189 contracts delivered out of their house account. The biggest stoppers/longs were the Bank of Nova Scotia and Barclays, plus dozens of small firms taking delivery.
In silver, all 275 contracts were delivered by the Bank of Nova Scotia...and the biggest stopper was JPMorgan [140 contracts]...followed by Barclays and Merrill.
Also on this report was the last of the silver to be delivered in the July contract. This amounted to 120 contracts...all of it delivered by Jeffries today. The biggest stoppers were the Bank of Nova Scotia and JPMorgan. I'll have more on this in 'The Wrap'.
The delivery report is very extensive...and well worth your time. The link is here.
The GLD ETF took in a huge stack of gold bars yesterday...as they reported receiving 584,345 ounces of the stuff. The GLD inventory hasn't been this high since mid January. There was no report from SLV.
The U.S. Mint had a sales report yesterday. The sold 2,000 ounces of gold eagles...along with 1,500 one-ounce 24K gold buffaloes...and 118,000 silver eagles. Maybe the mint will have one final report today...and if not, I'll list the final sales numbers for August in Saturday's column.
Wednesday was another busy day over at the Comex-approved depositories, as they received 1,241,262 ounces of silver...and shipped 726,531 troy ounces of the stuff out the door. The link to that action is here.
Here's an interesting sign that someone used in commentary about the world's economic situation...and I heartily agree.
Siemens, the German engineering and power giant, on Thursday posted third-quarter earnings that missed analyst forecasts blaming a slowdown in the global economy for the drop in profits.
“What we see is the early tail wind of the global recovery is over. We have Europe within the debt crisis and budget discussion in the U.S. and volatile commodity prices and political situations around the world. Although we continue to see a growth story in emerging markets,” Siemens chief executive Peter Löscher told CNBC.
This story, posted over at cnbc.com yesterday, was sent to me by reader Roy Stephens...and the link is here.
Sean Egan, the managing director of Egan-Jones Rating Co., tells it like it really is."
What is the loss going to be? We think it will be about 90% in the case of Greece...and about 70% in Ireland and Portugal. Every bank in Europe is a zombie bank...and doesn't have enough capital.
"The US debt to GDP ratio is on par with Portugal...and we cut the US Governments debt rating over the weekend."
Without the direct intervention by the government and the central banks of the world, virtually every bank on Planet Earth would be insolvent right now.
I thank reader U.D. for this 9:22 video from CNBC "Squawk Box" yesterday...and it's worth your time if you have it...and the link is here.
Senior Chinese officials are “appalled” by the impasse among U.S. politicians on raising the nation’s debt ceiling to avoid a default, said Stephen Roach, non-executive chairman of Morgan Stanley Asia Ltd.
“Coming so shortly on the heels of the subprime crisis, the debate over the debt ceiling and the budget deficit is the last straw” for China, New York-based Roach, 65, said in an e- mailed note today.
Roach cited an unnamed Chinese policy maker as saying in mid-July that “we understand politics, but your government’s continued recklessness is astonishing.”
This Bloomberg story is courtesy of reader Randall Reinwasser...and the link is here.
European leaders have long expressed confidence that the US would find a resolution to its ongoing debt impasse. But now there is growing concern that it won't. German Finance Minister Schäuble has urged US lawmakers to act responsibly and others have warned of unpredictable consequences if they don't.
Just as the US urged the euro zone recently to accelerate its efforts to solve the Greek debt crisis, European leaders have now begun demanding action in Washington.
This is another Roy Stephens offering...and this story was posted over at the German website spiegel.de yesterday...and the link is here.
The above headline is from a GATA release yesterday...but The Wall Street Journal headline reads "Brazil Real Weakens for 2nd Day on Government Derivatives Tax". Chris Powell comments that "Market rigging and currency controls are already under way."
The subscriber-protected story is contained in this GATA dispatch from yesterday...and the link is here.
The Italian government was forced to pay the highest borrowing costs in 11 years in a bond auction that underscored market fears that a new phase of the European debt crisis is set to be unleashed.
Analysts at Forex.com said: "Contagion is well and truly in the air. Both Italian and Spanish bond yields have risen sharply and are close to the highs reached last week, which suggests that on reflection the credit markets are not convinced with the EU's latest deal."
This story was posted in The Telegraph just before midnight in London...and is a must read. Once again I thank Roy Stephens for this story...and the link is here.
Credit default swaps (CDS) on Cyprus debt have jumped to 674 basis points, the sort of level that preceded the EU rescues of Greece, Ireland, and Portugal. The CDS were trading in the 300s earlier this month, according to Markit.
Yesterday’s 2-notch downgrade by Moody’s to Baa1 – due to “fractious politics” and exposure to Greece – has come as a nasty surprise to markets and the EU authorities. It should not have done.
Cyprus has been sailing close to the wind for several years. The current account deficit reached 17.5pc of GDP in 2008 (IMF data), and is still high. The budget deficit is running at over 7pc this year.
This was a very short blog from Ambrose Evans-Pritchard yesterday...and the link is here. Thanks again to Roy.
Gold is the obvious alternative to the dollar and euro, Tocqueville Gold Fund manager John Hathaway told King World News yesterday, and big institutions, sovereign wealth funds, and central banks haven't even gotten into gold seriously yet. An excerpt from the interview is headlined "Institutional and Sovereign Buys to Cause Gold Spike".
I stole 'all of the above' from Chris Powell's GATA release about this blog...and the link is here.
Here's audio interview with Robin Griffiths of Cazenove Capital. I posted the blog either yesterday or the day before. Eric King of King World News fame sent me the full audio interview very late last night...and he says that it's 'outstanding'. It probably is...and the link is here.
Here's another King World News blog that Eric sent me last night...and it, too, is worth the read...and the link is here.
Here's a piece by Robert P. Murphy that was posted over at mises.org yesterday.
Murphy concludes his essay with the following statement..."When it comes to "second-best" policy recommendations in a world of government intervention, we can never find perfection (by definition). But if we are going to have the government providing a monopoly of domestic currency, Ludwig von Mises's proposal for a return to a gold standard is theoretically elegant and eminently practical."
This is well worth the read...and I thank Australian reader Wesley Legrand for sending me this story. The link is here.
Today's last gold-related story is courtesy of reader John Steinke...and the headline pretty much says it all.
The gold rush in India, the world's biggest bullion consumer, continues unabated. Physical demand for the gold remains high despite the spike in prices, wealth management firm UBS has said in a note, adding that an indication of sales to India was a 23% jump in gold sales from the start of the year till July.
Bullion retailer Shantilal Makwana said even a slight selloff in either gold or silver ensures physical buying. ``Many small-time investors have deferred buying due to firm international and local prices. But, with prices levelling off even a slight bit, customers have started trickling in,'' he said.
This must read story was posted over at the mineweb.com yesterday...and the link is here.
Bayfield Ventures Corp. (TSX.V: BYV) is exploring for gold in the Rainy River District of NW Ontario. The Company’s “Burns” Block property adjoins the immediate east of Rainy River Resources’ (TSX.V: RR) world-class gold deposit which includes 2.37 million ounces Au at 1.3 g/t indicated in addition to 2.66 million ounces Au at 1.2 g/t inferred. Bayfield is presently exploring the known eastward extension of Rainy River’s main ODM17 gold zone onto the Burns Block. The Company is delineating both lower grade, bulk-tonnage gold mineralization as well as higher grade gold zones with drill results right in line with Rainy River’s. Two of the more notable holes intersected 81 metres of 5.08 g/t Au including 35.93 g/t Au over 10.0 metres, and 31.71 g/t Au over 3.0 metres within 9.0 metres of 12.88 g/t Au. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. The early success of the current 50,000+ metre drill program is very encouraging and much more drilling will be carried out on Bayfield’s Rainy River properties. Please visit our website to learn more about the company and request information.
There is, of course, great conjecture that Gold prices will once again correct - perhaps severely - when the US government raises its Treasury's debt limit. That might happen. It might indeed be a long-lived and deeper "correction" than was the one in anticipation of the European summit. The problem is that if and when the US government does raise the limit, nothing will have changed, least of all for the better. The debts will still be growing. The REAL economy will still be moribund. And the yawning chasm between the talk and the actions of politicians everywhere will be even more blatantly obvious than it is now - for anyone who wants to see it. - Bill Buckler, Gold This Week, July 23, 2011
It was a pretty big volume day in gold yesterday, with the gross volume a very hefty 254,000 contracts. This is not a surprise, as yesterday was the last day of trading in the August contract. The preliminary open interest number was up a relatively small 5,157 contracts...and I would suspect that most of that will disappear when the final o.i. number is posted later this morning.
Well, based on Wednesday's preliminary report yesterday, I was expecting a rather large decline in the final open interest number in gold...and that's exactly what happened, as the final o.i. number declined a very large 18,408 contracts. A lot of that would be spread related...and it's unfortunate that this won't show up until the Commitment of Traders report next Friday.
Silver's net high frequency trading volume yesterday was in the neighbourhood of 57,000 contracts, which is pretty chunky...but the preliminary open interest number was only a smallish 1,337 contracts, which I consider to be spread related. All of this...and probably a bit more...will disappear when the final open interest number is posted.
The remaining silver contracts for July delivery...all 246 of them...had to disappear in this morning's preliminary report for Thursday...and that's precisely what happened. The strange thing about this is that the CME's Daily Delivery Report only showed 120 of these contracts posted for delivery today, so the other 126 contracts must have decided to sell without taking delivery. This is a rather large number...and I don't know what to make of it, although the possibility exists that the longs got a phone call and got talked out of taking delivery.
I thought I'd throw the 6-month HUI chart in here. You can see that it touched its 200-day moving average yesterday before recovering strongly. I wouldn't read a lot into this, as the possibility exists that when the U.S. finally gets to up the limit on its credit card, we could see a knee-jerk reaction to the downside in both metals before the upward climb continues.
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The gold price didn't do much during Far East and early London trading today...and is down about four bucks as I write this paragraph at 5:22 a.m. Eastern. Silver is down about 30 cents. Gold volume is pretty light...and silver's high frequency trading volume is getting up there already. The dollar hasn't done much of anything since the New York close on Thursday afternoon.
Today is Friday...and the first full trading day for the September gold and silver delivery month. I have no idea what to expect, but I'm sure that the New York bullion banks will be doing their thing when the Comex opens for business this morning.
Have a good weekend...and I'll see you on Saturday.